/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050314.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, March 14, 2005, Vol. 9, No. 61 Headlines ADELPHIA COMMS: Wants Until June 10 to Decide on Leases ALERIS INT'L: Noteholders Tender $1.2 Million of 10-3/8% Sr. Notes ALPHARMA INC: Won't File Annual Report on Time AMERICAN AIRLINES: Cargo Div. Discloses Fuel Surcharge Increase AMERICAN BUSINESS: Gets Final Court Nod on $500-Mil. DIP Financing ARMSTRONG WORLD: Appeals Dist. Court's Plan Denial to 3rd Circuit BALLY TOTAL: Board Adopts Inducement Plan for New Employees BOUNDLESS CORP: Disclosure Statement Hearing Moved to April 19 CHESLEY ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors COEUR D'ALENE: Hosting Fourth Quarter Webcast Today CONNECTICARE INC: Health Insurance Purchase Cues S&P to Up Ratings CONGOLEUM CORP: Dec. 31 Balance Sheet Upside-Down by $20.9 Million CORAM HEALTHCARE: Cerberus Attacks Jenner & Block's Fees CSFB MORTGAGE: S&P Pares Rating on Class II-B Certificates to BB ELANIT FASHIONS: Case Summary & 2 Largest Unsecured Creditors EPOCH 2000-1: Fitch Holds Junk & Default Ratings on $71 Mil. Notes ENRON CORP: Gets Court Nod to Establish Unsecured Claims Reserve FEDDERS CORP: Purchases 80% Equity Stake in Islandaire Inc. FEDERAL-MOGUL: U.K. Insurance Dispute Settlement Still Bleak FIRST REPUBLIC: Plans to Sell $50 Million of Preferred Stock FURNAS COUNTY: Secured Lenders Demand Payment from Nebraska Pork GLOBAL CROSSING: Court Okays AGX Cross-Border Insolvency Protocol HAWAIIAN AIRLINES: Court Confirms Chapter 11 Trustee's Plan HEILIG-MEYERS: Court Approves RoomStore's Disclosure Statement HLI OPERATING: Moody's Puts B2 Rating on Euro 120MM Senior Notes HUDSON'S BAY: Performance Decline Prompts S&P to Slice Ratings HUFFY CORP: U.S. Trustee Amends Creditors Committee Membership HUFFY CORP: Creditors Committee Taps Armel Gray as Special Counsel HUNTER FAN: S&P Rates Planned $200M Sr. Sec. Loan & Facility at B IMAGING TECHNOLOGIES: Loss & Deficit Trigger Going Concern Doubt JETSGO CORP: Files for CCAA Protection After Halting Operations KAISER ALUMINUM: Alpart & Jamaica's Third Amended Liquidation Plan KAISER ALUMINUM: Australia & Finance's Amended Liquidation Plan LAIDLAW INT'L: Launches Cash Tender Offer for $202 Mil. Sr. Notes LIFE UNIVERSITY: Moody's Holds B2 Rating on $29.8MM Revenue Bonds LONG BEACH: Moody's Reviews Ratings on 16 Certs. & May Downgrade MATRIA HEALTHCARE: Inks Pact to Acquire Miavita for $5 Million M/I HOMES: Moody's Puts Ba2 Rating on $200MM Senior Notes Due 2015 MCI INC: Qwest & Verizon Trade Barbs in Wall Street Journal MCI INC: Verizon Amends February 14 Agreement & Plan of Merger MERRILL LYNCH: S&P Places Low-B Ratings on Six Certificate Classes MICHAEL JACKSON: Prosecutor Says King of Pop is Near Bankruptcy MIDWAY AILINES: Ch. 7 Trustee Taps Nexsen Pruet as Special Counsel MIRANT CORP: Gets Okay to Participate in Ninth Circuit Appeal MORGAN STANLEY: Moody's Junks $2.987 Million Class M Certificates MOSLER INC: Asks Court to Close Chapter 11 Case N-45O: Fitch Assigns Low-B Ratings on Two 2003-1 Mortgage Bonds NATIONAL ENERGY: Court Approves Plan Solicitation Procedures NATIONAL WASTE: Wants Until June 2 to File a Chapter 11 Plan NETWORK INSTALLATION: Founders Retire 2.5 Million Common Shares NOMURA ASSET: Fitch Affirms $42.8 Mil. Mortgage Certificates at BB N-STAR REAL: Fitch Puts BB Rating on $16 Mil. Class Jr. Sub. Notes NRG ENERGY: Declares $9.22 Per Share Preferred Stock Dividend OCTANE ENERGY: Selling Pronghorn Controls' Shares for $5.4 Million PINNACLE ENT: Fitch Affirms B+ & B- Ratings on Sr. & Sub. Debts PRESTWICK CHASE: Case Summary & 11 Largest Unsecured Creditors QUANTA SERVICES: Earns $1.8 Million of Net Income in 4th Quarter QWEST COMMS: Trades Barbs with Verizon Over MCI Acquisition REVLON CONSUMER: Launches $205 Million Private Debt Placement REVLON CONSUMER: S&P Holds Ratings Despite Internal Control Issues ROUGE INDUSTRIES: Gibraltar Holds $423,969 Allowed Unsec. Claim SATCON TECHNOLOGY: Auditors Raise Going Concern Doubt SATCON TECHNOLOGY: Gets $7M Loan to Fund Operations Until Sept. SBA COMMS: Dec. 31 Stockholders' Deficit Widens to $88.7 Million SEMCO ENERGY: Moody's Affirms Ba2 Senior Unsecured Rating SHOWTIME ENTERPRISES: Pelino & Lentz Approved as Committee Counsel SKIN NUVO INT'L: Wants to Hire Akin Gump as Bankruptcy Counsel SKIN NUVO INT'L: Taps Camino Real as Restructuring Advisors SMART MODULAR: Moody's Puts B2 Rating on $125MM Sr. Secured Notes SMART MODULAR: S&P Rates Proposed $125M Senior Sec. Notes at B SOUTH COAST: S&P Holds BB- Ratings on $35 Mil. Preference Shares SUPERCONDUCTOR TECH: Expects Going Concern Opinion in Form 10-K TAYLOR MADISON: Loss & Deficit Trigger Going Concern Doubt TELCORDIA TECH: Moody's Affirms B1 Rating on $570MM Sr. Sec. Loan TELIGENT: Unsecured Claims Rep. Wants Noteholders Sanctioned TEXAS STATE: S&P's Junk Ratings Slide Down Due to Payment Failure TEXAS STATE: S&P Slices Rating on $13.8 Mil. Revenue Bonds to CC TITAN CORP: Moody's Confirms Ba3 Rating on $135MM Sr. Secured Loan TRANS ENERGY: Board Appoints C. Smith & J. Corp as CEO & VP UAL CORP: Court Approves Varde Fund's Aircraft Claim Settlement UNION LABOR: S&P Places Junk Ratings Due to Weak Performances UNION PLANTERS: Fitch Affirms Two Mortgage-Backed Certificates UPC BROADBAND: S&P Places B Rating on New Eur3 Billion Bank Loans US AIRWAYS: Gets Court Nod to Borrow $125 Million from Eastshore USURF AMERICA: Hosting Shareholder Conference Call on Wednesday WESTPOINT STEVENS: Asks Court to Hold Sale Hearing on June 15 WESTPOINT STEVENS: Court Sets April 7 to Okay Bidding Procedures WHEELING-PITTSBURGH: Pushes to Assign Coal Contract to Severstal WINSTAR COMMS: Court Reassigns Chapter 7 Cases to Judge Sullivan WORLDCOM INC: Deutsche Bank Settles Class Action Suit for $325M WORLDCOM INC: WestLB AG & Caboto Settles Class Suit for $112.5M YOUTHSTREAM MEDIA: Completes Steel Mini-Mill Purchase in Kentucky YUKOS OIL: Will Contest Any New Tax Claims Levied by Russia * Six Attorneys Join Much Shelist as Partners * Bankruptcy Reporter & Collier's B.C. 2d For Sale Now on eBay * BOND PRICING: For the week of March 7 - March 11, 2005 ********* ADELPHIA COMMS: Wants Until June 10 to Decide on Leases ------------------------------------------------------- Adelphia Communications Corporation and its debtor-affiliates ask Judge Gerber of the U.S. Bankruptcy Court for the Southern District of New York to extend their time to assume or reject all unexpired nonresidential real property leases through and including June 10, 2005. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, tells the Court that during the coming months, the ACOM Debtors will continue to analyze their need for the various premises governed by their unexpired leases. The completion of this analysis however requires time to enable the Debtors to continue to evaluate the need for the locations in the context of either: -- a stand-alone plan of reorganization; or -- a possible sale of all or substantially all of the Debtors' assets. "To require the Debtors to make significant business decisions as to which of the Unexpired Leases will be needed for their reorganized business at this time would be impractical," Ms. Chapman contends. The Debtors must not be forced to choose between losing valuable locations and assuming leases that ultimately should be rejected. Similarly, Ms. Chapman adds, to require the Debtors to determine now which of the Unexpired Leases a potential buyer ultimately may choose to acquire through a sale process is also impracticable. Thus, the ACOM Debtors require a further extension of time pursuant to Section 365(d)(4) of the Bankruptcy Code to evaluate and make decisions with respect to the assumption or rejection of Unexpired Leases. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALERIS INT'L: Noteholders Tender $1.2 Million of 10-3/8% Sr. Notes ------------------------------------------------------------------ Aleris International, Inc. (NYSE: ARS) disclosed the results of its offer to purchase up to $5,500,000 in aggregate principal amount of outstanding 10-3/8 percent Senior Secured Notes due 2010. The offer to purchase commenced on Feb. 1, 2005; and the holders' option to surrender their notes for purchase expired at 5:00 p.m. New York time, on Mar. 2, 2005. Aleris has been advised by the depositary, JPMorgan Chase Bank, N.A., that $1,170,000 in aggregate principal amount of notes were validly tendered for purchase and not withdrawn, and Aleris has agreed to purchase all such notes. The purchase price for the notes was $1,000 in cash per $1,000 in principal amount, plus accrued and unpaid interest up to and including the date of purchase. After giving effect to this purchase, $208,830,000 in aggregate principal amount of notes remain outstanding. The funds available for this offer to purchase represented the remaining proceeds from a $24.0 million prepayment to Aleris of an intercompany note by Aleris' German subsidiary, VAW-IMCO Guss und Recycling GmbH, in February 2004. These proceeds were deposited into a collateral account held by the indenture trustee for the notes, and had been available for a one-year period for capital expenditures by Aleris for equipment and other assets that became security for the indebtedness under the notes. After giving effect to these note purchases and the capital expenditures that were made with such proceeds during this one-year period, $4,288,183 remained in the collateral account. Under the indenture, these remaining funds were released from the collateral account to Aleris on March 9, 2005, and may be used by Aleris for its general corporate purposes in accordance with the terms of the indenture. As previously reported in the Troubled Company Reporter on Dec. 15, 2004, Standard & Poor's Ratings Services raised its corporate credit rating on Cleveland, Ohio-based Aleris International, Inc., (formerly IMCO Recycling Inc.) to 'B+' from 'B'. It also raised its rating on the company's senior secured debt to 'B' from 'B-' and removed both ratings from CreditWatch where they were placed with positive implications on June 17, 2004. S&P says the outlook is stable. At the same time, Standard & Poor's affirmed its 'B-' rating on Aleris' $125 million senior unsecured notes due 2014. About the Company Aleris International, Inc., fka IMCO Recycling Inc. is one of the world's largest recyclers of aluminum and zinc. The company has 20 U.S. production plants and five international facilities located in Brazil, Germany, Mexico and Wales. IMCO Recycling's headquarters office is in Irving, Texas. ALPHARMA INC: Won't File Annual Report on Time ---------------------------------------------- Alpharma Inc., said it intends to request a fifteen-day extension for filing its Annual Report on Form 10-K with the Securities and Exchange Commission in order to complete the preparation of its annual report. The company will issue a press release to announce when it plans to release fourth quarter 2004 results and details regarding its related quarterly conference call. About the Company Alpharma Inc. -- http://www.alpharma.com/-- is a global generic pharmaceutical company with leadership positions in products for humans and animals. Uniquely positioned to expand internationally, Alpharma is presently active in more than 60 countries. Alpharma is a leading manufacturer of generic pharmaceutical products in the U.S., offering solid, liquid and topical pharmaceuticals. It is also one of the largest suppliers of generic solid dose pharmaceuticals in Europe, with a growing presence in Southeast Asia. Alpharma is among the worlds leading producers of several important pharmaceutical-grade bulk antibiotics and is internationally recognized as a leading provider of pharmaceutical products for poultry, swine and cattle. * * * As reported in the Troubled Company Reporter on Aug. 11, 2004, Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt rating on generic drug company Alpharma Inc. to 'B' from 'B+'. Standard & Poor's also lowered its senior unsecured debt rating on Alpharma to 'B-' from 'B' and its subordinated debt rating to 'CCC+' from 'B-'. The outlook remains negative. "The rating actions reflect the Fort Lee, N.J.-based Alpharma's continued poor operating performance in its key U.S. generics business, which has been exacerbated by ongoing FDA manufacturing compliance issues and the company's reduced--but still significant--debt load," said Standard & Poor's credit analyst Arthur Wong. "These negative factors are only partially offset by Alpharma's well-established positions in the human pharmaceutical and animal health businesses." AMERICAN AIRLINES: Cargo Div. Discloses Fuel Surcharge Increase --------------------------------------------------------------- American Airlines Cargo(SM) division disclosed an increase in its fuel surcharge from $0.30/kg to $0.35/kg for most U.S.-origin international shipments and from $0.12/lb to $0.14/lb for U.S. domestic shipments, effective March 21, 2005. The fuel surcharge will also be adjusted, in local currency, for most non-U.S.-origin shipments, unless the adjustment is not allowed for regulatory reasons. The fuel index for American Airlines Cargo reached 155.29 for the week ending March 4, exceeding the trigger point of 145.00 for the second consecutive week. The fuel index is based an average of five U.S. jet-fuel spot markets. It was established in September 2002 as a method to monitor and respond to changes in jet-fuel costs. Adjustments to the fuel surcharge occur when the index equals, exceeds, or falls below a specified fuel threshold for two consecutive weeks. The trigger-point matrix has also been expanded in response to the continued increases in the various fuel spot markets. This information, as well as a full matrix of applicable fuel surcharges, is available at http://www.AACargo.com/ Fuel Index Methodology The American Airlines Cargo Fuel Index is based on the weekly average spot price of kerosene-type jet fuel as reported by the U.S. Department of Energy in the Weekly Petroleum Status Report. The index is calculated by averaging the five current spot prices in the New York Harbor, U.S. Gulf Coast, Los Angeles, Rotterdam and Singapore markets. AMERICAN BUSINESS: Gets Final Court Nod on $500-Mil. DIP Financing ------------------------------------------------------------------ American Business Financial Services, Inc., received final Court approval of a $500 million debtor-in-possession financing facility, inclusive of $175.0 million of interim financing approved by the Bankruptcy Court on Feb. 17, 2005, provided by Greenwich Capital Financial Products, Inc., and CIT Business Credit, Inc., that will allow the Company to resume its loan origination business and continue to operate. "We are extremely pleased with the Court's final approval of the DIP financing," said Anthony J. Santilli, Chairman of the Board of ABFS. "We and our legal and financial advisors worked diligently during the last few weeks with our various creditor constituents and other interested parties, and their respective professionals, so that we were able to present a consensual final DIP order to the Court. This process required an extensive amount of negotiations among various parties and we appreciate all of the time and effort that was involved," Mr. Santilli added. "All of us at the Company are anxious to resume our loan origination business." ABFS also announced that after an agreement reached by all interested parties for the selection of a Chief Restructuring Officer (CRO), the Board of Directors has retained as CRO David Coles of turnaround and restructuring firm Alvarez & Marsal, LLC (A&M), subject to Court approval. Mr. Coles will report to the Board and have broad responsibilities comparable to those of a chief executive officer. Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203). Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. ARMSTRONG WORLD: Appeals Dist. Court's Plan Denial to 3rd Circuit ----------------------------------------------------------------- Armstrong World Industries, Inc., and its debtor-affiliates will take an appeal to the United States Court of Appeals for the Third Circuit from the decision and final order, dated Feb. 23, 2005, issued by District Court Judge Eduardo C. Robreno, which denied confirmation of AWI's Fourth Amended Plan of Reorganization, including any technical modifications to the Plan. As reported in the Troubled Company Reporter on Feb. 24, 2005, Judge Robreno finds that the distribution of New Warrants to the class of Equity Interest Holders over the objection of the class of Unsecured Creditors violates the "fair and equitable" requirement of 11 U.S.C. Section 1129(b)(2)(B)(ii), a codification of the absolute priority rule. AWI has estimated that the Unsecured Creditors in Class 6 have claims amounting to approximately $1.651 billion. Under the Plan, AWI proposed that the Unsecured Creditors would recover about 59.5% of their claims. The Asbestos PI Claimants in Class 7 have claims estimated at $3.146 billion and would recover approximately 20% of their claims under the Plan. The Equity Interest Holders in Class 12 would be issued New Warrants valued at approximately $35 million to $40 million. The Plan provides that, if the Unsecured Creditors reject the Plan, the Asbestos PI Claimants will receive the New Warrants, but then will automatically waive the distribution, causing the Equity Interest Holders to secure the New Warrants. Judge Robreno points out that the net result of the Asbestos PI Claimants' waiver is that the Equity Interest Holders -- the old AWI shareholders -- receive the Debtor's property -- the New Warrants -- on account of their equity interests, although a senior class -- the Unsecured Creditors -- would not have full satisfaction of its allowed claims. A full-text copy of the District Court's opinion is available at no charge at: http://bankrupt.com/misc/00-4471-7899.pdf Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/--the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 72; Bankruptcy Creditors' Service, Inc., 215/945-7000) BALLY TOTAL: Board Adopts Inducement Plan for New Employees ----------------------------------------------------------- Bally Total Fitness Holding Corporation (NYSE: BFT) said the Compensation Committee of its Board of Directors has adopted an Inducement Plan as a means of providing equity compensation to induce individuals to become employed by the Company. The Inducement Plan was adopted solely because the Company's 1996 Long-Term Incentive Plan may not have sufficient shares available to provide necessary equity inducement for new employees. The Inducement Plan provides for the issuance of up to 600,000 shares of the Company's common stock. Stockholder approval of the Inducement Plan is not required under the rules of the New York Stock Exchange. Once a new equity incentive plan is approved by the Company's stockholders, the Company does not intend to make any further grants under the Inducement Plan. "We are deeply committed to bringing in the most talented, professional executives to help build the business and achieve our strategic goals," said Paul Toback, Chairman and CEO, Bally Total Fitness. "[Thursday]'s announcement gives us an additional tool to attract the right people at this important time." On March 8, 2005, the Compensation Committee approved the grant of stock option and restricted stock awards to two new employees Marc D. Bassewitz, Senior Vice President, General Counsel and Secretary, and David S. Reynolds, Controller. Mr. Bassewitz was granted 25,000 options and 100,000 shares of restricted stock, subject to vesting conditions. Mr. Reynolds was granted 10,000 options and 10,000 shares of restricted stock, subject to vesting conditions. The stock options vest in three equal annual installments on the anniversary of the grant date and is subject to forfeiture in the event of resignation or termination for cause prior to vesting. The restricted stock has a four-year cliff vesting provision and vests in full upon a change in control or termination of employment by the Company without cause. About Bally Total Fitness Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness, Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness, Bally Sports Clubsr and Sports Clubs of Canada brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Feb. 15, 2005, Standard & Poor's Rating Services lowered its ratings on Bally Total Fitness Holding Corporation, including lowering the corporate credit rating to 'CCC+' from 'B-'. At the same time, Standard & Poor's changed its outlook on the ratings to negative from developing. Total debt outstanding at Sept. 30, 2004, was $747.7 million. "The rating actions are based on the potential for further delays in the filing of financial statements and on related uncertainties, in light of Bally's Audit Committee's recent findings," said Standard & Poor's credit analyst Andy Liu. BOUNDLESS CORP: Disclosure Statement Hearing Moved to April 19 -------------------------------------------------------------- The hearing to consider the adequacy of the Third Amended Disclosure Statement explaining the Third Amended Joint Plan of Reorganization filed by Boundless Corporation and its debtor-affiliates is moved to April 19, 2005. The Honorable Dorothy Eisenberg of the U.S. Bankruptcy Court for the Eastern District of New York was to consider approval of the Disclosure Statement on March 1, 2005. As reported in the Troubled Company Reporter on Jan. 31, 2005, all distributions to be made to holders of Allowed Claims, whether through the issuance of its capital stock or payment of monies, will be made by the Debtors, Vision Technologies, Inc., or by Oscar Smith, the President of Vision Technologies. Payments and Distributions to be made by the Debtors to Claimants under the Plan will consist of cash or new issue of Boundless Common Stock of the Reorganized Debtors. Any cash to be disbursed will be distributed only by the Debtors, while Boundless Common Stock will be distributed directly by the Debtors or their transfer agent. The Plan groups claims and interests into nine classes, with unimpaired claims consisting of: a) Allowed Administrative Claims to be paid 100% of their claims on the Effective Date; b) the Secured Valtee Claims will be paid in full over a period of 30 to 34 months subsequent to the Effective Date; c) the Secured Vision Claims will be paid 100% of their claims with shares of Boundless Common Stock; d) the partially Secured Norstan Claim will be paid with 72 monthly payments of $5,000 beginning on the Effective Date; and e) Allowed Priority Claims and Allowed Priority Tax Claims will be paid 100% of their claims in Cash on the Effective Date. Impaired claims consisting of: a) Allowed Unsecured Claims will receive their Pro Rata share of cash payments equal to 2% of the annual revenues from the sale of the text terminals reaching $7 million, but if the sale exceeds $7 million, they will receive 4% of the annual revenues; and b) Holders of Mandatorily Redeemable Preferred Stock and Holders of Existing Stock will not receive any cash or property under the Plan and their stock will be cancelled on the Record Date. Headquartered in Hauppauge, New York, Boundless Corp., is a global technology company and is composed of two subsidiaries: Boundless Technologies, Inc., a desktop display products company, and Boundless Manufacturing Services, Inc., an emerging EMS company providing build-to-order systems manufacturing, printed circuit board assembly. The Company and its debtor-affiliates filed for chapter 11 protection on March 12, 2003 (Bankr. E.D.N.Y. Case No. 03-81558). Jeffrey A Wurst, Esq., at Ruskin Moscou Faltischek PC, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $19,442,850 and total debts of $19,417,517. CHESLEY ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Chesley Enterprises, Inc. dba Chesley the Cleaner 515 Davidson Street Nashville, Tennessee 37213 Bankruptcy Case No.: 05-02902 Type of Business: The Debtor provides dry cleaning services. See http://www.chesleythecleaner.com/ Chapter 11 Petition Date: March 9, 2005 Court: Middle District of Tennessee (Nashville) Judge: Keith M Lundin Debtor's Counsel: Edwin M. Walker, Esq. Garfinkle Mclemore & Walker P.O. Box 158249 Nashville, TN 37215 Tel: 615-383-9495 Fax: 615-292-9848 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Phenix Supply Company Trade Debt $9,399 741 Massman Drive Nashville, TN 37210 Metropolitan Trustee Taxes $8,612 800 2nd Ave., North, Ste. 2 Nashville, TN 37201 Charles Cook Rent $7,098 3309 Fairmont Drive Nashville, TN 37203 Star Insurance Workers' Compensation $5,776 P. O. Box 5015 Insurance Southfield, MI 48086 Ganick Communications, Inc. Advertisement $5,200 Metalprogretti Conveyors Trade Debt $5,200 Humphres & Associates Accountant $4,045 A1 Products Trade Debt $3,423 Nashville Electric Service Utilities $2,656 AmComp Assurance Insurance Workers' Compensation $2,100 Insurance ADT Security System Security $1,726 Westgate Software Computer Support $1,260 Metro Water Services Utilities $993 Machinex Trade Debt $822 AutoW Truck Lease Van Lease $692 RedmanDavis, Inc. Commercial Insurance $767 Nashville Gas Company Utilities $745 Nextel Communications Communications $745 Xspedius Communications Communications $647 The Bag Lady Trade Debt $579 COEUR D'ALENE: Hosting Fourth Quarter Webcast Today --------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE: CDE; TSX: CDM) will report its fourth quarter and year-end 2004 results today, March 14, 2005, before the New York Stock Exchange opens for trading. There will be a conference call today at 1:00 p.m. Eastern time. Dial-In Numbers: (800) 611-1148 (US and Canada) (612) 332-0228 (International) The conference call and presentation will also be webcast on the Company's Web site at http://www.coeur.com/ Hosting the call will be Dennis E. Wheeler, Chairman, President and Chief Executive Officer of the Company, who will be joined by James A. Sabala, Executive Vice President and Chief Financial Officer, Donald J. Birak, Senior Vice President of Exploration, Raymond W. Threlkeld, President of South American Operations and Harry F. Cougher, Senior Vice President of North American Operations. A replay of the call will be available through March 22, 2005. The replay dial-in numbers are (800) 475-6701 (US and Canada) and (320) 365-3844 (International) and the access code is 773714. In addition, the call will be archived for a limited time on the Company's web site. About the Company Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. Coeur has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. * * * As reported in the Troubled Company Reporter on Oct. 4, 2004, Standard & Poor's Ratings Services affirmed its 'B-' corporate credit and senior unsecured debt ratings on Coeur D'Alene Mines Corporation and removed the ratings from CreditWatch, where they were placed on June 1, 2004, with positive implications. S&P said the outlook is stable. Coeur D'Alene, an Idaho-based silver and gold mining company, currently has about $180 million in debt. CONNECTICARE INC: Health Insurance Purchase Cues S&P to Up Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its counterparty credit and financial strength ratings on ConnectiCare, Inc., to 'BB+' from 'B+' and removed them from CreditWatch. Standard & Poor's also said that the outlook on ConnectiCare is negative. The ratings on ConnectiCare had been placed on CreditWatch on June 25, 2004, after Health Insurance Plan of Greater New York ('BBB-/Negative/--') announced its intention to acquire ConnectiCare's parent, ConnectiCare Holding Company, Inc. "T[he] rating action follows the completion of this acquisition," noted Standard & Poor's credit analyst Neal Freedman. The ratings on ConnectiCare are now one notch below the ratings on Health Insurance Plan, reflecting the company's strategic importance to Health Insurance Plan. Standard & Poor's affirmed its 'BBB-' counterparty credit and financial strength ratings on Health Insurance Plan on Feb. 15, 2005. "The negative outlook reflects Standard & Poor's concerns about the high level of goodwill on HIP's consolidated balance sheet as well as the integration risk resulting from the transaction," Mr. Freedman added. Standard & Poor's believes ConnectiCare will benefit from the stronger ratings on Health Insurance Plan and the strengthened business position the combined companies will have in the New York metropolitan health insurance marketplace. CONGOLEUM CORP: Dec. 31 Balance Sheet Upside-Down by $20.9 Million ------------------------------------------------------------------ Congoleum Corporation (AMEX:CGM) reported its financial results for year ended Dec. 31, 2004. Sales for the year ended Dec. 31, 2004 were $229.5 million, an increase of 4.0% compared to the $220.7 million reported in 2003. Income from operations in 2004 was $8.7 million, compared to a loss from operations of $3.1 million for 2003. Basic net income for 2004 was $2.9 million, compared with a loss of $6.8 million in 2003. Net income per share in 2004 was $0.36, compared to a net loss per share of $0.82 in 2003. Congoleum's reported results include charges of $5.0 million in 2004 and $3.7 million in 2003 for resolution of asbestos liabilities. Net income in 2004 also includes $2.9 million of anticipated tax carryback benefits related to spending in connection with resolution of asbestos liabilities. Roger S. Marcus, Chairman of the Board, commented "Sales improved in 2004 due to a combination of price increases, higher residential sales of our Xclusive and DuraCeramic product lines, and greater shipments to the manufactured housing industry. Our overall sales growth would have been higher were it not for lower sales in the do-it-yourself tile category, where we faced continued price pressure from China and other overseas sources, and by lower sales of specials and off-goods. The resulting sales mix was more profitable than 2003, and margins benefited further from increases in manufacturing efficiencies. Unfortunately, we also experienced significant inflation in raw material costs, particularly resins, which exceeded our price increases and offset much of the margin improvement." Mr. Marcus continued, "We lowered operating expenses by $4 million last year as a result of cost reduction steps taken in both 2003 and 2004, despite continued increases in medical and benefit costs. This reduction helped us achieve an $11.8 million improvement in income from operations, which swung from a loss of $3.1 million in 2003 to $8.7 million in income in 2004. We also increased our cash position considerably during the year, with unrestricted cash balances growing from $2.2 million at the end of 2003 to $29.7 million at the end of 2004. While the raw material situation will continue to be a challenge in 2005, we are committed to taking steps to protect our margins while continuing to build on the success of the new products we develop. We also hope to complete our reorganization process during the third quarter of 2005, putting the financial and management burden of our asbestos liabilities behind us." Headquartered in Mercerville, New Jersey, Congoleum Corporation -- http://www.congoluem.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No. 03-51524). Domenic Pacitti, Esq., at Saul Ewing, LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. Congoleum has filed an amended plan of reorganization and disclosure statement with the court and is seeking confirmation of the plan at a hearing scheduled to begin April 12, 2005. At Dec. 31, 2004, Congoleum's balance sheet showed a $20,860,000 stockholders' deficit, compared to a $25,777,000 deficit at Dec. 31, 2003. CORAM HEALTHCARE: Cerberus Attacks Jenner & Block's Fees -------------------------------------------------------- Cerberus Partners, L.P, objects to Jenner & Block, LLC's final application for compensation seeking payment of $7.4 million in connection with the firm's 32-month representation of the Official Committee of Equity Holders in the Coram Healthcare Corp. and Coram, Inc., chapter 11 cases. Cerberus also renews a request for sanctions against the law firm in connection with its drafting of an equitable subordination complaint. "Instead of fulfilling its duty to maximize the economic recovery for its entire constituency, the common shareholders," Cerberus charges, Jenner & Block "lapsed into catering to the whim of the litigious and combative Committee." Cerberus directs Judge Walrath's attention to Jenner & Block proclaiming on its Web site that the law firm was fighting Committee-leader "Sam Zell's battle for control of Coram Healthcare Corporation." The "battle" waged by Jenner, Cerberus continues, included frivolous filings, petty discovery disputes, and the general disruption of Coram's business operations. Those specific lapses are the basis of Cerberus' objection and its motion for sanctions. Cerberus points to an e-mail message from Richard F. Levy, Esq., the lead attorney representing the Equity Committee. That message, Cerberus says, "shows a complete disregard for the truth," by directing Committee advisors not to acknowledge the soundness of Coram's financial operations. "NO, NO, NO, Flattery is fine, even if insincere, but admissions like 'We were quite impressed with your operations' would haunt us in many dangerous ways," Mr. Levy wrote in a March 4, 2002, e-mail message. Cerberus complains that Jenner's tactics hampered the efforts of Coram's independent Chapter 11 Trustee, Arlin M. Adams, in operating the Debtors and concluding their prolonged reorganization. Cerberus tells Judge Walrath that the Trustee -- a respected former federal appellate judge, seasoned mediator, and successful businessman -- reached settlements with virtually every other constituency in the case, including the Internal Revenue Service, Coram's unsecured creditors, Coram's subsidiaries and their unsecured creditors, and Coram's three largest institutional creditors, Cerberus, Goldman Sachs Credit Partners, L.P., and Wells Fargo Foothill, Inc. Rather than cooperate, the Equity Committee steadfastly refused even to consider the Trustee's plan of reorganization. "Obsessed with litigation, but immune to its costs because the Debtors would presumably be paying its fees, Jenner engaged in scorched-earth tactics against the Trustee," Cerberus continues. Cerberus tabulates that the Equity Committee has taken at least 40 depositions, including multiple depositions of the same witnesses. Cerberus tells Judge Walrath that Jenner's desire to take depositions was so limitless that the Trustee's counsel, upon receiving notice at 11:20 p.m. of the Committee's desire to take five depositions in August 2003, remarked: Richard -- April Fool's Day was some time ago. Knowing your fondness for tennis, I quote Chief Justice McEnroe -- "You cannot be serious." If you like, I will get you the names of secretaries at SSG/EMB so you can notice their depositions. Some of them may have typed something relating to Coram. Jenner not only obstructed the Trustee with such efforts, but also took aim pointedly at Cerberus and other Noteholders, in the form of blatantly frivolous filings that wasted the resources of the Court and the Debtors, and caused needless additional expense for Cerberus. Cerberus gives Judge Walrath two examples: * First, on March 28,2003, Jenner filed on behalf of the Committee an equitable subordination complaint against the Noteholders which directly contradicted three orders of this Court staying such action, and broke a Committee representation in open court not to take advantage of the Noteholders' agreement to exchange debt for equity so as to avoid CMC's looming Stark II problems. Jenner resorted to this underhanded tactic only because its two previous attempts to initiate litigation against the Noteholders were stayed by the Court, and because the Trustee refused to initiate the litigation while he was negotiating a settlement with the Noteholders. On June 23 2003, the Court summarily dismissed the Equitable Subordination Complaint as inconsistent with its three previous orders. * Second, in August 2003, Jenner moved on behalf of the Committee against Cerberus and Goldman to compel discovery. The motion contained gross misrepresentations of fact, and ultimately sought nothing more than assurances from counsel that all documents had been produced. To make matters worse, the Motion To Compel was filed with a false certification that the Committee had first conferred with Goldman as required by the rules of this Court. The Court denied the Motion To Compel, and invited Cerberus and Goldman to apply for their attorneys' fees. Cerberus argues that Jenner should be denied compensation for its fees and costs associated with the Equitable Subordination Complaint and Motion To Compel, which added no value for the Committee or the estates. Moreover, the filings were so frivolous and wasteful that Jenner should be ordered to pay Cerberus' attorneys' fees in defending against them. Specifically, Cerberus asks Judge Walrath to: * deny Jenner $190,112 in compensation related to preparation of the equitable subordination complaint; * deny Jenner $15,959 in compensation for the offensive Motion to Compel; * deny Jenner $33,345 in compensation for defense of its earlier objectionable fee applications; * award Cerberus $100,000 in sanctions for Jenner's bad faith conduct relating to the equitable subordination complaint; and * award Cerberus $9,830 in sanctions for Jenner's bad faith conduct relating to the Motion to Compel. Cerberus is represented in Coram's chapter 11 cases by: Adam G. Landis, Esq. Kerri K. Mumford, Esq. LANDIS RATH & COBB LLP 919 Market Street, SUite 600 P.O. Box 2087 Wilmington, DE 19801 Telephone (312) 467-4400 - and - Michael L. Cook, Esq. Howard O. Godnick, Esq. SCHULTE ROTH & ZABEL LLP 919 Third Avenue New York, NY 10022 Coram Healthcare Corporation is a provider of infusion-therapy services. The Company filed for chapter 11 protection on August 8, 2000 (Bankr. D. Del. Case No. 00-03299), and emerged from chapter 11 in 2004 under a Plan of Reorganization prosecuted to confirmation by the Chapter 11 Trustee. Sam Zell, represented by Richard F. Levy, Esq., at Jenner & Block, LLC, led the Equity Committee in its charge to defeat confirmation of two plans proposed by the Debtors. CSFB MORTGAGE: S&P Pares Rating on Class II-B Certificates to BB ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class II-B of Credit Suisse First Boston Mortgage Securities Corp.'s mortgage-backed pass-through certificates from series 2002-9 to 'BB' from 'BBB'. At the same time, ratings are affirmed on the 11 other classes from the same series. The rating on class II-B is lowered due to the continuing deterioration of its credit support, which is provided by excess spread and overcollateralization. This deterioration has occurred as a result of inconsistent net losses incurred by the collateral during the past year. The class, originally rated 'BBB', had initial credit support of 1.50%. The transaction has been realizing net losses averaging approximately $104,000 per month during the most recent 12 months, with approximately 0.47% in cumulative realized losses. Moreover, the deal is generating approximately 0.66% of excess spread on an annualized basis, and the o/c is currently at 0.13%, which is below its original target of 0.50%. The pool performance has led to losses that have outpaced excess interest for most of the past year, leading to the continuous reduction of o/c every month. Total delinquencies have increased to approximately 21.66% from 17.96% in the past six months, with serious delinquencies (90-plus days, foreclosure, and REO) approximately at 17%, remaining steady for the past six months. The mortgage pool has paid down to approximately 9% of its original balance. Standard & Poor's expects continued poor performance of the collateral based on the delinquency profile and will continue to monitor the performance closely. The rating may be adjusted accordingly to reflect the available credit support. ELANIT FASHIONS: Case Summary & 2 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Elanit Fashions, Inc. 79 Through 89 Avenue D New York, New York 10009 Bankruptcy Case No.: 05-11515 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Lip.Sim LLC 05-11513 Type of Business: The Debtors are real estate developers. Chapter 11 Petition Date: March 10, 2005 Court: Southern District of New York (Manhattan) Judge: Stuart M. Bernstein Debtors' Counsel: Arnold Mitchell Greene, Esq. Robinson Brog Leinwand Greene, Genovese & Gluck, P.C. 1345 Avenue of the Americas, 31st Floor New York, New York 10105 Tel: (212) 586-4050 Fax: (212) 956-2164 Total Assets Total Debts ------------ ----------- Elanit Fashions, Inc. $5,000,000 $1,609,000 Lip.Sim LLC $2,500,000 $200,000 A. Elanit Fashions, Inc.'s Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Bela and Josef Fried $1,500,000 748 East 84th Street Brooklyn, New York 11236 B. Lip.Sim LLC's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Phillip Fried $200,000 11 Sheppard Drive Scarsdale, New York 10583 EPOCH 2000-1: Fitch Holds Junk & Default Ratings on $71 Mil. Notes ------------------------------------------------------------------ Fitch Ratings affirms three tranches and there was no action on three tranches of EPOCH 2000-1, Ltd.: -- $81,500,000 class I notes affirmed at 'BBB'; -- $23,750,000 class II notes affirmed at 'BB-'; -- $14,000,000 class III notes affirmed at 'B-'; -- $61,500,000 class IV notes remain at 'CC'; -- $9,500,000 class V notes remain at 'D'; -- $34,750,000 preferred shares remain at 'D'. EPOCH 2000-1, Limited, incorporated under the laws of the Cayman Islands, was created to enter into a credit default swap with Morgan Stanley Credit Products, Ltd. -- MSCPL -- and to issue the above-referenced securities. The notes are supported by the cash flows of the collateral, as well as the credit default swap premium paid by MSCPL. The credit default swap references a portfolio of securities, consisting predominantly of senior unsecured bonds. In conjunction with the review, Fitch stressed the underlying asset portfolio with a variety of default scenarios derived from Fitch's VECTOR model, which utilizes a multiperiod, Monte Carlo simulation. Fitch has reviewed the credit quality of the individual assets comprising the portfolio. Since Fitch's last rating action in June 2004, the portfolio has experienced an additional credit event. However, the portfolio has experienced minimal credit migration, and the current reserve account has increased to over $5.5 million. Additionally, the seasoned structure has less than three years remaining until final maturity. Accordingly, Fitch has determined that the ratings assigned to all rated securities, as indicated above, reflect the current risk to noteholders. The ratings assigned to the notes address the timely payment of interest and ultimate payment of principal. The rating assigned to the preferred shares addresses the ultimate receipt of the stated principal amount by the final maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments as needed. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/ ENRON CORP: Gets Court Nod to Establish Unsecured Claims Reserve ---------------------------------------------------------------- The Honorable Arthur Gonzalez authorizes Enron Corporation and its debtor-affiliates to establish an Unsecured Claims Reserve pursuant to a modified Reserve Methodology. The Modified Reserve Methodology provides for a six-step calculation: 1. a determination of the amount of allowed General Unsecured Claims -- Allowed Denominator; 2. a determination of the amount of disputed liquidated General Unsecured Claims, to the extent the claims are liquidated as of October 1, 2004, and remain disputed as of a particular Measurement Date -- Pre-10/04 Liquidated Denominator; 3. a determination of the amount of disputed liquidated General Unsecured Claims, to the extent the claims are liquidated after October 1, 2004, but remain disputed as of a particular Measurement Date -- Post-10/04 Liquidated Denominator; 4. a determination of an estimated amount for unliquidated General Unsecured Claims -- Unadjusted Unliquidated Denominator; 5. a determination of the sum of the Allowed Denominator, Pre- 10/04 Liquidated Denominator, Post-10/04 Liquidated Denominator and Unadjusted Unliquidated Denominator -- Unadjusted GUC Denominator; and 6. to the extent that the Unadjusted GUC Denominator includes an Unadjusted Unliquidated Denominator, the imposition of a minimum and a maximum threshold on the Unadjusted GUC Denominator, resulting in an adjustment to the Unadjusted Unliquidated Denominator for that Debtor or, with respect to the Sub/Con Recovery, the consolidated Debtors -- Adjusted Unliquidated Denominator. The General Unsecured Claims will include both General Unsecured Claims and Guaranty Claims as defined in the Plan. Disputed Claims Reserve Accounts Under the Modified Reserve Methodology, the Disputed Claims Reserve will be comprised of at least three distinct and independent accounts: 1. Pre-10/04 Liquidated DCR An account attributable to the Pre-10/04 Liquidated Denominator, which will be funded to facilitate distributions, based on the allowed amount of the claim, on any disputed liquidated General Unsecured Claims that were liquidated as of October 1, 2004, and become allowed. 2. Post-10/04 Liquidated DCR A separate account attributable to the Post-10/04 Liquidated Denominator, which will be funded to facilitate distributions based on the allowed amount of the claim, on any disputed liquidated General Unsecured Claims that were liquidated after October 1, 2004, and become allowed. 3. Unliquidated DCR An account which will be attributable to the Adjusted Unliquidated Denominator, which will be funded to facilitate distributions on any unliquidated General Unsecured Claims to the extent the claims are allowed. A full-text copy of the Modified Reserve Methodology is available for free at: http://bankrupt.com/misc/ModifiedReserveMethodology.pdf Disputed Liquidated Claims Include Dynegy Claims For purposes of calculating the Pre-10/04 Liquidated Denominator, these amounts, net of the $93 million claims already filed by Dynegy, Inc., and certain of its affiliated entities, will be included as Disputed Liquidated Claims until the time as the claims have been resolved: Claim No. Debtor Claim Amount --------- ------------------- ------------ 13397 Enron Broadband Services LP $803,807 13398 Enron Gas Liquids, Inc. 4,073,396 13399 Enron Capital & Trade Resources Int'l. Corp. 2,353,345 13400 Enron Energy Services, Inc. 5,471,505 13402 Enron North America Corp. 206,703,236 13403 Enron Corp. 270,005,255 For the avoidance of doubt, at the time of any distribution by any of the Reorganized Debtors under the Plan in respect of Allowed Claims, each of the Debtors will make the same ratable distribution: -- in respect of each Allowed Claim; -- to the Pre-10/04 Liquidated DCR and, to the extent applicable, Post-10/04 Liquidated DCR for each of Debtor in respect of each disputed liquidated General Unsecured Claim based on the liquidated amount of the Claim; and -- to the Unliquidated DCR. Judge Gonzalez rules that if a situation would arise where ratable distributions cannot be made, then the Reorganized Debtors will refrain from making any additional distributions to holders of Allowed Claims in the affected Plan Class, subject only to further order from the Court. Other than with respect to claims allegedly secured based on setoff rights, pending resolution of any Disputed Secured Claims, the Reorganized Debtors will either: (a) reserve the liquidated amount of the alleged Secured Claim in Cash; or (b) in those instances where the collateral for the Secured Claim is readily identifiable, exclude the collateral from the assets to be included for purposes of calculating distributions. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 137; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDDERS CORP: Purchases 80% Equity Stake in Islandaire Inc. ----------------------------------------------------------- Fedders Corporation, (NYSE: FJC), a leading global manufacturer of air treatment products, including air conditioners, air cleaners, dehumidifiers and humidifiers and thermal technology products, has purchased 80% of the stock of Islandaire, Inc., from its founder and sole shareholder, Robert E. Hansen, Jr., for a combination of cash and preferred stock. Located in Ronkonkoma, New York, Islandaire, which will become known as Fedders Islandaire Company, manufactures and markets a line of specialized through-the-wall packaged terminal air conditioners (PTACs) and heat pumps, primarily for replacement applications in apartment buildings, hotels and motels, and in institutional buildings such as schools, offices, hospitals and nursing homes. Islandaire's replacement PTAC units fit into existing wall openings without alteration to the structure of the building. Islandaire will be managed as an individual business unit, with Mr. Hansen remaining as President. Fedders Corp. intends to purchase the remaining 20% of Islandaire stock within three years. Islandaire sales in 2004 were approximately $26 million. Commenting on the acquisition, Fedders Chairman and Chief Executive Officer, Sal Giordano, Jr. said, "This acquisition enables Fedders to further expand into the commercial HVAC sector. With the addition of Islandaire, the commercial and industrial air treatment businesses of Fedders will be approximately one third of total sales." Robert Hansen added, "The Islandaire team is very pleased to become a part of Fedders. Together, we will broaden each company's product offering and become an even more formidable industry leader. As an example, Islandaire will be the platform to launch Fedders' new, ultra-quiet PTAC into the new construction market, which is significantly larger than the replacement market. We look forward to this opportunity and to continued growth as part of Fedders." About the Company Fedders Corporation manufactures and markets worldwide air treatment products, including air conditioners, air cleaners, gas furnaces, dehumidifiers and humidifiers and thermal technology products. * * * As reported in the Troubled Company Reporter on Oct. 13, 2004, Standard & Poor's Ratings Services lowered its ratings on air treatment products manufacturer Fedders Corp. and Fedders North America Inc., including its corporate credit ratings to 'CCC+' from 'B'. S&P says the outlook is negative. FEDERAL-MOGUL: U.K. Insurance Dispute Settlement Still Bleak ------------------------------------------------------------ As reported in the Troubled Company Reporter on Apr. 7, 2004, Federal-Mogul Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve certain settlement agreements resolving an asbestos insurance coverage litigation in England among non-Debtor subsidiary Curzon Insurance Limited, Curzon's insurance brokers, and a reinsurance firm. Subsequently, Munchener Ruckversicherungs-Gesellschaft AG and Centre Reinsurance International Co., a subsidiary of the Zurich Financial Services Group, notified the Debtors of their belief that the settlements with European International Reinsurance Company Ltd. and Sedgwick may breach one or more provisions of the Reinsurance Agreement. In a Form 10-K filing with the Securities and Exchange Commission, the Debtors report that the hearing to review the March 1, 2004 motion has been adjourned indefinitely as the parties attempt to resolve the issues raised by Munich Re and Centre Reinsurance. However, the settlement efforts have been unsuccessful, prompting the Administrators to file an action in the High Court of Justice, Chancery division in London, England, seeking a declaration that the settlements with European International and Sedgwick do not breach provisions of the Reinsurance Agreement. At a hearing on February 14, 2005, the English High Court gave directions to set out an approximate 35-day timetable for the production of evidence for a substantive hearing in early April 2005. In addition, the English High Court gave a direction that Curzon Insurance Limited, the original insurer under the policy, should make a similar application to run in tandem with the Administrators' application. English Court Rules on Curzon and T&N's Appeal on Claims Handling Issues In December 2002, Munchener Ruckversicherungs-Gesellschaft AG and Centre Reinsurance International Co. sought certain declarations from the English High Court as to the meaning of certain terms contained in the policy and Reinsurance Agreement. These proceedings were adjourned. However, in August 2003, T&N's Administrators issued their own applications for determinations of certain legal issues arising under the policy, including whether: (i) the provision for the transfer of claims handling rights under the policy was not enforceable under the provisions of S1(3) of the Third Party (Rights Against Insurers) Act 1930; (ii) the Reinsurers must meet all expenses incurred in claims handling following the transfer of the right to handle claims, even if the expenses are incurred within the retention of the policy; and (iii) the expenses incurred by the Reinsurers constitutes an administration expense payable in priority to other creditors. On February 12, 2004, the English High Court held that: (i) claims handling rights had been transferred; (ii) claims handling rights did not rank as an administration expense; and (iii) the Reinsurers could be obliged, in the proper exercise of claims handling, to incur expenses -- but only on the basis that they formed part of the ultimate net loss under the policy. The English High Court of Appeal gave judgment on February 11, 2005. Curzon and T&N's appeal was unsuccessful on all points. Munich Re and CRIC were successful only in relation to their appeal to the extent to which claims handling expenses incurred by the Reinsurers were administration expenses. The Court of Appeal held that the reimbursement of the expenses should be treated as sums payable in respect of liabilities incurred within Section 19(5) of the Insolvency Act of 1986. However, the Court of Appeal said that what claims handling expenses need to be incurred by the Reinsurers must remain a matter under the control of the Court. Curzon and T&N sought permission to appeal to the House of Lords but leave was refused. T&N's Administrators are considering whether to seek permission to appeal from the House of Lords. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood, 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 listed $10.15 billion in assets and $8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a $1.925 billion stockholders' deficit. (Federal-Mogul Bankruptcy News, Issue No. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIRST REPUBLIC: Plans to Sell $50 Million of Preferred Stock ------------------------------------------------------------ First Republic Bank (NYSE: FRC) has agreed to sell $50 million of depositary shares representing interests in its 6.25% Noncumulative Perpetual Series B Preferred Shares, subject to regulatory approval. The Bank currently expects to complete this offering on or about March 18, 2005. The depositary shares will have a $25 per share liquidation preference and will pay noncumulative quarterly dividends at an annual rate of 6.25%. Application will be made to list the depositary shares, each representing 1/40th of a Series B Preferred Share, on the New York Stock Exchange. The Bank expects to use the net proceeds from the offering for general corporate purposes, including the origination of additional single family, multifamily, commercial real estate and other loans. HSBC Securities (USA) Inc. will be the sole manager of this offering. Neither the depositary shares nor the Series B Preferred Shares are required to be registered under the Securities Act of 1933, as amended, or any state securities laws, and are offered pursuant to an exemption from registration under Section 3(a)(2) of that act. This press release does not constitute an offer or solicitation. The offering will be made solely by means of an offering circular which can be obtained from the manager of this offering. About First Republic Bank First Republic Bank -- http://www.firstrepublic.com/-- is a NYSE- traded commercial bank and wealth management firm. The Bank specializes in providing personalized, relationship-based wealth management services, including private banking, investment management, trust, brokerage, and real estate lending. As of December 31, 2004, the Bank had total banking and other assets under management and administration of $24.7 billion. First Republic provides its services online and through branch offices in seven major metropolitan areas: San Francisco, Los Angeles, Newport Beach, San Diego, Santa Barbara, Las Vegas and New York City. * * * Standard & Poor's Ratings Services rates First Republic's 7-3/4% Notes due Sept. 15, 2012, at BB+. Those bonds trade around 107 today. FURNAS COUNTY: Secured Lenders Demand Payment from Nebraska Pork ---------------------------------------------------------------- Furnas County Farms' secured creditors Sun Trust Bank, acting as Agent for First National Bank of Omaha, General Electric Capital Business Asset Funding, U.S. Bank N.A., Co Bank, ACB, Bank of America, N.A., Metropolitan Life Insurance Company and TIAA-CREF ask the U.S. Bankruptcy Court for the District of Nebraska to order Nebraska Pork Marketing, LLC, to honor a sale agreement and pay them $112,750. Furnas owes the Lenders an aggregate amount of $116,863,415, secured by substantially all of the Debtor's assets. In May 2004, Nebraska Pork Marketing, LLC, purchased most of the Debtor's assets. The acquisitions of the assets include Nebraska's assumption of Furnas' indebtedness. Included in the purchase are equipment serving as collateral for the prepetition lenders. The sale agreement stipulated that the equipment will be sold free and clear of liens, claims and encumbrances provided that the sale proceeds will be paid to the Lenders. The Lenders complain that Nebraska Pork improperly deducted a $112,750 when it remitted the sale proceeds. The Lenders have asked for the money but, Nebraska refused to pay. Headquartered in Columbus, Nebraska, Furnas County Farms operated the largest swine operations in Nebraska, South Dakota and Iowa. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Neb. Case No. 04-81489) on May 3, 2004. James Overcash, Esq., and Joseph H. Badami, Esq., at Woods & Aitken, LLP, represent the Debtors. When the Debtor filed for protection from its creditors, it listed over $50 million in estimated assets and over $100 million in estimated liabilities. GLOBAL CROSSING: Court Okays AGX Cross-Border Insolvency Protocol ----------------------------------------------------------------- On Nov. 18, 2002, Asia Global Crossing Ltd. sought the winding-up of its business under the Companies Act 1981 of Bermuda. In connection with the proceedings initiated by that petition, the Bermuda Court appointed Mark Smith and James Smith as AGX's Joint Provisional Liquidators. To coordinate the administration of the AGX Debtors' United States Case and their Bermuda Case, AGX Trustee Robert L. Geltzer believes that it is appropriate to enter into a compromise with the Joint Provisional Liquidators and implement a Cross-Border Insolvency Protocol. Under the Protocol, there would effectively be a stay of virtually all proceedings in the Bermuda Case until the closing of the U.S. Case, while Mr. Geltzer pursues the adversary proceedings which he has commenced and may in the future commence, and the claims of creditors of the Debtors are adjudicated, and where appropriate, paid, in the U.S. Case. Mr. Geltzer and the Joint Provisional Liquidators have executed the Protocol, dated as of December 13, 2004, which provides, essentially, that: (a) The Joint Provisional Liquidators will apply to the Bermuda Court to approve the Protocol and seek directions from the Bermuda Court that they need take no further steps in the Bermuda proceedings unless and until a certain time as contemplated by the Protocol pending the closing of the U.S. Case. (b) The Joint Provisional Liquidators will apply to the Bermuda Court for a direction that they will have no further involvement in the adjudication and payment of claims or administration of AGX's case, with the exception of the occurrence of presently unforeseen events requiring the Joint Provisional Liquidators' renewed involvement. (c) The functions and responsibilities of the Joint Provisional Liquidators will be limited to consulting with the Trustee and his retained professionals as may be required and taking the steps necessary under Bermuda law to seek a release and order of dissolution from the Bermuda Court only on the closing of the U.S. Case. (d) To the extent appropriate and possible under Bermuda law, the Bermuda Court will give judicial assistance to the Bankruptcy Court and apply Bermuda law remedies so as to replicate the automatic stay imposed by Section 362 of the Bankruptcy Code to prevent adverse actions against the assets, rights and holdings of AGX's estate. (e) With respect to the $400,000 received by the Joint Provisional Liquidators from one or both of the Debtors prior to the conversion of the U.S. Case to one under Chapter 7, the Joint Provisional Liquidators have represented to the Trustee that $397,637 has been disbursed by them to their professional advisors and themselves, and that those disbursements represent services and expenses properly incurred on AGX's behalf. Further, there remains a $29,204 due and owing amount to the Joint Provisional Liquidators and their professional advisors for services rendered and expenses billed through the Protocol date. The Joint Provisional Liquidators have represented to the AGX Trustee that the Outstanding Billed Fees represent services and expenses that were properly incurred on the AGX's behalf. Based on the Joint Provisional Liquidators' representations, supporting documents and a review of the same by the AGX Trustee's accountants, the AGX Trustee has no objections to the prior payments or of the outstanding billed fees. Thus, pursuant to the terms of the Protocol, the Outstanding Billed Fees will be paid in this manner: (i) the Trustee will disburse to the Joint Provisional Liquidators from the funds of AGX's estate $26,841; and (ii) the Joint Provisional Liquidators in turn will disburse to its professional advisors the amount received from the AGX Trustee, together with the $2,363 amount which the Joint Provisional Liquidators are presently holding as the un-reimbursed balance of the previous $400,000 cash advance, totaling $29,204, in amounts due to the Joint Provisional Liquidators and their professional advisors, or in other amounts as the Bankruptcy Court may allow. (f) The Trustee will advance $35,000 to the Joint Provisional Liquidators to be used to defray any additional fees and expenses incurred or to be incurred by the Joint Provisional Liquidators or the their professional advisors and not previously billed, including time incurred in negotiating and reviewing drafts of the Protocol document. In the event certain additional fees and expenses of the Joint Provisional Liquidators or the Bermuda representatives is less than the Advanced Amount, the Joint Provisional Liquidators will remit the balance of the unused Advanced Amount to the AGX Trustee. In the event that the Joint Provisional Liquidators' additional fees and expenses exceed the Advanced Amount, then the Joint Provisional Liquidators may make a motion in the U.S. Case, on notice in accordance with the applicable provisions of the Bankruptcy Code and the Bankruptcy Rules governing applications for compensation by professionals, for an order of the Bankruptcy Court allowing fees and expenses in excess of the Advanced Amount, and seeking authorization for the AGX Trustee to pay any allowed fees and expenses from the AGX's estate, without prejudice to the right of any party with standing, including the AGX Trustee, to object to any motion. * * * The Court approves the Cross-Border Insolvency Protocol. Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on December 9, 2003. (Global Crossing Bankruptcy News, Issue No. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) HAWAIIAN AIRLINES: Court Confirms Chapter 11 Trustee's Plan ----------------------------------------------------------- The United States Bankruptcy Court for the District of Hawaii approved Hawaiian Airlines Inc.'s plan of reorganization, on Thursday, March 10, 2005. The Company should emerge from bankruptcy protection in early April, after its two remaining labor contracts are ratified and a formal order is entered by the court. Hawaiian Airlines Trustee Joshua Gotbaum said, "This is a great day for a great airline and everyone who is part of Hawaiian: Our shareholders keep their shares, which have increased in value. Our creditors get repaid in full. And Hawaiian employees will, for the first time, get wages and benefits as good or better than our competitors. For an airline that two years ago was losing money and had less than $20 million in the bank, I think it's a real success. "We all look forward to Hawaiian's emerging from Chapter 11 and showing the world that what is already one of America's best airlines will get even better," he said. Mr. Gotbaum developed and proposed the Joint Plan with Hawaiian's creditors committee and investor group Ranch Capital LLC. He noted that, unlike most bankruptcies, under the plan at Hawaiian: -- Creditors will receive 100% of the value of their claims, most of them in cash. -- Existing stockholders keep their shares, whose value has risen during the bankruptcy, and; -- Employees have new negotiated contracts, which, for the first time, have pay and benefits comparable to or better than those at Hawaiian's competitors. Furthermore, thanks to financing provided and arranged by Ranch Capital, a co-proponent of the plan and now the controlling shareholder of Hawaiian's parent company, Hawaiian Airlines will have substantial new capital for growth. The Hawaiian bankruptcy has involved many twists and turns over the past two years. After the airline filed in March 2003, creditors successfully petitioned the bankruptcy court to replace the airline's CEO and controlling shareholder with a trustee. Under a trustee, multiple reorganization plans can be filed, and several plans were, including one by Boeing, a major creditor, and another by one of Hawaiian's own pilots. The former plan was withdrawn last fall and the latter plan was withdrawn on Thursday after its financing source was arrested by the FBI for fraud and bribery. Mr. Gotbaum, working with Hawaiian's creditors committee, established a competitive process to solicit investors for their own plan. In August, they selected and jointly proposed a plan with investors led by Ranch Capital, who had purchased a controlling interest in Hawaiian's parent company, Hawaiian Holdings, Inc. (Amex: HA). In the two years since Hawaiian entered Chapter 11, the airline has restructured its fleet, aircraft leases and other contracts and made changes to its routes, fares and marketing. It negotiated new three-year labor contracts with its six union groups that will provide most employees with wage increases while implementing productivity improvements to keep overall costs from rising. All but two of the contracts, those covering Hawaiian's flight attendants and its pilots, have been ratified. Once the remaining contracts are ratified, the bankruptcy judge can sign the order confirming the Plan. When the Plan becomes effective, Hawaiian Airlines President and Chief Operating Officer Mark Dunkerley will become Chief Executive Officer. Lawrence Hershfield, Ranch Capital's managing director, who became CEO of Hawaiian Holdings and chair of its board, will also chair the new board of Hawaiian Airlines, Inc. An Amazing Turnaround Since entering bankruptcy on March 21, 2003, Hawaiian's turnaround operationally and financially has been remarkable. According to the U.S. Department of Transportation, Hawaiian has led the industry in on-time performance for the past 15 consecutive months. In 2004, Hawaiian was the top-ranked airline by DOT finishing #1 for on-time service, #2 for baggage handling and for oversales and in the top five for consumer complaints. Two nationally recognized travel magazines, Conde Nast Traveler and Travel + Leisure rate Hawaiian as the best airline serving Hawaii and among the best in the nation. The past two years have also been Hawaiian's most profitable. In 2003, Hawaiian made a $133 million reversal of fortune, generating an operating profit of $77.5 million on revenue of $706.1 million after recording an operating loss of $55.2 million on revenue of $632 million in 2002. And despite skyrocketing fuel costs, Hawaiian followed up in 2004 with an estimated unaudited operating profit of $70 million on revenue of $764 million. Hawaiian's (unaudited) operating profit margin in 2004, 9.4%, was the highest of all major airlines. About Hawaiian Airlines Hawaiian Airlines, Inc. -- http://www.HawaiianAirlines.com/-- the nation's number one on-time carrier, is recognized as one of the best airlines in America. Readers of two prominent national travel magazines, Conde Nast Traveler and Travel + Leisure, have both rated Hawaiian as the top domestic airline serving Hawaii in their most recent rankings, and the fifth best domestic airline overall. Celebrating its 76th year of continuous service, Hawaiian is Hawaii's biggest and longest-serving airline, and the second largest provider of passenger air service between Hawaii and the U.S. mainland. Hawaiian offers nonstop service to Hawaii from more U.S. gateway cities than any other airline. Hawaiian also provides approximately 100 daily jet flights among the Hawaiian Islands, as well as service to Australia, American Samoa and Tahiti. On March 21, 2003, Hawaiian Airlines, Inc., filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Hawaii (Case No. 03-00827). Joshua Gotbaum serves as the chapter 11 trustee for Hawaiian Airlines, Inc. Mr. Gotbaum is represented by Tom E. Roesser, Esq., and Katherine G. Leonard, Esq., at Carlsmith Ball LLP and Bruce Bennett, Esq., Sidney P. Levinson, Esq., Joshua D. Morse, Esq., and John L. Jones, II, Esq., at Hennigan, Bennett & Dorman LLP. HEILIG-MEYERS: Court Approves RoomStore's Disclosure Statement -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Virginia approved the Disclosure Statement explaining the Amended and Restated Joint Plan of Reorganization proposed by HMY RoomStore, Inc., a wholly owned subsidiary of Heilig-Meyers Company, and the Official Committee of Unsecured Creditors, on March 10, 2005. RoomStore is now authorized to deliver the disclosure statement to its creditors and ask them to vote on the Plan. The Bankruptcy Court has scheduled a hearing on April 21, 2005, to consider plan confirmation. Objections, if any, to confirmation of the plan must be filed and served by April 7, 2005. Under the terms of the Plan, RoomStore will emerge as a reorganized business enterprise and the unsecured creditors of RoomStore will receive common stock in Reorganized RoomStore in satisfaction of their claims against RoomStore. Reorganized RoomStore will issue 9.8 million shares of new RoomStore common stock to an unsecured claims reserve for the benefit of allowed unsecured claims and affiliated debtor claim. Heilig-Meyers Company, the parent of RoomStore, is the single largest creditor of RoomStore and will receive approximately 67% of the new common stock of Reorganized RoomStore. Reorganized RoomStore will continue to operate stores under the RoomStore name. A full-text copy of the Court-approved Disclosure Statement explaining the Amended and Restated Joint Liquidating Plan of Reorganization proposed by HMY RoomStore, Inc., is available for a fee at: http://www.researcharchives.com/bin/download?id=050313223817 A full-text copy of the Amended and Restated Joint Liquidating Plan of Reorganization proposed by HMY RoomStore, Inc., is available for a fee at: http://www.researcharchives.com/bin/download?id=050313224525 Heilig-Meyer's Amended Plan On March 7, 2005, Heilig-Meyers Company and certain of its wholly owned subsidiaries: -- Heilig-Meyers Furniture Company, -- Heilig-Meyers Furniture West, Inc., -- HMY Star, Inc., and -- MacSaver Financial Services, Inc., and the Official Committee of Unsecured Creditors have filed an Amended and Restated Joint Liquidating Plan of Reorganization and Disclosure Statement with the Bankruptcy Court. The Amended Plan amends and restates the Proposed Joint Plan of Reorganization filed by the Companies and HMY RoomStore, Inc., on Sept. 16, 2004. The Bankruptcy Court will conduct a hearing for the purpose of making a determination as to the adequacy of the Disclosure Statement. Once the Bankruptcy Court approves the Disclosure Statement, the Companies will ask creditors to vote in favor of the Plan. The Initial Plan contemplated that only RoomStore would emerge as a reorganized business enterprise. Subsequently, the Companies, HMY RoomStore, Inc., and the Creditors' Committee determined that the value of RoomStore as a going concern would be best preserved and maximized for the benefit of the creditors of the Companies and RoomStore by filing and confirming a stand alone plan of reorganization for RoomStore. Accordingly, on Feb. 2, 2005, a Joint Plan of Reorganization Proposed by HMY RoomStore, Inc., and the Official Committee of Unsecured Creditors was filed with the Bankruptcy Court. Heilig-Meyers Company is the single largest creditor of RoomStore and, under the RoomStore Plan, will receive approximately 67% of the new common stock of Reorganized RoomStore. Reorganized RoomStore will continue to operate over 60 stores under the "RoomStore" name. Under the terms of the proposed Amended Plan, pre-petition creditors will receive beneficial interests in a Liquidation Trust in settlement of their claims. All of the Companies' assets will be transferred to a Liquidation Trust to be converted to cash for distribution or distributed directly to the beneficiaries of the Liquidation Trust. The holders of existing common stock of Heilig-Meyers Company will receive no distribution under the proposed Amended Plan and will have no interest in the Liquidation Trust, and it is anticipated that the existing shares of common stock will be cancelled. A full-text copy of the Disclosure Statement explaining the Amended and Restated Joint Liquidating Plan of Reorganization proposed by Heilig-Meyers Company and its debtor-affiliates is available for a fee at: http://www.researcharchives.com/bin/download?id=050313223438 A full-text copy of the Amended and Restated Joint Liquidating Plan of Reorganization proposed by Heilig-Meyers Company and its debtor-affiliates is available for a fee at: http://www.researcharchives.com/bin/download?id=050313224201 RoomStore offers a wide selection of professionally coordinated home furnishings in complete room packages at value-oriented prices. RoomStore operates 65 stores located in Pennsylvania, Maryland, Virginia, North Carolina, South Carolina and Texas. Heilig-Meyers Company filed for chapter 11 protection on Aug. 16, 2000 (Bankr. E.D. Va. Case No. 00-34533), reporting $1.3 billion in assets and $839 million in liabilities. When the Company filed for bankruptcy protection it operated hundreds of retail stores in more than half of the 50 states. In April 2001, the company shut down its Heilig-Meyers business format. In June 2001, the Debtors sold its Homemakers chain to Rhodes, Inc. GOB sales have been concluded and the Debtors are liquidating their remaining Heilig-Meyers assets. The Debtors are working to effect a restructuring of their RoomStore business operations with the expectation of bringing that business out of bankruptcy as a reorganized company. Bruce H. Matson, Esq., Troy Savenko, Esq., and Katherine Macaulay Mueller, Esq., at LeClair Ryan, P.C., in Richmond, Va., represent the Debtors. HLI OPERATING: Moody's Puts B2 Rating on Euro 120MM Senior Notes ---------------------------------------------------------------- Moody's Investors Service assigned a B2 rating for the proposed new guaranteed senior unsecured notes of HLI Operating Company, Inc., an indirect subsidiary of Hayes Lemmerz International, Inc. Half of the net proceeds of the proposed notes will be applied to prepay existing senior secured term loans, with the other half to be used to either augment cash or repay outstanding revolver debt or accounts receivable securitization usage. Moody's additionally downgraded all of the existing ratings for HLI Opco in response to Hayes Lemmerz's weaker-than-anticipated consolidated free cash flow performance since its June 2003 reorganization out of Chapter 11 bankruptcy. Hayes Lemmerz will likely once again realize negative free cash flow generation during the fiscal year ending January 31, 2006 and will therefore have to rely on either its balance sheet cash or liquidity facilities in order to finance a portion of its cash interest obligations during this period. The outlook for HLI Opco's ratings is stable after incorporating Moody's actions above. The specific rating actions taken by Moody's are: * Assignment of a B2 rating for HLI Operating Company, Inc.'s proposed Euro 120 million guaranteed senior unsecured notes maturing 2012, to be issued under Rule 144A with registration rights; * Downgrade to B2, from B1, of the rating for HLI Operating Company, Inc.'s $162.5 million remaining balance of 10.5% guaranteed senior unsecured notes maturing June 2010 (the original issue amount of $250 million was reduced as a result of an equity clawback executed in conjunction with Hayes Lemmerz's February 2004 initial public equity offering); * Downgrade to B1, from Ba3, of the ratings for HLI Operating Company, Inc.'s approximately $527 million of remaining guaranteed senior secured bank credit facilities, consisting of: -- $100 million guaranteed senior secured bank revolving credit facility due June 2008; -- $450 million ($427.3 million remaining) guaranteed senior secured bank term loan facility due June 2009 (which term loan will be prepaid by approximately $73 million through application of about half of the net proceeds from the proposed notes offering); * Downgrade to B1, from Ba3, of the senior implied rating; * Downgrade to B3, from B1, of the senior unsecured issuer rating, which rating does not presume the existence of subsidiary guarantees Hayes Lemmerz additionally entered into a three-year $75 million domestic accounts receivable securitization agreement during December 2004. The company is presently negotiating the terms of a $25 million foreign accounts receivable securitization agreement. These unrated off-balance sheet agreements will offset the impact of canceled OEM early pay arrangements (which discounted an average of approximately $35 million of accounts receivable) and also provide some incremental liquidity. A November 2004 amendment to the senior secured credit agreement was executed in order to permit these transactions. Usage under the securitization agreements is not captured as debt for financial covenant purposes. The new rating assignments and rating downgrades reflect Hayes Lemmerz's negligible debt reduction from operating cash flows to date, Moody's expectation that EBIT interest coverage will fall below 1.0x during the fiscal period ending January 2006, and the potential for total debt/EBITDAR leverage to gradually increase from above 3.5x pro forma for the transactions to more than 4.0x should performance fall short of management's base case projections. This leverage ratio captures off-balance sheet obligations for the present value of leases, letters of credit, and accounts receivable securitizations as debt. As a capital- intensive original equipment supplier with end customer exposure to the Big 3 manufacturers globally approximating 45%, Hayes Lemmerz is highly vulnerable to weakened production schedules. Hayes Lemmerz is additionally a major user of various grades of steel, iron, and gas. Moody's believes that the company will realize less-than-full recovery of commodity price increases despite various steps to negotiate customer price increases, maximize recovery from its own scrap, and reduce its cost structure. Hayes Lemmerz's North American operations including Mexico are undergoing an expansion program that is requiring substantial up-front capital investment in low-pressure aluminum die casting equipment along with consolidation expenses to eliminate high-cost excess capacity. Hayes Lemmerz is also investing heavily in expansion within low- cost countries in order to reduce overall production costs and additionally take advantage of significant growth trends within these emerging regions. The success of these efforts is highly critical to the company's realization of future performance goals. Hayes Lemmerz was notably excluded from bidding on many new business opportunities during the period the company was in bankruptcy. Much of the new business being booked entails long lead times and is therefore back-end loaded. The company has a significant goal of realizing annual productivity improvements of 6% or more in order to offset customer price-downs, the impact of higher commodity costs, and other volume and mix factors. The ratings and stable outlook are supported by the series of steps recently taken by Hayes Lemmerz to improve its liquidity profile. These include the proposed notes offering to be denominated in Euros, the new accounts receivable securitization agreement, and the amendments to the senior secured credit agreement to permit these transactions and to materially loosen financial covenants and improve effective unused liquidity to about $200 million. In the event that Hayes Lemmerz follows through with the contemplated sales of its commercial highway hub and drum business and also closes a $25 million accounts receivable securitization, liquidity would be further improved. The additional liquidity, partially extended maturities, and creation of a natural currency hedge for a portion of the company's loans enhance Hayes Lemmerz's ability to pursue expansion into lower cost countries. Hayes Lemmerz also continues to maintain #1 or #2 market positions within its key segments globally. The company is additionally investing heavily in incremental low-pressure aluminum die cast capacity with the goal of aggressively seeking awards for higher-margin aluminum products such as larger wheels. These less commodity-oriented products face more limited competition from both traditional and new Chinese competitors. Management has indicated that most existing capacity outside of North America is already near full utilization and thereby generating proportionately stronger margins. Hayes Lemmerz's revenue base is split nearly equally between North America and the rest of the world. This diversification reduces the company's vulnerability to production trends within particular geographic markets. Hayes Lemmerz is also the only global supplier of both steel and aluminum wheels. The company launched more than $375 million of follow-on and conquest business during 2004, and was awarded more than $300 million of gross new business scheduled to launch between 2005 and 2009. Once capacity is further expanded and the company establishes an even more significant presence in lower-cost countries, its new business awards are expected to accelerate at an even faster pace, and its customer base is expected to be further broadened. Moody's would be likely to lower Hayes Lemmerz's ratings or outlook in the event that liquidity deteriorates meaningfully, the company fails to achieve a turnaround of its North American free cash flow performance, steel and other commodity costs continue to rise and cannot be offset through recovery from customers or other means, new business awards are not realized as necessary to fill incremental capacity, or investment in new capacity exceeds expected levels. Substantial improvement in Hayes Lemmerz's free cash flow generation driving net debt reduction in excess of $100 million and a reduction in total debt/EBITDAR leverage closer to 3.0x would be the most likely driver of a positive movement in the company's outlook or ratings. HLI Opco's proposed Euro 120 million of senior unsecured notes due 2012 will be pari passu with its existing 162.5 million of 10.5% guaranteed senior unsecured notes due 2010. These notes will be supported by guarantees from Hayes Lemmerz and from substantially all domestic subsidiaries. The notes will be non-call for four years with the exception of a 35% equity clawback, will contain a change of control provision permitting puts at 101% of principal plus accrued interest, and will have a 30-day grace period for non-payment of interest. Hayes Lemmerz International, Inc., is the largest worldwide producer of aluminum and steel wheels for the light vehicle market, with an approximately 20% market share in both North America and Europe. The company is also a leading provider of steel wheels for the commercial highway market and a leading supplier in the market for suspension, brake and powertrain components. Annual revenues approximate $2.2 billion. HUDSON'S BAY: Performance Decline Prompts S&P to Slice Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit and senior unsecured debt ratings to 'BB' from 'BB+' on Hudson's Bay Co. At the same time, Standard & Poor's lowered its 'BB' debt rating to 'B+' on the company's 7.5% convertible unsecured subordinated debentures. The outlook is negative. "The downgrade on Hudson's Bay reflects continuing deterioration in the company's operating results, resulting in very weak profitability measures; and an extremely challenging competitive environment that has resulted in persistent market share losses, particularly at mass merchant Zellers," said Standard & Poor's credit analyst Don Povilaitis. The two-notch separation between the corporate credit rating on Hudson's Bay and the rating on its subordinated debentures reflects the subordinated ranking of this instrument and the high percentage of priority debt, which by Standard and Poor's definition, includes an adjustment to debt for operating leases in the company's capital structure. Hudson's Bay's fiscal 2005 (year ended Jan. 31, 2005) sales of C$7 billion declined about 3% from fiscal 2004, reflecting continued weakness at Zellers, where comparable store sales fell 2.3% in fiscal 2005, and weakness at The Bay department stores, where same store sales declined 0.2% for the same period. The declines were broadly based, resulting from continued competitive pressures in the mass channel from the likes of Wal-Mart Canada, unseasonable weather, a shorter Christmas selling season, and pricing pressures, which affect categories such as apparel and softlines. The company's revenue shortfall experienced in fiscal 2005 resulted in a significant decline in profitability, as full year lease-adjusted operating income declined 6% to C$499 million and lease-adjusted operating margin contracted to 7.1% from 7.3%. Return on permanent capital was especially weak at 5.8%. Free operating cash flow also declined substantially in fiscal 2005 to C$77.5 million from C$277.3 million, largely reflecting the company's increased capital expenditure program, specifically the focus on Zellers' Neighborhood Market food offerings. Incorporated into the current outlook is the expectation that the company will grow revenues meaningfully from current levels while stabilizing its profitability metrics to levels commensurate with the company's North American peer group. This could prove very challenging in the context of unrelenting competition in both the department store and mass channels. HUFFY CORP: U.S. Trustee Amends Creditors Committee Membership -------------------------------------------------------------- The United States Trustee for Region 9 amended the appointment of creditors to serve on the Official Committee of Unsecured Creditors of Huffy Corporation and its debtor-affiliates chapter 11 case. Creditors Bailey Cycle Service Limited and Jefferson Wells International, Inc., have been removed from the Committee, and China Export And Credit Insurance Corporation has been added. The Amended Creditors Committee in the Debtors' chapter 11 case: 1. China Export And Credit Insurance Corporation Attn: Edward H. Tillinghast, III, Esq. c/o Coudert Brothers, LLP 1114 Avenue of the Americas New York City, New York 10036-7703 Phone: 212-626-4400, Fax: 216-626-4120 2. Cortina International Attn: Peter Wu Room No. 1405B, 14th Floor Argyle Centre Phase 1 No. 688 Nathan Rd. KLN, Hong Kong Phone: 852 2385 6071 3. Richard L. Molen 1440 Country Wood Dayton, Ohio 45440 Phone: 937-848-7616, Fax: 937-848-7617 4. Pension Benefit Guaranty Corporation Attn: Suzanne Kelly 1200 K Street N.W., Suite 270 Washington, D.C. 20005-4026 Phone: 202-326-4070 5. Ramiko Co. Attn: Edward H. Tillinghast, III, Esq. c/o Coudert Brothers, LLP (for Sinosure) 1114 Avenue of the Americas New York City, New York 10036-7703 Phone: 212-626-4400, Fax: 216-626-4120 6. Shen Zhen Bo An Bike Co. Attn: Edward H. Tillinghast, III, Esq. c/o Coudert Brothers, LLP (for Sinosure) 1114 Avenue of the Americas New York City, New York 10036-7703 Phone: 212-626-4400, Fax: 216-626-4120 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Miamisburg, Ohio, Huffy Corporation -- http://www.huffy.com/-- designs and supplies wheeled and related products, including bicycles, scooters and tricycles. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 20, 2004 (Bankr. S.D. Ohio Case No. 04-39148). Kim Martin Lewis, Esq., and Donald W. Mallory, Esq., at Dinsmore & Shohl LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $138,700,000 in total assets and $161,200,000 in total debts. HUFFY CORP: Creditors Committee Taps Armel Gray as Special Counsel ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of Huffy Corporation and its debtor-affiliates asks the U.S. Bankruptcy Court for the Southern District of Ohio for permission to employ Armel, Gray LLP as its special counsel. The Committee has selected Armel Gray because of its expertise in commercial law within the country of Canada, and the Firm is highly qualified in general corporate matters and other areas of commercial and business law. Because certain of the Debtors' assets and business operations are located in Canada, Armel Gray will advise the Committee regarding Canadian law with respect to investigating the validity, extent, priority and perfection of liens and security interests of the Debtors' prepetition secured lenders. Armel Gray will also provide the Committee with all other specialized legal services that concerns the Debtors' Canadian assets and operations. Douglas Hendler, a Partner at Armel Gray, is the lead special counsel for the Committee. Mr. Hendler will charge $400 (CDN) for his services. Mr. Hendler discloses that the total amount of the Committee's engagement of the Firm will not exceed $5,000 (CDN). Armel Gray assures the Court that it does not represent any interest adverse to the Committee, the Debtors or their estates. Headquartered in Miamisburg, Ohio, Huffy Corporation -- http://www.huffy.com/-- designs and supplies wheeled and related products, including bicycles, scooters and tricycles. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 20, 2004 (Bankr. S.D. Ohio Case No. 04-39148). Kim Martin Lewis, Esq., and Donald W. Mallory, Esq., at Dinsmore & Shohl LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $138,700,000 in total assets and $161,200,000 in total debts. HUNTER FAN: S&P Rates Planned $200M Sr. Sec. Loan & Facility at B ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to ceiling fan designer and marketer Hunter Fan Company. At the same time, Standard & Poor's assigned its 'B' bank loan ratings and '3' recovery ratings to the company's proposed $150 million senior secured term loan B due 2012 and its $50 million revolving credit facility due 2010. The ratings are based on preliminary terms and are subject to review upon final documentation. The outlook is stable. Pro forma for the transaction, Memphis, Tennessee-based Hunter Fan will have $150 million in total debt outstanding. The ratings reflect Hunter Fan's leveraged capital structure, narrow product focus, small size, and customer and supplier concentration. Hunter Fan designs, engineers, and distributes ceiling fans under the Hunter and Casablanca brands, which represent the majority of sales. Other product segments include home comfort products such as air purifiers, humidifiers and programmable thermostats under the Hunter brand, and decorative lamps and fixtures under the Hunter and Kenroy brands. Supported by its strong brand names, Hunter Fan has significant market share within the $1 billion domestic ceiling fan market. However, the company is a smaller player in the highly fragmented $1.6 billion home comfort products industry. "Given the company's well-below-average business risk profile, we expect Hunter Fan to maintain credit protection measures above the medians for the rating category and apply free cash flow to debt reduction. If Hunter Fan improves credit metrics and further diversifies customer and product concentration over the next one to two years, we would consider an outlook change to positive," said Standard & Poor's credit analyst Alison Birch. IMAGING TECHNOLOGIES: Loss & Deficit Trigger Going Concern Doubt ---------------------------------------------------------------- Imaging Technologies Corporation discloses this financial information for the six months ended December 31, 2004: * a $725,000 net loss; * a $22,924,000 working capital deficiency; and * a $21,272,000 stockholders' deficit. In addition, the Company is in default on certain note payable obligations, is being sued by numerous trade creditors for nonpayment of amounts due and is late on its filings of payroll tax returns. The Company is also deficient in its payments relating to payroll tax liabilities. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company plans to overcome the circumstances that impact the ability to remain a going concern through a combination of achieving profitability, raising additional debt and equity financing, and renegotiating existing obligations. In addition, management will continue to work with the Internal Revenue Service and State taxing Authorities to reconcile and resolve all open accounts and issues. In recent years, Imaging Technologies has been working to reduce costs through reduction in staff and reorganizing its business activities. Additionally, it has sought to reduce debt through debt to equity conversions. The Company continues to pursue the acquisition of businesses that show the potential to grow its business. The Company says it needs additional funds for working capital and financial operations. Imaging Technologies Corporation provides a variety of financial services to small and medium-size businesses. These services allow its customers to outsource many human resources tasks, including payroll processing, workers' compensation insurance, health insurance, employee benefits, 401k investment services, personal financial management, and income tax consultation. In November 2001, the Company began to provide these services to relieve some of the negative impact they have on the business operations of its existing and potential customers. To this end, through strategic acquisitions, Imaging Technologies became a professional employer organization. JETSGO CORP: Files for CCAA Protection After Halting Operations --------------------------------------------------------------- Jetsgo Corporation is ceasing all operations effective immediately. The Company will be asking the Quebec Superior Court to immediately grant it protection under the Companies' Creditors Arrangement Act. Court protection will allow Jetsgo to consider all options available to reorganize its affairs. Passengers are advised to make alternative travel arrangements prior to going to the airport as there will be no Jetsgo staff or aircraft available. Travelers seeking to return to their point of origin must make alternative arrangements with other airlines or with their travel agent or tour operator. Given difficult market conditions resulting from competitive pressures in the Canadian airline industry, Jetsgo has determined that, in the circumstances, it is prudent and responsible to discontinue its operations and ground all of its planes. Michel Leblanc, President of Jetsgo, said: "We deeply regret that this had to happen. The decision to cease operations was only taken after difficult deliberation. We are very concerned about our customers and the significant hardship that this action causes. In the meantime, we encourage our passengers to contact their travel agent or an alternative airline." Jetsgo intends to keep its stakeholders, including its employees and customers, informed of the development of its restructuring process. Information and Court filed documents regarding the CCAA proceedings will be available on Jetsgo's website at http://www.jetsgo.net/as well as on RSM Richter Inc.'s website at http://www.rsmrichter.com/and will regularly be updated. Information may also be obtained by communicating with RSM Richter Inc. by telephone at 1-800-246-1125. Travel Agents Give Travelers Guidance Following JetsGo's early morning announcement that it was ceasing all operations, the Association of Canadian Travel Agencies -- ACTA -- is taking steps to inform affected travelers of their rights under relevant regulations in place in Quebec, Ontario and British Columbia and to remind them to seek counsel from their travel agent at their earliest opportunity. Those travelers who have booked with their registered travel agency in Quebec, Ontario and British Columbia will be entitled to compensation ranging from $3,000 (Quebec) to $5,000 (Ontario and B.C.) per passenger. Respective provincial authorities, TICO in Ontario, OPC in Quebec and BPCPA in BC have or will be issuing advisories to consumers through their respective Web site as to how to file a claim. Those travelers who have bought their ticket in other provinces or directly from JetsGo are not entitled to any compensation and will have to appeal to their credit card issuer hoping for relief if they have purchased their tickets using their credit card. "We keep reminding consumers of the advantages of using the services of a travel professional," said Mr. Charlebois, "and the value of these services becomes even more obvious in crisis situations like the one we face today." The demise of JetsGo could not have happened at a worst time. March is traditionally a month of high demand for air travel because so many students are on holidays. To compound the problem, airlines are reporting brisk bookings for the Easter holiday. Travelers left stranded by JetsGo will be able to make alternate arrangements to return home through the other major carriers. It is important to note that neither Air Canada, WestJet, nor CanJet are under any obligation to accommodate affected travelers. However, these airlines have committed to accepting reservations at their best possible fare available at the time of booking and are increasing capacity where warranted. Travelers are urged to make alternate flight arrangements through their travel agent at the earliest, given the high demand created by holidays compounded by JetsGo's failure. Marc-Andr, Charlebois, President and CEO of ACTA, is also seizing this opportunity to remind Federal Transport Minister, the Honorable Jean Lapierre, of ACTA's longstanding position regarding the need to establish a national traveler protection program designed to protect all Canadian travelers against the failure of travel services providers. Said Mr. Charlebois, "Back in August of last year, on the heels of Honorable Lapierre's appointment to Cabinet, we wrote to the Minister requesting, among other things, that he consider the urgency of putting in place a Traveler Protection Fund. At that time, Air Canada was in the midst of restructuring its operations, under bankruptcy protection, and it appeared to us that no carrier was impervious to failure. Our advice went unheeded but sadly, today's events have demonstrated the urgency of this matter." ACTA will be monitoring the situation and will keep both travel agencies and their clients informed of developments on its website at http://www.acta.ca/ KAISER ALUMINUM: Alpart & Jamaica's Third Amended Liquidation Plan ------------------------------------------------------------------ On February 28, 2005, Alpart Jamaica, Inc., and Kaiser Jamaica, Inc., delivered to the United States Bankruptcy Court for the District of Delaware its Third Amended Liquidation Plan. The Amended Plan contains a number of modifications discussed at the February 23 Disclosure Statement hearing. A. Guaranty Subordination Dispute The Third Amended Plan provides additional information on the pending litigation pertaining to the relative priority of holders of Senior Note Claims and holders of Senior Subordinated Note Claims to payments by Kaiser Aluminum Corporation and its debtor- affiliates that guaranteed the Notes, including Alpart Jamaica and Kaiser Jamaica. The Liquidating Debtors indicate that if the Court is required to resolve the Guaranty Subordination Dispute, the involved parties could appeal the Court's ruling and request a stay which, if granted, would prohibit the distribution of some or all of the Public Note Distributable Consideration to be distributed to holders of claims in Subclass 3A or Subclass 3B. Public Note Distributable Consideration means: (a) the Public Note Percentage -- 68% less or 68% of other unsecured claims percentage -- of the Cash in the segregated trust account to be established and maintained by the appointed distribution trustee to satisfy allowed unsecured claims against the Liquidating Debtors' estates; and (b) Cash equal to the fees in the aggregate up to an aggregate amount not to exceed $1,500,000. B. Preservation of Insurance Alpart Jamaica and Kaiser Jamaica supplement the provisions relating to "Preservation of Insurance" under the Third Amended Plan to include that nothing in the Plan or in the order confirming the Plan will preclude any entity from asserting in any proceeding any and all claims, defenses, rights, or causes of action that it has or may have under or in connection with any insurance policy or insurance settlement agreement. In addition, nothing in the Plan or the Confirmation Order will be deemed to waive any of the claims, defenses, rights, or causes of action that any entity has or may have under the provisions, terms, conditions, defenses, and exclusions contained in those policies or settlements. The Liquidating Debtors also clarify that notwithstanding the additional provisions and the substantial consummation of the Third Amended Plan, in connection with any settlement made in any of the Debtors' Chapter 11 cases that concerns any insurance policy, the Court retains jurisdiction to issue or approve (a) buybacks of those insurance policies under Section 363 of the Bankruptcy Code, and (b) injunctions, releases, or exculpations under the Bankruptcy Code, to, inter alia, protect any settling insurers against claims or demands made against the Debtors. In this regard, as between KACC and the Liquidating Debtors, KACC will have full and sole right and authority to settle, release, compromise, and enter into buybacks by insurers of insurance policies as to which the Liquidating Debtors, or any of them have or may assert rights as an insured. C. No Discharge The Liquidating Debtors emphasize that in accordance with Section 1141(d)(3), the confirmation of the Liquidation Plan will discharge neither Alpart Jamaica nor Kaiser Jamaica. D. Plan Modification or Revocation Affording creditors with an impenetrable shield, the Liquidating Debtors provide that the Third Amended Plan "may not be amended, modified, revoked, or withdrawn with the intent of altering or undermining in any way the Bankruptcy Court's determination of the . . . entitlement of holders of Allowed Claims under [the Third Amended Liquidation Plan]. " A copy of Alpart Jamaica and Kaiser Jamaica's Third Amended Liquidation Plan is available for free at: http://bankrupt.com/misc/AJI_KJC_ThirdPlan.pdf A copy of Alpart Jamaica and Kaiser Jamaica's Third Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/AJI_KJC_ThirdDS.pdf Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) KAISER ALUMINUM: Australia & Finance's Amended Liquidation Plan --------------------------------------------------------------- Kaiser Alumina Australia Corporation and Kaiser Finance Corporation delivered to the United States Bankruptcy Court for the District of Delaware its Third Amended Liquidation Plan on February 28, 2005. The Amended Plan contains a number of modifications discussed at the February 23 Disclosure Statement hearing. A. Guaranty Subordination Dispute The Third Amended Plan provides that in relation to the Guaranty Subordination Dispute, if the Court is required to resolve the pending Litigation, the involved parties could appeal the Court's ruling and request a stay that, if granted, would prohibit the distribution of some or all of the Public Note Distributable Consideration to be distributed to holders of Claims in Subclass 3A or Subclass 3B. B. No Discharge Kaiser Australia and Kaiser Finance clarify that in accordance with Section 1141(d)(3) of the Bankruptcy Code, the confirmation of the Third Amended Plan will not discharge either Liquidating Debtor. C. Preservation of Insurance Nothing in the Third Amended Plan or in the order confirming the Plan will preclude any entity from asserting in any proceeding any and all claims, defenses, rights, or causes of action that is or may have under or in connection with any insurance policy or insurance settlement agreement. Additionally, nothing in the Third Amended Plan or the Confirmation Order will be deemed to waive any claims, defense, right, or causes of action that any entity has or may have under the provisions, terms, conditions, defenses, and exclusions contained in those policies or settlements. The Liquidating Debtors also note that notwithstanding the Preservation of Insurance provisions and the substantial consummation of the Third Amended Plan, in connection with any possible settlements made in any of the Debtors' Chapter 11 cases that concern any insurance policies, the Court will retain jurisdiction over the Chapter 11 cases to issue or approve buybacks of insurance policies under Section 363 of the Bankruptcy Code or to issue or approve injunctions, releases, or exculpations under the Bankruptcy Code to, inter alia, protect any settling insurers against claims or demands made against the Kaiser Australia and Kaiser Finance. Moreover, the Court will provide Kaiser Aluminum & Chemical Corporation the full and sole right and authority to settle, release, compromise, and enter into buybacks by insurers of insurance policies as to which the Liquidating Debtors, or any of them, have or may assert rights as an insured. The Liquidating Debtors will not be entitled to any consideration or other value as a result of KACC's exercise of its right. D. Limitation of Actions The Liquidating Debtors also note that the Plan will not be amended, modified, revoked, or withdrawn with the intent of altering or undermining in any way the Court's determination of the entitlement of holders of Allowed Claims under the Plan. A copy of Kaiser Australia and Kaiser Finance's Third Amended Liquidation Plan is available for free at: http://bankrupt.com/misc/KAAC_KFC_ThirdPlan.pdf A copy of Kaiser Australia and Kaiser Finance's Third Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/KAAC_KFC_ThirdDS.pdf Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) LAIDLAW INT'L: Launches Cash Tender Offer for $202 Mil. Sr. Notes ----------------------------------------------------------------- Laidlaw International, Inc. (NYSE:LI), following the sale of its healthcare companies, has commenced a cash tender offer at par for the 10-3/4 % Senior Notes due 2011 as required under the terms and conditions of the Notes. In accordance with the sale of assets provisions of the Note's Indenture the Offer is made for up to $202 million of outstanding principal amount of the Notes. The Offer amount represents the net proceeds of the sale of the healthcare companies after repayment of indebtedness under Laidlaw's Credit Agreement dated June 19, 2003. Any cash not used for the repurchase of the Notes will be used by Laidlaw for general corporate or other purposes as determined by Laidlaw and permitted under the Note's Indenture. Holders that tender their Notes prior to expiration of the Offer at 5:00 p.m. (EDT) on April 4, 2005, will receive 100% of the principal amount of the Notes plus accrued and unpaid interest, if any. If the principal amount tendered exceeds $202 million, each Note holder will receive a prorated amount determined in accordance with the Offer. Questions regarding the Offer and requests for documents may be directed to D.F. King & Company ((800) 431-9645), the information agent for the Offer. This announcement is not an offer to purchase or a solicitation of an offer to sell the Notes or any other security. The tender offer is being made solely by means of the Offer to Purchase, which has been prepared by Laidlaw in connection with the Offer. 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. LIFE UNIVERSITY: Moody's Holds B2 Rating on $29.8MM Revenue Bonds ----------------------------------------------------------------- Moody's Investors Service has affirmed its underlying B2 rating on Life University's Revenue Bonds, Series 1995A and 1995B. The outlook for the rating remains negative reflecting ongoing accreditation concerns. The rating applies to $29.8 million of Series 1995A and B Bonds issued through the Development Authority of the City of Marietta. Moody's also rates the bonds Aaa based on municipal bond insurance through FSA. The B2 rating and negative outlook are based on Life University's: -- Strengths: * New management team and revitalized board have developed a credible plan to address the most pressing issues Life University faces as it continues to work through accreditation concerns and a sharp decline in student enrollment. * Solid progress has been made in in balancing current year operating performance, and the University received a liquidity boost from US Department of Education release of $2.8 million in financial resources from restrictions. -- Challenges: * With the majority of Life's students enrolled in its Chiropractic College, resolution of the special accreditation process with the Council on Chiropractic Education remains crucial to the University's continued viability. * Deficit operations continue, with three-year average operating deficit of 41% as calculated by Moody's through fiscal year 2004. * While enrollment edged up slightly in the Fall of 2004 from the previous year with 1,163 full-time equivalent students, that figure represents a 74% decline from the 2000 level. * Life University's $10 million base of expendable financial resources improved somewhat in fiscal year 2004, but it remains less than half of its fiscal year end 2001 level. * The University reports some degree of deferred maintenance in its student housing facilities. Recent Developments/Results: CCE currently has deferred a decision on Life's ongoing accreditation until July of this year. While University management reports steady progress in addressing the curriculum and clinical experience concerns of the CCE, Moody's views this issue as a material vulnerability. In December 2004 the Southern Association of Colleges and Schools, the general accrediting body in the region, removed Life University from its probationary accrediting status, though the University needs to evidence a history of financial stability to maintain its status. If Life were to lose its SACS accreditation, its students could not participate in federal financial aid programs, making it almost impossible for the University to stay in business. Expendable resources covered total debt 0.31 times and operations 0.45 times. Life's total direct debt of $30.3 million includes a $475 thousand line of credit. Currently the University reports it has made no draws on the line. The new management team was able to raise $4.3 million in unrestricted donations in its first months, providing a crucial infusion of cash and pointing to stakeholder support for the mission of the University. Liquid resources are invested in a portfolio of bank certificates of deposit. In fiscal year 2004, expenses were cut 25% and operating revenues grew 33%. While the University was able to cover debt service by 1.1 times in 2004, this calculation includes the roughly $4 million in extraordinary unrestricted gifts that year. Absent these gifts, coverage would have been negative 0.4 times. Year-to-date contributions for the current fiscal year indicate that the high degree of gift flow is not likely to be repeated. Assuming it regains CCE accreditation; the University plans to slowly grow its Chiropractic and wellness-related undergraduate programs over the coming years but will face significant competitive pressure. Housing needs could drive future capital expenditures as the institution seeks to improve its housing stock as it positions itself to attract new students. The Series 1995 bonds are secured by roughly $3 million in reserve funds, approximately $60 million carrying value of real property and a guaranty bond. While Life has sold off the bulk of its outlying property through which it raised roughly $3.7 million, it retains its well-located core campus in a relatively attractive real estate market in the metropolitan Atlanta area. Outlook Moody's negative outlook reflects ongoing uncertainty related to the University's accreditation status with CCE, operating challenges and reduced base of tuition revenues. What Could Change the Rating UP: Satisfactory resolution of the special accreditation process; balanced operating performance; continued fundraising successes; and tuition revenue growth. What Could Change the Rating DOWN: Ongoing problems with accrediting entities; continued deficit operations; weakened liquidity profile; difficulty in implanting revenue growth plans Key Data And Ratios (Fiscal 2004 financial data; Fall 2004 enrollment data): -- Total Enrollment: 1,163 full-time equivalent students -- Total Debt: $30.3 million (including $475 thousand line of credit with no current draws) -- Expendable Resources to Pro Forma Debt: 0.33 times -- Expendable Resources to Operations: 0.45 times -- Net Tuition per Student: $12,304 -- Average Operating Margin (3 years): -41.1% -- 2004 Operating Margin: -8.1% LONG BEACH: Moody's Reviews Ratings on 16 Certs. & May Downgrade ---------------------------------------------------------------- Moody's Investors Service has placed under review for possible downgrade sixteen certificates from six deals from Long Beach Mortgage Company deals, issued in 2000 and 2001. The transactions are backed by primarily first lien adjustable and fixed rate subprime mortgage loans originated by Long Beach. The master servicer on the deals is Long Beach Mortgage Company. The sixteen subordinate classes are placed on review for possible downgrade because existing credit enhancement levels may be low given the current projected losses on the underlying pools. The transactions have taken significant losses causing gradual erosion of the overcollateralization. The most subordinate fixed- rate tranche on the 2000-LB1 transaction has already taken significant write-downs. In addition, the 2000-LB1 fixed rate, 2000-1, 2001-1, 2001-2, 2001-3 and 2001-4 pools have stepped down and the subordinated certificates have begun to receive its share of unscheduled prepayments. In addition, the severity of loss on the liquidated loans has increased in the past year due to a high concentration of manufactured housing loans. Moody's complete rating actions are: -- Issuer: Long Beach Home Mortgage Loan Trust Asset Backed Certificates The ratings under review for downgrade are: * Series 2000-1; Class M-1, current rating Aa2, under review for possible downgrade * Series 2000-1; Class M-2, current rating Baa3, under review for possible downgrade * Series 2000-1; Class M-3, current rating B2, under review for possible downgrade * Series 2001-1; Class M-1, current rating Aa2, under review for possible downgrade * Series 2001-1; Class M-2, current rating Baa2, under review for possible downgrade * Series 2001-1; Class M-3, current rating B1, 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 Baa2, under review for possible downgrade * Series 2001-2; Class M-3, current rating B2, under review for possible downgrade * Series 2001-3; Class M-2, current rating Baa2, under review for possible downgrade * Series 2001-3; Class M-3, current rating B1, under review for possible downgrade * Series 2001-4; Class M-3, current rating Ba3, under review for possible downgrade -- Issuer: Asset Backed Securities Corporation, Long Beach Home Equity Loan Trust 2000-LB1, Home Equity Loan Pass-Through Certificates The rating under review for downgrade are: * Series 2000-LB1; Class M1F, current rating Aa2, under review for possible downgrade * Series 2000-LB1; Class M2F, current rating Ba1, under review for possible downgrade * Series 2000-LB1; Class BF, current rating Ca, under review for possible downgrade * Series 2000-LB1; Class BV, current rating Baa3, under review for possible downgrade MATRIA HEALTHCARE: Inks Pact to Acquire Miavita for $5 Million -------------------------------------------------------------- Matria Healthcare, Inc. (Nasdaq: MATR) signed a definitive agreement to acquire the business of Miavita LLC, a leading national provider of on-line health and wellness solutions. Founded in 1999, privately held Miavita has developed a proprietary suite of interactive programs that help individuals take active roles in improving their health and quality of life. Miavita's Healthy Living Programs are delivered on the Internet and tailored for each individual user, based on personal taste, health risks and lifestyle. Miavita's customers include major healthcare companies and employers seeking to engage their members and employees in actively managing -- and improving -- their health. Miavita's programs provide a unique personalized "curriculum" that helps each participant gradually make the changes necessary for a healthier lifestyle. Users select from customized programs that address healthy weight loss and long-term weight management, nutrition and diet, exercises for improving fitness, strategies to relieve and manage stress, and science-based lifestyle changes and strategies for managing the risk factors that lead to chronic diseases and other preventable conditions. Other Miavita programs include healthy aging, cancer fighting, healthy heart, diabetes fighting, smoking cessation and customized programs based on individual goals and interests. Miavita is accredited by URAC, the leading standards organization for web-based health programs. Parker H. Petit, Matria's Chairman and Chief Executive Officer, stated, "Health and wellness programs can be effective components of successful disease management and overall health enhancement. We are very excited to join with the nation's premier provider of personal health management services. Miavita's web-based programs will be complemented by Matria's clinical management capabilities and combined with Matria's sophisticated health risk assessment tool to provide a 'one-stop-shop' continuum of care to our clients. Miavita's programs will also be integrated with Matria's technology platform, enabling the measurement of outcomes across the entire care continuum. Employers and health plans are aggressively pursuing ways to reduce lifestyle-related healthcare costs. The addition of Miavita's Healthy Living programs to Matria's health enhancement programs will create greater opportunities for us to help our clients reduce the escalating costs of healthcare." Miavita's CEO Kathryn Creech commented, "Both companies share a commitment to state-of-the-art technology. Miavita's leverage of the dynamic personalization capabilities of the internet to successfully deliver its Healthy Living Programs has driven strong client support and high rates of member use and satisfaction. Matria's sophisticated TRAX(TM) technology has increased their ability to deliver compelling returns on investment and outcomes improvements to their clients, and has clearly differentiated them in the disease management market." The acquisition of Miavita is expected to be completed on April 1, 2005. Matria expects to pay approximately $5 million in cash at the closing with potential additional amounts to be paid under earnout arrangements. About Miavita Miavita's wellness programs empower individuals with the targeted interactive, personalized tools they need to make decisions and adopt new behaviors that reduce the risk of disease and other preventable conditions. Through the company's Healthy Living Programs, Miavita helps employers reduce health care costs by engaging employees and their families in healthy and nutritious new lifestyles. About Matria Healthcare Matria Healthcare -- http://www.matria.com/-- is the leading provider of comprehensive disease management programs to health plans and employers. Matria manages the chronic disease and episodic conditions representing the greatest cost to the healthcare system ... diabetes, cardiovascular diseases, respiratory disorders, high-risk pregnancy, cancer, chronic pain and depression. Headquartered in Marietta, Georgia, Matria has more than 40 offices in the United States and internationally. * * * As reported in the Troubled Company Reporter on Aug. 23, 2004, Standard & Poor's Ratings Services reinstated its 'BB-' senior secured debt rating on disease-state management and fulfillment services provider Matria Healthcare Inc.'s $35 million revolving credit facility due October 2005. At the same time, Standard & Poor's affirmed its 'B+' corporate credit rating and its 'B-' subordinated debt rating on Matria's $84 million of 4.875% convertible senior subordinated notes due in 2024. Standard & Poor's initially withdrew the senior secured rating because they believed that the $35 million revolving credit facility would be refinanced as part of Matria's transaction to retire $122 million of outstanding 11% senior notes. However, because the revolving credit facility will remain outstanding, Standard & Poor's is reinstating the rating. S&P says the outlook is stable. "The low-speculative-grade ratings on Matria Healthcare, a disease-state management and fulfillment services provider to patients, physicians, and health plans, reflect the company's limited scale of operations, its position as a small vendor supplying products for larger medical products manufacturers, and the decline in its women's health segment," said Standard & Poor's credit analyst Jesse Juliano. "These concerns are offset by the fact that Matria has acquired businesses during the past few years that have broadened its clinical infrastructure and disease-state management platforms. The company is also operating with relatively moderate debt leverage." M/I HOMES: Moody's Puts Ba2 Rating on $200MM Senior Notes Due 2015 ------------------------------------------------------------------ Moody's Investors Service assigned a Ba2 to the proposed $200 million of senior notes due 2015 of M/I Homes, Inc. At the same time, Moody's affirmed M/I Homes' existing senior implied and issuer ratings of Ba2. The ratings outlook is stable. The stable rating outlook reflects Moody's expectation that M/I Homes will maintain capital structure discipline as it seeks to accelerate the growth in unit deliveries from the levels of the past few years. The ratings acknowledge M/I Homes' conservative and disciplined growth strategy, success in diversifying its operating profits, significant improvement in its credit statistics, growth in its equity base, long history, and significant management ownership. At the same time, however, the ratings incorporate the company's still-heavy dependence on profits from the Ohio/Indiana markets, particularly Columbus, Ohio, uneven profitability in other markets although substantial progress has been made in recent years, its stock buyback program, essentially flat unit home deliveries for the last five years, and the cyclical nature of the homebuilding industry. In the Homebuilding Methodology published by Moody's in December 2004, M/I Homes outperformed its rating category in most of the performance measurements and was a positive outlier (i.e., it outperformed by two full rating bands) in the interest coverage and spec building metrics. It performed at or below its rating category in the size and diversity metrics. In particular, while M/I Homes has successfully reduced its formerly heavy concentration in the Columbus, Ohio market by expanding in the fast growing Florida and Washington, D.C. markets, it still derives a substantial percentage of homebuilding profits from the Columbus market. Further upgrade potential may be limited until this market represents a significantly smaller proportion of overall profits. In large part because of the flat level of deliveries for the past five years, M/I Homes has essentially harvested cash out of its homebuilding operations and used it to delever the balance sheet. Credit statistics have improved dramatically as a result, with debt/capitalization strengthening from 51.4% at the end of 1999 to 39.4% at year-end 2004 and EBIT interest coverage rising from 5.4x to 11.1x as of the same period. The equity base, which was $200 million at the end of 1999, was nearly $488 million at year-end 2004. The company has a growth strategy that eschews acquisitions. It concentrates on increasing penetration in its existing markets and has entered new markets in years past, few in number, through start-up operations. Among the markets that diversified its Columbus roots, Palm Beach, Tampa, Orlando, and Washington, D.C. have been very strong, the Carolinas recently weak, and Phoenix was exited because the capital required to become a significant factor was more than the company wished to invest. M/I Homes has made a conscious effort to lift its unit delivery performance off the relatively flat level of 4,000 homes per year since 1999 by buying and optioning more land than in previous years. While land purchases aggregated $95 million in 2002, they were bumped up to $270 million in 2004 and may be well over $300 million in 2005. While this may put a brake on further dramatic improvement in key financial ratio performance, the company's credit profile is likely to remain strong for its rating category. Going forward, consideration for an improvement in the company's outlook and ratings will include its maintaining its strong financial profile while boosting the size of its equity base and substantially diversifying its profits away from its Columbus base. Factors that might stress the outlook and ratings include any actions or transactions that would decapitalize or stress the balance sheet, including a major share repurchase program, a large impairment charge, or substantially accelerated growth financed largely with debt. Headquartered in Columbus, Ohio and begun in 1976, M/I Homes, Inc., sells homes under the trade names M/I Homes and Showcase Homes, with homebuilding operations located in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Tampa, Orlando, and Palm Beach County, Florida; Charlotte and Raleigh, North Carolina; Virginia and Maryland. Revenues and net income in 2004 were approximately $1.2 billion and $92 million, respectively. MCI INC: Qwest & Verizon Trade Barbs in Wall Street Journal ----------------------------------------------------------- On February 28, 2005, the Wall Street Journal published an editorial-page article written by Richard C. Notebaert, Chairman and Chief Executive Officer of Qwest Communications International, Inc. Qwest filed a copy of the article with the Securities and Exchange Commission on March 8, 2005. Don't Create A Duopoly On Wednesday, Capitol Hill will hold hearings on the recently announced round of mergers in the telecommunications industry. This recent flurry of transactions, as much or more than any technological development, will redefine the way Americans communicate. A key point should inform the committee's inquiry. Industry rationalization is not the same as industry concentration. Industry rationalization promotes competition and innovation. Simply put, it provides better service cheaper. It enables customers to benefit from more service options, a higher degree of care, technological innovations and lower prices. But that is not the whole story because industry rationalization can easily be confused with industry concentration. Some would argue whether this is just a matter of degree. But degrees count. Clearly, there is a threshold where the bad outweighs the good. The leading indicators are not a mystery: concentration will promote size-for-sizes' sake and geographic dominance. After initial job cuts which are the by- product of combining corporate structures, concentration inflates bureaucracy, reduces pricing competition, limits innovation and works to frustrate effective regulation. The result is that the technological backbone of our country will have no safety net.no margin for error. The announced mergers of SBC-AT&T and Verizon- MCI are cases directly on point. If the mergers are approved, the new companies would literally dwarf their nearest competitors and will control 79 percent of the business/government segment-one of the most lucrative in our industry. The practical reality is that this scale, pricing power and overall market clout make it extremely unlikely that any other player can grow market share. Odds are these behemoths would not compete head-to-head in most local markets but would instead flex their muscles to squeeze out smaller competitors. It empties the playing field. These are clear cases where we are moving beyond rationalization, and will result in bringing concentration of power to a new level: less choice, less competition, massively increased pricing power. Such concentration does not rationalize and improve the market, it just ossifies it-to the disadvantage of all. A truly competitive playing field doesn't just strike a good balance between behemoths and niche players. It allows a variety of national competitors to meet the challenges ahead. Our antitrust laws and regulatory oversight already have the wherewithal to help the market evolve toward this outcome. Our leadership should scrutinize policy in order that it produces the proper rules and thus the proper outcome. My interest in this matter is by no means academic: As a bidder for MCI, Qwest has a major economic stake in the outcome of hese matters. We have been an enthusiastic participant and beneficiary of the rationalizing of our markets. This management team has successfully worked very hard to rectify excesses that were part of the early stages of that process. We've seen what works and what doesn't. All the more reason for policymakers to look hard at these proposed massive combinations that will reduce competition and innovation and diversity. We know there is another way, a better way. Rather, than a duopoly, Qwest's vision is to build a competitive player that will truly contribute to choice borne out of a different approach to the marketplace and a different set of innovative products and services. Qwest-MCI would be a strong, but not dominant, local, long distance and broadband provider able to compete effectively nationwide with the combined SBC-AT&T and Verizon, which even today is a behemoth. That's the kind of market regulation must produce-not simply bigger, more powerful providers of indistinguishable service offerings, but real innovation with real customer focus. The outcome of these battles concerns more than just corporate power and bottom lines. Ultimately, the most important test is whether we create a marketplace that provides affordable, innovative communications services that empower residential and small business consumers in the Digital Age. The mega-mergers do not pass that test. Verizon Talks Back Tom Tauke, Executive Vice President of Verizon Communications, Inc., sent a Letter to the Editor to The Wall Street Journal in response to Mr. Notebaert's article. Verizon filed a copy of Mr. Tauke's letter with the Securities and Exchange Commission on March 3, 2005. Qwest Chairman Notebaert (Feb. 28) argues that concerns about "concentration" in the large business market suggest that Qwest, not Verizon, should team up with MCI. He conveniently ignores the fact that the Qwest-MCI combination would eliminate a critical network for large business and government customers, thereby eliminating a competitive facility and reducing choice. Instead of eliminating a network, Verizon has committed to major investment to improve that network. In talking to Wall Street, Mr. Notebaert candidly admits he plans to reduce choices by not only "consolidating traffic on one network" but also by "eliminating" duplicative "POPs" or access points where customers can connect to nationwide networks. This is how Qwest hopes to achieve huge synergies and cut 15,000 jobs. In short, a Verizon-MCI transaction brings together complementary assets. A Qwest-MCI transaction is designed to eliminate duplicative assets. Today AT&T dominates the business market place. Either alone or with SBC, it will continue as the dominant player. If partnered with a financially strong company like Verizon, MCI will be an attractive alternative for customers. Verizon-MCI offers the best alternative for customers because no competitive facilities are eliminated, and the financial health of the new company would assure a strong competitor would remain to the dominant player in the business market place. Tom Tauke Executive Vice President Verizon Communications Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/--is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 22, 2005, Moody's Investors Service has placed the long-term ratings of MCI, Inc., on review for possible upgrade based on Verizon's plan to acquire MCI for about $8.9 billion in cash, stock and assumed debt. These MCI ratings were placed on review for possible upgrade: * B2 Senior Implied * B2 Senior Unsecured Rating * B3 Issuer rating Moody's also affirmed MCI's speculative grade liquidity rating at SGL-1, as near term, MCI's liquidity profile is unchanged. As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. As reported in the Troubled Company Reporter on Feb. 16, 2005, Fitch Ratings has placed the 'A+' rating on Verizon Global Funding's outstanding long-term debt securities on Rating Watch Negative, and the 'B' senior unsecured debt rating of MCI, Inc., on Rating Watch Positive following the announcement that Verizon Communications will acquire MCI for approximately $4.8 billion in common stock and $488 million in cash. * * * As reported in the Troubled Company Reporter on Feb. 22, 2005, Moody's Investors Service has placed the long-term ratings of MCI, Inc., on review for possible upgrade based on Verizon's plan to acquire MCI for about $8.9 billion in cash, stock and assumed debt. These MCI ratings were placed on review for possible upgrade: * B2 Senior Implied * B2 Senior Unsecured Rating * B3 Issuer rating Moody's also affirmed MCI's speculative grade liquidity rating at SGL-1, as near term, MCI's liquidity profile is unchanged. As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. As reported in the Troubled Company Reporter on Feb. 16, 2005, Fitch Ratings has placed the 'A+' rating on Verizon Global Funding's outstanding long-term debt securities on Rating Watch Negative, and the 'B' senior unsecured debt rating of MCI, Inc., on Rating Watch Positive following the announcement that Verizon Communications will acquire MCI for approximately $4.8 billion in common stock and $488 million in cash. MCI INC: Verizon Amends February 14 Agreement & Plan of Merger -------------------------------------------------------------- As previously reported, Eric Slusser, MCI's Senior Vice President & Controller, said that on February 14, 2005, Verizon Communications Inc., a Delaware corporation, MCI, Inc., a Delaware corporation and Eli Acquisition, LLC, a wholly owned subsidiary of Verizon and a Delaware limited liability company -- Merger Sub -- entered into an Agreement and Plan of Merger. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, MCI will merge with and into Merger Sub, with Merger Sub continuing as the surviving person or, in certain situations, as provided in the Merger Agreement, a wholly owned corporate subsidiary of Verizon will merge with and into MCI, with MCI as the surviving corporation. * * * In a Form 8-K filing with the Securities and Exchange Commission dated March 9, 2005, Marianne Drost, Senior Vice President of Verizon Communications, Inc., discloses that Verizon Communications, Inc., proposed non-material amendments to the Agreement and Plan of Merger, dated as of February 14, 2005, among Verizon, Eli Acquisition LLC, and MCI, Inc. A full-text copy of the Letter Agreement is available for free at: http://www.sec.gov/Archives/edgar/data/723527/000119312505045616/dex21.htm Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/--is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 22, 2005, Moody's Investors Service has placed the long-term ratings of MCI, Inc., on review for possible upgrade based on Verizon's plan to acquire MCI for about $8.9 billion in cash, stock and assumed debt. These MCI ratings were placed on review for possible upgrade: * B2 Senior Implied * B2 Senior Unsecured Rating * B3 Issuer rating Moody's also affirmed MCI's speculative grade liquidity rating at SGL-1, as near term, MCI's liquidity profile is unchanged. As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. As reported in the Troubled Company Reporter on Feb. 16, 2005, Fitch Ratings has placed the 'A+' rating on Verizon Global Funding's outstanding long-term debt securities on Rating Watch Negative, and the 'B' senior unsecured debt rating of MCI, Inc., on Rating Watch Positive following the announcement that Verizon Communications will acquire MCI for approximately $4.8 billion in common stock and $488 million in cash. * * * As reported in the Troubled Company Reporter on Feb. 22, 2005, Moody's Investors Service has placed the long-term ratings of MCI, Inc., on review for possible upgrade based on Verizon's plan to acquire MCI for about $8.9 billion in cash, stock and assumed debt. These MCI ratings were placed on review for possible upgrade: * B2 Senior Implied * B2 Senior Unsecured Rating * B3 Issuer rating Moody's also affirmed MCI's speculative grade liquidity rating at SGL-1, as near term, MCI's liquidity profile is unchanged. As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. As reported in the Troubled Company Reporter on Feb. 16, 2005, Fitch Ratings has placed the 'A+' rating on Verizon Global Funding's outstanding long-term debt securities on Rating Watch Negative, and the 'B' senior unsecured debt rating of MCI, Inc., on Rating Watch Positive following the announcement that Verizon Communications will acquire MCI for approximately $4.8 billion in common stock and $488 million in cash. MERRILL LYNCH: S&P Places Low-B Ratings on Six Certificate Classes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary ratings to Merrill Lynch Mortgage Trust's commercial mortgage pass-through certificates series 2005-MKB2. The preliminary ratings are based on information as of March 10, 2005. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the fiscal agent, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A-1, A-2, A-3, A-SB, A-4, A-1A, A-J, B, C, D, and XP are currently being offered publicly. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web- based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/ Select Credit Ratings, and then find the article under Presale Credit Reports. Preliminary Ratings Assigned Merrill Lynch Mortgage Trust 2005-MKB2 Class Rating Preliminary amount ($) ----- ------ ---------------------- A-1 AAA 50,000,000 A-2 AAA 228,186,000 A-3 AAA 40,623,000 A-SB AAA 42,997,000 A-4 AAA 332,815,000 A-1A AAA 215,188,000 AJ AAA 61,128,000 B AA 32,696,000 C AA- 9,951,000 D A 21,323,000 E A- 12,795,000 F BBB+ 18,480,000 G BBB 11,373,000 H BBB- 14,216,000 J BB+ 7,107,000 K BB 5,687,000 L BB- 4,264,000 M B+ 4,265,000 N B 2,843,000 P B- 5,687,000 Q N.R. 15,637,494 XC AAA 1,105,841,000 XP AAA 1,137,261,494 * Interest-only class with a notional amount N.R. Not rated MICHAEL JACKSON: Prosecutor Says King of Pop is Near Bankruptcy --------------------------------------------------------------- Assistant District Attorney Gordon Auchincloss told the judge overseeing Michael Jackson's trial on child molestation charges that the superstar singer may be "on the precipice of bankruptcy," according to a report from the Associated Press. The AP reports that Mr. Auchincloss told Judge Melville that Mr. Jackson may be $300 million in debt, then said the singer may have $400 million in liabilities and that his financial troubles "will all come crashing down on him in December of 2005." The DA's office, apparently, is trying to get access to detailed financial data to show that Mr. Jackson's growing financial pressures in early 2003 motivated him to pressure the victim's family to retract their abuse allegations. The AP says the defense is fighting the request. Robert M. Sanger, Esq., at Sanger & Swysen, representing Mr. Jackson, resisted the request for financial data, arguing that existing case law should prevent admission of evidence about any possible financial motive, according to the AP report. MIDWAY AILINES: Ch. 7 Trustee Taps Nexsen Pruet as Special Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of North Carolina gave Joseph N. Callaway, the Chapter 7 Trustee for the estate of Midway Airlines Corp., and its debtor-affiliate, permission to employ Nexsen Pruet Adams Kleemeier, as his special counsel. Mr. Callaway explains that he employed Nexsen Pruet for the specific purpose of performing specified legal services required in the administration of the Debtor's estate concerning review and possible disgorgement of professional fees allowed on an interim basis as Chapter 11 administrative expenses when the Debtor's bankruptcy proceedings was still under Chapter 11. Benjamin A. Kahn, Esq., a Member at Nexsen Pruet, is the lead special attorney for Mr. Callaway. Mr. Kahn reports Nexsen Pruet's professionals bill: Designation Hourly Rate ----------- ----------- Bankruptcy Specialists $225 Non-Bankruptcy Specialists $215 Senior Associates $175 Junior Associates $150 Paralegals $85 Nexsen Pruet assures the Court that it does not represent any interest adverse to Mr. Callaway, the Debtor or its estate. Headquartered in Morrisville, North Carolina, Midway Airlines Corp., is in the commercial passenger airline business and also provides cargo and charter transportation on a limited bases. The Company and its debtor-affiliate, Midway Airlines Parts, LLC, filed for chapter 11 protection on Aug. 13, 2001 (Bankr. E.D.N.C. Case No. 01-02319-5-ATS). The Court converted the case to a Chapter 7 liquidation proceeding on Oct. 30, 2003. Gerald A. Jeutter, Jr., Esq., at Kilpatrick Stockton LLP, represents the Debtors. When the Debtors filed for chapter 11 protection, they listed total assets of $318,291,000 and total debts of $231,952,000. MIRANT CORP: Gets Okay to Participate in Ninth Circuit Appeal ------------------------------------------------------------- Mirant Corporation and its debtor-affiliates are parties to an appellate case pending in the Court of Appeals for the Ninth Circuit, in which the Debtors have already incurred substantial expense, and may result in potentially significant claims if unresolved. The Appeal includes seven of the many lawsuits brought by public and private plaintiffs attempting to use state law to secure refunds from wholesale electricity rates that prevailed in California markets beginning in 2000. The suits also seek regulation by injunction of the future conduct of wholesale electricity sellers. Like prior unsuccessful claims, the Plaintiffs allege that the transactions violate state law and are unfair, unlawful and fraudulent business practices and fraudulent commodities transactions. Previously, numerous courts have repeatedly dismissed the claims on the ground of federal preemption. Prepetition Litigation In April 2002, Mirant Corp., along with Mirant Americas Development, Inc., Mirant Americas Energy Marketing, LP, Mirant Delta, LLC, and Mirant Potrero, LLC, among several other unrelated defendants, were served with a complaint styled T&E Pastorino Nursery, and Pastorino & Son Nursery, et al. v. Mirant Corporation, et al. The Plaintiffs in the Pastorino Action allege that the Pastorino Defendants engaged in a number of unlawful, unfair, fraudulent and manipulative trading schemes, in violation of California's Unfair Competition Law, Section 17200 et seq. of the California Business and Professions Code. The Plaintiffs seek restitution, damages, and injunctive relief. The Pastorino Defendants removed the case to the United States District Court for the Northern District of California and it was subsequently transferred to the United States District Court for the Southern District of California. Certain Debtors were also named in six other cases filed in the San Francisco Superior Court alleging the same types of conduct and similar claims for relief: (1) RDJ Farms, Inc., v. Allegheny Energy Supply Co., L.L.C., et al., in which plaintiffs named, among others, Mirant Corp., MADI, MAEM, Mirant Delta, and Mirant Potrero; (2) Century Theaters, Inc., v. Allegheny Energy Supply Co., L.L.C., et al., in which plaintiffs named, among others, Mirant Corp., MADI, MAEM, Mirant Delta, and Mirant Potrero; (3) Bronco Don Holdings, LLP, v. Duke Energy Trading and Marketing, L.L.C, et al., in which plaintiffs named, among others, Mirant Corp., MADI, MAEM, Mirant Delta, Mirant Potrero, Mirant California Investments, Inc., and Mirant California, LLC; (4) El Super Burrito, Inc., v. Allegheny Energy Supply Co., L.L.C., et al., in which plaintiffs named, among others, Mirant Corp., MADI, MAEM, Mirant Delta, and Mirant Potrero; (5) Leo's Day and Night Pharmacy v. Duke Energy Trading and Marketing, L.L.C., et al., in which plaintiffs named, among others, Mirant Corp., MADI, MAEM, Mirant Delta, Mirant Potrero, Mirant California Investments, and Mirant California; and (6) J&M Karsant Family Limited Partnership v. Duke Energy Trading and Marketing, L.L.C. et al., in which plaintiffs named, among others, Mirant Corp., MADI, MAEM, Mirant Delta, Mirant Potrero, Mirant California Investments, and Mirant California. The six cases were removed to the Northern California District Court and subsequently transferred to the Southern California District Court before the Honorable Robert H. Whaley. The six cases were then coordinated with the Pastorino Action in November 2002. In May 2003, the Southern California District Court denied the Plaintiffs' motion to remand. In August 2003, the Southern California District Court granted the Mirant Defendants' motion to dismiss. The District Court cited its recent decision in In re Public Utility Dist. No. 1 of Snohomish County v. Dynegy Power Marketing, Inc., 384 F.3d 756 (2004), and explained that the claims made by the Plaintiffs "are nearly identical to those addressed by the Court in Snohomish." Consequently, the Plaintiffs took an appeal from both the denial of the motion to remand and the granting of the motion to dismiss. The automatic stay pursuant to Section 362 of the Bankruptcy Code prevents the Debtors to proceed with the litigation. At the Debtors' request, the U.S. Bankruptcy Court for the Northern District of Texas modifies the automatic stay on a final basis with respect to the Pastorino Action to allow the Debtors to participate in the Appeal before the Ninth Circuit. According to Judge Lynn, "it is not necessary for the Court to determine the applicability of the automatic stay to the Pastorino Action at this time." All issues with regard to and the rights of all parties with respect to the applicability of the automatic stay are reserved for future determination. 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. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) MORGAN STANLEY: Moody's Junks $2.987 Million Class M Certificates ----------------------------------------------------------------- Moody's Investors Service confirmed and affirmed thirteen classes and downgraded four classes of Morgan Stanley Capital I Inc., Commercial Mortgage Pass-Through Certificates, Series 2003-TOP11. Moody's ratings actions are: * Class A-1, $126,035,194, Fixed, affirmed at Aaa * Class A-2, $175,000,000, Fixed, affirmed at Aaa * Class A-3, $165,114,000, Fixed, affirmed at Aaa * Class A-4, $561,379,000, Fixed, affirmed at Aaa * Class X-1, Notional, affirmed at Aaa * Class X-2, Notional, affirmed at Aaa * Class B, $31,366,000, WAC, affirmed at Aa2 * Class C, $32,859,000, WAC, confirmed at A2 * Class D, $13,443,000, WAC, confirmed at A3 * Class E, $14,936,000, WAC, confirmed at Baa1 * Class F, $7,468,000, WAC, confirmed at Baa2 * Class G, $7,468,000, WAC, confirmed at Baa3 * Class H, $11,948,000, Fixed, confirmed at Ba2 * Class J, $2,988,000, Fixed, downgraded to B1 from Ba3 * Class K, $2,987,000, Fixed, downgraded to B2 from B1 * Class L, $2,987,000, Fixed, downgraded to B3 from B2 * Class M, $2,987,000, Fixed, downgraded to Caa1 from B3 Moody's placed Classes C through M on review for possible downgrade on January 3, 2005 due to concerns regarding potential losses associated with two specially serviced loans - the Alabama/Arizona Warehouse/Distribution Loan ($27.4 million - 2.3% of pool) and the Troy Technology Park Portfolio Loans ($25.7 million - 2.2% of pool). Moody's has concluded its review of all the loans in the pool, including the specially serviced loans. As of the February 14, 2005, distribution date, the transaction's aggregate principal balance has decreased by approximately 2.0% to $1.171 billion from $1.195 billion at securitization. The Certificates are collateralized by 188 loans, ranging in size from less than 1.0% to 7.3% of the pool, with the top 10 loans representing 28.8% of the pool. The pool contains eight shadow rated loans which comprise 26.5% of the pool. To date the pool has not experienced any losses. Moody's was provided with year-end 2003 and partial year 2004 operating results for 90.0% of the pool. Moody's weighted average loan to value ratio for the conduit component is 77.2%, compared to 76.8% at securitization. The downgrade of Classes J, K, L and M is due to the decline in performance of the two specially serviced loans, which are discussed below. The Alabama/Arizona Warehouse/Distribution Loan was transferred to special servicing in January 2004 due to the bankruptcy filing of KB Toys, Inc., the single tenant of the collateral securing the loan. The loan is secured by two warehouse distribution facilities containing a combined 1.4 million square feet. The properties are located in Montgomery, Alabama and Glendale, Arizona. KB Toys has announced plans to close 500 to 600 stores, but has not indicated plans to close any of its four distribution centers. KB has obtained an extension for the Reorganization Plan filing until May 31, 2005. At this time it is not known whether KB will accept or reject any of the distribution center leases. Moody's analysis incorporates the uncertainty of continued occupancy of KB and the potential costs associated with releasing the properties. Moody's shadow rating for this loan is Ba2. The Troy Technology Park Portfolio Loans were transferred to special servicing in November 2004 due to imminent default. The portfolio consists of three cross-collateralized and cross- defaulted loans secured by 11 flex/industrial buildings totaling 426,500 square feet. The properties are located in an industrial park in Troy, Michigan. At securitization the complex was 98.0% leased, with General Motors occupying approximately 80.6% of the premises and Visteon occupying 9.9%. General Motors now occupies only 22.6% of the premises on a lease expiring in December 2005 and Visteon has vacated the premises but is continuing to pay rent through lease expiration in May 2005. The complex is now 44.0% leased; however an 18,000 square foot lease has recently been executed increasing the overall occupancy to 51.6%. Although the loan has been delinquent since the December payment, the borrower is cooperating with the special servicer on the resolution of the loan and has been remitting net cash flow to the trust. The properties are located in the South Troy market, which is currently 40.0% vacant. Moody's shadow rating for this loan is B1. The current shadow ratings of the remaining six large loans remain the same as at securitization. The John Hancock Loan ($85.0 million - 7.3%) is shadow rated Baa2. The Center Tower Loan ($71.7 million - 6.1%) is shadow rated A3. The 516 West 34th Street Loan ($23.0 million - 2.0%) is shadow rated Baa1. The ITT Gilfillan Building Loan ($21.2 million - 1.8%) is shadow rated Baa2. The Rexmere Village Loan ($19.5 million - 1.7%) is shadow rated Aa3. The 9401 Wilshire Loan ($15.6 million - 1.3%) is shadow rated Baa2. The top three conduit loans represent 5.0% of the outstanding pool balance. The largest conduit loan is the 1333 Broadway Loan ($25.1 million - 2.1%), which has a Moody's LTV of 80.9%, compared to 82.6% at securitization. The second largest conduit loan is the Monterey Pines Loan ($17.5 million - 1.5%), which has a Moody's LTV of 69.7%, the same as at securitization. The third largest conduit loan is the Crown Point Corporate Center Loan ($16.6 million - 1.4%), which has a Moody's LTV of 92.2%, compared to 93.8% at securitization. The pool's collateral is a mix of office and mixed use (36.4%), retail (29.0%), industrial and self-storage (17.8%), multifamily (13.2%), land/parking garage (2.1%) and lodging (1.5%). The collateral properties are located in 33 states. The highest state concentrations are California (31.4%), Massachusetts (10.4%), New Jersey (7.3%), New York (6.1%) and Illinois (4.5%). All of the loans are fixed rate. MOSLER INC: Asks Court to Close Chapter 11 Case ----------------------------------------------- Mosler, Inc., nka MDIP, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to close its chapter 11 case, since: * it has consummated its Second Amended Joint Plan of Reorganization, and its estates have been fully administered; and * the docket maintained in the Debtor's chapter 11 case reflects that there are no adversary proceedings or contested matters pending before the Court. The chapter 11 cases of MDIP of Alabama, Inc., and MDIP Indiana LLC were closed effective March 31, 2004. The Debtor has already settled its last existing dispute with Bechtel Corporation and Sachs Electric Co., Inc. Bechtel remitted to the Debtor $475,000 pursuant to the settlement. Alfred R. Rabasca, the plan agent appointed pursuant to the confirmed Chapter 11 Plan, has paid $2,989,348 to fully satisfy administrative claims. MDIP, Inc., fka Mosler, Incorporated, a leading integrator of physical and electronic security systems, filed, along with its debtor-affiliates for chapter 11 protection on August 6, 2001, in the United States Bankruptcy Court for the District of Delaware (Case No. 01-10055). Russell C. Silberglied, Esq., at Richards Layton & Finger, and Robert Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the company filed for protection from its creditors, it listed an estimated assets of $10 million to $50 million and estimated debts of more than $100 million. The Debtors' Second Amended Joint Plan of Liquidation was confirmed by the Honorable Gregory M. Sleet on June 30, 2003. N-45O: Fitch Assigns Low-B Ratings on Two 2003-1 Mortgage Bonds --------------------------------------------------------------- N-45o First CMBS Issuer Corporation, series 2003-1, commercial mortgage-backed bonds are affirmed by Fitch: -- C$176.4 million class A-1 at 'AAA'; -- C$278.6 million class A-2 at 'AAA'; -- Interest-only class IO at 'AAA'; -- C$8.4 million class B at 'AA'; -- C$16.8 million class C at 'A'; -- C$19.6 million class D at 'BBB'; -- C$14.0 million class E at 'BB'; -- C$9.1 million class F at 'B'. Fitch does not rate the $13.3 million class G certificates. The affirmations are the result of stable performance of the pool. As of the February 2005 distribution date, the transaction has paid down 1.7% to $550.5 million from $559.7 million at issuance. One loan has paid off, bringing the total number of loans to 62 from 63. The properties are located in Canada, with concentrations in Quebec (56.5%) and Ontario (32.8%) and consist mostly of office (57.6%) and retail (24.4%) properties. To date, there have been no losses and no delinquent or specially serviced loans. NATIONAL ENERGY: Court Approves Plan Solicitation Procedures ------------------------------------------------------------ The Honorable Paul Mannes of the United States Bankruptcy Court for the District of Maryland approves the Solicitation and Tabulation Procedures and authorizes NEGT Energy Trading Holdings Corporation and its debtor-affiliates to mail notices of the confirmation hearing together with the Plan, the Disclosure Statement, and ballots, and begin the solicitation process. As previously reported, on March 4, 2005, the Honorable Paul G. Mannes of the U.S. Bankruptcy Court for the District of Maryland, Greenbelt Division, approved the Disclosure Statement explaining the Amended Joint Liquidation Plan filed by six affiliates of National Energy & Gas Transmission, Inc.: -- NEGT Energy Trading Holdings Corporation; -- NEGT Energy Trading - Gas Corporation; -- NEGT ET Investments Corporation; -- NEGT Energy Trading - Power L.P., -- Quantum Ventures, and -- Energy Services Ventures, Inc. Judge Mannes will convene a hearing April 13, 2005, at 10:30 a.m., to consider confirmation of the Debtors' Plan. Any objections to confirmation of the Plan must be filed and served by 4:00 p.m., on April 5, 2005. Creditors' ballots must be received by Bankruptcy Services LLC, the ET Debtors' balloting agent, by 4:00 p.m., on April 13, 2005. Judge Mannes sets March 3, 2005, as the Record Date for the purposes of determining creditors who are entitled to vote on the ET Debtors' First Amended Liquidation Plan and receive the required notices. Judge Mannes sets April 5, 2005, at 4:00 p.m. as the deadline for voting creditors to turn over their ballots to Bankruptcy Services LLC, the ET Debtors' Balloting Agent. Any Claimant may file a request pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy Procedure for the temporary allowance of its claims for voting purposes by March 28, 2005. The Court will consider the Rule 3018 Motions, if any, at a hearing on April 7, 2005, at 10:30 a.m. The ET Debtors will publish notices of the April 13 Confirmation Hearing in the national edition of The Wall Street Journal and The Washington Post by March 18, 2005. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and its debtor-affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher, and Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston L.L.P., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and that plan took effect on Oct. 29, 2004. (PG&E National Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL WASTE: Wants Until June 2 to File a Chapter 11 Plan ------------------------------------------------------------ National Waste Services of Virginia asks the U.S. Bankruptcy Court for the District of Delaware for an extension of its exclusive period to file a plan of reorganization and solicit acceptances of that plan. The Debtor wants its exclusive period to file a plan extended until June 2, 2005, and wants until August 1 to solicit acceptances of that plan. The Debtor explains that it is currently negotiating to resolve a dispute over the operation of the Battle Creek Landfill in Page County, Virginia. The Landfill has been operated by the Debtor since 2001. In late 2002, the Virginia Department of Environmental Quality began issuing notices of noncompliance with state law against the Debtor. This resulted in the revocation of the Debtor's permit. National Waste then sought and obtained a stay of the permit revocation. The parties are currently in the process of documenting, finalizing and implementing the terms of a consensual resolution of the dispute. National Waste adds that a substantial amount of its time has been focused on preserving its business as a going concern as well as obtaining postpetition financing. Headquartered in Little Creek, Delaware, National Waste Services of Virginia, Inc. -- http://www.natwaste.com/-- collects, processes and disposes solid non-hazardous waste and recycling materials. The Company filed for chapter 11 protection on March 4, 2004 (Bankr. Del. Case No. 04-10709). Michael Gregory Wilson, Esq., at Hunton & Williams represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $50 million each. NETWORK INSTALLATION: Founders Retire 2.5 Million Common Shares --------------------------------------------------------------- Network Installation Corp.'s (OTC Bulletin Board: NWKI) former CEO Michael Cummings and venture investor Dutchess Capital Management will retire a total of 2.5 million shares of their Company common stock. The total current shares outstanding will be reduced to approximately 22.3 million as a result of the transaction. Network Installation CEO Jeffrey Hultman stated, "This action certainly communicates another positive message to our shareholders. Our goal moving ahead is to maximize our growth while minimizing the effects of dilution. It also states to me that Michael as well as our partners at Dutchess have significant confidence in the direction we are headed. I am truly excited about the opportunity we have and am looking forward to the challenge of accelerating our growth." About the Company Network Installation Corp. -- whose Sept. 30, 2004 balance sheet showed a $213,146 stockholders' deficit -- provides communications solutions to the Fortune 1000, Government Agencies, Municipalities, K-12 and Universities and Multiple Property Owners. These solutions include the design, installation and deployment of data, voice and video networks as well as wireless networks including Wi-Fi and Wi-Max applications and integrated telecommunications solutions including Voice over Internet Protocol applications. For more information, visit http://www.networkinstallationcorp.net/ NOMURA ASSET: Fitch Affirms $42.8 Mil. Mortgage Certificates at BB ------------------------------------------------------------------ Fitch Ratings upgrades these classes of Nomura Asset Securitization Corp.'s commercial mortgage pass-through certificates, series 1995-MD III: -- Interest-only class A-3CS to 'AAA' from 'AA-'; -- $42.8 million class A-4 to 'AAA' from 'AA-'. In addition, Fitch affirms these: -- $8.9 million class A-3 at 'AAA'; -- $42.8 million class B-1 at 'BB'. These classes are not rated by Fitch: -- $29.7 million class B-2; -- $2.4 million class B-3; -- $2.5 million class B-4A; -- $2.8 million class B-4B; -- $1,000 class B-4C. Classes A-1A, A-1B, A-1CS, A-2, and A-2CS have paid in full. The upgrades are the result of paydown due to repayment and scheduled amortization. The certificates are currently collateralized by three mortgage loans (60.5%) on six properties and one defeased loan consisting of two notes: Hagan A (15.9%), which matures April 1, 2005 and Hagan B (23.6%), which matures April 1, 2010. Overall, the pool's balance has been reduced by 75%, to $131.9 million since issuance. Of the remaining three non-defeased loans in the transaction, Fitch considers two, the Cayman loan (24.4%) and the Larkin loan (17.5%), to be loans of concern. The Cayman loan is collateralized by a Marriott Hotel on Grand Cayman Island in the British West Indies. The property has been REO (real estate owned) since May 2003. The property sustained approximately $8.5 million in damage during Hurricane Ivan in September 2004, and is currently undergoing renovations to bring the hotel back to 'pre-hurricane' status. The hotel is not open to tourists, but some rooms are being rented by construction workers and insurance representatives. Fitch anticipates that this loan will likely be resolved at a significant loss. The other loan of concern, the Larkin loan, is secured by four full-service hotels in Colorado, Texas, and Montana. The loan transferred to the special servicer in late November 2004. Workout options are currently under evaluation. While the portfolio's performance improved for 2004, Fitch stressed DSCR (debt service coverage ratio), after giving credit for amortization, remains below 1 times, at 0.94x. Fitch will continue to closely monitor this portfolio as more information, including a new appraisal, becomes available. The final non-defeased loan in the transaction is the Bayfront loan, representing 18.5% of the pool. The loan is secured by an 18-story office building in Miami, Florida, containing 230,000 square feet -- sf -- of office space and 98,000 sf of retail space. Performance continues to improve, and Fitch's stressed net cash flow is up 11.4% over issuance. The current occupancy is 85%. One potential concern is the large amount of space expiring in 2005. While a large retail tenant recently renewed its lease, there is an additional 23% of space, concentrated primarily among two, long-term tenants, that expires between July and September 2005. This could cause a significant stress to the property's cash flow, should neither tenant renew its lease. N-STAR REAL: Fitch Puts BB Rating on $16 Mil. Class Jr. Sub. Notes ------------------------------------------------------------------ Fitch Ratings rated the notes issued by N-Star Real Estate CDO III Ltd. and co-issuer N-Star Real Estate CDO III Corp. (collectively, the co-issuers): -- $294,000,000 class A-1 floating-rate senior notes due 2040 'AAA'; -- $15,000,000 class A-2A floating-rate senior notes due 2040 'AA'; -- $5,000,000 class A-2B fixed-rate senior notes due 2040 'AA'; -- $17,000,000 class B floating-rate senior subordinate notes due 2040 'A-'; -- $10,000,000 class C-1A floating-rate junior subordinate notes due 2040 'BBB+'; -- $6,000,000 class C-1B fixed-rate junior subordinate notes due 2040 'BBB+'; -- $12,000,000 class C-2A floating-rate junior subordinate notes due 2040 'BBB'; -- $2,000,000 class C-2B fixed-rate junior subordinate notes due 2040 'BBB'; -- $16,000,000 class D fixed-rate junior subordinate notes due 2040 'BB'. The ratings on classes A-1, A-2A, and A-2B address the timely payment of interest and ultimate payment of principal as outlined in the governing documents. The ratings on classes B, C-1A, C-1B, C-2A, C-2B, and D address the ultimate payment of interest and principal as outlined in the governing documents. The collateral portfolio will be managed by NS Advisors, LLC, an indirect wholly owned subsidiary of NorthStar Realty Finance Corp. -- NRF. The ratings are based upon the capital structure of the transaction, the quality of the collateral, and the overcollateralization and interest coverage tests provided for within the indenture. The transaction will have a five-year reinvestment period, during which time proceeds from regular asset amortization can be used to purchase additional collateral up to a 35% reinvestment cap. For the first three years of the transaction, proceeds from the sale of defaulted and distressed assets can be used to purchase additional collateral up to a 5% reinvestment cap. During the five-year reinvestment period, each class of rated notes will receive pro rata principal repayments above the 35% reinvestment cap in the case of regular amortizing principal and 5% in the case of defaulted and distressed asset recoveries (for the first three years). After the five-year reinvestment period, or if the portfolio collateral balance drops below 50% of the original portfolio balance, principal proceeds will be applied to repay outstanding notes sequentially. Repayment of notes will remain pro rata within classes. The proceeds of the notes will be used to purchase a portfolio of real estate structured finance securities, consisting of approximately 50.3% conduit commercial mortgage-backed securities -- CMBS, 22.6% large-loan CMBS, 11.8% real estate investment trust securities, 8.8% credit tenant lease CMBS, and 6.5% collateralized debt obligations. NS Advisors will purchase all investments for the portfolio on behalf of N-Star Real Estate CDO III Ltd. and N-Star Real Estate CDO III Corp., which are special purpose companies incorporated under the laws of the Cayman Islands and Delaware, respectively. NS Advisors, an indirect wholly owned subsidiary of NRF, is the collateral administrator for the co-issuers. NRF is an internally managed commercial REIT that makes fixed-income, structured finance, and net lease investments in real estate assets. NRF was formed in October 2003 to continue to expand the subordinate debt, real estate securities, and net lease businesses conducted by NorthStar Capital Investment Corp. (NorthStar Capital). Simultaneous with the closing of the initial public offering, certain subsidiaries of NorthStar Capital contributed an initial portfolio of assets to NRF. From inception through December 2004, NRF and its predecessor organizations have made structured finance investments of approximately $2.3 billion, including approximately $350 million in subordinate real estate debt, approximately $1.4 billion in real estate securities, and approximately $520 million in properties, substantially all of which were net leased. For more information, see the presale report 'N-Star Real Estate CDO III, Ltd./Corp.,' dated Feb. 18, 2005, available on the Fitch Ratings web site at http://www.fitchratings.com/ NRG ENERGY: Declares $9.22 Per Share Preferred Stock Dividend ------------------------------------------------------------- NRG Energy, Inc., (NYSE:NRG) declared a $9.22 per share cash dividend on its preferred stock issued December 27, 2004. The dividend is payable on March 15, 2005, to shareholders of record as of March 1, 2005. NRG Energy, Inc., owns and operates a diverse portfolio of power-generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged from chapter 11 on December 5, 2003, under the terms of its confirmed Second Amended Plan. James H.M. Sprayregen, Esq., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented NRG Energy in its $10 billion restructuring. * * * As reported in the Troubled Company Reporter on Dec. 14, 2004, Standard & Poor's Ratings Services assigned its 'CCC+' rating to NRG Energy Inc.'s (NRG; B+/Stable/--) proposed $400 million convertible perpetual preferred stock. S&P says the outlook is stable. OCTANE ENERGY: Selling Pronghorn Controls' Shares for $5.4 Million ------------------------------------------------------------------ Octane Energy Services Ltd. has received Court approval to enter into a Letter of Intent with a Confidential Purchaser to sell the shares of its wholly owned subsidiary, Pronghorn Controls Ltd. The purchase price is $5,400,000. The LOI provides for a period of due diligence. If the due diligence is satisfactory, the LOI requires a definitive agreement to be negotiated and concluded on or before March 22, 2005. The LOI is non-exclusive, but subject to a break fee of $270,000 if an alternative transaction prevents completion of the proposed transaction. The proposed transaction is supported by management of Octane and Pronghorn, their respective Boards of Directors, the Monitor of Octane, Ernst and Young Inc. and Octane's financial advisor, Ernst & Young Orenda Corporate Finance Inc. Octane Energy Services Ltd. remains under management direction under the protection of the CCAA filing and its wholly owned subsidiary Pronghorn Controls Ltd. remains intact and outside of the CCAA process. Pronghorn Controls Ltd. will carry on business in the ordinary course as it has done since the filing under the CCAA on October 15, 2004. Octane Energy Services Ltd.'s wholly owned subsidiaries, Octane Energy Services, Inc., and Octane Energy Services (BC), Inc., were placed into receivership by consent after close of business on Friday, December 4, 2004. In addition, the role of the court appointed monitor was expanded at the parent company (Octane Energy Services Ltd.) and includes a receivership over the equipment held in that corporate entity. Octane is an oilfield services company whose main business is providing electrical and instrumentation services through its subsidiary Pronghorn, Pronghorn remains outside of the CCAA process and continues to operate in the ordinary course of business. The common shares of Octane trade on the TSX Venture Exchange under the symbol "OES". PINNACLE ENT: Fitch Affirms B+ & B- Ratings on Sr. & Sub. Debts --------------------------------------------------------------- Fitch Ratings affirmed the respective 'B+/B-' senior secured bank and subordinated debt ratings of Pinnacle Entertainment (NYSE: PNK). Ratings primarily reflect PNK's stable and growing cash flow base, solid liquidity profile, and long-dated maturity schedule. These factors are offset by construction/start-up risks and continued high leverage associated with the company's aggressive development plans through fiscal year-end 2007 and relative uncertainty regarding the company's ability to generate acceptable returns there. The Rating Outlook is Stable. PNK is in the process of significantly increasing its operating platform, expecting to double or even triple EBITDA over the next five years via greenfield development of three new properties. Projects include a $365 million casino in Lake Charles (opening May 2005), a $200 million casino project in downtown St. Louis (opening late 2006), and a $300 million casino project in St. Louis county (opening late-2007). These plans are significant relative to the company's operating profile, and free cash flow will be negative over this period. However, net leverage should remain in line with the current rating category, peaking at 5.3 times in 2006 (versus 3.7x at fiscal year-end 2004) as the company taps its bank facility to fund the St. Louis projects, but declining to 4.2x by fiscal year-end 2007 as EBITDA benefits take effect. Timing of scheduled projects is prudently sequenced such that financing of the two Missouri projects benefit from cash flows from completed projects. Liquidity of $563 million at fiscal year-end 2004 (comprising $288 million in cash, $125 million in revolver availability, and a $150 million delayed draw term loan) appears adequate to fund the vast majority of planned projects. Over the last 12 months, the company has repeatedly accessed the capital markets to improve liquidity and strengthen its balance sheet. PNK successfully tapped the bank market twice during 2004 to increase size and pricing of its facility. It also executed two equity offerings in February and December, raising a combined total of $204 million in gross proceeds. Finally, in late 2004/early 2005, PNK redeemed remaining outstandings under its 9.25% notes, funded in part via a $100 million add-on to its 8.25% notes, effectively eliminating the company's most restrictive indenture. These actions have reduced the funding gap for both of its St. Louis projects to modest levels and provide the company with the additional flexibility it needs to execute its growth plans. Importantly, no material maturities occur prior to completion of the Missouri build-out. With five casinos in five distinct gaming jurisdictions, PNK is somewhat diversified geographically, but remains highly vulnerable to tax increases/regulatory changes in Louisiana where it will continue to derive roughly 40% of its cash flows over the long term. Notably, the Louisiana governor is currently evaluating the potential impact of raising gaming taxes at riverboats and racetracks in Louisiana to 32.5% (versus the current 21.5% and 18.5%, respectively). Fitch estimates that the annual impact to PNK's EBITDA would be material at roughly $40 million-$45 million while leverage would rise to 7.3x versus original estimates of 5.3x in 2006. However, this is a preliminary proposal, and assuming a strong reaction from gaming interests, the final form of the tax increase is likely to be somewhat watered down from this level or accompanied by some form of offsetting legislation. Current market exposure is also somewhat unfavorable given the mature and highly competitive conditions in a number of markets where PNK is not the market leader (Reno, Nevada; Biloxi, Mississippi; and Bossier City, Louisiana). This has left the company somewhat dependent on its flagship Belterra property for topline growth. That said, performance in most of these markets has been solid due to significant operational improvements implemented by new management since taking over in early 2002. Since their arrival, same store EBITDA has increased by 51% on a 10% increase in revenues, reflecting margin expansion of 550 bps to 18.6% at fiscal year-end 2004. Looking forward, addition of the three new properties should provide further scale and diversification and reduce PNK's reliance on Belterra for long- term growth (though Louisiana exposure remains high). Fitch expects the new Lake Charles property to produce adequate returns given its superior quality and satisfactory location relative to current offerings in that market. Fitch acknowledges that a significant level of risk has subsided as the Lake Charles construction draws to a close. The project remains on time and on budget for its planned opening in May. Fitch is also encouraged by the steady improvement in same store operating results, which continued through most of 2004, as well as continued improvements to PNK's liquidity and maturity profile. Nonetheless, weaker-than-expected operating results in the fourth quarter at the flagship Belterra property due to margin contraction, and recent momentum for a material tax increase in Louisiana during a period of high and increasing leverage leads Fitch to retain the Stable Outlook until there is more clarity on these issues and until PNK demonstrates a degree of success in Lake Charles. PRESTWICK CHASE: Case Summary & 11 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Prestwick Chase, Inc. 100 Saratoga Boulevard Saratoga Springs, New York 12866 Bankruptcy Case No.: 05-11456 Type of Business: The Debtor offers senior housing and independent living as an alternative to home ownership. Prestwick Chase active adult community offers spacious suites and private cottages as senior housing for elegant, independent living. See http://www.prestwickchase.com/ Chapter 11 Petition Date: March 11, 2005 Court: Northern District of New York (Albany) Debtor's Counsel: Jennifer C. Driver, Esq. Stockli Green, LLP 90 State Street Albany, New York 12207 Tel: (518) 449-3125 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Saratoga County IDA Taxes $199,285 Saratoga City Municipal Center 50 West High Street Ballston Spa, NY 12020 Saxton & Farrar, CPAs Trade Debt $103,650 PO Box 817 648 Maple Avenue, Route 9 Saratoga Springs, NY 12866 Saratoga County Treasurer Taxes $77,040 25 West High Street Ballston Spa, NY 12020 Mirabito Trade Debt $30,921 Crane, Greene & Parente Trade Debt $27,965 Saratoga Springs CSD Taxes $19,946 The CBORD Group, Inc. Trade Debt $7,515 National Equity Trade Debt $5,255 Stockli Greene, LLP Trade Debt $5,000 Verizon Yellow Pages Trade Debt $1,970 Richard T. Saxton Trade Debt $575 QUANTA SERVICES: Earns $1.8 Million of Net Income in 4th Quarter ---------------------------------------------------------------- Quanta Services, Inc. (NYSE: PWR) reported results for the three and twelve months ended Dec. 31, 2004. Revenues in the fourth quarter of 2004 were $419.2 million, compared to revenues of $431.3 million in the fourth quarter of 2003. For the fourth quarter of 2004, net income attributable to common stock was $1.8 million, compared to a net loss attributable to common stock of $25.7 million in the fourth quarter of 2003. Revenues for the twelve months of 2004 were $1.63 billion, compared to $1.64 billion for the twelve months of 2003. For the twelve months of 2004, the company reported a net loss attributable to common stock of $9.2 million, compared to a net loss attributable to common stock of $32.9 million for the year 2003. "Quanta enters 2005 with cautious enthusiasm," said John Colson, chairman and chief executive officer of Quanta Services. "The Fiber to the Premises initiatives of our telecommunications customers and increased spending by our utility customers should facilitate Quanta's improved performance and provide growth opportunities for Quanta this year. We ended 2004 in a strong financial position with more than $265 million in cash on our balance sheet. Quanta is well positioned financially and operationally to pursue growth opportunities in 2005." The fourth quarter 2003 results included a $35.1 million charge comprised of make-whole pre-payment premiums, the write-off of deferred financing costs and other related costs due to: -- the early extinguishment of debt; -- a $6.5 million goodwill impairment charge associated with the closure of an operating unit; and -- a $2.9 million charge as a result of the disposition of an investment in a fiber network, all on a pre-tax basis. In addition to the previously discussed charges recorded in the fourth quarter of 2003, results for 2003 were impacted by allowances for certain accounts and notes receivable in the amount of $19.0 million, related primarily to notes receivable from one customer. Outlook Quanta expects revenues for the first quarter of 2005 to range from $345 million to $360 million, and a loss per share of approximately $0.04 to $0.06. About the Company Quanta Services, Inc., is a leading provider of specialized contracting services, delivering end-to-end network solutions for electric power, gas, telecommunications and cable television industries. The company's comprehensive services include designing, installing, repairing and maintaining network infrastructure nationwide. * * * As reported in the Troubled Company Reporter on Dec. 3, 2004, Moody's Investors Service affirmed ratings of Quanta Services, Inc. reflecting the company's large cash balance, free cash flow generation vs. its debt levels, and significant contract backlog. The rating outlook however has been changed to negative from stable. These ratings were affirmed: * $35 million Revolving Credit Facility due 2007, rated Ba3; * $150 million Senior Secured Term Loan due 2008, rated Ba3; * Senior Implied, rated B1; * Issuer Rating, rated B2. The change in outlook to negative from stable reflects the company's high leverage and thin margins. The company's operating fundamentals remain under pressure due to tough industry conditions. Furthermore, the rate of credit quality improvement, while visible in some areas, has been below Moody's expectations. QWEST COMMS: Trades Barbs with Verizon Over MCI Acquisition ----------------------------------------------------------- On February 28, 2005, the Wall Street Journal published an editorial-page article written by Richard C. Notebaert, Chairman and Chief Executive Officer of Qwest Communications International, Inc. Qwest filed a copy of the article with the Securities and Exchange Commission on March 8, 2005. Don't Create A Duopoly On Wednesday, Capitol Hill will hold hearings on the recently announced round of mergers in the telecommunications industry. This recent flurry of transactions, as much or more than any technological development, will redefine the way Americans communicate. A key point should inform the committee's inquiry. Industry rationalization is not the same as industry concentration. Industry rationalization promotes competition and innovation. Simply put, it provides better service cheaper. It enables customers to benefit from more service options, a higher degree of care, technological innovations and lower prices. But that is not the whole story because industry rationalization can easily be confused with industry concentration. Some would argue whether this is just a matter of degree. But degrees count. Clearly, there is a threshold where the bad outweighs the good. The leading indicators are not a mystery: concentration will promote size-for-sizes' sake and geographic dominance. After initial job cuts which are the by- product of combining corporate structures, concentration inflates bureaucracy, reduces pricing competition, limits innovation and works to frustrate effective regulation. The result is that the technological backbone of our country will have no safety net.no margin for error. The announced mergers of SBC-AT&T and Verizon- MCI are cases directly on point. If the mergers are approved, the new companies would literally dwarf their nearest competitors and will control 79 percent of the business/government segment-one of the most lucrative in our industry. The practical reality is that this scale, pricing power and overall market clout make it extremely unlikely that any other player can grow market share. Odds are these behemoths would not compete head-to-head in most local markets but would instead flex their muscles to squeeze out smaller competitors. It empties the playing field. These are clear cases where we are moving beyond rationalization, and will result in bringing concentration of power to a new level: less choice, less competition, massively increased pricing power. Such concentration does not rationalize and improve the market, it just ossifies it-to the disadvantage of all. A truly competitive playing field doesn't just strike a good balance between behemoths and niche players. It allows a variety of national competitors to meet the challenges ahead. Our antitrust laws and regulatory oversight already have the wherewithal to help the market evolve toward this outcome. Our leadership should scrutinize policy in order that it produces the proper rules and thus the proper outcome. My interest in this matter is by no means academic: As a bidder for MCI, Qwest has a major economic stake in the outcome of hese matters. We have been an enthusiastic participant and beneficiary of the rationalizing of our markets. This management team has successfully worked very hard to rectify excesses that were part of the early stages of that process. We've seen what works and what doesn't. All the more reason for policymakers to look hard at these proposed massive combinations that will reduce competition and innovation and diversity. We know there is another way, a better way. Rather, than a duopoly, Qwest's vision is to build a competitive player that will truly contribute to choice borne out of a different approach to the marketplace and a different set of innovative products and services. Qwest-MCI would be a strong, but not dominant, local, long distance and broadband provider able to compete effectively nationwide with the combined SBC-AT&T and Verizon, which even today is a behemoth. That's the kind of market regulation must produce-not simply bigger, more powerful providers of indistinguishable service offerings, but real innovation with real customer focus. The outcome of these battles concerns more than just corporate power and bottom lines. Ultimately, the most important test is whether we create a marketplace that provides affordable, innovative communications services that empower residential and small business consumers in the Digital Age. The mega-mergers do not pass that test. Verizon Talks Back Tom Tauke, Executive Vice President of Verizon Communications, Inc., sent a Letter to the Editor to The Wall Street Journal in response to Mr. Notebaert's article. Verizon filed a copy of Mr. Tauke's letter with the Securities and Exchange Commission on March 3, 2005. Qwest Chairman Notebaert (Feb. 28) argues that concerns about "concentration" in the large business market suggest that Qwest, not Verizon, should team up with MCI. He conveniently ignores the fact that the Qwest-MCI combination would eliminate a critical network for large business and government customers, thereby eliminating a competitive facility and reducing choice. Instead of eliminating a network, Verizon has committed to major investment to improve that network. In talking to Wall Street, Mr. Notebaert candidly admits he plans to reduce choices by not only "consolidating traffic on one network" but also by "eliminating" duplicative "POPs" or access points where customers can connect to nationwide networks. This is how Qwest hopes to achieve huge synergies and cut 15,000 jobs. In short, a Verizon-MCI transaction brings together complementary assets. A Qwest-MCI transaction is designed to eliminate duplicative assets. Today AT&T dominates the business market place. Either alone or with SBC, it will continue as the dominant player. If partnered with a financially strong company like Verizon, MCI will be an attractive alternative for customers. Verizon-MCI offers the best alternative for customers because no competitive facilities are eliminated, and the financial health of the new company would assure a strong competitor would remain to the dominant player in the business market place. Tom Tauke Executive Vice President Verizon Communications About Qwest Qwest Communications International Inc. (NYSE:Q) -- http://www.qwest.com/-- is a leading provider of voice, video and data services. With more than 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. At Dec. 31, 2004, Qwest Communications' balance sheet showed a $2,612,000,000 stockholders' deficit, compared to a $1,016,000,000 deficit at Dec. 31, 2003. * * * As reported in the Troubled Company Reporter on March 1, 2005, Standard & Poor's Ratings Services placed its ratings on Denver, Co.-based diversified telecommunications carrier Qwest Communications International, Inc., and subsidiaries, including the 'BB-' corporate credit rating, on CreditWatch with negative implications. This follows the company's counter bid to Verizon Communications, Inc., for long-distance carrier MCI, Inc., for $3 billion in cash and $5 billion in stock. MCI also has about $6 billion of debt outstanding. The ratings on MCI, including the 'B+' corporate credit rating, remain on CreditWatch with positive implications, where they were placed Feb. 14, 2005 following Verizon's announced agreement to acquire the company. The positive CreditWatch listing for the MCI ratings reflects the company's potential acquisition by either Verizon or Qwest, both of which are more creditworthy entities. However, the positive CreditWatch listing of the 'B+' rating on MCI's senior unsecured debt assumes no change to the current MCI corporate and capital structure under an assumed acquisition by Qwest, such that this debt would become structurally junior to other material obligations. "The negative CreditWatch listing of the Qwest ratings reflects the higher business risk at MCI if its bid is ultimately successful," explained Standard & Poor's credit analyst Catherine Cosentino. As a long-distance carrier, MCI is facing ongoing stiff competition from other carriers, especially AT&T Corp. Moreover, MCI is considered to be competitively disadvantaged relative to AT&T in terms of its materially smaller presence in the enterprise segment and fewer local points of presence -- POPs. The latter, in particular, results in higher access costs relative to AT&T. Qwest also faces the challenge of integrating and strengthening MCI's operations while improving its own underperforming, net free cash flow negative long-distance business. These issues overshadow the positive aspects of Qwest's incumbent local exchange carrier business that were encompassed in the former developing outlook. If Qwest's offer is accepted by MCI's shareholders, Standard & Poor's will evaluate the company's plans for integrating MCI, its financial plans, and longer-term strategy given the competitive and consolidating telecommunications industry. Moreover, the status of the shareholder lawsuits is still uncertain and could be a factor in the rating or outlook even after the CreditWatch listing is resolved under an assumed successful bid by Qwest for MCI at current terms. As such, if Qwest's bid is rejected and it terminates efforts to acquire MCI, ratings on Qwest will be affirmed and removed from CreditWatch, and a developing outlook will be reassigned. REVLON CONSUMER: Launches $205 Million Private Debt Placement ------------------------------------------------------------- Revlon Consumer Products Corporation intends to privately place $205 million in aggregate principal amount of senior notes due 2011. The offering is expected to be consummated this month, subject to market and other customary conditions. There can be no assurances that the offering will be consummated. The net proceeds from the private placement are expected to be used by RCPC to: (i) retire all of the $116.2 million aggregate principal amount outstanding of its 8-1/8% Senior Notes due 2006 and all of the $75.5 million aggregate principal amount outstanding of its 9% Senior Notes due 2006, (ii) pay related fees and expenses, including accrued interest and the applicable premium on such notes, and any remaining balance will be available for general corporate purposes. This press release does not constitute a call for redemption of the 8-1/8% Senior Notes or the 9% Senior Notes. The notes will be sold only to qualified institutional buyers in reliance on Rule 144A, and outside the United States in compliance with Regulation S under the Securities Act of 1933, as amended. The proposed issuance of the new RCPC notes will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities, nor shall there be any sale of securities mentioned in this press release 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 Revlon Consumer Products Corporation is a wholly owned subsidiary of Revlon, Inc., a worldwide cosmetic, skin care, fragrance, and personal care products company. The Company's vision is to deliver the promise of beauty through creating and developing the most consumer preferred brands. Web sites featuring current product and promotional information can be reached at http://www.revlon.com/and http://www.almay.com/Corporate investor relations information can be accessed at http://www.revloninc.com/The Company's brands, which are sold worldwide, include Revlon(R), Almay(R), Ultima(R), Charlie(R), Flex(R), and Mitchum(R). * * * As reported in the Troubled Company Reporter on March 10, 2005, Moody's Investors Service assigned a Caa2 rating to the proposed $205 million senior notes offering by Revlon Consumer Products Corporation. In addition, Moody's affirmed Revlon's existing ratings and its negative rating outlook. The affirmation and assignment of long-term ratings reflect the company's continued operational and financial progress, including the prospective improvement in Revlon Consumer's near-term liquidity profile as proceeds from the notes are used to refinance bonds maturing as early as February 2006. However, the continuation of a SGL-4 speculative grade liquidity rating and a negative long-term rating outlook reflect the company's ongoing negative free cash flow profile and ongoing liquidity concerns beyond the near term. The ratings affected by this action are: * New $205 million senior notes due 2011, assigned at Caa2; * Senior implied rating, affirmed at B3; * $160 million senior secured revolving credit facility due 2009, affirmed at B2; * $800 million senior secured term loan facility due 2010, affirmed at B3; * $116 million 8.125% senior notes due 2006, affirmed at Caa2; * $76 million 9% senior notes due 2006, affirmed at Caa2; * $327 million 8.625% senior subordinated notes due 2008, affirmed at Caa3; * Speculative grade liquidity rating, affirmed at SGL-4; * Senior unsecured issuer rating, affirmed at Caa2. At the same time, Standard & Poor's Ratings Services affirmed its ratings on Manhattan-based cosmetics manufacturer Revlon Consumer Products Corp., including its 'B-' corporate credit rating. At the same time, Standard & Poor's assigned a 'CCC' senior unsecured debt rating to Revlon's planned $205 million senior unsecured note offering due 2011. The outlook is negative. Approximately $1.4 billion of debt is affected by this action. Proceeds from the $205 million senior unsecured note offering will be used primarily to repay approximately $192 million of debt due in 2006. "The refinancing of Revlon's debt maturities due in 2006 significantly improves the company's short-term liquidity, however, the company will be challenged to improve operations in fiscal 2005 due to a soft mass-market color cosmetics segment, and planned increases in marketing and promotional expenses to support new product introductions," said Standard & Poor's credit analyst Patrick Jeffrey. While Revlon achieved its revised targeted EBITDA level of $190 million in fiscal 2004, the company's planned increased media spending, particularly in the first half of 2005, will affect the company's EBITDA growth and margins for fiscal 2005. As a result, the company will need to continue to demonstrate sustained operating stability and adequate liquidity before a stable outlook is considered. REVLON CONSUMER: S&P Holds Ratings Despite Internal Control Issues ------------------------------------------------------------------ Standard & Poor's says its ratings and outlook on Revlon Consumer Products Corp. (B-/Negative/--) are not affected by the company's disclosure in its annual Form 10-K of a material weakness in its internal controls under Section 404 of the Sarbanes-Oxley Act. The weakness stems from an incorrect estimate of sales returns based upon information received from one of Revlon's key retail customers. However, the amount is not material ($1.2 million), and Revlon has implemented new controls to immediately address this control weakness and is continuing to evaluate additional controls and procedures in order to remediate the material weakness. Additionally, the company's financials as reported in the 10K are accurately represented, and Revlon's auditor, KPMG LLP, has provided a clean opinion on its financial statements. After reviewing the information provided, Standard & Poor's does not expect these matters to have an impact on Revlon's ratings or outlook. However, Revlon is using the 45-day extension provided by the SEC on its required filing of a report on internal controls over financial reporting and its auditor's attestation to this report. Upon its release, Standard & Poor's will review this final report to ensure no further weaknesses exist. ROUGE INDUSTRIES: Gibraltar Holds $423,969 Allowed Unsec. Claim --------------------------------------------------------------- Rouge Industries, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve their settlement agreement with Gibraltar Steel Corporation nka Gibraltar Steel Corporation of New York dba Integrated Terminals, American Strapping Tool Repair, Gibraltar Metals and Gibraltar Strip. Gibraltar filed a proof of claim on April 7, 2004, asserting: -- a $313,279 unsecured claim, and -- a $229,039 secured claim. The Debtors alleged that Gibraltar received a $364,112 preferential transfer recoverable under Sections 547 and 550 of the Bankruptcy Code. Additionally, Gibraltar purported owes the Debtors $229,039 for obligations arising from their commercial relationship. This receivable was transferred to OAO Severstal when the Debtors sold substantially all of their assets to Severstal. Gibraltar asked the Court to lift the automatic stay under Section 362 of the Bankruptcy Code to allow set-off of its claim against its receivable. The parties agreed to settle those matters to avoid lengthy litigation. They agreed that: * Gibraltar will pay the Debtors $90,000, * the Debtors will allow Gibraltar's unsecured claim reduced to $423,969, * the parties will exchange mutual releases. 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. SATCON TECHNOLOGY: Auditors Raise Going Concern Doubt ----------------------------------------------------- Satcon Technology Corporation has incurred significant costs to develop its technologies and products. These costs have exceeded total revenue. As a result, the Company has incurred losses in each of the past ten years. As of January 1, 2005, it had an accumulated deficit of $129,092,433, since inception. During the three months ended January 1, 2005, the Company incurred a loss from operations of $1,206,465 and used cash in operations of $1,409,394. The Company's restricted cash balances at Jan. 1, 2005 and September 30, 2004 were $1,011,900. In addition, the Company envisions successfully completing its fixed-price contract with the EDO Corporation. Initially this contract was for $1.1 million, which during 2004 was increased to $1.5 million. Through January 1, 2005, the Company has incurred approximately $2.7 million of costs and has projected a total cost of approximately $3.0 million before satisfying the requirements of this contract. As of January 1, 2005 the total $3.0 million has been fully accrued and reflected in the Company's results of operations for the period ended January 1, 2005. Due to the technical challenges associated with this contract it is possible that the Company will overrun its latest forecast before successfully completing the contract as it has done in the past (the Company accrued $0.6 million in contract losses associated with this contract in fiscal year 2003 and had incurred an additional $0.9 million in fiscal 2004 related to the EDO contract.) If, however, the Company is unable to complete this contract as envisioned it may continue to incur losses putting a strain on cash flow and exposing the Company to potential contractual remedies. If this were to occur it could result in non-compliance with the New Loan covenants, and the Company may be forced to raise additional funds by selling stock or taking other actions to conserve its cash position. Going Concern Doubt Satcon's financial statements for its fiscal year ended Sept. 30, 2004, contain an audit report from Grant Thornton LLP. The audit report contains a going concern qualification, which raises substantial doubt with respect to Satcon's ability to continue as a going concern. Satcon Technology Corporation performs funded research and development and product development for commercial companies and government agencies under both cost reimbursement and fixed-price contracts. SATCON TECHNOLOGY: Gets $7M Loan to Fund Operations Until Sept. --------------------------------------------------------------- Satcon Technology Corporation entered into a new loan agreement with Silicon Valley Bank, which replaced its amended loan for $6,250,000. Under the terms of the New Loan, the Bank will provide the Company with a credit line of up to $7,000,000. The New Loan is secured by most of the assets of the Company and advances under the New Loan are limited to 80% of eligible receivables and up to $1,000,000 based on the levels of eligible inventory. Interest on outstanding borrowings accrues at the Bank's prime rate of interest plus 2% per annum. In addition, the Company will pay to the Bank a collateral handling fee of $1,000 per month and has agreed to these additional fees: (i) $25,000 commitment fee; (ii) an unused line fee in the amount of 0.5% per annum; and (iii) an early termination fee of 0.5% of the total credit line if the Company terminates the New Loan within the first six months. The New Loan contains certain financial covenants relating to tangible net worth, which the Company must satisfy in order to continue to borrow from the Bank. The New Loan will expire on January 30, 2006. The Company anticipates that its current cash, after a December 2004 Financing Transaction, together with the ability to borrow under the New Loan will be sufficient to fund its operations at least through September 30, 2005. This assumes the Company achieves its business plan and completes its contract without significant further losses or other remedies. Further, this assumes that the Company will be able to remain in compliance with all New Loan covenants. If, however, the Company is unable to realize its operating plan and is unable to remain in compliance with an New Loan agreement with the Bank, the Company may be forced to raise additional funds by selling stock or taking other actions to conserve its cash position. Satcon Technology Corporation performs funded research and development and product development for commercial companies and government agencies under both cost reimbursement and fixed-price contracts. Going Concern Doubt Satcon's financial statements for its fiscal year ended Sept. 30, 2004, contain an audit report from Grant Thornton LLP. The audit report contains a going concern qualification, which raises substantial doubt with respect to Satcon's ability to continue as a going concern. SBA COMMS: Dec. 31 Stockholders' Deficit Widens to $88.7 Million ---------------------------------------------------------------- SBA Communications Corporation (Nasdaq: SBAC) reported results for the fourth quarter ended December 31, 2004. Highlights of the results include: * Fourth quarter over year earlier period: Site leasing revenue growth of 14.3% Tower cash flow growth of 20.6% Loss from continuing operations reduced by 24.7% Adjusted EBITDA growth of 34.3% * Reduction in net debt/annualized adjusted EBITDA leverage ratio to 9.7x. All historical financial results presented herein for the fiscal year ended December 31, 2003 and nine months ended September 30, 2004 have been restated to reflect the Company's change in its method of accounting for ground lease expense. Additionally, as previously announced in the first half of 2004, the Company adopted a plan to sell all of its services business in the western United States and has completed the sale of all portions of its western services business. The results of the Company's western services segment are reflected as discontinued operations in accordance with generally accepted accounting principles for the three months and fiscal year period ended December 31, 2004 and 2003. Other than the net loss information presented below, all other financial information contained in the text of this press release is from the Company's continuing operations. Operating Results Total revenues in the fourth quarter of 2004 were $65.5 million, compared to $51.4 million in the year earlier period. Site leasing revenue of $37.7 million and site leasing gross profit of $25.9 million were up 14.3% and 22.1%, respectively, over the year earlier period. Cost of site leasing revenue for the three months ended December 31, 2004 and 2003 included approximately $1.3 million and $1.5 million, respectively, of non-cash ground lease expense calculated pursuant to the Company's revised method of accounting for ground lease expense. Same tower revenue and site leasing gross profit growth on the 3,053 towers owned at Dec. 31, 2004 and December 31, 2003 were 13.6% and 19.8% respectively. Site leasing contributed 92.1% of the Company's gross profit in the fourth quarter of 2004. As a result of the Company's change in its method of accounting for ground lease expense, SBA is changing its definition of Tower Cash Flow and Adjusted EBITDA to exclude the non-cash impact from straight-line calculations used to determine leasing revenue or ground rent expense. Tower Cash Flow for the three months ended December 31, 2004 was $26.8 million, a 20.6% increase over the year earlier period. Tower Cash Flow margin for the three months ended December 31, 2004 was 72.0%, a 340 basis point improvement over the year earlier period. Site development revenues were $27.9 million compared to $18.5 million in the year earlier period, a 50.7% increase. Site development gross profit margin was 8.0% in the fourth quarter, compared to 9.1% in the year earlier period. Selling, general and administrative expenses were $7.2 million in the fourth quarter, compared to $7.7 million in the year earlier period. Loss from continuing operations for the fourth quarter was $41.5 million, compared to $55.1 million in the year earlier period. Net loss in the fourth quarter of 2004 was $41.8 million, compared to a net loss of $52.8 million in the year earlier period. Excluding $21.9 million relating to non-cash asset impairment charges and the write-off of deferred financing fees and extinguishment of debt charges, fourth quarter 2004 loss from continuing operations was $19.6 million. Adjusted EBITDA was $21.9 million, compared to $16.3 million in the year earlier period, or a 34.3% increase. Adjusted EBITDA margin was 33.6%. Net cash interest expense and non-cash interest expense was $10.4 million and $7.9 million, respectively, in the fourth quarter of 2004, compared to $20.0 million and $3.4 million in the year earlier period. Cash provided by operating activities for the three months ended December 31, 2004 was $0.2 million, compared to a use of cash of $9.5 million for the three months ended December 31, 2003. Cash provided by operating activities for the fourth quarter of 2004 includes interest payments associated with the repurchase of our 10 1/4% senior notes of approximately $7.5 million that would otherwise have been paid in the first quarter of 2005. Equity free cash flow (defined below) for the three months ended December 31, 2004 was a negative $7.8 million compared to a negative $12.4 million in the year earlier period. Investing Activities During the fourth quarter, SBA purchased five towers, built ten towers and sold or otherwise disposed of 16 towers, all of which were previously held for sale. As a result of these activities, as of December 31, 2004 SBA owned 3,060 towers in continuing operations, excluding six towers that were held for sale. The Company received $0.3 million from the sale or disposition of the 16 towers. In the fourth quarter, the Company recognized a loss, included in discontinued operations, of $0.3 million on the disposition of its western services segment. Total cash capital expenditures for the fourth quarter were $3.5 million, consisting of $0.9 million of non-discretionary capital expenditures (tower maintenance and general corporate) and $2.6 million of discretionary capital expenditures (new tower builds, tower augmentations, tower acquisitions and related earn-outs, and ground lease purchases). The five towers were purchased for an aggregate amount of $3.6 million, consisting of $0.5 million in cash and 0.4 million shares of SBA common stock. Since January 1, 2005, SBA has purchased 24 towers for an aggregate amount of $8.1 million, consisting of $4.0 million in cash and 0.5 million shares of SBA common stock. The Company has agreed to purchase an additional 32 towers for an aggregate amount of $8.7 million, of which we expect to pay approximately 70% in cash and the remainder in SBA common stock. We anticipate that these acquisitions will be consummated in the first quarter of 2005. Financing Activities and Liquidity SBA ended the fourth quarter with $323.4 million outstanding under its: -- $400.0 million senior credit facility, -- $302.4 million of 9-3/4% senior discount notes, -- $250.0 million of 8-1/2% senior notes, -- $50.0 million of 10-1/4% senior notes, and -- net debt of $854.2 million. The Company's net debt to annualized adjusted EBITDA leverage ratio was 9.7x at December 31, 2004. Debt amounts as of Dec. 31, 2004 exclude approximately $1.9 million of deferred gain from the termination of a derivative in 2002. In the fourth quarter of 2004, SBA issued $250.0 million of 8-1/2% senior notes and used the net proceeds from the issue to repay indebtedness, including repurchases of $228.5 million of its 10-1/4% senior notes and $1.3 million face amount of its 9-3/4% senior discount notes. SBA paid cash of $220.9 million and issued 4.1 million shares of its common stock for such repurchases, including accrued interest. Liquidity at December 31, 2004 was approximately $108.1 million, consisting of $71.6 million of cash and restricted cash, and approximately $36.5 million of additional availability under the senior credit facility. On February 1, 2005, SBA repurchased the remaining $50.0 million of its 10-1/4% senior notes. The Company paid from cash on hand $55.1 million including accrued interest. The Company currently has issued and outstanding $250.0 million of 8-1/2% senior notes, $307.3 million of 9 3/4% senior discount notes (accreted through February 28, 2005), $323.4 million under its senior credit facility and 65.4 million shares of common stock. "We are very pleased to present our fourth quarter results," said Jeffrey A. Stoops, SBA's President and Chief Executive Officer. "We produced very strong growth over the year earlier period. We performed extremely well on our three primary goals -- Adjusted EBITDA and Tower Cash Flow growth, improving free cash flow, and reduced leverage. We completed a major refinancing transaction in the fourth quarter, allowing us to further reduce our weighted average cost of debt. Our strong growth and financial results reflect good customer activity in 2004, and gave us the confidence to recommence a measured new tower build and acquisition effort. We believe that customer activity and backlog in both our site leasing and services segments will continue to be solid, which gives us optimism for continued growth for 2005. We enjoyed success on many fronts in the fourth quarter, and we are very appreciative of our customers and employees for their contributions to our success. We believe we are well positioned to achieve material Tower Cash Flow, Adjusted EBITDA and equity free cash flow growth in 2005, and continue to delever the balance sheet." Outlook The Company has updated its Full Year 2005 Outlook for anticipated results from continuing operations. The update reflects the Company's change to its method of accounting for ground lease expense. 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. At Dec. 31, 2004, SBC Communications' balance sheet showed an $88,671,000 stockholders' deficit, compared to a $1,566,000 deficit at Dec. 31, 2003. * * * As reported in the Troubled Company Reporter on Feb. 2, 2005, Fitch Ratings has placed the 'A+' senior unsecured debt rating of SBC Communications, Inc., on Rating Watch Negative and placed the 'BB+' senior unsecured debt rating of AT&T Corp. on Rating Watch Positive following the announcement of SBC's proposed acquisition of AT&T for approximately $15 billion in SBC common stock and the assumption of approximately $6 billion of net debt. Including a $1 billion special dividend to be paid to AT&T shareholders at the close of the transaction the total value of the transaction is approximately $22 billion. The Rating Watch Negative also applies to the existing long-term debt of various SBC subsidiaries that no longer issue debt, as financing activities have been consolidated at the SBC Communications level. In addition to the long-term rating of SBC, the 'F1' commercial paper ratings of SBC and SBC International, the 'A' rating of Cingular Wireless and the 'A' rating assigned to AT&T Wireless debt guaranteed by Cingular are on Rating Watch Negative. Finally, the 'B' commercial paper rating of AT&T has been placed on Rating Watch Positive. The closing of the transaction is anticipated to be in the first half of 2006. The rating action reflects Fitch's concern regarding the prospects for the moderately higher business risk profile of SBC following the acquisition of AT&T. The transaction is not expected to have a material impact on SBC's credit metrics, given AT&T's low leverage for its current assigned rating. AT&T's gross debt to EBITDA for 2004 was approximately 1.5 times, and its net debt to EBITDA was 1.0x. SBC's 2004 leverage, which was affected by its financing for Cingular's acquisition of AT&T Wireless in October 2004, was 2.2x including proportionate Cingular debt (but including only approximately two months of EBITDA from AT&T Wireless). At year-end 2005, Fitch expects SBC's leverage to be in the 1.5x-1.7x range. At year-end 2006 and following the close of the acquisition of AT&T, Fitch expects the combination of SBC's debt and SBC's 60% share of Cingular's public debt to be in the range of $34-36 billion. Strong free cash flows at both SBC and AT&T prior to the close of the transaction are expected to allow both companies to continue to reduce debt in the interim. Fitch expects the 2006 pro forma leverage of SBC to approximate 1.5x, which if achieved could limit the company's senior unsecured debt to a one-notch downgrade. Fitch's primary concerns with the effect of the acquisition on SBC are the weak business fundamentals of the long distance business, the impact of the integration costs on the company's cash flow, and the risk that the projected synergies will be materially less than anticipated. Over the past several years, heightened competition, weak demand and unstable pricing have contributed to the erosion of AT&T's revenues and EBITDA. In addition, AT&T has suffered from a lack of growth opportunities in its core business. The impact of the weak fundamentals of the long distance business on SBC's credit profile will be moderated by the significant synergies of the combined companies, which are expected to reach $2 billion annually by 2008. Since receiving long distance approvals at the end of 2003, SBC has been aggressively targeting the enterprise customer market. Synergies will arise from the elimination of duplicate spending on network, information technology, sales efforts and headquarters functions. In evaluating the transaction, Fitch will evaluate the potential synergies and the cash flows of the combined companies after integration costs. SBC is expected to incur integration costs of approximately $1.6-1.9 billion in 2006 following the close of the transaction, with integration costs declining thereafter. The transaction is expected to close in the first half of 2006 following the customary regulatory approvals. The effects of the regulatory approval process on the economic potential of the transaction are not known, and could have an impact on the ultimate financial profile of the company. The Rating Watch Negative applies to the 'A+' senior unsecured debt of these issuers: -- SBC Communications Corp.; -- SBC Communications Capital Corp.; -- Ameritech Capital Funding; -- Illinois Bell Telephone Company; -- Indiana Bell Telephone Company; -- Michigan Bell Telephone Company; -- Pacific Bell Telephone Company; -- Wisconsin Bell Telephone Company; -- Southern New England Telecom Corp.; -- Southern New England Telephone; -- Southwestern Bell Telephone; -- Southwestern Bell Capital Corp. SEMCO ENERGY: Moody's Affirms Ba2 Senior Unsecured Rating --------------------------------------------------------- Moody's Investors Service affirmed the credit ratings of SEMCO Energy, Inc., and its supported debt (Ba2 sr. uns.), and changed the outlook from stable to negative. The rating actions follow SEMCO's announcement that it will take out the preference stake held by K-1 Ventures Limited, a private equity firm and the company's largest shareholder, with a new preferred stock issuance. The transaction was prompted by recent unfavorable regulatory developments and was not known to Moody's at the time Moody's stabilized SEMCO's outlook in 1/05. The refinancing will result in weaker credit metrics and covenant cushions than we had expected previously. Furthermore, according to the company's latest forecast, it appears less likely that SEMCO will sustain positive post-capex free cash flow over the near term as previously expected. This setback in its credit profile makes it more critical that SEMCO successfully clear some upcoming hurdles, including: a favorable rate order in Michigan, issuing common stock, and renewing its bank facility. Negative Outlook The stabilization of SEMCO Energy's outlook would depend on its successfully clearing the above-mentioned hurdles in the near term. This would entail: a revenue increase from the Michigan rate case (a meaningful portion of the $12 million requested, an order expected within the next several months); a common stock issue of at least $25 million in the second half of 2005; and renewal of the bank credit facility in 9/05 with capacity of at least $100 million and covenants that are accommodating of the company's emerging credit profile and seasonality. Moody's notes that SEMCO Energy has limited leeway under some of its covenants, notably the interest coverage test in its bank agreement in the March quarter. The new preferreds will reduce the cushion it has under the current restricted payments test. The stabilization of the outlook will also depend on SEMCO's consistently performing on its current plan, achieving positive post-capex free cash flow, de-leveraging, and staying comfortably in compliance with its financial covenants over the next 12-18 months. The key credit metrics that we incorporate in our current ratings include: FFO/fixed charges approaching 2x (vs. 1.6x in 2004), GCF/debt (including the new preferreds) in the upper single digits (5% in 2004), debt (including the new preferreds)/capital in the low 70% range (78% at 12/31/04, including the K-1 preference stock as debt). What Can Change Rating Down A downgrade is possible if the above-mentioned expectations for a stable outlook are not met, or if SEMCO becomes more aggressively capitalized as a result of, among other factors, M&A activity. The Transaction The refinancing resulted from the difficulties that SEMCO Energy encountered in obtaining approval relating to K-1's investment from the Regulatory Commission of Alaska before an agreed deadline. SEMCO will use $60 million in proceeds from its new preferred stock to retire $52.5 million of preference stock that is held entirely by an affiliate of K-1 and to pay $10 million in related make-whole payments. This transaction will also end K-1's involvement with SEMCO. K-1's affiliate currently holds two seats on the board, which it will vacate upon the closing of this transaction. The preference stock is convertible into common stock equal to about a fifth of SEMCO's outstanding common stock after giving effect to the conversion. The new preferreds ($65 million, $70 million if the greenshoe is exercised), requiring a cash repayment in 2015, will add $7.5 million in incremental adjusted debt. These preferreds will also add incrementally to SEMCO's cash requirements and lessen the already thin cushion under the restricted payments test in its bank agreement ($2 million at 12/31/04). From an earnings standpoint, the cost of the new preferreds will be lower than that of the K-1 preference stock (5%, compared to the nominal 6% rate on K-1 preference stock, but which is effectively 9% including the amortization of the discount, and for which costs grow over time because of the PIK feature). However, the new preferreds will require $3.5 million annually in cash dividends unlike the non-cash stock dividends that the K-1 preference stock requires. SEMCO Energy, Inc., is a natural gas distribution company, headquartered in Port Huron, Michigan. SHOWTIME ENTERPRISES: Pelino & Lentz Approved as Committee Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of New Jersey gave the Official Committee of Unsecured Creditors of Showtime Enterprises, Inc., and its debtor-affiliate permission to employ Pelino & Lentz, P.C., as its counsel. Pelino & Lentz will: a) provide the Committee with legal advice as to its right and obligations in the Debtors' chapter 11 case and prepare on behalf of the Committee all necessary motions, applications, objections, reports and other legal papers; b) represent the Committee in all matters involving contests with the Debtors, their secured creditors and other third parties; c) assist the Committee in the negotiation and preparation of a disclosure statement and plan of reorganization; and d) provide all other legal services to the Committee that are necessary and in the best interests of the Debtors' unsecured creditors; James T. Asali, Esq., a Partner at Pelino & Lentz, is the lead attorney for the Committee. Mr. Asali charges $240 per hour for his services. Mr. Asali reports Pelino & Lentz's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Alan R. Gordon Partner $430 Ronald L. Daugherty Partner $315 Kevin C. Rakowski Associate $220 Stephanie R. Katz Paralegal $150 Darlene E. Mcbride Paralegal $115 Pelino & Lentz assures the Court that it does not represent any interest adverse to the Committee, the Debtors or their estates. Headquartered in Paulsboro, New Jersey, Showtime Enterprises, Inc. -- http://www.showtimeinc.com/-- provides creative design and high quality fabrication. The Debtor's full-service portfolio includes trade show and museum exhibits, corporate interiors, event management, retail merchandising displays and environments as well as corporate gifts & incentives. The Company and its debtor- affiliates filed for chapter 11 protection on Jan. 12, 2005 (Bankr. D. N.J. Case No. 05-11089). Rocco A. Cavaliere, Esq., at Blank Rome Comisky and McCauley LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $3,695,364.85 and total debts of $9,616,355.77. SKIN NUVO INT'L: Wants to Hire Akin Gump as Bankruptcy Counsel --------------------------------------------------------------- Skin Nuvo International, LLC, and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Nevada for permission to employ Akin Gump Strauss Hauer & Fled LLP, as their general bankruptcy counsel. Akin Gump is expected to: a) render legal advice with respect to the powers and duties of the Debtors as debtor-in-possession in the continued operation of their businesses and management of their properties; b) assist the Debtors in negotiating, preparing and filing a disclosure statement and plan of reorganization and assist in the financial rehabilitation of the Debtors; c) take all necessary actions to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, negotiations concerning all litigation involving the Debtors, and the evaluation and objection to claims filed against the estates; d) prepare on behalf of the Debtors all necessary applications, motions, answers, orders, reports and papers in connection with the administration of the Debtors' estates; e) appear on behalf of the Debtors at all Court hearings in connection with their chapter 11 cases; and f) provide all other legal services to the Debtors that are necessary in their chapter 11 cases. Keith M. Aurzada, Esq., and Sarah Link Schultz, Esq., are the lead attorneys for the Debtors. Mr. Aurzada discloses that the Firm received a $236,520 retainer. For their professional services, Mr. Aurzada will receive $500 per hour, while Ms. Schultz will receive $325 per hour. Mr. Aurzada reports Akin Gump's professionals bill: Designation Hourly Rate ----------- ----------- Partners/Counsels $285 - $775 Associates $160 - $450 Paralegals $95 - $195 Akin Gump assures the Court that it does not represent any interest adverse to the Debtors or their estates. Headquartered in Henderson, Nevada, Skin Nuvo International, LLC, dba Nuvo International, LLC, and dba A&E Aesthetics, LLC, -- http://www.nuvointernational.com/-- specializes in offering progressive anti-aging treatments and top quality products and the first medical cosmetic company to launch a chain of retail skin care clinics in shopping malls throughout the United States. The Company and its debtor-affiliates filed for chapter 11 protection on March 7, 2005 (Bankr. D. Nev. Case No. 05-50463). When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. SKIN NUVO INT'L: Taps Camino Real as Restructuring Advisors ----------------------------------------------------------- Skin Nuvo International, LLC, and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Nevada for permission to employ Camino Real Advisors, LLC, as their restructuring advisors. Camino Real is expected to: a) provide the Debtors with strategic, operational and financial advisory services in connection with maximizing recovery to the Debtors' estates; and b) provide all other financial and restructuring advisory services to the Debtors that are necessary for the restructuring and reorganization of their businesses under chapter 11. William C. Shackelford and Greg Murray are the lead professionals of Camino Real performing services for the Debtors. Mr. Shackelford charges $300 per hour for his services, while Mr. charges $275 per hour. Restructuring Analysts who will perform services to the Debtors will charge at $100 per hour. Mr. Shackelford reports Camino Real's terms of compensation: a) a Consulting Fee of $7,500 per week payable every Monday; and b) a Success Fee equal to 5% of the return to unsecured creditors upon confirmation of the Debtors' plan of reorganization; Camino Real assures the Court that it does not represent any interest adverse to the Debtors or their estates. Headquartered in Henderson, Nevada, Skin Nuvo International, LLC, dba Nuvo International, LLC, and dba A&E Aesthetics, LLC -- http://www.nuvointernational.com/-- specializes in offering progressive anti-aging treatments and top quality products and the first medical cosmetic company to launch a chain of retail skin care clinics in shopping malls throughout the United States. Keith M. Aurzada, Esq., and Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Fled LLP represent the Debtors in their restructuring efforts. The Company and its debtor-affiliates filed for chapter 11 protection on March 7, 2005 (Bankr. D. Nev. Case No. 05-50463). When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. SMART MODULAR: Moody's Puts B2 Rating on $125MM Sr. Secured Notes ----------------------------------------------------------------- Moody's Investors Service assigned a first-time rating of B2 to SMART Modular Technologies (WWH), Inc.'s proposed $125 million senior secured second lien notes due 2012 to be issued under Rule 144A. SMART Modular is a holding company engaged through its subsidiaries in the design, manufacturing, and distribution of specialty and standard memory modules and flash memory modules and cards that are sold to OEM's in the computing, networking, communications, and industrial sectors worldwide. The rating outlook is stable. The ratings and outlook are subject to review of the final documentation of the financing transactions. The rating reflects SMART Modular's very volatile, cyclical and competitive industry (although less volatile than the memory component makers themselves) and its significant dependence on limited number of customers. Positively, the rating also reflects SMART's leading market position as an independent memory module supplier to OEMs, its long-standing relationships with tier-1 OEM customers; Moody's expectations of modest improvements in gross and operating margins due in part to the intent to de-emphasize some of its more commoditized product mix; the prospects for positive albeit modest free cash flow; and the maintenance of a good liquidity profile. The first time ratings assigned by Moody's are: * $125 million senior secured second lien notes due 2012 rated B2 * Senior Implied rated B2 * Senior Unsecured Issuer rated B3 Proceeds from the proposed issuance of $125 million senior secured second lien notes will be used to redeem $65.1 million of preferred shares held by its sponsors (Texas Pacific Group, Francisco Partners, and Shah Capital Partners) and repay $48.5 million of its existing $100 million secured bank credit facility to terminate that facility. This facility is expected to be replaced by an unrated $35 million senior secured first lien bank facility. Management does not expect to draw down on its credit facility at closing. The second lien notes benefit from a second priority lien on 100% of the capital stock of substantially all of its subsidiaries and substantially all of the assets of the company, which include all US, Cayman Island and UK subsidiaries. Additionally, the notes have joint and several upstream guarantees from substantially all domestic and international subsidiaries. Notwithstanding the fairly small $35 million first lien bank facility (which is not expected to be drawn), in Moody's view the collateral coverage in a distressed scenario would be insufficient to warrant notching the second lien note above the B2 senior implied rating. The terms of the second lien notes do allow for incremental first lien bank debt of $15 million in addition to $45 million of other incremental indebtedness. To the extent that the company were to incur additional first lien debt without notable improvements in business performance, the rating on the second lien notes could be pressured. The ratings reflect SMART Modular's breadth and depth of technical expertise, broad product offerings, global scale and leading market position as an independent memory module supplier to OEMs. Pro forma the transaction, credit statistics are modest. The company's total pro forma debt of $125 million relative to its LTM adjusted EBITDA of $35.7 million results in a pro forma debt to EBITDA of 3.5 times. LTM EBITDA to pro forma interest expense coverage is 3.6 times. EBITDA less capital expenditures coverage of pro forma interest expense tightens to approximately 3.0 times. Moody's believes that the company will generate modest free cash flow after capital expenditures. The company has noted that it is in negotiations to acquire a business outside of the United States for up to $8.4 million, which if completed would complement its existing OEM memory module business. The rating also reflects good EBITA returns on assets, net of cash, of 11% as of LTM November 2004. Moody's believes that the overall liquidity profile of SMART Modular is reasonable as it is expected that operational cash flow should be sufficient to fund working capital as well as the company's modest capital expenditures over the next year. With fairly modest capacity utilization levels, capital expenditures are expected to be less than $10 million per year. Additionally, the company maintains cash and equivalents of $45.5 million as of November, 2004 (most of which is readily accessible), and has access to external liquidity through the proposed $35 million senior secured credit facility. SMART's liquidity profile is somewhat tempered by the modest level of free cash flow and the limitation of alternate sources of liquidity since substantially all assets will be encumbered under the credit agreement and the second lien notes. SMART Modular operates in a volatile, cyclical and intensely competitive industry that is subject to rapidly changing technologies. SMART provides modest value-added services and products as evidenced by its low double-digit gross margins. Further, the ratings incorporate the risk from significant customer concentration, with its top two customers representing 62% of its Q1 2005 net revenues, the absence of any enforceable long-term contractual agreements, and competition from financially strong captive memory module suppliers such as Samsung, Hynix, Micron, and Elpida, along with flash memory manufacturers such as Infineon, SanDisk, and Toshiba. In the independent memory module supplier market, it faces competition from Kingston Technology, who is a dominant player in the retail and VAR channels, where SMART does not and is not expected to participate in any material way. SMART Modular is well positioned in its rating category, however, factors that could have negative rating implications include: 1) a loss or significant reduction in business from major customers without offsetting new customers, which would lead to an erosion of performance metrics; 2) changes in competitive landscape such as sustained pricing aggressiveness by existing or new competitors; or 3) a significant increase in leverage due to acquisitions or other cash usage. Factors that could have positive rating implications include: 1) consistency of performance coupled with sustained top line growth, 2) operating margin and free cash flow margin expansion in part through a richer product mix, or 3) reduced customer concentration, without an increase in leverage. SMART Modular Technologies (WWH), Inc., headquartered in Fremont, California and incorporated in the Cayman Islands, is the largest independent manufacturer of specialty and standard memory modules, flash memory cards, and communication card solutions that are sold to OEM's. Revenues for the latest twelve months ended November 2004 were approximately $769 million. SMART MODULAR: S&P Rates Proposed $125M Senior Sec. Notes at B -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Fremont, California-based SMART Modular Technologies (WWH), Inc. At the same time, Standard & Poor's assigned its 'B' rating to SMART Modular's proposed $125 million of senior secured, second-lien notes. The second-lien debt rating, which is one notch below the corporate credit rating, reflects Standard & Poor's expectation of meaningful recovery by creditors in the event of default or bankruptcy, given the amount of collateral available to secured creditors and the limited amount of first priority debt in the capital structure. The outlook is stable. "The ratings reflect modest profitability, particularly in recent years when the business was a part of Solectron; execution challenges in a highly competitive market; and relatively high concentration with a handful of large original equipment manufacturers," said Standard & Poor's credit analyst Joshua Davis. These factors partly are offset by: (1) the company's leading market position as an independent supplier of memory modules, (2) long-standing relationships with top-tier original equipment manufacturers customers, (3) solid operating capabilities, and (4) a moderate financial profile following the proposed refinancing. SMART Modular's well-established position as a leading independent designer and manufacturer of memory module products is based on strong engineering, manufacturing, logistics, and service capabilities. SMART Modular is a leading independent designer and manufacturer of a range of memory module products for use in a variety of electronics systems, including computers and storage devices, networking and communications equipment, industrial products and others. Between 1999 and 2004, SMART Modular was owned by Solectron Corp. The business later was spun out of Solectron to private equity investors and management in April 2004. SMART Modular largely is insulated from swings in the prices of DRAM and other types of memory. These components typically are consigned to SMART Modular, or the company has the ability to pass through swings in costs to customers. Profitability -- which has been relatively modest, in the mid-to-high single digits on a percentage basis, in recent years--is affected by other factors, e.g., product mix and volumes. While the outlook for unit growth in memory modules is positive, risks are centered on the company's ability to act on its design innovation, time-to-market, and service plans within a competitive market, and with a limited financial cushion to absorb declines in profit margins or deceleration in asset turns. Additional potential risk factors include high customer concentration, with Hewlett Packard and Cisco Systems together accounting for more than 60% of company revenues. SOUTH COAST: S&P Holds BB- Ratings on $35 Mil. Preference Shares ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its rating on the class C notes issued by South Coast Funding IV Ltd., a CDO backed primarily by investment-grade ABS securities and other structured securities, on CreditWatch with positive implications. Additionally, four other ratings from this transaction are affirmed. This transaction is managed by TCW Asset Management Co. The CreditWatch placement reflects factors that have positively affected the credit enhancement available to support the notes since the transaction was originated in December 2003. These factors primarily include an increase in the level of overcollateralization available to support the class C notes due to the transaction's de-levering. The class C overcollateralization ratio has improved, and according to the most recently available trustee report (Jan. 31, 2005), the overcollateralization ratio is at 104.93%, versus the minimum required 100.75%, improving from an initial value of 103.95%. The driver for the increase in the class C overcollateralization ratio follows a $7.60 million cumulative paydown to the class C notes as per the terms of the security agreement. In particular, following an annualized dividend yield of 16% per annum to the preference shareholders, any remaining interest cash is used to pay down the principal of the class C notes. Standard & Poor's will be reviewing the results of current cash flow runs to determine the level of future defaults the rated tranches can withstand under various stressed default timing and interest rate scenarios while still paying all of the rated interest and principal due on the notes. The results of these cash flow runs will be compared to the projected default performance of the performing assets in the collateral pool to determine whether the ratings currently assigned to the notes remains consistent with the amount of credit enhancement available. Rating Placed on CreditWatch with Positive Implications South Coast Funding IV Ltd. Rating Current Original Class To From Bal. (mil. $) Bal.(mil. $) ----- -- ---- ------------- ------------ C BBB/Watch Pos BBB 37.395 45.00 Ratings Affirmed South Coast Funding IV Ltd. Current Original Class Rating Bal. (mil. $) Bal.(mil. $) ----- ------ ------------- ------------ A-1 AAA 673.759 690.00 A-2 AAA 120.00 120.00 B AA 110.00 110.00 Pref. shares BB- 35.00 35.00 Transaction Information Issuer: South Coast Funding IV Ltd. Co-issuer: South Coast Funding IV Corp. Current manager: TCW Asset Management Co. Underwriter: Merrill Lynch & Co. Inc. Trustee: JPMorgan Chase Bank N.A. Transaction type: CBO of ABS SUPERCONDUCTOR TECH: Expects Going Concern Opinion in Form 10-K --------------------------------------------------------------- Superconductor Technologies Inc. (Nasdaq: SCON), the global leader in high-temperature superconducting products for wireless voice and data applications, anticipates that its independent auditor, PricewaterhouseCoopers LLP, will include an explanatory paragraph expressing concern about the company's ability to continue as a going concern due to past losses and negative cash flows in the Company's upcoming Form 10-K for fiscal year 2004. For the quarter and year ended Dec. 31, 2004, the Company reported total net revenues for the fourth quarter were $3.9 million, a decrease of 76 percent compared to $16.4 million for the year-ago fourth quarter. Net commercial product revenues for the fourth quarter of 2004 were $3.0 million, a decrease of 77 percent compared to $12.9 million in the fourth quarter of 2003. Government and other contract revenue totaled $950,000 during the 2004 fourth quarter compared to $3.4 million during the year ago period. Net loss for the quarter ended December 31, 2004 was $11.3 million, which included restructuring and impairment charges of $1.9 million, of which $1.6 million was non-cash. The net loss also included increased inventory obsolescence reserves of $4.2 million. The fourth quarter loss compared to net income of $910,000 in the fourth quarter of 2003. "As previously announced, our lower than expected fourth quarter revenues reflected delays in receiving a few large government and commercial purchase orders, which the company now expects to receive in 2005," said M. Peter Thomas, STI's president and chief executive officer. "On the other hand, we secured a follow-on purchase contract from one of our major customers in December, which calls for minimum shipments in 2005 of about $7.25 million. Furthermore, our immediately shippable backlog at the end of 2004 was $730,000, as compared with $250,000 at the end of 2003." Total net revenues were $23.0 million in 2004, a decrease of 53 percent as compared to $49.4 million in 2003. Net commercial product revenues for the year 2004 were $16.8 million, a decrease of 56 percent compared to $38.6 million a year ago. The company recorded $6.2 million in government and other contract revenues for the year ended December 31, 2004, versus $10.8 million for the year ended December 31, 2003. Net loss for the year ended December 31, 2004 was $31.2 million, which included restructuring and impairment charges of $5.2 million, of which $3.7 million was non-cash. The net loss for the year also included increased inventory obsolescence reserves of $4.8 million, ISCO related litigation expenses of $545,000 and a non-cash interest charge of $802,000 for warrants issued in connection with a bridge loan. Net loss for the year ended December 31, 2003 was $11.3 million, or $0.18 per diluted share. This net loss included ISCO related litigation expenses of $4.8 million. At December 31, 2004, STI had $12.8 million in cash and cash equivalents, and $16.1 million in working capital. The total number of common shares outstanding was 107,711,026 at December 31, 2004. "Last month we announced the appointment of Jeff Quiram, who will become STI's president and chief executive officer and a member of our Board in conjunction with my retirement on March 15th," continued Thomas. "A 20 plus year telecom veteran, Jeff has the leadership, relationships and new ideas to drive long-term STI growth." Commenting on STI's future, Mr. Quiram stated, "In 2005, we will focus on capitalizing on STI's successful product cost reduction initiatives and the opportunities presented by the industry's transition to data-intensive networks. One of the elements that attracted me to STI was its unmatched technology when it comes to the interference protection and increased sensitivity today's advanced wireless networks need. We are exploring ways to use our technology to expand our current product base, as well as pursue relationships with carriers and original equipment manufacturers. I look forward to updating you on our progress as the year continues." Financial Guidance STI has decided to discontinue its practice of providing quarterly guidance due to the continuing unpredictability of the capital spending patterns of its customers who generally purchase products through non-binding commitments with minimal lead-times. About the Company Superconductor Technologies Inc., headquartered in Santa Barbara, CA, is the global leader in developing, manufacturing, and marketing superconducting products for wireless networks. STI's SuperLink(TM) Solutions are proven to increase capacity utilization, lower dropped and blocked calls, extend coverage, and enable higher wireless transmission data rates. SuperLink(TM) Rx, the company's flagship product, incorporates patented high- temperature superconductor (HTS) technology to create a cryogenic receiver front-end (CRFE) used by wireless operators to enhance network performance while reducing capital and operating costs. Almost 4,550 SuperLink Rx systems have been shipped worldwide, logging in excess of 73 million hours of cumulative operation. TAYLOR MADISON: Loss & Deficit Trigger Going Concern Doubt ---------------------------------------------------------- Taylor Madison Corporation has incurred net losses since inception aggregating $12,100,00 and has a $239,620 working capital deficiency at December 31, 2004. The company's balance sheet reflects a $239,620 stockholders' deficit. These factors, among others, indicate that the Company may be unable to continue as a going concern. The Company's continuation as a going concern is dependent upon future events, including obtaining financing adequate to support the Company's cost structure and business plans. At December 31, 2004 the Company had current assets of $11,580, consisting of cash and cash equivalents of $2,780 and prepaid expenses of $8,800 and current liabilities of $251,200, which consisted of accounts payable of $116,962, accrued payroll and other expenses of $58,118, income tax payable of $29,120 and loan payable to a related party of $47,000, which was given to the Company in the form of a loan from Omniscent, whose president is wife of the Company's Chief Executive Officer. The Company is seeking to raise $6.5 million to further its business strategy. Taylor Madison has a commitment from Lucien Lallouz, its Chief Executive Officer, to purchase up to $200,000 of Company common stock at $.05 per share. As of February 2005, Mr. Lallouz has purchased 1,200,000 shares for $60,000, of which no shares have been issued to date. Other than Mr. Lallouz's subscription, the Company has no commitments from officers, directors or affiliates to provide funding. The failure of the Company to obtain adequate additional financing may require the Company to delay, curtail or scale back some, or all, of its operations, sales, and marketing efforts. Any additional financing may involve dilution to the Company's then-existing shareholders. The Company may also seek to enter into a merger or acquisition. Taylor Madison Corporation is focusing on the development and wholesale distribution of fragrances, skincare products and other products both proprietary and under license. The Company acquired licensing rights to certain brands that enabled the Company to enter into sub-licensing and distribution agreements that have generated income for the Company. TELCORDIA TECH: Moody's Affirms B1 Rating on $570MM Sr. Sec. Loan ----------------------------------------------------------------- Moody's Investors Service affirmed the ratings (senior implied rating at B1) for Telcordia Technologies, Inc., but revised the ratings outlook to negative from stable. The revised outlook results from lowered expectations for enhancements to revenue and profitability in the near term and expected resulting elevation in leverage levels above 5.0 times debt to EBITDA. Telcordia Technologies, currently a subsidiary of Science Applications International Corp., is being purchased by private equity buyers in a highly leveraged transaction. Providence Equity Partners and Warburg Pincus, joint acquirers of the telecommunications software provider, expect to close the transaction in March 2005. Proceeds from the transactions will be applied towards the $1.35 billion purchase of Telcordia from SAIC, and to fund Telcordia's beginning cash balances and transaction fees and expenses. The ratings affirmed include: * Senior implied rating of B1 * $100 million senior secured revolving credit facility maturing 2011 rated at B1 * $570 million senior secured term loan maturing 2012 rated at B1 * $300 million senior subordinated notes due 2013 rated at B3 * Senior unsecured issuer rating at B2 The ratings outlook is negative. The ratings outlook change to negative reflects heightened uncertainty in the company's ability to offset declines in its legacy RBOC operations systems support (OSS) software business with sales of next generation software to RBOCs and other tier 1 carriers and with new software offerings for cable and wireless providers. Moody's believes that ongoing consolidation and cost reductions in these markets will result in fewer, but potentially larger, software and service contracts. As a result, timing of contract awards and revenue conversion from backlog is likely to introduce greater volatility into revenue and earnings streams. The ratings could be positively influenced to the extent that the company is able to materially de-leverage through cash flow generation or the subsequent issuance of equity, or if the company is able to profitably grow revenue from new products and markets to offset revenue decline from its highly profitable legacy RBOC business. Alternatively, the ratings could be negatively influenced to the extent the company has additional borrowings under its credit facilities, revenue and profitability decline further than expected, or currently weak pro forma credit metrics show further signs of deterioration. The current transaction will result in pro forma debt to EBITDA leverage for the fiscal year ended January 31, 2005, of approximately 5.0 times, and EBITDA to interest coverage of approximately 2.8 times. Credit metrics may show moderate deterioration in the fiscal first quarter ending April 30, 2005, as a result of expected delays in contract signings and new sales, which should negatively impact operating margins. Current consolidation of the telecommunications industry could have negative long-term impact on the company's core businesses, as RBOCs seek to reduce capital spending and consolidate duplicative infrastructure and related software costs. Given the company's desire to grow its wireless and cable software offerings amidst rationalization of R&D spending, Moody's expects Telcordia to pursue "fill-in" acquisitions, which could have a negative impact on leverage and liquidity. The ratings reflect Telcordia's: (i) legacy position as the primary supplier of embedded operations system support (OSS) software for the regional Bell operating companies (RBOCs), (ii) solid but contracting margins from reduced telecommunications infrastructure spending and price declines on its core wireline OSS maintenance contracts, (iii) limited consolidated revenue growth and margin enhancement expected over the intermediate term, and (iv) high degree of leverage and low interest coverage resulting from the acquisition financing transaction. The ratings also reflect the challenges the company faces as a newly independent entity with transitioning product lines away from a heavy reliance on legacy wireline software products for a very concentrated customer base. The B3 subordinated rating further reflects its contractual subordination to senior indebtedness. Prior to its acquisition by SAIC in 1997, Telcordia Technologies (previously Bellcore) was the internal research and development arm of the RBOCs. Due to its origin as a captive software provider, Telcordia enjoys a dominant market position in providing OSS software for wireline networks of RBOCs and major telecom providers. However, the company has experienced declines in revenue from its legacy RBOC business, persistent pressure on pricing and margins, and intense competition in new products and markets the company is targeting for future growth. In response, the company hopes to increase its presence in providing OSS software for wireless and cable networks as well as in transaction-based services and consulting, a strategy made challenging due to the intense competition from both domestic and foreign software suppliers. Less than 10% of Telcordia's revenue is from non-U.S. markets. Resulting from a curtailment in telecommunications carrier spending and voluntary reductions in pricing of its OSS maintenance contracts, Telcordia Technologies' revenue dropped 39% from $1.5 billion in the fiscal year ended January 31, 2002 to $899 million in fiscal 2004. Significant reduction in headcount and operating expenses has helped stabilize operating margins to 16.6% in fiscal 2004 and 16.2% for the first nine months of fiscal 2005. Spending on research and investment declined from $97.8 million in fiscal 2002 (6.7% of revenue) to $64.7 million (7.2% of revenue) in fiscal 2004, with further reductions expected for fiscal 2005. Low capital investment requirements and a minimal cash conversion cycle due to RBOC contract prepayments have historically resulted in substantial free cash flow generation. Going forward, however, interest payments on the newly issued debt and working capital investment will constrain cash flow generation. The company reports two segments: Software license and maintenance (Software) and Services. Software, the larger segment, includes Telcordia's historically high margin, legacy OSS business. Under long term support agreements, Telcordia manages wireline OSS maintenance contracts with RBOCs and other major carriers. Software also includes the company's next generation OSS products for wireline services, a smaller market that faces greater competitive threat from emerging technologies and providers. Software also houses Telcordia Technologies' development effort for new, higher growth markets such as wireless and cable. Although the wireless and cable business is relatively small, Telcordia expects growth in this market to help offset revenue declines from wireline customers. The second segment, Services, comprises transaction services, consulting services and applied research. This segment is not expected to be a significant contributor to the company's growth. The company's credit facilities are secured by substantially all the tangible and intangible assets of Telcordia and its domestic subsidiaries and are subject to guarantees from domestic subsidiaries. Tangible asset coverage is modest, with approximately $30 million of net PP&E and $330 million of other assets, pro forma for the transaction. The remaining collateral consists of Telcordia Technologies' intellectual property rights, including an extensive portfolio of patents. The revolving credit facility is not expected to be drawn over the intermediate term. The company can borrow an additional $200 million under the existing terms of the term loan, subject to senior leverage remaining below 3.0 times EBITDA, pro forma for the incremental borrowing. The term loans contain mandatory excess cash flow sweep provisions that take effect starting in fiscal 2007. The excess cash flow sweep, in which the company is required to offer partial repayment of the term loan, is 50% of defined cash flow if leverage is greater than 4.0 times trailing EBITDA, stepping down to 0% of defined cash flow if total leverage falls below 3.5 times trailing EBITDA. The subordinated notes are contractually subordinated to the large amount of secured debt and are structurally subordinated to liabilities of non-guarantor subsidiaries. Because of their subordinated position in the capital structure, senior subordinated notes could be more sensitive to any weakening credit metrics of the company. The indenture provides limited protection against dividends and restricted payments. The debt incurrence test requires fixed charge coverage of 2.0 times, but includes somewhat generous baskets. The senior subordinated notes are being issued under Rule 144A and will not be exchanged for SEC registered notes. The company will not provide SEC filings, but will provide annual and interim financial reports. Telcordia Technologies Inc., currently a subsidiary of Science Applications International Corp., is headquartered in Piscataway, New Jersey. The company is a leading provider of operations systems support software and network systems products for telecommunications providers. Revenues were $896 million in fiscal 2005. TELIGENT: Unsecured Claims Rep. Wants Noteholders Sanctioned ------------------------------------------------------------ Denise L. Savage, at Savage & Associates, P.C., the Unsecured Claims Estate Representative of Teligent, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York to impose sanctions for violation of Rule 11 against certain senior secured lenders and First Union National Bank as indenture trustee to the Noteholders. Pursuant to Teligent's confirmed Third Amended Joint Plan of Reorganization, the senior secured lenders "gifted" recoveries on avoidance claims to the general unsecured creditors. Distribution of the avoidance claims recoveries were made outside of the Plan. Accordingly, Ms. Savage was appointed as Unsecured Claims Estate Representative. In May 2003, Ms. Savage commenced over 1,000 Avoidance Actions including a complaint against the Debtors' former senior secured lenders. The lenders retaliated by filing a motion asking for the removal of Savage & Associates as Representative. They also asked the Court to review the Representative's fees and expenses. In June 2004, JPMorgan Chase, acting as administrative agent for the senior secured lenders reached a settlement agreement with the Representative. The motion to dismiss Savage & Assoc. was withdrawn. In October, the Representative filed omnibus objections seeking to reduce claims by more than $2 billion. The objections included one against the claim filed by First Union Bank. The progress of the avoidance actions has been consistently reported to the secured lenders. David Adler, Esq., e-mailed Ms. Savage sometime in December demanding to know how much of the funds collected were distributed and how much the Representative had on hand. Ms. Savage complied right away. Another removal motion was filed by the Noteholders against the Representative on Dec. 30. Documents regarding the avoidance actions were demanded from the Representative. Ms. Savage sent all relevant documents to Mr. Adler in Jan. 2005. Ms. Savage's Side of the Story Ms. Savage reminds the Court, that while the noteholders feign confusion, this is not a particularly complicated analysis. The noteholders apparently argue that they are unable to reconstruct the fate of all the monies recovered even though they are in possession of all bank statements, all checks from the account, list of all expenses, invoices for those expenses. Ms. Savage states that in these cases, no other professional has been required to provide and submit to this level of detail. She claims that the Noteholders' arguments are laughable, malicious and frivolous aimed to destroy the Representative's reputation who has been most efficient in her duties prosecuting avoidance actions. Ms. Savage stresses that the Noteholders' removal motion contains misrepresentations and falsehoods that can't be substantiated by evidence nor justified upon information and belief. These actions warrant Rule 11 sanctions. Why Some of the Noteholders' Complaints Are Laughable The most prominent charge made by the Noteholders against the Representative is her retention of temporary staff. This includes a $700 "inappropriate meals" charge. The staff's $700 meal, according to Ms. Savage, yielded a recovery of $375,000 and settled an $850,000 claim. The Noteholders also cite approximately $1,000 of telephone charges incurred over the last 2-1/3 years since Ms. Savage's appointment. Ms. Savage is clueless what to make of the complaint. Teligent, Inc., a provider of broadband communication services offering business customers local, long distance, high-speed data and dedicated Internet services over its digital SmartWave local networks in major markets throughout the United States, filed for chapter 11 protection on May 21, 2001. James H.M. Sprayregen, Esq., Matthew N. Kleiman, Esq., and Lena Mandel, Esq., at Kirkland & Ellis represent the Debtors in their restructuring effort. When the Company filed for protection from its creditors, it listed $1,209,476,000 in assets and $1,649,403,000 debts. The Debtors' Third Amended Plan of Reorganization was confirmed on Sept. 6, 2002. TEXAS STATE: S&P's Junk Ratings Slide Down Due to Payment Failure ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its underlying rating on Texas State Affordable Housing Corp.'s (American Opportunity for Housing portfolio) $53.2 million multifamily housing revenue bonds series 2002A to 'CC' from 'CCC'. At the same time, Standard & Poor's lowered its standard long-term rating on the corporation's $5.5 million multifamily mortgage revenue bonds series 2002B to 'C' from 'CC'. The outlook is negative. The downgrades reflect an event of default under the loan agreement, based on the borrower's failure to make loan payments sufficient to fund payment on the bonds; and the very poor financial performance of the housing pool, which is negatively affecting project net operating income and debt service coverage levels. The trustee for this issue informed Standard & Poor's of an event of default under the loan agreement based on the borrowers inability to make loan payments sufficient to pay bondholders. The owner had been supplementing the cash flow to help pay debt service since the last interest payment date of Sept. 1, 2004. The debt service reserve funds have been further drawn on to make the March 1, 2005, debt service payments. Approximately $647,512 was drawn from the series A debt service reserve fund, approximately $238,375 from the series B debt service reserve fund, and $191,443 from the series C debt service reserve fund. The trustee reports that the current balances after the draws, are approximately $2.9 million in the series A debt service reserve fund, $6,528 in the series B DSRF, and $3,350 in the series C debt service reserve fund. The debt service reserve funds were previously drawn on the last interest payment date of Sept. 1, 2004. The American Opportunity for Housing portfolio contains a total of 1,322 units in five properties in Dallas and Houston, Texas. Three of the properties are in the Houston metropolitan statistical area, incorporating a total of 796 units. Two of the properties in the pool are in the Dallas metropolitan statistical area, incorporating a total of 526 units. The average rent collected in fiscal 2003 was $488 per unit per month, compared to the original projection of $558 per unit per month. This is a result of a very high economic vacancy rate, which includes physical vacancy, and very high concessions, which are typical in these markets. TEXAS STATE: S&P Slices Rating on $13.8 Mil. Revenue Bonds to CC ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Texas State Affordable Housing Corp.'s (American Housing Foundation Apartment Portfolio) $13.8 million multifamily mortgage revenue bonds series 2002B to 'CC' from 'CCC'. The outlook is negative. The downgrade reflects the projects' draw on the debt service reserve fund, below forecast coverage levels, and soft real estate markets. The trustee, Wells Fargo Bank N.A., informed Standard & Poor's that there was a $626,400 draw on the series B debt service reserve fund to make the March 1, 2005, payment on the series B bonds. After the draw, the amount left in the series B debt service reserve fund was $625,200. Original projected coverage levels were at 1.44x for senior debt, and 1.25x for junior rated debt. As of Dec. 31, 2003, fiscal year-end audited financial statements showed that the issue had debt service coverage of 0.98x maximum annual debt service on the senior bonds and 0.80x on the subordinate bonds. For the six months ended June 30, 2004, unaudited financial statements showed coverage of 0.92x and 0.80x on the senior debt and junior debt, respectively. The very soft real estate markets in Houston and Dallas, Texas continue to negatively affect the projects vacancy rates, net operating income, and debt service coverage levels. The American Housing Foundation portfolio contains a total of 2,627 units. Nine of the 13 properties in the housing pool are in the Houston metropolitan statistical area, and in Beaumont, incorporating a total of 1,605 units, which represent about 61% of the total units in the housing pool. Four of the 13 properties in the pool are in the Dallas-Fort Worth metropolitan statistical area, incorporating a total of 1,022 units, which represent about 39% of the total units in the pool. The owner is the American Housing Foundation, a local Texas nonprofit organization formed in 1989, dedicated to the promotion, creation, and preservation of housing for low-to-moderate income families. American Housing Foundation has significant low-income housing experience, including developing numerous low-income housing tax credit transactions, former Resolution Trust Corp. transactions, and tax-exempt bond projects. American Housing Foundation currently owns more than 8,000 units, in 42 properties, primarily in Texas and Oklahoma. American Housing Foundation is currently working on addressing the issues in the portfolio. This includes, reviewing the levels of bad debt and instituting systems to alleviate the problem, renegotiating insurance contracts, and increasing advertising to attract more tenants. TITAN CORP: Moody's Confirms Ba3 Rating on $135MM Sr. Secured Loan ------------------------------------------------------------------ Moody's Investors Service confirmed all the ratings of The Titan Corporation and changed the outlook to stable. Moody's action concludes the review of the company's ratings for possible downgrade initiated on July 1, 2004. Titan recently announced a settlement of the outstanding criminal inquiries by the United States government relating to its former international operations. The settlement was in line with Moody's expectations and required Titan to plead guilty plea to three felony counts and make total payments of $28.5 million. The settlement will allow the company to continue to receive government contracts. The ratings continue to reflect a large and diverse contract backlog, solid revenue growth and the projected continued growth of the United States defense and information technology budgets. The ratings remain constrained by moderate leverage and the company's exposure to potential changes in government spending policies. The ratings confirmed by Moody's are: * $135 million senior secured revolving credit facility due 2008, rated Ba3; * $341 million senior secured term loan B due 2009, rated Ba3; * $200 million senior subordinated notes due 2011, rated B2; * Senior implied, rated Ba3; * Senior unsecured issuer (non-guaranteed exposure), rated B1. The settlement agreements recently announced by Titan resolve the issues that led Moody's to put Titan on review for downgrade in July 2004. On March 1, 2005, Titan entered into a consent to the entry of a final judgment with the Securities and Exchange Commission and a plea agreement with the Department of Justice. Pursuant to the plea agreement, the company pled guilty to three felony counts related to certain of its former overseas commercial operations. These counts consist of violations of the anti- bribery and the books and records provisions of the Foreign Corrupt Practices Act (FCPA) and aiding and assisting in the preparation of a false tax return. The company agreed to make total payments of $28.5 million in connection with these settlements, the same amount that was reserved for in 2004. Titan is in the process of winding down its remaining international commercial businesses. Titan was sentenced to a three-year term of supervised probation and will be required to implement a best-practices compliance program designed to detect and deter future violations of the FCPA. Titan and the Navy negotiated an administrative settlement agreement that will allow the company to continue to receive government contracts and provide for Navy monitoring of the company's compliance activities for three years. Despite the distraction of the government investigations, Titan's core domestic businesses performed well in 2004. Sales grew 17% to $2 billion in 2004 from $1.8 billion in 2003. Operating profit (adjusted to exclude merger, investigation and settlement costs and asset impairment charges) increased to $146 million from $127 million in 2003. The company's win rate on re-competes and new contracts was high and contract backlog increased to over $6 billion ($935 million funded) from over $5 billion in 2003. Titan has a large and diverse contract base consisting of over 2,000 contracts, with only one contract expected to exceed 10% of 2005 revenues. Titan also benefits from low capital expenditure requirements (about 1% of sales) and a large balance of net operating losses, which should result in minimal cash taxes in 2005 and 2006. The stable ratings outlook reflects Moody's expectation that the company will continue to increase its sales base as it benefits from the growth in federal defense and information technology spending, particularly in the areas of national security, intelligence and homeland defense. Moody's expects that the company will comply with the terms of its settlement agreements with the federal government and will continue to win new business from federal government agencies. Titan is strongly positioned within its rating category and Moody's expects that the ratings or outlook could be upgraded if the company's credit metrics strengthen such that sustainable levels of free cash flow to debt are in the range of 15-20%. The outlook or ratings could be pressured if the company takes any action that restricts its ability to win new contracts from the federal government; the company's win rate on re-competes and new contracts decline significantly and its competitors, many of which are larger than Titan, gain market share at the company's expense; debt levels increase significantly due to an acquisition or share repurchase; or the company's exposure to class action lawsuits leads to material liability. The confirmation of the Ba3 rating on the senior secured revolving credit facility reflects the credit facility's senior position in the capital structure. The credit facility is secured by a first priority security interest in substantially all the tangible and intangible assets of the company and its domestic subsidiaries. Term loan amortization is minimal until the second half of 2008. At December 31, 2004, the company had about $115 million of available borrowings under the $135 million revolver and there was substantial cushion under the company's bank covenants. The confirmation of the B2 rating on the senior subordinated notes reflects the contractual subordination of these notes to all existing and future senior obligations of the company. Substantially all of the Titan's domestic subsidiaries guarantee the notes. Free cash flow to debt was about 11% in the year ended December 31, 2003 and was negative in 2004. The negative free cash flow in 2004 reflects the substantial merger, investigation and settlement costs and an increase in the days sales outstanding of accounts receivable (DSO). A significant portion of the increase in DSO was related to billing issues that delayed payment on the company's Army linguist contract. Moody's expects free cash flow to debt to exceed 15% in 2005, reflecting in part the decline in accounts receivable in 2005 as these billing issues are resolved. Headquartered in San Diego, California, The Titan Corp., is a leading technology developer, systems integrator and services provider for the Department of Defense, The Department of Homeland Security and intelligence and other key government agencies. For the year ended December 31, 2004, revenues were about $2 billion. TRANS ENERGY: Board Appoints C. Smith & J. Corp as CEO & VP ----------------------------------------------------------- Trans Energy, Inc. (OTC Bulletin Board: TENG) has appointed Clarence E. Smith as CEO and John G. Corp as Vice President and a new member to the Board of Directors. Mr. Smith has been involved in the oil and gas business his entire working career. He has drilled and operated wells, manages and operates Arvilla Pipeline, Inc. He is currently President of Arvilla Oilfield Services a wholly owned subsidiary of Trans Energy, Inc. Mr. Corp has twenty-five years of experience in drilling, production, and oilfield service operations in the Appalachian Basin. He graduated from Marietta College with a BS in Petroleum Engineering. He is a member of the Society of Petroleum Engineers and the Ohio Oil and Gas Association. He is Chairman of the technical advisory committee for the Ohio Department of Natural Resources. Prior to joining Trans Energy, Inc., Mr. Corp held various management positions with Belden & Blake Corporation. Both Mr. Smith and Mr. Corp bring a wealth of knowledge and experience in the oil and gas industry to the company. They will assume their positions immediately. Trans Energy, Inc. -- http://www.transenergy.com/-- specializes in the exploration, completion, drilling, and production of oil and natural gas in the Appalachian and Powder River basin. Further, TENG is actively involved in the transmission, transportation and sales of oil and natural gas. At Sept. 30, 2004, Trans Energy's balance sheet showed a $5,632,981 stockholders' deficit, compared to a $5,430,033 deficit at Dec. 31, 2003. UAL CORP: Court Approves Varde Fund's Aircraft Claim Settlement --------------------------------------------------------------- Pursuant to a Lease Agreement, dated March 15, 1989, Wilmington Trust Company, as Owner Trustee, leased an Aircraft with Tail No. N353UA to the Debtors. The Aircraft was financed by U.S. Bank, as Mortgagee. The Debtors filed a request to reject the Lease, which the Court approved on September 17, 2004. Prior to rejection and after the Petition, the Debtors used the Aircraft, but did not make postpetition payments. In January 2005, U.S. Bank foreclosed its liens and the Lease on Tail No. N353UA, including Claim Nos. 35501 and 43787. On January 27, 2005 the Varde Fund, LP, purchased all right, title and interest connected with the Claims. Therefore, Varde became the sole owner of the Lease and the Claims. Consequently, the Debtors struck a deal with Varde to settle the administrative expense claim, including any claims under Section 365(d)(10) of the Bankruptcy Code, for the Debtors' use of the Aircraft after the Petition. Under a Stipulation, Varde agree to reduce its administrative claim "by a significant amount." In return, Varde will receive payment of the administrative claim and a general unsecured claim for the deficiency claim in an amount to be determined later. The Debtors ask the Court to approve the Stipulation. The Settlement allows the Debtors to pay the administrative claim for postpetition use of the Aircraft at a substantial discount to the contract rate under the Lease. The Settlement helps the Debtors achieve cost reductions and is in the best interests of the estates. The Stipulation contains confidential information and has been filed in redacted form. Only the Official Committee of Unsecured Creditors, the DIP Lenders and parties with a direct interest in the Aircraft will be provided with non-redacted versions of the Stipulation, subject to confidentiality agreements. Judge Wedoff approves the stipulation. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNION LABOR: S&P Places Junk Ratings Due to Weak Performances ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on Union Labor Life Insurance Co., Ulico Casualty Co., and Ulico Indemnity Co. to 'CCCpi' from 'Bpi'. At the same time, Standard & Poor's affirmed its 'CCCpi' counterparty credit and financial strength ratings on Ulico Standard of America Casualty Co. These ratings actions bring all four members of the group to the same rating level. The four companies are ultimately owned by ULLICO Inc., a stock company privately held by various labor organizations. "The downgrades on Ulico Casualty and Ulico Indemnity are based primarily on the companies' weak operating performance, partly offset by good capitalization," explained Standard & Poor's credit analyst James Sung. Ulico Casualty and Ulico Indemnity previously participated in an intercompany pooling arrangement, but this arrangement was terminated, effective Sept. 30, 2003. The life company is rated on a standalone basis, with no credit given for implied group support. "The downgrade on Union Labor Life reflects the company's declining revenue base; weak, but improving, operating performance; weak capitalization; and high risk-asset profile," Mr. Sung added. Union Labor's revenue-generating ability has been hurt in recent years by unfavorable publicity generated by corporate scandals and poor financial performance. In 2003, the company lost its largest health insurance customer, and lost 40% of its stop loss renewal business in the last seven months of the year. Through the first nine months of 2004, net premiums and deposits were down 27% at $222.1 million, compared with $304.0 million in the same period in 2003. Union Labor Life's operating performance is weak. The company reported pretax operating losses in each of the past five years (1999-2003), with an average five-year ROA of negative 1.2%; however, operating performance improved in 2004, with the company reporting pretax operating income of $18.8 million through the first nine months of 2004, compared with a pretax operating loss of $29.2 million in the same period in 2003. The property/casualty companies' operating performance is weak. Ulico Casualty and Ulico Indemnity both reported pretax operating losses in four of the past five years (1999-2003), while Ulico Standard reported pretax operating losses in all five years during the same period, but operating performance of the property/casualty companies improved through the first nine months of 2004, as the property/casualty companies reported a combined pretax operating loss of negative $500,000, compared with a pretax operating loss of negative $17.1 million through the first nine months of 2003. Union Labor Life's capitalization is weak. Over the five-year period from 1999 to 2003, statutory surplus steadily decreased to $63.4 million in 2003 from $119.5 million in 1999. In addition, the company's capital adequacy ratio, based on Standard & Poor's model was considered weak at less than 100% in 2003. The company's risk-asset profile was high as the company had an excessive ratio of 113% in 2003 of total risk assets to total surplus; however, capitalization improved through the first nine months of 2004 as statutory surplus grew to $83.3 million, driven by improved operating performance. The property/casualty companies' capitalization is good, but prospective capital growth continues to be constrained by weak earnings. The property/casualty companies had a consolidated capital adequacy ratio, based on Standard & Poor's model, of 137% in 2003, which is considered good. Over the five-year period of 1999 to 2003, however, capitalization at the lead company, Ulico Casualty, decreased from $57.7 million in 1999 to $43.4 million in 2003. Through the first nine months of 2004, statutory surplus grew to $48.0 million, but these gains were mostly driven by unrealized capital gains and a change in nonadmitted assets, as opposed to earnings. Union Labor Life, Ulico Casualty, Ulico Indemnity, and Ulico Standard are ultimately owned by ULLICO Inc., a privately held insurance and financial services holding company. Union Labor Life is licensed in all 50 states and D.C. and predominantly sells products involving group life and health insurance, care management, administrative services, individual life insurance, direct response marketing and investment services. Ulico Casualty is licensed in 47 states and the D.C., and predominantly sells products involving fiduciary liability coverage for jointly managed benefit trust funds, union liability errors and omissions coverage, and collectively bargained workers' compensation programs for union organization and organized employers. Ulico Indemnity is a wholly owned subsidiary of Ulico Casualty. Ulico Standard was previously owned by Ulico Casualty, until it was sold to ULLICO, Inc., in 2000. UNION PLANTERS: Fitch Affirms Two Mortgage-Backed Certificates -------------------------------------------------------------- Fitch Ratings has taken rating actions on Union Planters residential mortgage-backed certificates: Union Planters mortgage pass-through certificates, series 1998-1 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AA'; -- Class B3 upgraded to 'A+' from 'A'; -- Class B4 affirmed at 'BBB'; -- Class B5 affirmed at 'BB'. Union Planters mortgage pass-through certificates, series 1999-1 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 upgraded to 'AA+' from 'AA'; -- Class B3 upgraded to 'A+' from 'A'; -- Class B4 upgraded to 'BBB+' from 'BBB'; -- Class B5 affirmed at 'BB'. Union Planters mortgage pass-through certificates, series 2000-1 -- Class A affirmed at 'AAA'. The affirmations, affecting approximately $106.3 million of outstanding certificates, reflect performance and credit enhancement -- CE -- levels that are generally consistent with expectations. The upgrades reflect a substantial increase in CE relative to future loss expectations and affect approximately $1.5 million of outstanding certificates. The CE levels for series 1998-1, class B3, have increased to approximately 3 times original enhancement levels at the closing date (May 28, 1998). Class B3 currently benefits from 6.24% subordination (originally 1.76%). There is currently 18% of the original collateral remaining in the pool (based on principal balance). The CE levels for series 1999-1 classes B2, B3, and B4 have also increased to approximately 3x original enhancement levels at the closing date (Feb. 26, 1999). Class B2 currently benefits from: * 7.73% subordination (originally 2.25%); * class B3 benefits from 6.86% subordination (originally 2.00%); and * class B4 benefits from 5.11% subordination (originally 1.50%). There is currently 21% of the original collateral remaining in the pool (based on principal balance). Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ UPC BROADBAND: S&P Places B Rating on New Eur3 Billion Bank Loans --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to UPC Broadband Holding B.V.'s (formerly named UPC Distribution Holding B.V.) approximately E3 billion in new bank loan tranches. A recovery rating of '3' also was assigned to the loan, indicating the expectation for meaningful recovery of principal (50%-80%) in the event of a default. (These ratings are based on preliminary information and are subject to final bank loan documentation.) The new bank tranches are pari passu with company's E3.6 billion of existing senior secured bank facilities. The proceeds from these new bank tranches will be partially used to repay existing bank tranches, including tranche B, C, and E (E2.36 billion). In addition, the tranche A revolving credit will be permanently reduced by E167 million. The resultant total commitment for the bank facilities will be E4 billion. The ratings on the new bank tranches were placed on CreditWatch with positive implications, in conjunction with parent UnitedGlobalCom Inc.'s (B/Watch Pos/--) existing ratings. However, the '3' recovery rating for the amended and restated bank facility is not on CreditWatch, as recovery prospects for the loan will not improve due to UnitedGlobalCom's pending merger with Liberty Media International. On Jan. 19, 2005, Standard & Poor's placed its ratings on European cable TV operator UGC and its related entities on CreditWatch with positive implications. This action followed the announced merger agreement between UnitedGlobalCom and its approximate 53% economic owner Liberty Media. "If the merger is consummated, ratings on UGC will reflect the ratings of its new parent, which will incorporate the assets of Liberty Media," explained Standard & Poor's credit analyst Catherine Cosentino. "The rating on the parent entity may be higher than the current 'B' corporate credit rating on UnitedGlobalCom, given its 45% interest in Japanese cable TV operator Jupiter Telecommunications Co. Ltd. Jupiter Telecommunications generates substantial EBITDA and has good growth prospects relative to that of UnitedGlobalCom's European cable operations, which have been viewed by Standard & Poor's as being fairly weak." Standard & Poor's will meet with management to review Jupiter Telecommunications' business strategy. With Jupiter Telecommunications' Feb. 18 initial public offering, UnitedGlobalCom now exerts control of Jupiter Telecommunications under terms of the joint venture agreement and began to consolidate this operation effective Jan. 1, 2005. Standard & Poor's will also evaluate the combined company's plans for the significant cash and noncore monetizable investment balances that are expected to exist subsequent to the merger, especially in light of management's indications about prospective share buybacks. US AIRWAYS: Gets Court Nod to Borrow $125 Million from Eastshore ---------------------------------------------------------------- Judge Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia authorizes US Airways, Inc., and its debtor-affiliates to borrow up to $125,000,000 in DIP financing from Eastshore Aviation LLC. The Debtors are also authorized to provide the Lender with junior security interests on certain property of the Debtors' estates to secure repayment of the DIP Obligations. The DIP Liens are senior to any liens arising after the Petition Date other than the Replacement Liens securing the ATSB Loan Obligations and the Carve-Out. The Debtors are authorized to pay the Lender's reasonable out-of-pocket expenses of up to a maximum of $200,000. The Debtors have received the initial funding of $75,000,000 under the Loan Agreement on March 1, 2005. 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. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) USURF AMERICA: Hosting Shareholder Conference Call on Wednesday --------------------------------------------------------------- Usurf America, Inc. (OTC Bulletin Board: USUR), a leading provider of voice, video and high-speed broadband communications services, will be hosting a special conference call on Wednesday, March 16, 2005, to discuss the recent acquisition of Sovereign Companies and its accretive revenue impact. Also, Chairman Dave Weisman will discuss the Company's growth prospects, increased revenue, and new corporate initiatives. At the conclusion, Usurf management will take live questions and questions submitted via the web. When: Wed. March 16, 2005 Time: 11:00 a.m. EST Call-in number: 1-800-362-0571 Access code: USURF Webcast address: http://www.usurf.com/ (please click on the link located under the News section on the right- hand side) Minimum Requirements to listen to broadcast: The Windows Media Player software is downloadable for free at: http://www.microsoft.com/windows/windowsmedia/EN/default.aspand requires at least a 28.8 kbps connection to the Internet. If you experience problems listening to the broadcast, please send an email to webcastsupport@tfprn.com If you are unable to participate at the scheduled time, the webcast will be archived on Usurf's website at http://www.usurf.com/ and the call will be replayed at 1-402-220- 2555 or 1-800-839-5576. About the Company Based in Broomfield, Colo., Usurf America -- http://www.usurf.com/ -- is implementing specific strategies designed to leverage the Company's IP-based software technology enabling fully ubiquitous voice, video and data product deployments in targeted geographic regions of the United States. * * * Going Concern Doubt As reported in the Troubled Company Reporter on Dec. 23, 2004, USURF reported that for the nine months ended September 30, 2004 and 2003, it incurred a net loss of $12,448,539 and $1,990,795, respectively. As of September 30, 2004, USURF had an accumulated deficit of $56,310,384. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company is actively seeking customers for its services. The Company's financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence. At September 30, 2004, USURF had a net working capital deficit of $1,711,155, compared to a net working capital deficit of $757,040 at December 31 2003. A net working capital deficit means that current liabilities exceeded current assets. Current assets are generally assets that can be converted into cash within one year and can be used to pay current liabilities. WESTPOINT STEVENS: Asks Court to Hold Sale Hearing on June 15 ------------------------------------------------------------- To recall, WestPoint Stevens Inc. entered into a definitive agreement for the sale of the Company to an investor group. The investor group consists of WL Ross & Co. LLC, and holders of a majority of the Company's Senior Credit Facility, including Contrarian Capital Management and CP Capital Investments. The agreement calls for the sale of substantially all of the assets of WestPoint Stevens. As part of the agreement, equity in the new company will be distributed to holders of outstanding senior secured debt, and the new company will conduct a rights offering, underwritten by the investor group, to raise $207.5 million of equity capital. All of WestPoint Stevens' Senior Credit Facility holders will have the equal right to participate, and in certain circumstances WestPoint Stevens' Second Lien Facility holders could participate in the rights offering. The new company will repay WestPoint Stevens' debtor in possession loan, satisfy certain administrative claims, and assume WestPoint Stevens' ordinary course payables and certain other postpetition liabilities, including bankruptcy emergence costs. The agreement provides that WestPoint Stevens' Second Lien Facility holders would receive $10.0 million released from escrowed adequate protection payments provided they do not object to the transaction and additional consideration in certain other events if the sale is completed. Following the sale, WestPoint Stevens will wind down its estate, and as a result, its unsecured creditors could receive a small distribution and all shares of its common stock would be cancelled with no payment. Reasons Prompting the Sale John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New York, tells the Court that for the past seven months, the Debtors have attempted to reach consensus with their three main creditor constituencies on the terms of a Chapter 11 reorganization plan: Creditor Group Approximate Claim -------------- ----------------- First Lien Lenders $480 million Second Lien Lenders 165 million Creditors Committee 1.1 billion The First Lien Lenders are the holders of claims against any of the Debtors based upon that certain Second Amended and Restated Credit Agreement dated as of June 9, 1998, among WestPoint Stevens Inc., as Borrower, WestPoint Stevens (U.K.) Limited and WestPoint Stevens (Europe) Limited, as Foreign Borrowers, Bank of America, N.A., as Issuing Lender, Swingline Lender as Administrative Agent and the several banks and other financial institutions from time to time parties thereto. The Second Lien Lenders are the holders of claims against any of the Debtors based on that certain Second Lien Credit Facility dated as of June 29, 2001, among WestPoint as Borrower, Wilmington Trust Company (as successor to Deutsche Bank Trust Company Americas) as Administrative Agent, and the banks and other financial institutions from time to time parties thereto. Among other things, the Debtors: (i) delivered a revised business plan on August 20, 2004; (ii) presented a valuation of the Debtors as a going concern on September 20, 2004; (iii) distributed a term sheet outlining a potential restructuring plan on October 8, 2004; (iv) distributed a draft Chapter 11 plan on November 30, 2004; (v) distributed a draft disclosure statement on December 10, 2004; (vi) held extensive discussions with the First Lien Lenders and Second Lien Lenders throughout that period; and (vii) filed a "compromise" Chapter 11 Plan and Disclosure Statement on January 20, 2005. As described in the Valuation Report prepared by Rothschild, Inc., the Debtors' financial advisor, the enterprise value for the Debtors' business operations is likely to be less than the total amount of the secured claims against their assets. Even the upper limit of the range of values in the report is not sufficient to cover the claims of the First Lien Lenders, Second Lien Lenders, and lenders under the DIP Financing. Given the relative size of the claims of the First Lien Lenders compared to the Second Lien Lenders, it is apparent that the First Lien Lenders will control the restructured Company. Unfortunately, the limited enterprise value, coupled with the existence of opposing factions among the First Lien Lenders, has made it impossible to reach agreement on the terms of a Chapter 11 Plan. The First Lien Lenders consist of: * certain institutions acting as a steering committee (Satellite Senior Income Fund LLC, CP Capital Investments LLC, and Contrarian Capital Management, LLC) owning or controlling 51% of the claims of the group; and * affiliates of Carl Icahn, holding 40% of the claims of this group. In addition, Mr. Icahn owns 50% of the claims held by the Second Lien Lenders. The Steering Committee has a "blocking position" with respect to the class of claims held by the First Lien Lenders and Mr. Icahn has a blocking position with respect to the classes of claims held by both the First Lien Lenders and the Second Lien Lenders. Stalemate Mr. Rapisardi explains that the problem facing the Debtors is that both the Steering Committee and Mr. Icahn demand control of the restructured Company and they have been unable to reach a compromise. The Debtors have proposed various alternatives to attempt to bridge the gap between the two parties, including filing the Plan -- which gives control to the party investing the most new money in the Debtors. Although the Debtors could proceed to solicit acceptances and rejections for the Plan, the inflexibility of the two groups has convinced the Debtors that it would be a waste of time and money. Nevertheless, accelerating changes in the marketplace require the Debtors to begin implementing their Revised Business Plan, which will necessitate both a significant infusion of new capital and the conversion of all or substantially all their secured claims to equity. Moreover, the Debtors' customers will not enter into long-term commitments that could improve the business as long as the Debtors remain in Chapter 11. Sale is the Best Option In light of the stalemate among the First Lien Lenders, the valuation of the Company, and the need for their businesses to emerge from Chapter 11 as soon as possible, the Debtors have concluded that they have no choice but to sell substantially all their assets to a third party and use the proceeds to satisfy the liens that encumber those assets and to wind up their Chapter 11 cases. The Debtors intend to market their businesses to parties not involved in their Chapter 11 cases, as well as to their creditors. According to Mr. Rapisardi, a sale transaction would not predetermine the contours of a Chapter 11 plan as to unsecured creditors, or even among the First and Second Lien Lenders. Rather, proceeds from the sale of collateral will be distributed to the creditors having a lien on that property. The extent to which First Lien Lenders share the proceeds with the Second Lien Lenders will be determined separately by the Court. In addition, value generated by the sale in excess of all secured claims, if any, plus the proceeds of unencumbered assets will be available for distribution to unsecured creditors. The Debtors' present intention is to proceed with a Chapter 11 plan of liquidation following the closing of a sale transaction. The Debtors believe that the most effective way to start the sale process is to enter into a "stalking horse" contract. This approach provides two principal benefits: -- the "stalking horse" bid helps the marketing process by setting a floor for third party bids, while at the same time demonstrating initial demand for the purchase of the business; and -- the "stalking horse" contract gives assurance to the Debtors that a minimum level of recoveries for their secured creditor constituencies will actually occur and that the expense of the sale process will be worthwhile. Accordingly, the Debtors invited the Steering Committee and Mr. Icahn to submit their "best" bid to act as the "stalking horse" for the proposed auction. Both parties submitted bids. After careful consideration, the Debtors' board of directors selected the Steering Committee's bid as the "stalking horse." The Debtors concluded that the Steering Committee's proposed sale transaction will preserve the Debtors' enterprise value and ensure a seamless continuity of operations, which will save numerous jobs and inure to the benefit of the Debtors' customers, suppliers, and surrounding communities, who rely heavily on WestPoint's continued success. Agreement with New Textile Accordingly, the Debtors entered into a contract, dated as of February 28, 2005, to sell substantially all their assets to New Textile Co., an entity acting on behalf of the Steering Committee and WL Ross & Co. LLC. "The Steering Committee's bid provides a clear path for the emergence of the Debtors' ongoing business operations, solves the current stalemate among the First Lien Lenders, and affords a mechanism for maximizing the value of the collateral securing the claims of the Debtors' secured creditors," Mr. Rapisardi says. The Asset Purchase Agreement will also provide for the satisfaction of substantially all of the Debtors' administrative and priority obligations, and payment in full of the Debtors' obligations under the DIP Credit Agreement. Sale Hearing The Debtors ask Court to hold a hearing on June 15, 2005, to consider approval of: (a) the terms of the asset purchase agreement(s) selected by the Debtors as the highest or best bid(s); (b) the sale(s) of any assets under the asset purchase agreement free and clear of all liens, claims, encumbrances, and other interests to the party or parties submitting the highest or otherwise best offer(s) at the Auction; (c) the assumption(s) and assignment(s) of certain executory contracts and unexpired leases related thereto; and (d) the distribution of proceeds from the sale to satisfy the liens of the First Lien Lenders and, if applicable, the Second Lien Lenders in the manner provided in the Asset Purchase Agreement. Mr. Rapisardi points out that the textile industry is in a state of great flux. The Debtors are concerned that unless they proceed with a sale now, they will lose further ground in their efforts to restructure their operations. Attempting to complete a sale pursuant to a Chapter 11 plan would be an inherently longer process. With the assistance of Rothschild, Hilco Appraisal Services, LLC, and American Appraisal Associates, Inc., the Debtors have analyzed the value to be realized through consummation of a sale transaction as compared to an orderly liquidation. This analysis clearly demonstrates that an orderly liquidation would yield far less value than a sale of their business as a going concern to the ultimate purchaser. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/--is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTPOINT STEVENS: Court Sets April 7 to Okay Bidding Procedures ---------------------------------------------------------------- Judge Drain will convene a hearing on April 7, 2005, to consider WestPoint Stevens, Inc., and its debtor-affiliates' request to: (a) approve the terms and procedures governing the submission of competing bids; and (b) authorize the payment of a break-up fee and certain bidding protections for the benefit of the entity bidding for the Debtors' assets on behalf of the Steering Committee. The Debtors propose to conduct an auction on June 7, 2005. Michael F. Walsh, Esq., at Weil, Gotshal & Manges LLP, in New York, contends that good and sufficient cause exists to approve the Bidding Procedures. "The Bidding Procedures will enable the Debtors to realize the maximum value from the sale of the Assets and include appropriate noticing procedures to ensure all parties-in-interest will receive adequate notice of all relevant information." Mr. Walsh points out that the Bidding Protections also meet the "business judgment rule" standard. The break-up fee is limited to $5.0 million, which is 2.4% of the total amount of cash committed by New Textile Co., an entity acting on behalf of the Steering Committee and WL Ross & Co. LLC. Expense reimbursement would be capped at $1.0 million. "The total cost to the estate is even more reasonable if the winning bid is submitted by Carl Icahn. In that event, there would be no break-up fee and the expenses of New Textile would be limited to up to $3.5 million," Mr. Walsh says. Mr. Walsh asserts that the break-up fee is reasonable because it is not excessive compared to fees and reimbursements approved in other cases and it will not diminish the Debtors' estates. The Debtors submit that the proposed Bidding Protections will not chill bidding, are reasonable, and their availability to the Debtors will enable the Debtors to maximize the value of their estates. Accordingly, the Debtors should be authorized to offer those forms of bid protection, as is necessary in the Debtors' business judgment. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/--is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) WHEELING-PITTSBURGH: Pushes to Assign Coal Contract to Severstal ---------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Mar. 8, 2005, Central West Virginia Energy Company has balked at Wheeling- Pittsburgh Steel Corp.'s attempt to assign a Coal Supply Agreement to a joint venture with flat rolled sheet steel producer Severstal North America Inc. CWVEC says that a post-confirmation contract assignment is illegal and the Debtors can't provide adequate assurance of future performance unless CWVEC is assured that WPSC, Severstal, and the joint venture-assignee will be jointly and severally liable for all of WPSC's current and future obligations under the Contract. Wheeling-Pittsburgh says that CWVEC's analysis is flawed. WPSC tells the Honorable Kay Woods that CWVEC's opposition stems from the bad business deal CWVEC cut a couple of years ago when the price of metallurgical coal was round $40 per ton. Today, the price of metallurgical coal is north of $100 per ton. CWVEC doesn't want to continue supplying $100-per-ton coal for $40 per ton. That's understandable, WPSC says, but not an impediment to assigning the Coal Contract. A review of WPSC's motion to assume and assign the Coal Supply Contract appeared in the Troubled Company Reporter on Feb. 16, 2005. A hearing on this matter is scheduled for March 15, 2005; CWVEC has asked that the hearing be delayed to permit further discovery. Central West Virginia Energy Company is represented in this matter by Benjamin C. Ackerly, Esq., and Jesse N. Silverman, Esq. at Hunton & Williams LLP. Wheeling-Pittsburgh Steel Corporation and eight debtor-affiliates filed for Chapter 11 protection on Nov. 16, 2000 (Bankr. N.D. Ohio Case No. 00-43394). WPSC was the nation's seventh largest integrated steelmaker at the time, reporting $1.3 billion in assets and liabilities exceeding $1.1 billion. In September 2002, Royal Bank of Canada filed an application on behalf of the company with the Emergency Steel Loan Guarantee Board to obtain a $250 million federal steel loan guarantee. The application for the loan guarantee was approved in March 2003. The Debtors' plan of reorganization was confirmed on June 18, 2003, and the plan became effective on August 1, 2003. Michael E Wiles, Esq., at Debevoise & Plimpton LLP, and James M. Lawniczak, Esq., at Calfee, Halter & Griswold LLP, represent the Debtor. WINSTAR COMMS: Court Reassigns Chapter 7 Cases to Judge Sullivan ---------------------------------------------------------------- Judge Mary F. Walrath, Chief Judge of the U.S. Bankruptcy Court for the District of Delaware, reassigns the Chapter 7 cases of Winstar Communications, Inc. and its debtor-affiliates to Judge Donal D. Sullivan. Judge Walrath also transfers 42 pending adversary proceedings to Judge Sullivan: -- Nine adversary proceedings commenced by Winstar Holdings: Defendants Case No. ---------- -------- Accounting Quest 02-03553 Data Research Unlimited, Inc. 02-03022 Datatreasury 02-04433 Gillette Global Networks, Inc., et al. 02-06951 Mass-Tec 02-03552 Money.net Incorporated 02-02261 Sun Cal Manufacturing and Supply Company 02-04427 Superwire.com 02-03562 Vantage 02-06952 -- 32 adversary proceedings commenced by Christine C. Shubert, the Chapter 7 Trustee overseeing the liquidation of Winstar's estate: Defendants Case No. ---------- -------- Ackerman 02-05412 Adam's Mark Hotel, et al. 03-52502 Adams & Ryan, Inc. 03-52739 ADC Telecommunications Sales, Inc. 03-52017 Advanced Fibre Communications 03-52014 Burr Computer Environments, Inc. 03-52660 Business Wire 03-52784 Carol Electric Company, Inc. 03-52681 Day Wireless System, Inc. 03-52875 Digishoppe.com 03-52630 Edge Technical Services LLC 03-52881 Flaherty 02-05324 Georgetown Discoveries LLC 03-52972 HI Tech Data Floors, Inc. 03-52892 Hotjobs.com 03-52904 HY Enterprises, Inc. 03-52905 i3 Solutions, Inc. 03-52867 Kendra Carlson 03-52786 LaSalle Adams LLC 03-52913 McGuire 02-05410 MIE Properties, Inc. 03-52990 Nat-Com, Inc. 03-52947 Pacific Natcom, Inc. 03-52951 PPI Consulting 03-52954 Sales Talent, Inc. 03-52964 Shields 02-05326 Sibson & Company LLC 03-52966 Stackig/TMP 03-52973 Teknion LLC 03-52139 The Phillips Group 03-52982 United States Trust Company of New York 03-52989 White and Case 03-52995 -- The adversary proceeding filed by Corporate Telecommunications Group, Inc., et al., against the Chapter 7 Trustee. Judge Sullivan is a visiting judge from the District of Oregon. Headquartered in New York, New York, Winstar Communications, Inc., provides broadband services to business customers. The Company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). The Debtors obtained the Court's approval converting their case to a chapter 7 liquidation proceeding in January 2002. Christine C. Shubert serves as the Debtors' chapter 7 trustee. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. (Winstar Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM INC: Deutsche Bank Settles Class Action Suit for $325M --------------------------------------------------------------- Deutsche Bank has reached a settlement agreement in the WorldCom class action litigation, which was brought on behalf of purchasers of WorldCom securities. The case is pending in the U.S. District Court in the Southern District of New York. (In re WorldCom, Inc. Securities Litigation, Master File No.02 CIV 3288) The WorldCom suit was brought against former officers and directors of the Company, its accountant, Arthur Andersen LLP and more than a dozen banks and brokerages that were underwriters of WorldCom bonds. The parties that filed the suit claimed the defendants should have been aware of ongoing fraud at WorldCom, which has since emerged from bankruptcy as MCI Inc. Under the terms of the agreement, which is subject to court approval, Deutsche Bank will pay $325 million to the settlement class. Although it denies that it engaged in any wrongdoing, Deutsche Bank is pleased to resolve this matter. About Deutsche Bank With roughly Euro 840 billion in assets and approximately 65,400 employees, Deutsche Bank -- http://www.deutsche-bank.com/-- offers unparalleled financial services in 74 countries throughout the world. Deutsche Bank competes to be the leading global provider of financial solutions for demanding clients creating exceptional value for its shareholders and people. Deutsche Bank ranks among the global leaders in corporate banking and securities, transaction banking, asset management, and private wealth management, and has a significant private & business banking franchise in Germany and other selected countries in Continental Europe. About WorldCom, Inc. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. WORLDCOM INC: WestLB AG & Caboto Settles Class Suit for $112.5M --------------------------------------------------------------- Two additional investment banking firms facing trial next week have agreed to pay a total of $112.5 million to settle the claims asserted against them in the WorldCom Securities Litigation, Alan G. Hevesi, New York State Comptroller and sole Trustee of the New York State Common Retirement Fund and Court-appointed Lead Plaintiff, disclosed. The investment banks are: * WestLB AG (paying $75,000,000); and * Caboto Holding SIM S.p.A. (paying $37,500,000). Both banks participated as junior underwriters in WorldCom's May 2001 bond offering, in which they underwrote 3 percent of the bonds issued in that offering. The firms did not participate in the offering in May 2000. These additional settlements bring the total recovery for the Class to about $3.7 billion. As in other settlements, these amounts, on a percentage basis, are higher than the rates established by the amount the Citigroup Defendants agreed in May 2004 to pay to settle the bond portions of the claims against them. These settlements follow the $460.5 million settlement with Bank of America, the $100.3 million settlement with Lehman Brothers, Goldman Sachs, Credit Suisse First Boston, and UBS Warburg, the $428.4 million in settlements with ABN AMRO, Mitsubishi Securities International, BNP Paribas Securities Corp. and Mizuho International, and the $2.575 billion settlement with the Citigroup Defendants, which was approved by United States District Court Judge Denise Cote on November 12, 2004. Hevesi is the Court-appointed Lead Plaintiff in the consolidated securities class action, In re WorldCom, Inc. Securities Litigation, which is pending before Judge Cote. The NYSCRF and investor class are represented by the law firms of Barrack, Rodos & Bacine and Bernstein Litowitz Berger & Grossmann LLP, who were appointed as Lead Counsel by Judge Cote in August 2002. The two firms also served as Lead Counsel in the Cendant class action, which was previously the highest recovery ever achieved in a securities law class case. The WorldCom suit was brought against former officers and directors of the Company, its accountant, Arthur Andersen LLP and more than a dozen banks and brokerages that were underwriters of WorldCom bonds. The parties that filed the suit claimed the defendants should have been aware of ongoing fraud at WorldCom, which has since emerged from bankruptcy as MCI Inc. Under the terms of the agreement, which is subject to court approval, Deutsche Bank will pay $325 million to the settlement class. Although it denies that it engaged in any wrongdoing, Deutsche Bank is pleased to resolve this matter. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. YOUTHSTREAM MEDIA: Completes Steel Mini-Mill Purchase in Kentucky ----------------------------------------------------------------- YouthStream Media Networks, Inc. (OTC Bulletin Board: YSTM) completed the acquisition of KES Acquisition Company, LLC, the owner and operator of Kentucky Electric Steel, a steel mini-mill located in Ashland, Kentucky. The Company consolidated the operations of the Mill through its ownership of KES Acquisition on March 1, 2005. The Mill has been producing steel for approximately fifty years, and was acquired by the sellers through a bankruptcy proceeding in September 2003. Following the acquisition, the Mill was refurbished and has been generating revenues since late January 2004. In connection with the acquisition, the Company formed a new subsidiary, YouthStream Acquisition Corp., in which the Company owns 80.01% of the total outstanding common stock and 100% of the voting common stock. The remaining 19.99% common stock interest in Acquisition Corp. is owned by the sellers of KES Acquisition. The Company capitalized Acquisition Corp. with an aggregate of $500,000 in cash. Acquisition Corp. issued to the sellers of KES Acquisition: (i) 25,000 shares of its non-convertible non-voting redeemable preferred stock with a redemption price equal to $25,000,000 and a 13% annual cumulative dividend and (ii) senior subordinated promissory notes in the aggregate principal amount of $40,000,000 with an annual interest rate of 8%. Additional information with regard to this transaction can be found in the Company's Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on February 25, 2005, which can be viewed online at http://www.sec.gov/ Prior to August 2002, YouthStream Media Networks, Inc., had a media business and a retail business. The media segment represented the Company's media, marketing and promotional services provided to advertisers by Network Event Theater, Inc. and American Passage Media, Inc. In August 2002, the Company sold substantially all of the assets and certain liabilities from this segment to Cass Communications, Inc., a subsidiary of Alloy, Inc., for $7 million in cash. The Company discontinued any remaining media operations at that time. The retail segment consisted of on-campus, online and retail store poster sales provided by its Beyond the Wall subsidiary. In February 2004, the Company sold substantially all of the assets, subject to certain liabilities, of this segment and discontinued its operation. Going Concern Doubt In its Form 10-Q for the quarterly period ended Dec. 31, 2004, filed with the Securities and Exchange Commission, YouthStream Media Neworks, Inc., disclosed that it has incurred recurring operating losses since its inception. As of December 31, 2004, the Company had an accumulated deficit of $344,043,452, a stockholders' deficiency of $13,273,981, a working capital deficiency of $3,597,743, and a net loss and negative cash flows from operating activities for the three months ended December 31, 2004 of $208,616 and $203,147, respectively. The Company has insufficient capital to fund all of its obligations. The Company also sold its remaining operating business during the year ended September 30, 2004. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effect of the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of this uncertainty. The Company's independent registered public accounting firm, in its report dated December 17, 2004, included an explanatory paragraph stating that the Company's recurring losses and accumulated deficit, working capital deficiency and negative cash flow, among other things, raise substantial doubt about the Company's ability to continue as a going concern. YUKOS OIL: Will Contest Any New Tax Claims Levied by Russia ----------------------------------------------------------- Yukos Oil Company confirmed its intentions to continue to contest, in appropriate fora, any new tax claims levied against its subsidiaries, affiliates and associated companies. This announcement follows the most recent allegations from the Russian Tax Authorities of additional questionable tax assessments for its production subsidiary, Tomsneft. Equally concerning to Yukos are recent comments by the Russian Tax Authorities that Fargoil and Ratibor, two Yukos associated trading companies consolidated in Yukos' US GAAP Consolidated Financial Statements, are under investigation for inappropriate distribution of funds. Yukos strongly asserts that such allegations are completely unfounded. At the root of many of these allegations, and those previously disputed by Yukos, is a lack of understanding or the unwillingness of the Russian Tax Authorities to comprehend consolidated accounting. Yukos has followed US generally accepted accounting principles, US GAAP since 1999, and has openly operated this system consistently for five years. Under these GAAP principles, Yukos accounts have been audited by independent auditors PricewaterhouseCoopers, the results of which in the past have been made available in Russia and to all of the company's approximately 60,000 domestic and international shareholders. 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Six Attorneys Join Much Shelist as Partners --------------------------------------------- The Chicago based law firm, Much Shelist, disclosed the appointment of eight attorneys to the firm. Louis G. Apostol, David B. Goodman, James P. Hanrath, Vernon A. Kowal, Michael L. O'Shaughnessy, and Oran F. Whiting joined as Partners; Robert G. Goldstein as Of Counsel; and Julia A. Fuld as an Associate. All joined the firm during the past several weeks. "The addition of these outstanding attorneys to the firm will strengthen our practice and continue the firm's commitment to excellence and client service," said David T. Brown, Chairman of the Management Committee. "This strategic growth is indicative of the firm's vitality and our response to our clients' evolving legal and business needs," he concluded. Of the eight appointments, four attorneys have joined the Corporate Practice; two have joined the Litigation Practice; and both the Intellectual Property and Wealth Transfer & Succession Planning Practices have expanded by one. Louis Apostol, 58, has joined the firm as a Partner in the Corporate Practice. Mr. Apostol will focus his practice in corporate, banking, estates and trusts, healthcare and government law. In 1991, he was appointed Public Administrator of Cook County by the governor. He has been re-appointed to successive terms since that time. In 2003, he was appointed Commissioner to the Illinois Court of Claims by Governor Rod Blagojevich, a position he still holds. He is also a member of the Chicago Sister Cities International program as an appointee of the mayor of Chicago. Prior to joining Much Shelist, Mr. Apostol was counsel with Freeborn & Peters LLP in Chicago. He received a J.D. from Northern Illinois University College of Law, an M.B.A. in Management and Finance from Northern Illinois University, and a B.A. in Business Administration and Finance from Elmhurst College. Robert Goldstein, 42, has joined the firm as Of Counsel in the Corporate Practice. He has extensive corporate transactional experience with a focus on mergers and acquisitions, corporate finance, private securities offerings, and related business transactions. Coupled with his CPA background, he brings an additional level of business acumen in his role as general corporate counsel to clients. Mr. Goldstein was formerly founding Partner of Levenfeld Pearlstein in Chicago. He received his J.D. from IIT Chicago-Kent College of Law and his B.S. from Indiana University. David Goodman, 42, has joined the firm as Partner in the Litigation Practice. Mr. Goodman has extensive trial experience and has litigated cases in state and federal courts across the country. He has a broad-ranging practice that includes employment litigation and counseling, commercial litigation, trade secret and unfair trade competition litigation, and tort defense. Prior to joining the firm, Mr. Goodman was Special Counsel with Sedgwick, Detert, Moran & Arnold LLP in Chicago. He received a J.D. from Boston University School of Law and a B.A. in History from Brandeis University. James Hanrath, 50, has joined the firm as a Partner in the Intellectual Property Practice. Mr. Hanrath will focus his practice on all aspects of intellectual property law, including protective right procurement, maintenance, exploitation, and litigation, in both domestic and foreign jurisdictions, relative to utility and design patent, trademark, copyright, trade secret, e-commerce, software, business method, and unfair competition matters. Prior to joining the firm, Mr. Hanrath was a Partner with Boundas, Skarzynski, Walsh & Black, LLC in Chicago. Mr. Hanrath received an LL.M. in Intellectual Property from John Marshall Law School and a J.D. from DePaul University, College of Law. He received a B.A. in Economics and Political Science from Illinois State University. Vernon Kowal, 46, has joined the firm as a Partner in the Corporate Practice. Mr. Kowal has experience in corporate, nonprofit, educational and governmental law. He regularly represents corporations in matters of finance, corporate organization and reorganization. Mr. Kowal also handles employment and construction matters. Prior to joining the firm, Mr. Kowal was Special Counsel with Sedgwick, Detert, Moran & Arnold LLP in Chicago. Mr. Kowal received an LL.M. in Taxation from DePaul University School of Law, and was awarded his J.D. from Valparaiso University School of Law. He received an M.A. in Urban Studies/Urban Planning from Loyola University, and his B.A. in Political Science, Business and History from Illinois Benedictine University. He is a Certificant of Georgetown University's Institute on Comparative Political and Economic Systems. Michael L. O'Shaughnessy, 55, has joined the firm as a Partner in the Corporate Practice. Mr. O'Shaughnessy has extensive experience handling complex corporate transactions ranging from mergers & acquisitions for both public and private companies, to finance (public, private and commercial), to complex cross-border joint ventures. He has worked in a broad range of industries including transportation, metals manufacturing, utilities and coatings, as well as e-commerce, banking third-party logistics and fiber optic telecommunications. Prior to joining the firm, he was a partner at Freeborn & Peters LLP in Chicago. He received a J.D. from the University of Cincinnati College of Law and a B.A. from Christian Brothers University. Oran Whiting, 44, has joined the firm as a Partner in the Litigation Practice. He will concentrate his practice on commercial litigation, healthcare law, government affairs and regulatory law, and products liability litigation and counseling. Mr. Whiting has served as a Commissioner on the Illinois Court of Claims since his appointment to the Court by Governor Jim Edgar in 1997. Additionally, he served as Counsel to the Speaker of the Illinois House of Representatives during the 89th Illinois General Assembly (1995-1997). Prior to joining the firm, Mr. Whiting was Special Counsel with Sedgwick, Detert, Moran & Arnold LLP in Chicago. Mr. Whiting received a J.D. from Georgetown University Law Center and a B.A. in International Relations and a B.S. in Economics from The University of Pennsylvania. Julia Fuld, 25, has joined the firm as an Associate in the Wealth Transfer & Succession Planning Practice. Ms. Fuld received a J.D. from Benjamin N. Cardozo School of Law and a B.A. in Journalism from University of Wisconsin. Much Shelist Freed Denenberg Ament & Rubenstein, P.C., established in 1970, is a Chicago-based law firm with nearly 90 attorneys. The firm offers a wide range of business and litigation services including: bankruptcy reorganization & creditors' rights, business litigation, class action/contingent fee litigation, corporate finance and securities, corporate law, e-commerce/Internet, employee benefits, health care, intellectual property, labor & employment, real estate, secured lending, taxation and business planning, and wealth transfer & succession planning. Clients include small and mid-sized businesses, financial institutions, public and private companies, families, and high-net-worth individuals. * Bankruptcy Reporter & Collier's B.C. 2d For Sale Now on eBay -------------------------------------------------------------- An eBay seller located in Eureka, Illinois, is auctioning two sets of bound reporters: * West's BANKRUPTCY REPORTER, Vols. 1 through 191 -- see http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=4535130152 - and - * COLLIER BANKRUPTCY CASES 2d, Vols. 1 through 39 -- see http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=4535129352 These two auctions end just after 6:00 p.m., Pacific Time, on Friday, March 18, 2005. * BOND PRICING: For the week of March 7 - March 11, 2005 -------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 12/31/04 0 Adelphia Comm. 3.250% 05/01/21 7 Adelphia Comm. 6.000% 02/15/06 8 Allegiance Tel. 11.750% 02/15/08 33 Allegiance Tel. 12.875% 05/15/08 31 Amer. Comm. LLC 12.000% 07/01/08 5 Amer. Color Graph. 10.000% 06/15/10 70 Amer. Restaurant 11.500% 11/01/06 62 Amer. Tissue Inc. 12.500% 07/15/06 62 American Airline 7.377% 05/23/19 71 American Airline 7.379% 05/23/16 63 American Airline 8.800% 09/16/15 75 American Airline 9.070% 03/11/16 72 American Airline 10.610% 03/04/11 67 AMR Corp. 4.250% 09/23/23 74 AMR Corp. 4.500% 02/15/24 68 AMR Corp. 9.000% 08/01/12 75 AMR Corp. 9.200% 01/30/12 74 AMR Corp. 9.880% 06/15/20 65 AMR Corp. 9.800% 10/01/21 65 AMR Corp. 10.000% 04/15/21 68 AMR Corp. 10.190% 05/26/16 74 AMR Corp. 10.200% 03/15/20 66 AMR Corp. 10.290% 03/08/21 60 AMR Corp. 10.450% 11/15/11 56 AMR Corp. 10.550% 03/12/21 57 Apple South Inc. 9.750% 06/01/06 16 Applied Extrusion 10.750% 07/01/11 59 Armstrong World 6.350% 08/15/03 71 Armstrong World 6.500% 08/15/05 70 Armstrong World 7.450% 05/15/29 69 Armstrong World 9.000% 06/15/04 70 Armstrong World 9.750% 04/15/08 71 AT Home Corp. 0.525% 12/28/18 3 AT Home Corp. 4.750% 12/15/06 10 ATA Holdings 12.125% 06/15/10 44 ATA Holdings 13.000% 02/01/09 44 Atlantic Coast 6.000% 02/15/34 33 Atlas Air Inc. 9.702% 01/02/08 56 Avado Brands Inc. 11.750% 06/15/09 20 B&G Foods Holding 12.000% 10/30/16 8 Bank New England 8.750% 04/01/99 10 Bank New England 9.500% 02/15/96 5 Bethlehem Steel 10.375% 09/01/03 0 Big V Supermarkets 11.000% 02/15/04 1 Borden Chemical 9.500% 05/01/05 1 Budget Group Inc. 9.125% 04/01/06 1 Burlington Inds. 7.250% 08/01/27 7 Burlington Inds. 7.250% 09/15/05 7 Burlington Northern 3.200% 01/01/45 61 Calpine Corp. 7.750% 04/15/09 72 Calpine Corp. 8.500% 02/15/11 72 Calpine Corp. 8.625% 08/15/10 72 Cendant Corp. 4.890% 08/17/06 51 Chic East Ill. RR 5.000% 01/01/54 60 Collins & Aikman 12.875% 08/15/12 71 Color Tile Inc. 10.750% 12/15/01 0 Comcast Corp. 2.000% 10/15/29 44 Cone Mills Corp. 8.125% 03/15/05 11 Cray Research 6.125% 02/01/11 67 Delta Air Lines 2.875% 02/18/24 49 Delta Air Lines 7.711% 09/18/11 66 Delta Air Lines 7.779% 01/02/12 56 Delta Air Lines 7.900% 12/15/09 52 Delta Air Lines 8.000% 06/03/23 44 Delta Air Lines 8.300% 12/15/29 37 Delta Air Lines 8.540% 01/02/07 71 Delta Air Lines 8.950% 01/12/12 61 Delta Air Lines 9.000% 05/15/16 39 Delta Air Lines 9.200% 09/23/14 45 Delta Air Lines 9.250% 03/15/22 39 Delta Air Lines 9.300% 02/02/10 61 Delta Air Lines 9.375% 09/11/07 66 Delta Air Lines 9.750% 05/15/21 39 Delta Air Lines 9.875% 04/30/08 73 Delta Air Lines 10.000% 05/17/10 73 Delta Air Lines 10.000% 06/01/08 59 Delta Air Lines 10.000% 06/01/09 65 Delta Air Lines 10.000% 06/01/10 64 Delta Air Lines 10.000% 08/15/08 55 Delta Air Lines 10.060% 01/02/16 49 Delta Air Lines 10.125% 05/15/10 47 Delta Air Lines 10.140% 08/26/12 50 Delta Air Lines 10.375% 02/01/11 47 Delta Air Lines 10.375% 12/15/22 38 Delta Air Lines 10.430% 01/02/11 73 Delta Air Lines 10.500% 04/30/16 52 Delta Air Lines 10.790% 03/26/14 71 Delta Mills Inc. 9.625% 09/01/07 49 Diva Systems 12.625% 03/01/08 1 DVI Inc. 9.875% 02/01/04 5 E. Spire Comm Inc. 10.625% 07/01/08 0 E. Spire Comm Inc. 12.750% 04/01/06 0 E. Spire Comm Inc. 13.000% 11/01/05 0 E&S Holdings 10.375% 10/01/06 51 Eagle Food Center 11.000% 04/15/05 5 Encompass Service 10.500% 05/01/09 0 Enron Corp. 6.400% 07/15/06 33 Enron Corp. 6.500% 08/01/02 30 Enron Corp. 6.625% 10/15/03 32 Enron Corp. 6.625% 11/15/05 32 Enron Corp. 6.725% 11/17/08 32 Enron Corp. 6.750% 08/01/09 32 Enron Corp. 6.750% 09/01/04 33 Enron Corp. 6.750% 09/15/04 30 Enron Corp. 6.875% 10/15/07 32 Enron Corp. 6.950% 07/15/28 33 Enron Corp. 7.125% 05/15/07 32 Enron Corp. 7.375% 05/15/19 32 Enron Corp. 7.625% 09/10/04 31 Enron Corp. 7.875% 06/15/03 31 Enron Corp. 9.125% 04/01/03 32 Enron Corp. 9.625% 03/15/06 32 Enron Corp. 9.875% 06/15/03 33 Falcon Products 11.375% 06/15/09 40 Federal-Mogul Co. 7.375% 01/15/06 32 Federal-Mogul Co. 7.500% 01/15/09 32 Federal-Mogul Co. 8.160% 03/06/03 29 Federal-Mogul Co. 8.370% 11/15/01 30 Federal-Mogul Co. 8.800% 04/15/07 31 Fibermark Inc. 10.750% 04/15/11 75 Finova Group 7.500% 11/15/09 44 Fleming Cos. Inc. 10.125% 04/01/08 36 Flooring America 9.250% 10/15/02 0 Foamex L.P. 9.875% 06/15/07 64 Golden Books Pub. 10.750% 12/31/04 1 Icon Health & Fit 11.250% 04/01/12 74 Imperial Credit 9.875% 01/15/07 0 Imperial Credit 12.000% 06/30/05 0 Impsat Fiber 6.000% 03/15/11 69 Inland Fiber 9.625% 11/15/07 49 Intermet Corp. 9.750% 06/15/09 67 Iridium LLC/CAP 10.875% 07/15/05 18 Iridium LLC/CAP 11.250% 07/15/05 17 Iridium LLC/CAP 13.000% 07/15/05 17 Iridium LLC/CAP 14.000% 07/15/05 18 IT Group Inc. 11.250% 04/01/09 1 Kaiser Aluminum & Chem. 12.750% 02/01/03 14 Kmart Corp. 6.000% 01/01/08 15 Kmart Funding 9.440% 07/01/18 40 Lehman Bros. Holding 6.000% 05/25/05 67 Lehman Bros. Holding 7.500% 09/03/05 63 Level 3 Comm. Inc. 2.875% 07/15/10 58 Level 3 Comm. Inc. 6.000% 03/15/10 52 Level 3 Comm. Inc. 6.000% 09/15/09 54 Liberty Media 3.750% 02/15/30 66 Liberty Media 4.000% 11/15/29 71 LTV Corp. 8.200% 09/15/07 0 MacSaver Financial 7.400% 02/15/02 9 MacSaver Financial 7.600% 08/01/07 8 MacSaver Financial 7.875% 08/01/03 9 Metro Mortgage 9.000% 12/15/04 0 Mississippi Chem. 7.250% 11/15/17 73 Muzak LLC 9.875% 03/15/09 68 Nat'l Steel Corp. 8.375% 08/01/06 3 Nat'l Steel Corp. 9.875% 03/01/09 3 Northern Pacific Railway 3.000% 01/01/47 59 Northpoint Comm. 12.875% 02/15/10 1 Northwest Airlines 7.248% 01/02/12 73 Northwest Airlines 7.360% 02/01/20 66 Northwest Airlines 7.875% 03/15/08 71 Northwest Airlines 8.070% 01/02/15 65 Northwest Airlines 8.130% 02/01/14 68 Northwest Airlines 10.000% 02/01/09 72 Northwest Steel & Wir. 9.500% 06/15/01 0 Nutritional Src. 10.125% 08/01/09 72 Oakwood Homes 7.875% 03/01/04 41 Oakwood Homes 8.125% 03/01/09 25 Oglebay Norton 10.000% 02/01/09 75 O'Sullivan Ind. 13.375% 10/15/09 31 Orion Network 11.250% 01/15/07 52 Orion Network 12.500% 01/15/07 52 Owens Corning 7.000% 03/15/09 66 Owens Corning 7.500% 05/01/05 68 Owens Corning 7.500% 08/01/18 67 Owens Corning 7.700% 05/01/08 68 Owens Corning Fiber 8.875% 06/01/02 65 Pegasus Satellite 9.625% 10/15/05 55 Pegasus Satellite 9.750% 12/01/06 60 Pegasus Satellite 12.375% 08/01/06 60 Pegasus Satellite 12.500% 08/01/07 61 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings Inc. 9.875% 06/15/08 61 Penn Traffic Co. 11.000% 06/29/09 50 Piedmont Aviat. 10.300% 03/28/06 7 Piedmont Aviat. 10.300% 03/28/12 0 Polaroid Corp. 6.750% 01/15/02 2 Polaroid Corp. 7.250% 01/15/07 3 Polaroid Corp. 11.500% 02/15/06 2 Primedex Health 11.500% 06/30/08 50 Primus Telecom 3.750% 09/15/10 58 Railworks Corp. 11.500% 04/15/09 1 Read-Rite Corp. 6.500% 09/01/04 55 Realco Inc. 9.500% 12/15/07 40 Reliance Group Holdings 9.000% 11/15/00 25 Reliance Group Holdings 9.750% 11/15/03 2 RDM Sports Group 8.000% 08/15/03 0 RJ Tower Corp. 12.000% 06/01/13 60 S3 Inc. 5.750% 10/01/03 0 Safety-Kleen Corp. 9.250% 05/15/09 0 Safety-Kleen Corp. 9.250% 06/01/08 0 Salton Inc. 12.250% 04/15/08 67 Silverleaf Res. 10.500% 04/01/08 0 Specialty Paperb. 9.375% 10/15/06 75 Syratech Corp. 11.000% 04/15/07 26 Teligent Inc. 11.500% 12/01/07 0 Tower Automotive 5.750% 05/15/24 18 Twin Labs Inc. 10.250% 05/15/06 17 United Air Lines 6.831% 09/01/08 13 United Air Lines 7.762% 10/01/05 3 United Air Lines 7.811% 10/01/09 38 United Air Lines 8.030% 07/01/11 12 United Air Lines 8.250% 04/26/08 21 United Air Lines 8.310% 06/17/09 53 United Air Lines 8.700% 10/07/08 47 United Air Lines 9.000% 12/15/03 9 United Air Lines 9.125% 01/15/12 8 United Air Lines 9.200% 03/22/08 45 United Air Lines 9.350% 04/07/16 48 United Air Lines 9.560% 10/19/18 38 United Air Lines 9.750% 08/15/21 8 United Air Lines 9.760% 05/13/06 48 United Air Lines 10.020% 03/22/14 45 United Air Lines 10.250% 01/15/07 8 United Air Lines 10.360% 11/20/12 54 United Air Lines 10.670% 05/01/04 8 Univ. Health Services 0.426% 06/23/20 59 United Homes Inc. 11.000% 03/15/05 0 US Air Inc. 7.500% 04/15/08 0 US Air Inc. 8.930% 04/15/08 0 US Air Inc. 10.250% 01/15/07 1 US Air Inc. 10.490% 06/27/05 3 US Air Inc. 10.900% 01/01/09 5 US Air Inc. 10.900% 01/01/10 5 US Airways Inc. 7.960% 01/20/18 48 US Airways Pass. 6.820% 01/30/14 40 Westpoint Stevens 7.875% 06/15/08 0 Winn-Dixie Store 8.875% 04/01/08 59 Winsloew Furniture 12.750% 08/15/07 20 Winstar Comm Inc. 12.500% 04/15/08 0 World Access Inc. 13.250% 01/15/08 3 ********* 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. 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