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/raid1/www/Hosts/bankrupt/TCR_Public/050323.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, March 23, 2005, Vol. 9, No. 69 Headlines AIR CANADA: Ace Aviation Raising $600 Mil. Through Bond Offering AIR CANADA: Gets BMO Nesbitt's Commitment for $300 Mil. Revolver ALLIED WASTE: Completes $3.425 Billion Credit Facility Refinancing AMERICA ONLINE LATIN: Warns of Chapter 11 Filing AMERICAN CASINO: Solid Performance Cues S&P to Lift Rating to B+ AMI SEMICONDUCTOR: Moody's Rates $300M Loan & Facility at Ba3 AMORTIZING RESIDENTIAL: S&P Holds Low-B Ratings on 2 Cert. Classes ANN TAYLOR: S&P Revises Outlook on BB- Credit Rating to Stable APPLIED EXTRUSION: Wants Until April 29 to Remove Actions APPLIED EXTRUSION: Ask Court to Formally Close Chapter 11 Cases ATA AIRLINES: Inks Employment Pact with CEO John Denison ATA AIRLINES: Moody's Junks Six Trust Certificate Classes ATR LAND LLC: Case Summary & Largest Unsecured Creditor BAKER ENTERPRISES: Case Summary & 27 Largest Unsecured Creditors BANC OF AMERICA: S&P Holds Low-B Rating on 12 Certificate Classes BEARINGPOINT INC: Weak Controls Prompt Moody's to Slice Ratings CATHOLIC CHURCH: Spokane Can Maintain Existing Bank Accounts CATHOLIC CHURCH: Court Approves Spokane's Interim Fee Procedure CENTURY/ML: Wants Until June 30 to File a Plan of Reorganization COGENTRIX DELAWARE: Moody's Holds Ba2 Rating on $246M Facility COLLINS & AIKMAN: Weak Liquidity Prompts Moody's to Slice Ratings CONE MILLS: Has Until April 18 to File Notices of Removal DINASTIA L.P.: Case Summary & 20 Largest Unsecured Creditors EMISPHERE TECH: PwC Expresses Going Concern Doubt in Annual Report ENERSYS: S&P Reviews Low-B Ratings & May Cut After Fiamm Buy-Out FIBERMARK: Scraps Chapter 11 Plan & Goes Back to Drawing Board FIRST REPUBLIC: Completes $50 Million Preferred Stock Offering FRESH CHOICE: Asks Court to Bless Workers' Compensation L/C Deal GENERAL DATACOMM: Has Until June 6 to Object to Proofs of Claim GENEVA STEEL: Sierra Energy to Examine CEO & Creditors in April GRAFTECH INT'L: Poor Performance Prompts S&P to Downgrade Ratings HEALTHSOUTH CORP: Closes $715 Million Refinancing & Cures Default HILITE INT'L: Moody's Assigns Low-B Ratings to $465 Million Debt HILITE INT'L: S&P Rates Planned $180M Sr. Sec. Facilities at BB- INTERSTATE BAKERIES: Recalculating Non-Union Retiree Premiums J.C. PENNEY: Fitch Says Capital Restructuring Won't Affect Ratings KRISPY KREME: Subsidiary & Officer Face ERISA Complaint in NC LIBERATE TECH: Shareholders to Vote on Asset Sale on April 5 LORAL SPACE: Disagrees with Examiner on Estate's Value LORAL SPACE: Revised Consensual Chapter 11 Plan on the Table LORAL SPACE: Pref. Shareholders Want Official Committee Appointed MCI INC: Halts Talks; Qwest Seeks Meeting with Monitor MCI INC: Files Annual Report on Form 10-K with SEC MILLER EXCAVATING: Case Summary & List of Known Creditors MIRANT: 9th Circuit Remands Suit Under Clayton Act to Dist. Court MIRANT CORP: Wants to Enter into New Trading Contracts NANOPIERCE TECH: Losses & Deficit Trigger Going Concern Doubt NAVARRE CORP: Moody's Places B3 Rating on $125M Sr. Unsec. Notes NEXSTAR BROADCASTING: Moody's Puts B3 Rating on $75M Sr. Sub. Debt OWENS CORNING: Seeking Creditors' Compromise in Plan Confirmation OWENS-ILLINOIS: Edward White Succeeds Thomas Young as CFO PARMALAT GROUP: Citigroup Seeks Discovery in New Jersey Action PEI HOLDINGS: Moody's Withdraws Low-B Ratings After Tender Offer PHILLIPS-VAN: S&P Says Outlook is Positive Due to Good Portfolio PLY GEM: Lenders Waive Covenant Defaults Through April 2005 POTLATCH CORP: Annual Shareholders Meeting Scheduled for May 2 PRIME CAMPUS: Case Summary & 20 Largest Unsecured Creditors QWEST COMMS: Seeks Meeting with Monitor After MCI Halts Talks SGD HOLDINGS: Creditors Must File Proofs of Claim by July 7 SGD HOLDINGS: Section 341(a) Meeting Slated for April 8 SOLUTIA INC: Court Okays Kirkland's Employment on Interim Basis SPIEGEL INC: Asks Court to Okay Work Fee Letters with Lenders SPIEGEL INC: Wants Home Store Lease Disposition Protocol Set SPIEGEL INC: Wants Court to Compel FCNB Agent to Produce Documents STRUCTURED ASSET: Moody's Puts Ba2 Rating on Class M-9 Sub. Certs. TELESOURCE INT'L: $15.2 Million Deficit Spurs Going Concern Doubt TOM'S FOODS: Renewed Warning About a Chapter 11 Filing UAL CORPORATION: Wants to Amend Boeing Aircraft Lease UNIVERSAL HOSPITAL: Dec. 31 Equity Deficit Widens to $93.1 Million V-ONE CORP.: Files for Chapter 11 Protection in Maryland VALCOM INC: Losses & Deficit Trigger Going Concern Doubt VALMONT INDUSTRIES: Moody's Says Liquidity is Good VARTEC TELECOM: U.S. Trustee Amends Creditors Committee Membership VERILINK CORP: Inks $10 Million Private Debt Placement Agreement WILLIAM TAYLOR: Case Summary & 8 Largest Unsecured Creditors YUKOS OIL: Says It Will Drop U.S. Bankruptcy Appeal YUKOS OIL: Fulbright Wants to Disburse Fees from $5-Mil. Retainer * Gibson Dunn Adds Five Media & Entertainment Litigators to Firm * Chadbourne & Parke Welcomes Christopher Owen as Partner * Upcoming Meetings, Conferences and Seminars ********* AIR CANADA: Ace Aviation Raising $600 Mil. Through Bond Offering ---------------------------------------------------------------- ACE Aviation Holdings, Inc., has filed preliminary prospectuses in Canada for the concurrent offering of Class A Variable Voting Shares and Class B Voting Shares, and Convertible Senior Notes due 2035. Gross proceeds from the concurrent offerings are expected to be approximately $600 million, approximately $350 million in equity and approximately $250 million in convertible notes. It is anticipated that ACE will grant the underwriters over-allotment options to purchase up to an additional 15 per cent of each of the offerings, during the 30 days following closing. The net proceeds from the offerings will be used primarily to repay currently outstanding debt of $540 million under the exit credit facility with General Electric Capital Corporation. The repayment of this exit facility will reduce net annual interest costs by an estimated $27 million and will provide ACE with greater strategic and financial flexibility. As at March 18, 2005, the Company's consolidated cash balance, measured on the basis of cash in bank accounts, amounted to approximately $1.7 billion and after giving effect to the offering, the syndicated credit facility and the repayment of the exit facility, the Company will have cash and committed credit facilities in excess of $2 billion, resulting in adjusted net debt (including the capitalized value of all aircraft leases) of approximately $4 billion. RBC Capital Markets, BMO Nesbitt Burns and CIBC World Markets are acting as joint bookrunning managers for the equity offering. RBC Capital Markets, Merrill Lynch and BMO Nesbitt Burns are acting as joint bookrunning managers for the convertible senior note offering. The shares and convertible notes being offered by ACE have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Air Canada filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher, serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from their creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On September 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising $1.1 billion of new equity capital and, as of September 30, has approximately $1.9 billion of cash on hand. As of December 31, 2004, Air Canada's shareholders' deficit narrowed to CDN$203 million compared to a $4.155 billion deficit at December 31, 2004. (Air Canada Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Gets BMO Nesbitt's Commitment for $300 Mil. Revolver ---------------------------------------------------------------- Air Canada, ACE Aviation Holdings Inc.'s principal subsidiary, obtained commitments from a syndicate of lenders for the establishment of a two-year senior secured revolving credit facility in an aggregate amount of $300 million, subject to completion of the equity offering. Bank of Montreal is acting as administrative agent for the syndicated revolving credit facility. The syndicate of lenders includes Bank of Montreal, Royal Bank of Canada, Canadian Imperial Bank of Commerce, Merrill Lynch Capital Canada, The Toronto- Dominion Bank, Citigroup and Deutsche Bank AG. ACE Aviation and Air Canada entered into a commitment letter with BMO Nesbitt Burns Inc. and its Canadian chartered bank parent for the $300,000,000 senior secured syndicated revolving credit facility on February 7, 2005. ACE Aviation discloses in a recent filing with the Canadian Securities Administrators that the facility may be extended at Air Canada's option for additional one-year periods on each anniversary of closing, subject to approval by a majority of the lenders. A swingline facility of up to $20,000,000 will be provided for cash management and working capital needs. The amount available to be drawn by Air Canada under the revolving credit facility will be limited to the lesser of $300,000,000 and the amount of a borrowing base determined with reference to certain eligible accounts receivable of Air Canada and eligible real property owned and leased land of Air Canada. The credit facility will be secured by a first priority security interest and hypothec over the present and after acquired property of Air Canada, subject to certain exclusions and permitted encumbrances. Air Canada filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher, serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from their creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On September 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising $1.1 billion of new equity capital and, as of September 30, has approximately $1.9 billion of cash on hand. As of December 31, 2004, Air Canada's shareholders' deficit narrowed to CDN$203 million compared to a $4.155 billion deficit at December 31, 2004. (Air Canada Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED WASTE: Completes $3.425 Billion Credit Facility Refinancing ------------------------------------------------------------------ Allied Waste Industries, Inc. (NYSE: AW) completed the refinancing and funding of its credit facility. The new credit facility includes: -- a $1.35 billion term loan, -- a $1.575 billion revolving credit facility, and -- a $500 million institutional letter of credit facility. The term loan and institutional letter of credit facility are both priced at LIBOR plus 200 basis points. The revolving credit facility is priced at LIBOR plus 300 basis points and includes grid-based pricing tied to changes in the company's leverage ratio. The refinancing of the existing credit facility was the final piece of the multifaceted financing plan announced on Feb. 22, 2005, that included the offering of: -- $600 million of 7.25% senior notes, -- $600 million of mandatory convertible preferred stock, and -- $100 million of common stock. Additional terms of the new credit facility include: * Maturities -- Maturity of the revolver was extended from 2008 to 2010. The term loan and institutional letter of credit facilities were extended from 2010 to 2012 and will amortize at an annual rate of 1% of the principal from 2005 through 2011, with the balance due 2012. * Liquidity -- Revolver capacity was increased from $1.5 billion to $1.575 billion and the institutional letter of credit facility was increased from $200 million to $500 million, giving the company over$1 billion of available capacity. * Covenants -- Financial covenants are consistent with those in the previous credit facility and include an Interest Coverage Covenant and a Leverage Covenant. The minimum and maximum thresholds under these covenants improved to the following: Interest Coverage Minimum Threshold: For the Through the Quarter Ending Quarter Ending EBITDA*/Interest March 31, 2005 December 31, 2005 1.85x March 31, 2006 June 30, 2006 1.95x September 30, 2006 December 31, 2006 2.00x March 31, 2007 March 31, 2007 2.10x June 30, 2007 June 30, 2007 2.15x September 30, 2007 March 31, 2008 2.20x June 30, 2008 September 30, 2008 2.25x December 31, 2008 December 31, 2008 2.30x March 31, 2009 June 30, 2009 2.40x September 30, 2009 December 31, 2009 2.55x March 31, 2010 Thereafter 2.75x Leverage Maximum Threshold: For the Through the Quarter Ending Quarter Ending Total Debt/EBITDA* March 31, 2005 December 31, 2005 6.50x March 31, 2006 June 30, 2006 6.25x September 30, 2006 December 31, 2006 6.00x March 31, 2007 June 30, 2007 5.75x September 30, 2007 December 31, 2008 5.50x March 31, 2009 June 30, 2009 5.25x September 30, 2009 December 31, 2009 5.00x March 31, 2010 Thereafter 4.50x "We are pleased with the successful completion of the refinancing of the credit facility, which was the final piece of our multifaceted financing plan," said Pete Hathaway, Executive Vice President and CFO of Allied Waste. "We now have a clear path to execute our operational initiatives with minimal debt maturities over the next three years, ample room under our revised covenants and over $1 billion of available capacity under our revolver. We will also reduce our annual cash interest payments by almost $60 million, partially offset by $38 million of new dividends, for a net annual benefit of over $20 million." About the Company Allied Waste Industries, Inc., a leading waste services company, provides collection, recycling and disposal services to residential, commercial and industrial customers in the United States. As of December 31, 2004, Allied Waste served customers through a network of 314 collection companies, 165 transfer stations, 166 active landfills and 58 recycling facilities in 37 states. * * * As reported in the Troubled Company Reporter on Feb. 28, 2005, Fitch Ratings' indicative ratings for Allied Waste's (NYSE: AW) new securities are: * 'BB-' for the new senior secured credit facility, * 'B+' for the new 10-year senior secured, and * 'CCC+' for the new three-year mandatory convertible preferred stock. Existing ratings are: * 'BB-' for senior secured credit facility, * 'B+' for senior secured notes, * 'B' for senior unsecured notes, * 'B-' for senior subordinated notes, and * 'CCC+' for mandatory convertible preferred stock. Fitch says the outlook is negative. AMERICA ONLINE LATIN: Warns of Chapter 11 Filing ------------------------------------------------ America Online Latin America, Inc., said in a regulatory filing with the Securities and Exchange Commission yesterday that it does not expect to reach cash flow break even with available cash on hand. The Company expects available cash will only be sufficient to fund operations into the third quarter of 2005. To continue operations beyond such time, the Company says it will need an additional, substantial capital infusion. The Company says it may not be able to obtain additional financing, whether from Time Warner Inc., America Online, Inc., the Cisneros Group of Companies, Banco Ita�, S.A. or any other source. "We are not currently expending resources to obtain financing from any source because we believe that any efforts to obtain financing would be futile based on past experience," the Company said. Since May 2004, AOL Latin America has consulted with its financial advisors, and explored potential strategic alternatives, including a possible sale of the entire company, the sale of one or more operating businesses, the sale of specific assets or other comparable transactions. No transaction's materialized to date. "We are reviewing preliminary and non-binding indications of interest from multiple parties with respect to the sale of certain assets," AOL Latin America says. AOL Latin America notes that Time Warner, the holder of $160 million of its senior convertible notes, has the right to require it to use the proceeds from any sale transaction to repay the senior convertible notes. In addition, AOL Latin America preferred stock has a current aggregate liquidation preference of approximately $599 million, excluding accrued but unpaid dividends. "Even if we are successful in selling all of our businesses, the proceeds will not be sufficient to repay the senior convertible notes, and none of those proceeds will be available to our common stockholders. As a result, we do not believe that our common stock has, or will have, any value," Executive Vice President and CFO Osvaldo Banos says. "If we do not consummate the disposition of our businesses in a timely manner, we expect to cease operating those businesses, although no definitive decision has been made to cease any particular operation at any particular time," Mr. Banos continues. "At any time during the process of attempting to sell our businesses or ceasing any operation, we may conclude that it is advantageous for us to file for protection under the bankruptcy laws of the United States or the insolvency laws of one or more foreign jurisdictions in which we operate. Any such voluntary filing would require the consent of the holders of our class B and C preferred stock, in addition to the authorization of our board of directors. "On March 16, 2005," Mr. Banos relates, "management concluded that AOLA is not a going concern for financial reporting purposes and eventually will not have sufficient funds to continue operations. In light of that conclusion, management reviewed current contracts in effect and determined that the recording of a partial impairment of the remaining unamortized balance of unearned services recorded as a result of our strategic marketing agreement with Banco Ita� was necessary. Management estimates that the amount of this non-cash impairment is approximately $38.9 million. In addition, we believe that our disclosure in this report concerning our financial condition and prospects may have resulted in a default under the senior convertible notes held by Time Warner. This may have accelerated automatically our obligation to repay these notes and, therefore, the full $160 million may be immediately due and payable. We do not have sufficient funds available to repay this debt." AOL Latin America expects that Ernst & Young LLP will include a going concern qualification in its report when it reviews the company's 2004 audited financial statements. America Online Latin America, Inc., is a leading interactive service provider in Latin America, deriving the bulk of its revenues principally from member subscriptions in Brazil, Mexico, Argentina and Puerto Rico. AOLA also generates additional revenues from advertising and other revenue sources, including programming services provided to America Online for Latino content area and revenue sharing agreements with certain local telecommunications providers. At Sept. 30, 2004, AOLA's balance sheet shows $39.9 million in assets and a $147.4 million shareholder deficit. AMERICAN CASINO: Solid Performance Cues S&P to Lift Rating to B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on casino owner and operator American Casino & Entertainment Properties LLC, including its corporate credit rating to 'B+' from 'B'. The outlook is stable. The company has about $219 million in total debt. "The upgrade reflects [American Casino's] continued solid operating performance and modest debt leverage, providing a cushion within the rating in the event of a downturn in the Las Vegas market or for an increase in capital expenditures," said Standard & Poor's credit analyst Peggy Hwan. The ratings on Las Vegas, Nevada-headquartered American Casino reflect a portfolio of second-tier assets, the disadvantaged location on the Las Vegas Strip of its largest cash flow generating property, reliance on a single market, and a relatively small cash flow base. AMI SEMICONDUCTOR: Moody's Rates $300M Loan & Facility at Ba3 ------------------------------------------------------------- Moody's Investors Service raised the ratings of AMI Semiconductor, Inc., to reflect improvements in revenue and profitability, the relative stability of the company's predominantly integrated mixed signal business as well as the company's modest debt reduction efforts as evidenced by the pending $130 million senior subordinated bond tender and refinancing. At the same time, Moody's assigned ratings for AMI's proposed new bank credit facilities. Proceeds from the new facilities plus cash on hand of approximately $75 million will be used to refinance the existing bank credit facilities as well as the senior subordinated notes. The rating outlook is stable. These ratings were raised: * Senior implied rating raised to Ba3 from B1; * $125 million senior secured term loan maturing 2008 raised to Ba3 from B1; * $90 million senior secured revolving credit facility maturing 2006 raised to Ba3 from B1; and * $200 million (now $130 million) senior subordinated notes maturing 2013 raised to B2 from B3. This rating was affirmed: * Senior unsecured issuer rating affirmed at B2. These ratings were assigned: * $210 million senior secured term loan maturing 2012 assigned Ba3; and * $90 million revolving credit facility maturing 2010 assigned Ba3. The rating on the senior subordinated notes and existing bank credit facilities will be withdrawn once the tender is completed. The ratings on the new bank credit facilities are subject to review of final documentation. The ratings reflect the company's: 1. solid credit metrics including pro forma leverage (debt / EBITDA) of 1.5x and pro forma EBIT interest coverage exceeding 10x; 2. the relative stability of the business model due to long product lives and moderate price volatility in the integrated mixed signal operations; 3. long-standing customer relationships; and 4. the company's low capital intensity which contributes to moderate operating leverage and Moody's expectation that free cash flow in 2005 will be greater than 20% of outstanding debt, pro forma for the planned transaction. The rating is constrained by: 1. the company's lack of scale compared to some of its major competitors; 2. modest liquidity with pro forma cash balances expected to be less than $100 million; and 3. some volatility in margins primarily resulting from the degree of utilization of the company's fabrication facilities. The stable outlook reflects expectations for continued growth in revenues over the medium term, maintenance of healthy margins and continuation of strong customer relationships. Nevertheless, near term revenue growth will be challenged. Upward rating pressure may be constrained by the limited scale of the business unless free cash flow improves meaningfully and there is cash build or reduction in debt. Ratings could be pressured if the company loses a significant number of customers; the company relevers the balance sheet; or if the company engages in significant acquisition activity. AMI's financial performance benefits from the company's mixed- signal operations, comprising 56% of 2004 revenues, which focus on the automotive, medical and industrial end-markets. These markets are characterized by longer product lives and less volatility compared to other end-markets such as communications. AMI benefits from long product lives because once the design is accepted, AMI typically becomes the sole source for the life of the product. The high proportion of sales to the target markets reduces planning risk over the medium term and allows the company to plan its investment needs with relatively good visibility. Further, AMI's design capability and steady execution should support continued long-standing relationships with its customers. The company's current EBITDA margins in excess of 25% reflect strong semiconductor market conditions through most of 2004 but could weaken should market conditions continue to deteriorate. The company's technologies do not depend on leading edge capital equipment; therefore, Moody's anticipates that capex will remain less than 10% of revenues. The company's financial performance, coupled with the reduction in interest expense expected through the proposed refinancing and bond tender, will increase EBIT interest coverage to more than 10x, though at the expense of lower balance sheet liquidity. Pro forma debt to EBITDA will fall to approximately 1.5x following the refinancing. The Ba3 ratings on the proposed bank credit facilities are based on Moody's belief that the collateral coverage is not adequate to warrant notching the facilities above the Ba3 senior implied rating. The shift in the capital structure effectively subordinates unsecured creditors to a larger amount of secured debt, hence the affirmation of the B2 issuer rating. AMI Semiconductor is a leader in designing and manufacturing mixed-signal application-specific integrated circuits and structured digital products. Revenues were $517 million in 2004. AMORTIZING RESIDENTIAL: S&P Holds Low-B Ratings on 2 Cert. Classes ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on 18 classes from nine series of mortgage pass-through certificates issued by Amortizing Residential Collateral Trust. Concurrently, ratings are affirmed on 92 classes from 19 series from the same issuer. The raised ratings reflect the increase in the actual and projected credit support percentages to the respective classes, although the total delinquency and cumulative realized loss percentages were relatively high. The higher credit support percentages resulted from the shifting interest structure of the transactions, benefiting from the significant paydown of their respective mortgage pools. As a result, the projected credit support percentages for these classes have grown to more than twice their original credit support percentages. As of the February 2005 remittance period, the outstanding pool principal balances for these transactions ranged from 18.48% (series 2002-BC2) to 26.61% (series 2002-BC8). Total delinquencies ranged from 20.01% (series 2002-BC4) to 30.11% (series 2002-BC7), while cumulative realized losses ranged from 0.69% (series 2002-BC8) to 1.22% (series 2002-BC7). In addition, each of these transactions was at its respective overcollateralization target. The affirmed ratings reflect adequate actual and projected credit support percentages, with total delinquencies ranging from 4.93% (series 2004-1) to 40.52% (series e2001-BC4). Cumulative realized losses ranged from 0.00% (series 2004-1) to 2.03% (series 2000- BC3). In addition, these transactions are at their respective overcollateralization targets. Credit support for these transactions is provided by subordination, overcollateralization, and excess interest cash flow. In addition, loan-level primary mortgage insurance (deep MI) was purchased for a majority of the noninsured mortgage loans with loan-to-value (LTV) ratios greater than 60%. The primary mortgage insurance covers claims on the uninsured portion of the mortgage loan, down to an effective LTV ratio of 60%. The seller purchased the primary mortgage insurance on behalf of the individual trusts (through Mortgage Guaranty Insurance Corp., ('AA+'), PMI Mortgage Insurance Co., ('AA+'), or Radian Mortgage Guaranty Inc., ('AA')). The collateral for these transactions comprises 30-year, subprime, fixed-or adjustable-rate mortgage loans, which are secured by first liens on one-to-four family residential properties. Ratings Raised Amortizing Residential Collateral Trust Mortgage pass-thru certificates Series Class To From ------ ----- -- ---- 2002-BC1 M1 AA+ AA 2002-BC2 M1 AA+ AA 2002-BC3 M1 AA+ AA 2002-BC3 M2 A+ A 2002-BC4 M1 AA+ AA 2002-BC4 M2 A+ A 2002-BC5 M1 AAA AA 2002-BC5 M2 AA- A 2002-BC6 M1 AA+ AA 2002-BC6 M2 A+ A 2002-BC7 M1 AAA AA+ 2002-BC7 M2 AA+ AA 2002-BC7 M3 AA AA- 2002-BC7 M4 AA- A+ 2002-BC8 M1 AA+ AA 2002-BC8 M2 A+ A 2002-BC9 M1 AA+ AA 2002-BC9 M2 A+ A Ratings Affirmed Amortizing Residential Collateral Trust Mortgage pass-thru certificates Series Class Rating ------ ----- ------ 2000-BC1 A1, A2 AAA 2000-BC1 M1 AA+ 2000-BC1 M2 A 2000-BC2 A2 AAA 2000-BC2 M1 AA+ 2000-BC2 M2 A 2000-BC3 A2 AAA 2000-BC3 M1 AA+ 2000-BC3 M2 A 2000-BC3 B BBB 2001-BC1 A1 AAA 2001-BC1 M1 AA 2001-BC1 M2 A 2001-BC3 A AAA 2001-BC3 M1 AA+ 2001-BC4 A1, A2 AAA 2001-BC4 M1 AA+ 2001-BC4 M2 A 2001-BC4 B BBB 2001-BC5 A-1, A-2 AAA 2001-BC5 M1 AA 2001-BC5 M2 A 2001-BC6 A AAA 2001-BC6 M1 AA+ 2001-BC6 M2 A 2001-BC6 B BBB 2002-BC1 A, A-IO AAA 2002-BC1 M2 A 2002-BC1 B BBB 2002-BC2 A, A-IO AAA 2002-BC2 M2 A 2002-BC2 B BBB 2002-BC3 A, A-IO AAA 2002-BC3 B1 BBB- 2002-BC4 A AAA 2002-BC4 M3 BBB 2002-BC4 B1 BBB- 2002-BC5 A AAA 2002-BC5 M3 BBB 2002-BC5 B BBB- 2002-BC6 A1, A2, A4 AAA 2002-BC6 M3 BBB 2002-BC6 B BBB- 2002-BC7 A1, A3 AAA 2002-BC7 M5 A 2002-BC7 M6 A- 2002-BC7 B1 BBB+ 2002-BC7 B2 BBB 2002-BC7 B3 BBB- 2002-BC8 A1, A3 AAA 2002-BC8 M3 BBB+ 2002-BC8 M4 BBB 2002-BC8 B BBB- 2002-BC9 A1, A2 AAA 2002-BC9 M3 BBB+ 2002-BC9 M4 BBB 2002-BC9 B BBB- 2002-BC10 A1, A2, A3, A4 AAA 2002-BC10 M1 AA 2002-BC10 M2 A 2002-BC10 M3 BBB+ 2002-BC10 B BBB- 2004-1 A1, A2, A3, A4, A5 AAA 2004-1 M1 AA+ 2004-1 M2 AA 2004-1 M3 AA- 2004-1 M4 A+ 2004-1 M5 A 2004-1 M6 A- 2004-1 M7 BBB+ 2004-1 M8 BBB 2004-1 M9 BBB- 2004-1 B1 BB+ 2004-1 B2 BB ANN TAYLOR: S&P Revises Outlook on BB- Credit Rating to Stable -------------------------------------------------------------- Standard & Poor's Ratings Services revised it outlook on specialty women's apparel retailer Ann Taylor, Inc., to stable from positive. The 'BB-' corporate credit rating on the company was affirmed. "The outlook revision is based on the company's weaker-than- anticipated results in the fourth quarter ended Jan. 29, 2005," said Standard & Poor's credit analyst Ana Lai. "In addition, we do not expect that Ann Taylor's financial profile will improve to levels that warrant an upgrade, given the inconsistent operating performance at the company's Ann Taylor Stores unit. The rating continues to reflect Ann Taylor's high business risk given its participation in the highly competitive and fashion sensitive specialty women's apparel industry, inconsistent operating performance, and the rapid growth strategy at the Ann Taylor Loft business." Ann Taylor reported a significant decline in operating results in the fourth quarter ended Jan. 29, 2005, with comparable-store sales declining 4%, reflecting a 10.1% drop at Ann Taylor Stores, tempered by a 3.2% gain at its Ann Taylor Loft division. This compares to a 15.5% comparable-store sales increase for the prior year. Poor consumer response to Ann Taylor Stores' fall merchandise contributed to a steep decline in profitability. The company reported an operating loss of about $21.5 million, compared with an operating income of about $54 million a year ago. Due to the negative earnings in the fourth quarter, operating margins declined to about 13% in the fiscal year ended January 29, 2005, compared with 19% the previous year. APPLIED EXTRUSION: Wants Until April 29 to Remove Actions --------------------------------------------------------- Applied Extrusion Technologies, Inc., and its debtor-affiliate ask the U.S. Bankruptcy Court for the District of Delaware for an extension, through and including April 29, 2005, to remove actions and related proceedings pursuant to Section 1452 of the Judiciary Procedures Code and Rules 9006 and 9027 of the Federal Rules of Bankruptcy Procedure. The Debtors explain that they are parties to various Actions currently pending in various State Courts and they need additional time to determine whether removal is appropriate for any of the State Court Actions. The Debtors want to protect their right to remove any of the State Court Actions or any additional actions asserted against their estates. The Debtors assure the Bankruptcy Court that the requested extension will not prejudice their adversaries' rights or of any parties involved in the State Court Actions. The Bankruptcy Court will convene a hearing at 4:00 p.m., on March 29, 2005, to consider the Debtors' extension request. Headquartered in New Castle, Delaware, Applied Extrusion Technologies, Inc. -- http://www.aetfilms.com/-- develops & manufactures specialized oriented polypropylene films used primarily in consumer products labeling and flexible packaging application. The Company and its debtor-affiliate filed for chapter 11 protection on Dec. 1, 2004 (Bankr. D. Del. Case No. 04-13388). Edward J. Kosmowski, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, and Sheldon K. Rennie, Esq., at Fox Rothschild O'Brien & Frankel LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $407,912,000 in total assets and $414,957,000 in total debts. APPLIED EXTRUSION: Ask Court to Formally Close Chapter 11 Cases --------------------------------------------------------------- Applied Extrusion Technologies, Inc., and its debtor-affiliate, Applied Extrusion Technologies (Canada), Inc., ask the U.S. Bankruptcy Court for the District of Delaware to enter a final decree formally closing their chapter 11 cases. The Court confirmed the Debtors' Plan of Reorganization on Jan. 24, 2005, and the Plan became effective on March 8, 2005. The Debtors present four reasons militating in favor of their request: a) the Reorganized Debtors' estates have been fully administered, the confirmed Plan has been substantially consummated, all Claims other than Disputed Claims have been processed and all payments to Allowed Claims have been made; b) the Debtors continue to work to reconcile and resolve all Disputed Claims amounts with relevant creditors and they are willing to negotiate a resolution with the creditors of those Claims; c) the Debtors have filed on March 14, 2005, the Final Report on their chapter 11 cases, and there are no more motions, contested matters and adversary proceedings pending before the Bankruptcy Court; d) all expenses arising from the administration of the Debtors' estates, including U.S. Trustee fees, professional fees and expenses have been paid or will soon be paid. The Debtors submit that these facts demonstrate cause for the Court to formally close their chapter 11 cases pursuant to Section 350 of the Bankruptcy Code, Bankruptcy Rule 3022 and Local Rule 5009-1. The Court will convene a hearing at 4:00 p.m., on March 29, 2005, to consider the Debtors' closure request. Headquartered in New Castle, Delaware, Applied Extrusion Technologies, Inc. -- http://www.aetfilms.com/-- develops & manufactures specialized oriented polypropylene films used primarily in consumer products labeling and flexible packaging application. The Company and its debtor-affiliate filed for chapter 11 protection on Dec. 1, 2004 (Bankr. D. Del. Case No. 04-13388). Edward J. Kosmowski, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, and Sheldon K. Rennie, Esq., at Fox Rothschild O'Brien & Frankel LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $407,912,000 in total assets and $414,957,000 in total debts. ATA AIRLINES: Inks Employment Pact with CEO John Denison -------------------------------------------------------- On Feb. 21, 2005, ATA Airlines, Inc., the principal operating subsidiary of ATA Holdings Corp, appointed John G. Denison as its Chief Executive Officer. Mr. Denison had previously served as the Company's Co-Chief Restructuring Officer since January 20, 2005. On March 7, 2005, ATA entered into an employment agreement with Mr. Denison. The agreement is for an indefinite period of time until the earlier of the time Mr. Denison resigns or voluntarily terminates his employment, or ATA Airlines' Board of Directors terminates his employment, removes him from office or appoints him to another position. Mr. Denison will receive $25,000 for the period from January 20, 2005, to February 20, 2005, and a beginning salary, commencing on February 21, 2005, of $315,000 per year. Mr. Denison is also eligible to be considered for a discretionary bonus on the earlier to occur of: (a) the termination of his employment; (b) a transaction involving ATA Holdings and ATA Airlines including a merger, recapitalization, acquisition of ATA Holding's stock or assets by a purchaser or confirmation of a Chapter 11 reorganization plan for ATA or the Company, or both of them; or (c) December 31, 2005. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Moody's Junks Six Trust Certificate Classes --------------------------------------------------------- Moody's Investors Service downgraded the debt ratings on selected Enhanced Equipment Trust Certificates of ATA Airlines, Inc., the primary operating subsidiary of ATA Holdings Corp. The rating outlook is negative. The downgrades reflect ATA's continuing operation under Chapter 11 protection and Moody's assessment of the adequacy of collateral protection for the transactions. Because of concern as to the adequacy of information to monitor the ratings on an ongoing basis, Moody's will withdraw all ratings assigned to ATA. The downgrades reflect the continuing difficult environment for values of the underlying collateral (the aircraft) and the pressures on the loan to values ratios, especially in transactions collateralized by B757-200 aircraft types. These aircraft are no longer in production, and secondary market values remain a concern. The lower tranche of securities that are secured by these aircraft are substantially under-collateralized, and the new ratings reflect risk levels that are similar to those of unsecured creditors. Moody's notes that seven B757-200 aircraft collateralizing the 2000-1 series were recently sold at auction, and estimates that the proceeds from the sale did not generate sufficient cash to repay outstanding principal to the Class C Certificate holders. Moody's Investors Service will withdraw its ratings assigned to all debt of ATA including the senior implied rating -- Caa3, and the senior unsecured rating -- C. Moody's is withdrawing its ratings because of insufficient ongoing information about the status of these securities to maintain a current opinion. Some recovery for holders of EETC's is anticipated but will be highly dependent on the value of the aircraft collateral, the structure of the individual transaction and the outcome of discussions with ATA. Ratings downgraded: -- Enhanced Equipment Trust Certificates: * Series 1996-1A to Caa1 from Ba2 * Series 1996-1B to Ca from Caa1 * Series 1997-1A to Caa1 from Ba2 * Series 1997-1B to Ca from Caa1 * Series 2000-1C to C from Caa1 * Series 2002-1A to Ba3 from Baa3 * Series 2002-1B to Caa1 from B1 All certificate classes benefit from the lien on the aircraft collateral, with access to that collateral under the provisions of Section 1110 of the US Bankruptcy Code and the deferral of default through the use of the liquidity facilities available to debt holders. The liquidity facilities provide up to 18 months of interest service, but any drawings under the facilities have a priority claim on the collateral. The ratings on ATA's Series 1996-1 and 1997-1 certificates were adjusted downward to reflect Moody's assessment of the realizable values of the 757 aircraft type which collateralize the transaction. Although widely used (about 865 in service with around 80 operators), demand for these aircraft has suffered in recent years mainly due to a ramp-up in production of newer, more fuel efficient aircraft. As a result of lower demand, Boeing ended production of the 757-200 series aircraft late last year. Although current demand has recovered from post 9/11 lows, Moody's remains concerned with the market's ability to absorb liquidations, as seen in the recent prices achieved at auction of other ATA 757's. Distressed airlines carry a significant number of 757s in their fleets. The ATA Series 2002-1 notes are secured by Boeing 737-800 series aircraft, currently similarly in wide demand. Moody's calculates that the loan-to-values associated with this transaction are substantially lower than the transactions supported by the B757's. However, with the passage of time the potential for Certificate default or a renegotiated payment stream increases risk to Certificate holders. In addition, drawings on the liquidity facilities and the cost associated with negotiating with ATA have a priority claim on collateral adding to the stress on principal. The ratings of the Class A and B Certificates have been adjusted to reflect this increased risk. ATA Holdings Corp and its primary operating subsidiary ATA Airlines, Inc. are headquartered in Indianapolis, IN. ATR LAND LLC: Case Summary & Largest Unsecured Creditor ------------------------------------------------------- Debtor: ATR Land, LLC dba American Trailer Repair, Inc 8001 West 47th Street Lyons, Illinois 60534 Bankruptcy Case No.: 05-10046 Type of Business: The Debtor repairs truck trailers. Chapter 11 Petition Date: March 21, 2005 Court: Northern District of Illinois (Chicago) Judge: Pamela S. Hollis Debtor's Counsel: Gina B. Krol, Esq. Cohen & Krol 105 West Madison Street, Suite 1100 Chicago, IL 60602 Tel: 312-368-0300 Fax: 312-368-4559 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Cook County Collector Real estate taxes Unknown 118 North Clark Room 314 Chicago, IL 60602 BAKER ENTERPRISES: Case Summary & 27 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Baker Enterprises, Inc. 4968 Underwood Avenue Baton Rouge, Louisiana 70805 Bankruptcy Case No.: 05-0775 Chapter 11 Petition Date: March 16, 2005 Court: Middle District of Louisiana Judge: Douglas D. Dodd Debtor's Counsel: Martin A. Schott, Esq. 7922-B Wrenwood Boulevard Baton Rouge, Louisiana 70809 Tel: (225) 928-9292 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 27 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Loretta Haydel $152,000 38020 Seven Oaks Prairieville, LA 70769 Jimmy McGraw $21,467 13012 Justice Blvd Baton Rouge, LA 70816 Jenny Baker (wife) $20,000 c/o 4968 Underwood Avenue Baton Rouge, LA 70805 Triche & Associates $17,906 Dell Value of Security: $16,690 $8,000 Wooddale Glass $12,845 c/o David Dawson, Esq. Lamar Advertising $9,500 Brekeen & Son's Flooring $8,598 Hancock Bank $8,444 Bailey's Lumber & Supply Co $7,874 c/o Sharon Kyle, Esq. CIT Technology Financing $6,600 c/o Dynamin Recovery Services Office Depot $6,586 Lexington General Agency $6,032 Great America Leasing Company $5,368 c/o Q Collection, Inc. Gray Bar Value of Security: $5,368 $3,000 Home Depot $4,596 c/o PRO Consulting Services, Inc. American Business Systems $3,388 Wells Fargo Financial Leasing $3,500 Climate Control $3,345 CIT Technology Financing $3,000 c/o Dynamic Recovery Services Lowes $2,893 c/o Universal Fidelity Corp. Harrison Paint Co. $2,613 Dorothy Baker (mother) $2,500 c/o 4968 Underwood Avenue Stanton's Ace Appliances $1,718 c/o Mac Achee, Esq. Nextel $1,823 c/o Diversified Consultants Capital City Glass $699 Federal Express $592 c/o Worthington, Moore & Jacobs BANC OF AMERICA: S&P Holds Low-B Rating on 12 Certificate Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 11 publicly rated classes of mortgage pass-through certificates from three series issued by Banc of America Funding Trust and Banc of America Funding Corp. At the same time, ratings are affirmed on 123 other classes from eight Banc of America Funding securitizations. Concurrently, ratings are affirmed on 66 classes from four Banc of America Alternative Loan Trust transactions. The raised ratings reflect: (1) credit support percentages that have increased to at least 2.05x the loss coverage levels associated with the new ratings on the upgraded issues; (2) excellent collateral pool performance, as demonstrated by low cumulative losses of no more than 3 basis points; (3) a shifting interest structure that has been influenced by significant principal prepayments, as evidenced by a 12-month constant prepayment rate averaging 45.13%; (4) remaining collateral balances that are less than half their original sizes; and (5) at least two years of mortgage seasoning. As of the February 2005 remittance date, the mortgage pools backing the certificates with raised ratings had serious delinquencies (90-plus days, foreclosure, and REO) of 4.35%, 0.22%, and 0.55% for series 2002-1, 2002-2, and 2003-1, respectively. The affirmations for the Banc of America Funding transactions are based on current credit enhancement percentages that are sufficient to support the certificates at their current ratings. Serious delinquencies ranged between 0.00% (for three series) and 0.22% (for series 2004-2). Furthermore, the mortgage pools backing the certificates with affirmed ratings experienced no realized losses. The affirmations for the Banc of America Alternative Loan Trust transactions reflect credit support percentages that are sufficient to support the current ratings. These transactions have also experienced excellent collateral performance with low delinquencies and no realized losses. Credit support for the transactions is provided by subordination. The underlying collateral backing the certificates consists of fixed rate, first-lien mortgage loans secured by one- to four- family residential properties. Ratings Raised Banc of America Funding Mortgage pass-through certificates Rating Series Class To From ------ ----- -- ---- 2002-1 B-1 AAA AA+ 2002-1 B-2 AAA A+ 2002-1 B-3 AA+ BBB 2002-2 B-1 AA+ AA 2002-2 B-2 AA- A 2002-2 B-3 A- BBB 2003-1 B-1 AAA AA 2003-1 B-2 AAA A 2003-1 B-3 AA BBB 2003-1 B-4 A BB 2003-1 B-5 BB B Ratings Affirmed Banc of America Funding Mortgage pass-through certificates Series Class Rating ------ ----- ------ 2000-1 1A-12,1A-WIO,2A-2,2A-WIO AAA 2002-1 A-1,A-5,A-WIO,A-PO AAA 2002-2 A-2,A-3,A-4,A-5,A-WIO,A-PO AAA 2003-1 A-1,A-WIO,A-PO AAA 2003-2 1-A-1,1-A-WIO,2-A-1,2-A-WIO,A-PO AAA 2003-3 1-A-1,1-A-2,1-A-3,1-A-4,1-A-5,1-A-6,1-A-7 AAA 2003-3 1-A-8,1-A-9,1-A-10,1-A-11,1-A-12,1-A-13 AAA 2003-3 1-A-14,1-A-15,1-A-16,1-A-17,1-A-18,1-A-19 AAA 2003-3 1-A-20,1-A-21,1-A-22,1-A-23,1-A-24,1-A-25 AAA 2003-3 1-A-26,1-A-27,1-A-28,1-A-29,1-A-30,1-A-31 AAA 2003-3 1-A-32,1-A-33,1-A-34,1-A-35,1-A-36,1-A-37 AAA 2003-3 1-A-38,1-A-39,1-A-40,1-A-41,1-A-42,1-A-43 AAA 2003-3 1-A-44,1-A-WIO,2-A-1,2-A-2,2-A-WIO,A-PO AAA 2003-3 B-1 AA 2003-3 B-2 A 2003-3 B-3 BBB 2003-3 B-4 BB 2003-3 B-5 B 2004-2 1-CB-1,1-CB-IO,1-CB-P,2-A-1,2-A-IO AAA 2004-2 3-A-1,3-A-2,3-A-3,3-A-4,3-A-5 AAA 2004-2 3-A-6,3-A-7,3-A-8,3-A-9,3-A-10,3-A-11 AAA 2004-2 3-A-12,3-A-13,3-A-14,3-A-15,3-A-16,3-A-17 AAA 2004-2 3-A-IO,30-PO AAA 2004-2 1-B-1,3-B-1 AA 2004-2 1-B-2,3-B-2 A 2004-2 I-B-3,3-B-3 BBB 2004-2 1-B-4,3-B-4 BB 2004-2 I-B-5,3-B-5 B 2004-A 1-A-1,1-A-2,1-A-3,1-A-4,2-A-1,3-A-1,4-A-1 AAA 2004-A 5-A-1 AAA 2004-A B-1 AA 2004-A B-2 A 2004-A B-3 BBB 2004-A B-4 BB 2004-A B-5 B Ratings Affirmed Banc of America Alternative Loan Trust Mortgage pass-through certificates Series Class Rating ------ ----- ------ 2003-1 A-1,A-2,A-3,A-4,A-5,A-6,A-WIO,A-PO AAA 2003-1 B-1 AA 2003-1 B-2 A 2003-1 B-3 BBB 2003-2 CB-1,CB-2,CB-3,CB-4,CB-5,CB-6,CB-7,CB-WIO AAA 2003-2 NC-1,NC-2,NC-3,NC-4,NC-5,NC-WIO,PO AAA 2003-2 B-1 AA 2003-2 B-2 A 2003-2 B-3 BBB 2003-2 B-4 BB 2003-2 B-5 B 2004-4 1-A-1,2-A-1,3-A-1,CB-IO,4-A-1,4-A-2 AAA 2004-4 4-A-3,4-A-4,4-A-5,4-IO,30-B-IO AAA 2004-4 30-B-1 AA 2004-4 30-B-2 A 2004-4 30-B-3 BBB 2004-4 30-B-4 BB 2004-4 30-B-5 B+ 2004-7 1-A-1,2-A-1,2-A-2,CB-IO,3-A-1,3-A-2 AAA 2004-7 3-A-3,3-A-4,3-IO,X-PO,4-A-1,5-A-1 AAA 2004-7 15-PO,15-IO AAA 2004-7 30-B-1 AA 2004-7 30-B-2 A 2004-7 30-B-3 BBB 2004-7 30-B-4 BB 2004-7 30-B-5 B BEARINGPOINT INC: Weak Controls Prompt Moody's to Slice Ratings --------------------------------------------------------------- Moody's Investors Service lowered the ratings for BearingPoint, Inc. (senior implied at Ba2). The outlook is negative. The rating action follows the company's announcement of a significant delay in filing its 2004 Form 10-K related to likely material weaknesses in its internal control and financial reporting, probable adjustments to prior period reported results and probable impairment of goodwill for the European, Middle East and Africa business segment. Ratings lowered include: * Senior Implied Rating to Ba2 from Ba1 * Interim senior secured credit facility to Ba1 from Baa3 * Senior unsecured Issuer Rating to Ba3 from Ba2 * Series A and Series B convertible subordinated debentures to B1 from Ba3 * Shelf registration for senior unsecured, subordinated, and preferred stock to (P)Ba3, (P)B1 and (P)B2, respectively The rating action reflects heightened uncertainty of the company's ability to manage its global operations effectively through adequate internal controls and financial reporting processes. The action also considers Moody's expectation for a prolonged timeframe for improving profitability and management of its cost structure and business practices. The company expects to record a loss for the fourth quarter of 2004 and possibly for the entire year. In 2003, the company had a net loss of $151 million. The company may be required to restate prior period results due to inaccurate revenue recognition by a foreign operation and charges associated with client engagements based on detailed reviews of current contracts. The negative outlook considers the near term challenges BearingPoint faces with respect to: (i) the sufficiency of its internal controls, financial policies and financial reporting; (ii) amendments to and reductions in the size of its interim credit facility; (iii) achievement of adequate sustained profitability and (iv) limited improvement in the operational and financial performance of its international businesses. Ratings could be subject to further downward action to the extent the company faces constriction of liquidity as a result of its delayed filing or if it is not able to make meaningful progress in improving its operations and internal controls. Stabilization of the negative outlook will depend on the progress the company makes in improving internal controls and management of its global businesses, maintaining revenue growth across its business segments, attaining sustainable profitability and cash flow generation, and its ability to retain sufficient internal and external liquidity. BearingPoint has experienced difficulty in managing its global operations in addition to controlling growth in direct contract costs and selling, general and administrative expenses. Underperforming contracts and cancellations as well as contract award disputes have also highlighted overall concerns for the company to manage its global portfolio of businesses. Outstanding receivables and unbilled revenue have reached elevated levels, as weak collection practices and a conversion of its internal billing systems have expanded working capital requirements. The company recently amended its interim senior secured credit facility to allow an impairment charge of up to $230 million without impact to its potential covenant compliance, while reducing creditor commitments to $300 million from $400 million previously. Cash available for direct borrowings by the company remains at $150 million. The credit facility was amended to extend the deadline for receiving 2004 audited financial statements until April 29, 2005. BearingPoint, Inc., headquartered in McLean, Virginia, is a global business consulting, systems integration and managed services firms serving government and commercial clients with revenue of $3.2 billion in 2003. CATHOLIC CHURCH: Spokane Can Maintain Existing Bank Accounts ------------------------------------------------------------ As previously reported in the Troubled Company Reporter on Dec. 23, 2004, the Diocese of Spokane asked Judge Williams for authority to maintain and continue to use its Existing Accounts in the names and with the account numbers existing immediately before the Petition Date. Spokane reserves the right, however, to close certain of the Existing Accounts and open new DIP accounts as may be necessary to facilitate it's Reorganization Case and operations, on notice to the U.S. Trustee. The Spokane Diocese believes that all parties-in-interest, including employees, trade vendors, and most important, the parishioners of the thirteen counties within the Diocese of Spokane, will be best served by preserving operational continuity and avoiding the disruption and delay to payroll and to the Diocese's financial activities that would necessarily result from closing the Diocese's existing bank accounts and the opening of new accounts. The Diocese also sought permission to deposit funds in and withdraw funds from any accounts by all usual means, including, but not limited to items like checks, wire transfers, automated clearinghouse transfers, electronic funds transfers and other debits, and to treat the Existing Accounts for all purposes as DIP accounts. Judge Williams authorizes, on an interim basis, the Diocese of Spokane and the Parishes to maintain their existing bank accounts. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Archdiocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Court Approves Spokane's Interim Fee Procedure --------------------------------------------------------------- Judge Williams approves the Diocese of Spokane's proposed procedure for awarding interim compensation and reimbursement of expenses to all Professionals. As previously reported in the Troubled Company Reporter on Dec. 23, 2004, the Diocese of Spokane sought to establish a procedure for paying and monitoring the interim compensation due from the estate on a monthly basis. By reviewing the amounts requested on a monthly basis rather than every 120 days, Spokane believes that it, the United States Trustee, and creditors and other parties-in-interest will be in a better position to monitor and control the costs and fees of estate professionals on a current basis. The Diocese also noted that the various Professionals already have devoted and will be required to devote substantial time, effort, money, and expense to its case. The absence of a procedure permitting payment of interim compensation on a monthly basis may cause undue financial burdens on the Professionals, unfairly compel the retained Professionals to finance the Chapter 11 case, or discourage other Professionals, whose services Spokane might require, from accepting or continuing employment in this case. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Archdiocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTURY/ML: Wants Until June 30 to File a Plan of Reorganization ---------------------------------------------------------------- Century/ML Cable Venture, ML Media Partners LP and Century Communications Corp. ask the U.S. Bankruptcy Court for the Southern District of New York to further extend the exclusive periods in which they may: a. file a plan of reorganization, through June 30, 2005; and b. solicit and obtain plan acceptances, through August 23, 2005. The United States Trustee has no objection to the proposed extension. As reported in the Troubled Company Reporter on Aug. 5, 2004, Century Communications Corporation sought and obtained the Bankruptcy Court's authority to employ Lazard Freres & Co., LLC, as its sole investment banker to provide general restructuring advice in connection with a possible sale of Century/ML Cable Venture or any Century/ML interest or subsidiary division. Specifically, Lazard: -- assists Century Communications in identifying and evaluating candidates for a potential Century/ML sale transaction; -- advises Century Communications in connection with negotiations; and -- assists in the consummation of the Century/ML Transaction. The Century/ML Transaction may take the form of a merger or a sale of assets or equity securities or other interests. Century Communications Corporation filed for Chapter 11 protection on June 10, 2002. Century's case has been jointly administered to proceedings of Adelphia Communications Corporation. Century operates cable television services in Colorado, California and Puerto Rico. CENTURY is an indirect wholly owned subsidiary of ACOM and an affiliate of Adelphia Business Solutions, Inc. Lawyers at Willkie, Farr & Gallagher represent CENTURY. 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. 82; Bankruptcy Creditors' Service, Inc., 215/945-7000) COGENTRIX DELAWARE: Moody's Holds Ba2 Rating on $246M Facility -------------------------------------------------------------- Moody's Investors Service has confirmed the Ba2 rating for $246 million of senior secured credit facilities of Cogentrix Delaware Holdings, Inc. This rating action completes a review for possible upgrade. CDHI's rating outlook is stable, reflecting the predictability of its cash flow that is derived from activities under long-term contracts. Separately, Moody's has assigned a Ba2 rating to the proposed $700 million senior secured credit facilities of CDHI. Proceeds from the new credit facilities will be used to repay an affiliate acquisition bridge loan, to replace the existing bank credit facilities, and to provide liquidity support. The new secured credit facilities are expected to be structured as a $650 million seven-year term loan and a $50 million five-year revolving credit facility. The rating outlook for CDHI is stable. CDHI is a direct wholly owned subsidiary of Cogentrix Energy, Inc. CEI is wholly owned by The Goldman Sachs Group, Inc (Goldman Sachs: Aa3 senior unsecured). Proceeds from the bridge loan were used to fund the acquisition of equity interests in eleven power plants, an equity interest in a natural gas pipeline and related assets from National Energy & Gas Transmission, Inc. (the IPP portfolio). The acquisition was completed on January 31, 2005. Nine of the eleven power plants in the IPP portfolio overlap with CDHI's existing portfolio and the increased ownership position will provide the company with effective managerial control over the day-to-day operations of the majority of the plants in its portfolio. The Ba2 rating considers the size and stability of cash flows derived from a diverse portfolio of generating assets operating under long-term contracts with creditworthy utility counterparties. The rating also reflects expected sizeable debt reductions in the near-term, operational efficiencies resulting from an increase in managerial control, and benefits associated with its ownership by a highly rated entity. The rating however also considers CDHI's high balance sheet leverage and structural subordination to approximately $4 billion (gross) of non-recourse project debt. The rating considers the payment guarantee provided by Goldman Sachs for approximately $355 million of CEI senior notes due October 2008, but assumes that the notes will be refinanced at maturity without support from Goldman Sachs. These senior notes constitute all of the debt obligations of CEI. The Ba2 senior secured rating also takes into account that the credit facilities are secured mainly by the stock of subsidiaries rather than by liens on physical assets. The credit facilities benefit from a covenant package that includes restrictions on additional borrowings and distributions and requires prepayment with proceeds from asset sales and asset monetization, subject to certain exceptions. Financial covenants include a maximum leverage ratio and minimum cash flow coverage. CEI is headquartered in Charlotte, North Carolina. COLLINS & AIKMAN: Weak Liquidity Prompts Moody's to Slice Ratings ----------------------------------------------------------------- Moody's Investors Service downgraded all debt and corporate ratings for Collins & Aikman Products Co. by two notches. Moody's additionally downgraded C&A's speculative grade liquidity rating to SGL-4, which indicates our assessment that the company now has weak liquidity. Moody's outlook after incorporating these rating changes is negative. These specific rating actions were taken: 1. Downgrade to Caa2, from B3, of the rating for C&A's $415 million of 12.875% guaranteed senior subordinated notes due August 2012; 2. Downgrade to B3, from B1, of the ratings for C&A's $675 million of guaranteed senior secured credit facilities, consisting of: - $105 million revolving credit facility due August 2009; - $170 million supplemental deposit-linked revolving credit facility due August 2009; - $400 million term loan B due August 2011; 3. Downgrade to Caa1, from B2, of the rating for C&A's $500 million of 10.75% guaranteed senior unsecured notes due December 2011; 4. Downgrade to B3, from B1, of C&A's senior implied rating; 5. Downgrade to Caa1, from B2, of C&A's senior unsecured issuer rating; 6. Downgrade to SGL-4, from SGL-3, of C&A's speculative grade liquidity rating. The rating downgrades reflect that a series of challenging industry and company-specific developments are driving meaningful deterioration in C&A's near-to-intermediate-term revenues, margins, and liquidity. Despite the fact that C&A refinanced a substantial portion of its debt facilities during August 2004, extended the maturity of its $250 million accounts receivable securitization agreement to March 2006 with higher advance rates, and still receives meaningful accounts receivable support from at least two original equipment manufacturers, the company experienced unused effective liquidity levels to $85 million or below during January 2005 and additionally plans to seek financial covenant amendments to its recently-executed credit agreement. Moody's downgrade of C&A's speculative grade liquidity rating to SGL-4, from SGL-3, furthermore acknowledges Moody's perception of increased risk of deterioration of OEM trade terms, and/or access to uncommitted lines of credit globally and the fact that the company believes it must seek bank covenant amendments. Despite C&A's realization of meaningful improvement over the past year in plant-by-plant performance, the company's cash flow generation remains significantly challenged. This is primarily attributable to weakening North American light vehicle production levels (particularly with regard to higher-margin SUV's), delayed program launches, rising raw materials costs for resins and certain other commodities, continued pressure from customers to grant price-downs which cannot be fully offset, delayed tooling reimbursements, increased working capital requirements, substantial up-front investment requirements to support a high volume of future program launches, and residual restructuring expenses. C&A has notably determined that it is appropriate to recognize an impairment charge of approximately $500 million, which will reduce US and Mexico Plastics' goodwill by approximately $325 million and Global Fabrics' goodwill by approximately $175 million. Substantially all of the goodwill booked upon the acquisition of the TacTrim division from Textron Inc. will be thereby eliminated. C&A will also write down the level of net deferred assets by $175 million. Corresponding with these writedowns of certain acquisition values, C&A furthermore announced that Textron Inc. has agreed to sell at least 60% of its PIK preferred stock in C&A to the company's equity sponsor Heartland Industrial Partners at a substantial discount. While Moody's would have preferred to see the equity sponsor announce plans for a direct incremental cash investment into C&A, the sponsor's commitment to invest at least $25 million of additional cash into the company appears to be a vote of confidence that brings its total cash investment in C&A above $360 million. C&A additionally announced that it would not file its 2004 annual report on time in order to be able to complete its review of the accounting treatment that the company historically applied for supplier rebates, but which is now believed to have led to premature or inappropriate revenue recognition. While actual cash flows were not misstated, the company expects that it will have to reduce previously reported operating income for the nine months ended September 30, 2004 by $10-$12 million. C&A and its auditors also desire to complete the company's first- time assessment of internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act before concluding the audit process. The company has communicated to the market its preliminary conclusion that certain material weaknesses existed at December 31, 2004. C&A is already implementing remediation steps for significant deficiencies identified to this point. In its favor, C&A continues to win a steady pace of new business awards, which totaled over $880 million during 2004. The company has weathered its semiannual interest payments on its notes along with the many other demands for cash during the first two months of 2005, and management believes that C&A will now steadily generate positive cash flows for the balance of the fiscal period. C&A has stated that replacement funding for the nearly $60 million in fast pay funding for NAFTA Ford and Chrysler accounts that was eliminated since mid-Q4 2004 has been successfully arranged through a combination of direct customer initiatives to accelerate terms and through an improved advance rate from the domestic accounts receivable securitization facility. The company's efforts to insource additional components, enhance material utilization, negotiate a degree of recovery from customers and suppliers for increased commodity costs, and improve production efficiencies are gaining traction. Future events that would be likely to drive further ratings downgrades for C&A include further declines in liquidity or even a failure to improve liquidity, an inability to obtain amendments to the company's financial covenant requirements, and an inability to generate at least break-even free cash flow during 2005. Future events that have potential to drive improvements in C&A's ratings and outlook include positive operating cash flow generation applied to debt reduction and liquidity enhancement, an incremental offering of common equity, steadily rising liquidity and cash interest coverage, and improved diversification of the company's customer base and geographic base of revenues. Collins & Aikman Corporation, headquartered in Troy, Michigan, is a leading designer, engineer, and manufacturer of automotive interior components, including instrument panels; fully assembled cockpit modules; floor and acoustic systems; automotive fabric; interior trim; and convertible top systems. The company has content on approximately 89% of all North American light vehicle platforms. Collins & Aikman's common stock is publicly listed on the NYSE, but is thinly traded given that the majority of shares are owned by insiders. Annual revenues currently approximate $4 billion. CONE MILLS: Has Until April 18 to File Notices of Removal --------------------------------------------------------- The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware extended the period within which Cone Mills Corporation and its debtor-affiliates can remove related proceedings under Bankruptcy Rules 9027(a)(2) and (a)(3). Judge Walrath gave the Debtors until April 18, 2005, or until 30 days after the entry of an order terminating the automatic stay with respect to the particular action sought to be removed. The Debtors explain that since their bankruptcy filing, their time, effort and resources have been focused on completing the sale of substantially all of their assets, the claims reconciliation process, and finalizing their Amended Plan of Reorganization, of which they are presently soliciting acceptances from their creditors. The Debtors are parties to various Actions currently pending in different State and Federal tribunals, and the postpetition activities the Debtors had to prioritize did not give them adequate time to fully investigate and evaluate all the Actions and determine whether removal is appropriate for all those Actions. Headquartered in Greensboro, North Carolina, Cone Mills Corp. -- http://www.cone.com-- is one of the leading denim manufacturers in North America and also produces fabrics and operates a commission finishing business. The Company and its debtor- affiliates filed for chapter 11 protection on September 24, 2003 (Bankr. Del. Case No. 03-12944). Cone Mills filed a Chapter 11 Liquidation Plan following a sale of substantially all of the company's assets to WL Ross & Co. in March 2004, for $46 million plus assumption of certain liabilities. WL Ross, in turn, merged Cone Mills' assets with Burlington Industries' assets to form International Textile Group. Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors. When the Company filed for protection from its creditors, it listed $318,262,000 in total assets and $224,809,000 in total debts. DINASTIA L.P.: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Dinastia, L.P. 402 West Calton Road Laredo, Texas 78041 Bankruptcy Case No.: 05-33650 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Dinastia International Corp. 05-33651 Dinamex, Inc. 05-33652 Patal Investments, L.P. 05-33653 Type of Business: The Debtor sells, repairs and maintains computers and equipment. Chapter 11 Petition Date: March 10, 2005 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: Christopher Donald Johnson, Esq. Erin E. Jones, Esq. Kyung Shik Lee, Esq. Stephen Douglas Statham, Esq. Diamond McCarthy Taylor and Finley 909 Fannin, Suite 1500 Houston, TX 77010 Tel: 713-330-5100 Fax: 713-330-5195 Estimated Assets: Estimated Debts: Dinastia, L.P.: $1M to $10M $10M to $50M Dinastia Int'l Corp.: $1M to $10M $10M to $50M Dinamex, Inc.: $50,000 to $100,000 $10M to $50M Patal $10M to $50M $10M to $50M Investments, L.P. Dinastia, L.P.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Int'l Finance Corp. Guaranty of loan $10,000,000 2121 Pennsylvania Ave., North West Washington, D.C. 20433 Aopen Trade payable $814,420 1911 Lundy Ave. San Jose, CA 95131 I.E.T. Texas Inc. Trade payable $747,739 10631 Harwin Drive, Suite 618 Houston TX 77036 Biostar Microtech Int'l Corp. Trade payable $720,962 All Components Trade payable $558,054 Athenatech U.S.A. Inc. Trade payable $543,070 Swissbit Trade payable $512,647 First International Computer Trade payable $494,668 Max Group Corporation Trade payable $465,851 Kingston Technology Trade payable $456,448 Avus Trade payable $433,933 Avnet Applied Center Trade payable $370,325 BMA Industrial, Inc. Trade payable $347,001 Logitech Trade payable $332,499 BML Industrial, Inc. Trade payable $297,881 Linkworld Electronic Corp. Trade payable $295,563 Envision Peripherals Trade payable $270,047 Soyo, Inc. Trade payable $248,415 Casedge/Foxconn Trade payable $211,832 International Bank Promissory note $200,087 of Commerce Dinastia Int'l Corp.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ International Finance Corp. Guaranty of loan $10,000,000 2121 Pennsylvania Ave., N.W. Washington, D.C. 20433 BMA Industrial, Inc. Trade payable $105,308 18343 E. Gale Avenue City of Industry, CA 91748 Leasefin/GE Capital Equipment lease $27,272 P.O. Box 676010 Dallas, TX 75287 IC Intracom USA, Inc. Trade payable $16,935 NTFC Equipment lease $3,010 Garza Martinez & Co. PLLC Professional services $2,875 Citi-Corp Delaware Equipment lease $2,006 KVTV Trade payable $1,650 Telecheck Equipment Equipment lease $1,617 South Texas Neon Trade payable $1,262 Fortis Benefits Trade payable $517 SBC Trade payable $297 SM Bell Yellow Pages Trade payable $245 Culligan Trade payable $159 Associated Publishing Trade payable $133 Unline Shipping Supply Trade payable $120 Pure Spring Water Trade payable $107 Exxon Trade payable $78 Executive Office Supply Trade payable $29 Laredo Examiners Trade payable Unknown Dinamex, Inc.'s 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ International Finance Corp. Guaranty of loan $10,000,000 2121 Pennsylvania Ave., N.W. Washington, D.C. 20433 Garza Martinez & Co. PLLC Professional service $9,115 P.O. Box 2664 Laredo, TX 78044 Patal Investment L.P.'s 9 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ International Finance Corp. Guaranty of loan $10,000,000 2121 Pennsylvania Ave., N.W. Washington, D.C. 20433 Garza Martinez & Co. PLLC Professional service $6,801 P.O. Box 2664 Laredo, TX 78044 Clarity Bank Equipment lease $3,399 P.O. Box 790448 St. Louis, MO 63179 Michael Dickerson Trade payable $450 Laredo Morning Times Trade payable $256 SBC Trade payable $73 Gentry's Trade payable $40 Alvarez & Co. Trade payable Unknown Time Warner Trade payable Unknown EMISPHERE TECH: PwC Expresses Going Concern Doubt in Annual Report ------------------------------------------------------------------ Emisphere Technologies, Inc.'s (Nasdaq: EMIS) auditors, PriceWaterhouseCoopers LLP, raised a going-concern uncertainty in Emisphere Technologies' 2004 financial statements included in the Company's Form 10-K filed with the U.S. Securities and Exchange Commission on March 11, 2005. At Dec. 31, 2004, the Company reported a $333 million accumulated deficit. For the year ended Dec. 31, 2004, the Company reported $37.5 million of net loss, compared to a $44.9 million net loss in 2003. The Company's stockholders' equity decreased from $67.5 million as of Dec. 31, 2002, to an $11.3 million deficit at Dec. 31, 2004. Emisphere made substantial debt payments to Elan and have commitments to make additional payments during 2005. The Company said it has limited capital resources and operations to date have been funded with the proceeds from collaborative research agreements, public and private equity and debt financings and income earned on investments. "We anticipate that our existing capital resources, without implementing cost reductions, raising additional capital, or obtaining substantial cash inflows from potential partners for our products, will enable us to continue operations through the end of the second quarter of 2005," the Company said in its regulatory filing. "Should we be unable to raise needed capital by April 2005, we have developed a plan whereby we would significantly decrease operating costs by reducing our workforce and scaling back research and development efforts. These decreases would allow us to continue to operate through December 31, 2005. However, if these restructuring efforts are not sufficient due to unanticipated costs and expenses, we may be required to discontinue, shutdown, or cease operations." About the Company Emisphere Technologies, Inc. -- http://www.emisphere.com/-- is a biopharmaceutical company pioneering the oral delivery of otherwise injectable drugs. Emisphere's business strategy is to develop oral forms of injectable drugs, either alone or with corporate partners, by applying its proprietary eligen(R) technology to those drugs or licensing its eligen(R) technology to partners who typically apply it directly to their marketed drugs. Emisphere's eligen(R) technology has enabled the oral delivery of proteins, peptides, macromolecules and charged organics. Emisphere and its partners have advanced oral formulations or prototypes of salmon calcitonin, heparin, insulin, parathyroid hormone, human growth hormone and cromolyn sodium into clinical trials. Emisphere has strategic alliances with world-leading pharmaceutical companies. ENERSYS: S&P Reviews Low-B Ratings & May Cut After Fiamm Buy-Out ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Reading, Pa.-based EnerSys to negative from stable because of the impact on credit measures from the pending acquisition of Italy-based unrated Fiamm SpA's motive power business. At the same time, Standard & Poor's affirmed its 'BB' corporate credit rating on EnerSys, and the 'BB' senior secured rating of subsidiary, EnerSys Capital Inc. Outstanding debt at Jan. 2, 2005, totaled about $375 million for the Reading, Pa.-based company. The Fiamm motive power business had revenues of around $90 million in 2004. The debt-financed acquisition is expected to leave little room for additional acquisitions or significant adverse lead costs in fiscal year ending March 2006. "The purchase will likely result in measures that are on the weak end of our expectations," said Standard & Poor's credit analyst Natalia Bruslanova. "Still, the purchase appears to make strategic sense, bolstering EnerSys' market share in European motive power. If credit measures weaken beyond those anticipated for the rating on a sustained basis over the next two years, ratings could be lowered. The outlook could be revised to stable if the strategic benefits from the acquisition gain traction -- bolstering earnings and cash generation -- and if lead price recovery is successful." EnerSys competes in the industrial battery market, which includes a balanced proportion of both reserve power (telecom and computer back-up, aerospace and defense applications) and motive power (primarily electric forklifts) batteries, with leading global market shares of roughly 20% and 28% in each, respectively. After two years of declining demand among EnerSys' core customers in electric industrial forklift trucks and wireless telecom, global demand is strengthening and is expected to improve over the intermediate term. As the company seeks to expand in the faster-growing Asian and Central/Eastern European markets, broaden its product offering to the aerospace and defense sector, and acquire non-lead acid technologies, acquisitions remain a possibility. FIBERMARK: Scraps Chapter 11 Plan & Goes Back to Drawing Board -------------------------------------------------------------- FiberMark, Inc. (OTCBB: FMKIQ) withdrew its current Plan of Reorganization because, the Company says, its three largest bondholders, also members of the Creditors Committee, remain unable to resolve disputes among themselves relating to corporate governance and control issues involving the reorganized company. Despite the company's ongoing efforts to facilitate agreement on these normally routine Plan implementation matters, the bondholders again missed a Court deadline to take the actions necessary to permit confirmation of the Plan. Although the Plan submitted to creditors for approval in December was unanimously supported by the Creditors Committee, the three bondholder members of the Creditors Committee subsequently voted against the Plan due to intercreditor disagreements. Without the bondholders' resolution of these issues, their votes in favor of the Plan and the Creditors Committee approval of corporate governance and other implementation documents, the company cannot proceed with confirmation of its current Plan. As a result, in an effort to move the chapter 11 process forward, FiberMark filed motions Tuesday in the U.S. Bankruptcy Court for the District of Vermont, to expedite resolution of claims trading issues raised by certain bondholders and safeguard estate resources relative to the intercreditor dispute, as well as to reinstate the exclusivity period so that the company can formulate a new Plan of Reorganization that it believes could be confirmed. Alex Kwader, chairman and chief executive officer of FiberMark, said: "This bondholder dispute has been extremely frustrating for us, particularly given the unanimous support for the Plan that we had received last December from the Creditors Committee, of which the three bondholders were members. In any case, we must move this stalled process forward, and today FiberMark has taken important steps in this regard. Going forward, building upon the significant progress made in developing the Plan that was filed in December, we will submit a new Plan that we hope will enable us to move quickly toward Plan confirmation. Although the delay is frustrating, we fortunately have more than adequate cash flow and access to working capital through our DIP facility in North America and in Germany through our revolving credit facility. Accordingly, we expect to continue meeting the needs-including fully meeting all post-petition obligations-of our customers and vendors and we appreciate their ongoing support." While a number of variables will influence the timing of completion of the chapter 11 process, the company currently estimates that emergence could be delayed by six months. The company will file a new Plan of Reorganization as soon as practicable. Headquartered in Brattleboro, Vermont, FiberMark, Inc. -- http://www.fibermark.com/-- produces filter media for transportation applications and vacuum cleaning; cover stocks and cover materials for books, graphic design, and office supplies and base materials for specialty tapes, wallcoverings and sandpaper. The Company filed for chapter 11 protection on March 30, 2004 (Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D.J. Baker, Esq., David M. Turetsky, Esq., and Rosalie Walker Gray, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $329,600,000 in total assets and $405,700,000 in total debts. FIRST REPUBLIC: Completes $50 Million Preferred Stock Offering -------------------------------------------------------------- First Republic Bank (NYSE: FRC) closed its offering of 2,000,000 depositary shares, each representing 1/40th of a 6.25% Noncumulative Perpetual Series B Preferred Share, for gross proceeds of $50,000,000. The depositary shares have a $25 per share liquidation preference and pay noncumulative quarterly dividends at an annual rate of 6.25%. The depositary shares will be listed on the New York Stock Exchange under the symbol "FRC- PrB." HSBC Securities (USA) Inc. was the sole manager of the offering. Copies of the offering circular relating to this offering can be obtained from HSBC. Neither the depositary shares nor the Series B Preferred Shares were required to be registered under the Securities Act of 1933, as amended, or any state securities laws, and were 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. About First Republic Bank First Republic Bank -- http://www.firstrepublic.com/-- is an 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+. FRESH CHOICE: Asks Court to Bless Workers' Compensation L/C Deal ---------------------------------------------------------------- Fresh Choice, Inc., asks the U.S. Bankruptcy Court for the Northern District of California for permission to collateralize a new letter of credit to secure repayment of postpetition workers' compensation obligations and pay some fees to the bank underwriting some existing letters of credit securing repayment of prepetition workers' compensation obligations. Fresh Choice reminds Judge Weissbrodt that it employs 1,600 workers in its 39 restaurants in California, Texas and Washington. The Debtor stresses that it is statutorily required to maintain workers' compensation insurance in order to continue its operations in these three states. Two prepetition letters of credit -- one for $950,000 for the benefit of Safety National Casualty Corporation and another for $1,372,000 for the benefit of United States Fire Insurance -- issued by Mid-Peninsula Bank secure repayment of Fresh Choice's prepetition workers' compensation obligations. Those two Letters of Credit were issued under the Debtor's Revolving Credit Line and fully collateralized by cash deposits. Fresh Choice is obligated to reimburse the Bank for any draws on those Existing Letters of Credit. The Debtor wants to keep them in place for another year in exchange for a $41,500 fee. To secure payment of postpetition workers' compensation obligations, the Bank will underwrite a third letter of credit in exchange for a $50,000 cash deposit. The Debtor asks Judge Weissbrodt to approve these transactions in all respects. Joshua M. Fried, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., tells Judge Weissbrodt that Fresh Choice has continued to pay all workers' compensation claims in the ordinary course of business while in chapter 11. Consistent with past practices, Mr. Fried says, the Debtor expects to continue to pay all allowed workers' compensation claims. Mr. Fried adds that Fresh Choice doesn't expect there will ever be a draw on any of the letters of credit securing payment of its workers' compensation obligations. Headquartered in Morgan Hill, California, Fresh Choice, Inc. -- http://www.freshchoice.com/-- owns and operates a 39 salad bar eateries, mostly located in California. The company filed for chapter 11 protection on July 12, 2004 (Bankr. N.D. Calif. Case No. 04-54318). Debra I. Grassgreen, Esq., Tobias S. Keller, Esq., and Joshua M. Fried, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $29,651,000 in total assets and $14,348,000 in total debts. GENERAL DATACOMM: Has Until June 6 to Object to Proofs of Claim --------------------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware gave General DataComm Industries, Inc., until June 6, 2005, to object to proofs of claim. The Court confirmed General DataComm and its debtor-affiliates' Amended Joint Plan of Reorganization on Aug. 5, 2003, and the Plan became effective on Sept. 15, 2003. The Court formally closed the Debtors' jointly administered cases on Sept. 1, 2004, leaving Case No. 01-11101 as the only remaining open bankruptcy case. The Reorganized Debtor presents three reasons militating in favor of its request: a) the extension of the Claims Objection Deadline is essential and in the best interests of the Debtor's estate and its creditors to ensure that the claims analysis is accurate and comprehensive; b) the Debtor is still in the process of resolving contested claims pending before the Bankruptcy Court, including eleven omnibus objections and numerous individual objections; and c) the Debtor has still significant remaining claims it is currently reviewing and attempting to resolve. The Court's order is without prejudice to the Debtor's right to seek further extension of its claims objection deadline. Headquartered in Middlebury, Connecticut, General DataComm Industries, Inc. -- http://www.gdc.com-- is a worldwide provider of wide area networking and telecommunications products and services, and it designs, assembles, markets, installs, and maintains products that enable telecommunications common carriers, corporations, and government to build, improve, and more cost effectively manage their global telecommunication networks. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 2, 2001 (Bankr. D. Del. Case No. 01-11101-PJW). Curtis J. Crowther, Esq., at Young Conaway Stargatt & Taylor LLP, represents the Debtor. When the Debtor filed for chapter 11 protection, it listed total assets of $64 million and total debts of $94 million. GENEVA STEEL: Sierra Energy to Examine CEO & Creditors in April --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Utah allows Sierra Energy, Geneva Steel LLC's creditor, to conduct a Rule 2004 examination on the Company's President and Chief Executive Officer, Ken C. Johnsen, & members of the Official Committee of Unsecured Creditors. Sierra Energy will examine Mr. Johnsen and Chemical Lime Company, a Creditors Committee member, on April 11, 2005. Sierra Energy will examine these Creditors Committee members on April 18, 2005: * Voest-Alpine Services & Technologies * Louis A. Grant Company Sierra Energy will examine these Creditors Committee members on April 21, 2005: * Praxair, Inc. 21 * Ainge Enterprises, Inc. * Cartwright Enterprises, Inc. Sierra Energy will examine these Creditors Committee members on April 22, 2005: * Highland Transportation * Oxbow Carbon & Minerals, Inc. * Union Pacific Railroad All examinations will be done at: Snell & Wilmer West South Temple, Suite 1200 Salt Lake City, Utah Sierra Energy wants each of these parties to designate a person to testify on its behalf concerning its acts and conduct subsequent to Sierra Energy's involvement in the Case, as well as Geneva's contemplation of any plan of reorganization, either contemplated, hypothetical or proposed, by any person or entity, prior to October 25, 2004. Sierra Energy wants to focus on documents and meetings relating to its request for allowance of its $225,516 administrative claim. Chapter 11 Examiner Appointed As reported in the Troubled Company Reporter yesterday, the Court appointed Joel T. Marker as chapter 11 examiner, at the United States Trustee for Region 19's behest. The Chapter 11 Examiner needs to find out what confidential and privileged information was leaked from the Creditors Committee to Ken Johnsen or any person working at or for Geneva. The U.S. Trustee believes Mr. Johnsen has violated bankruptcy and other laws in connection with Sierra Energy's request to allow its administrative claim. Headquartered in Provo, Utah, Geneva Steel LLC, owns and operates an integrated steel mill. The Company filed for chapter 11 protection on January 25, 2002 (Bankr. Utah Case No. 02-21455). Andrew A. Kress, Esq., Keith R. Murphy, Esq., and Stephen E. Garcia, Esq., at Kaye Scholer LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $262 million in total assets and $192 million in total debts. GRAFTECH INT'L: Poor Performance Prompts S&P to Downgrade Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered Wilmington, Del.-based GrafTech International Ltd.'s corporate credit rating to 'B' from 'B+'. The senior secured debt rating was lowered to 'B+' from 'BB-' and the senior unsecured debt rating was cut to 'B-' from 'B'. Standard & Poor's also lowered the convertible note rating to 'CCC+' from 'B-'. The outlook is stable. "The downgrade reflects our reassessment of the company's prospects," said Standard & Poor's credit analyst Dominick D'Ascoli. Although GrafTech's financial performance will improve in 2005 due to strong graphite electrode fundamentals, financial performance is expected to be below levels appropriate for a 'B+' corporate credit rating. GrafTech's projected financial performance for 2005 is below Standard & Poor's expectations as a result of expected lower graphite electrode volumes and rising cost pressures. A decline in 2005 volumes due to price increases GrafTech implemented heightens concerns about the ability to increase prices further to offset rising costs. GrafTech's reduced sales volume is surprising, given strong industry demand and high industry capacity utilization rates. The ratings on GrafTech reflect its aggressive financial leverage, poor free cash flow generation, significant exposure to the cyclical steel industry, and key raw-material cost pressure, particularly for needle coke. Somewhat offsetting these negative factors are the company's favorable cost position compared with its competitors, good market position in graphite electrodes, and currently favorable industry conditions. GrafTech manufactures carbon-based materials throughout the world for use in various applications. Its primary product, graphite electrodes, accounted for 66% of the $848 million in sales generated in 2004. HEALTHSOUTH CORP: Closes $715 Million Refinancing & Cures Default ----------------------------------------------------------------- HealthSouth Corporation (OTC Pink Sheets: HLSH) amended and restated its existing bank credit facility. The amended and restated credit facility, which provides for: -- a $315 million term loan, -- a $250 million revolving line of credit, and -- $150 million in letter of credit facilities, cures all defaults of the company's outstanding indebtedness. J.P. Morgan Securities Inc. and Wachovia Capital Markets, LLC, acted as co-lead arrangers and joint bookrunners and Deutsche Bank Securities acted as arranger for the amended and restated credit facility. "We are very pleased with the overwhelming response from the financial community on this credit facility, which is a first step in being able to access the capital markets," said HealthSouth CFO John Workman. "This provides us with financial flexibility that the company has not had over the past 18 months and the liquidity to satisfy future obligations. The substantial interest from the investment community allowed us to gain more competitive pricing, reducing our annual fees by almost $1 million." "Beginning with the resolution last summer of the bondholder litigation and continuing with the recent CMS/DOJ Civil settlement, the resolution of this final technical default is another significant step in working through the fraud-related issues unique to the company," said HealthSouth President and CEO Jay Grinney. About HealthSouth HealthSouth is one of the nation's largest providers of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, operating facilities nationwide. HealthSouth can be found on the Web at http://www.healthsouth.com/ * * * Notice of Late Filing HealthSouth filed a Form 12b-25 with the Securities and Exchange Commission saying that it will not be filing its 2004 Form 10-K on time due to the company's ongoing accounting reconstruction and restatement efforts. The company is currently targeting the filing of its 2004 Form 10-K in the fourth quarter of 2005. The company says it plans to file a comprehensive Form 10-K for the years ended Dec. 31, 2000, through Dec. 31, 2003, by the middle of the second quarter 2005. This comprehensive Form 10-K will contain restated financial statements for periods which previously had been reported and initial financial statements for the other periods covered by the report. "Our external auditor is now auditing these documents and is taking steps to ensure a thorough review," said HealthSouth CFO John Workman. "We have been working extensively with external resources to ensure that our accounting records are reconstructed thoroughly and our financial statements and other disclosures are prepared properly. This process has consumed more than 500 man- years of external labor resources and required millions of lines of adjusting journal entries. It is our intention to not rush a process of this importance to reach an earlier, self-imposed deadline." HILITE INT'L: Moody's Assigns Low-B Ratings to $465 Million Debt ---------------------------------------------------------------- Moody's Investors Service confirmed the existing ratings of Hilite International, Inc. and assigned additional ratings in conjunction with subsidiary Hilite Industries, Inc.'s revised proposal to refinance its debt structure. Moody's rating outlook for Hilite was revised to negative, primarily to reflect deteriorating industry conditions which are expected to negatively impact Hilite's cash flow generation during 2005. These actions concluded the review for possible downgrade that was initiated by Moody's on February 23, 2005 following the company's decision to terminate its earlier proposed $150 million senior unsecured notes offering. The following specific ratings actions were taken: 1. Assignment of B1 ratings for Hilite Industries, Inc.'s $180 million of proposed new guaranteed senior secured credit facilities, to consist of: * $80 million revolving credit facility due March 2010; and * $100 million term loan B due March 2010. 2. Assignment of B3 rating for Hilite Industries, Inc.'s proposed new $30 million of 11% guaranteed senior subordinated mezzanine notes due March 2012, to be purchased by CVC Capital Funding, LLC; 3. Confirmation of the B1 ratings for the approximately $255 million equivalent of existing guaranteed senior secured credit facilities for Hilite and its foreign subsidiary Hilite Germany GmbH & Co. KG (which ratings will be withdrawn once the obligations are refinanced by the proposed facilities), consisting of: * $50 million guaranteed senior secured revolving credit facility due March 2008; * $125 million guaranteed senior secured term loan A due March 2009; * Euro 60 million guaranteed senior secured term loan A due March 2009; 4. Confirmation of the B1 senior implied rating for Hilite International, Inc.; and 5. Confirmation of the B2 senior unsecured issuer rating for Hilite International, Inc. Holding company Hilite International, Inc., also proposes to obtain $30 million of new 11% guaranteed senior subordinated mezzanine notes due March 2013 (with warrants), to be purchased by CVC Mezzanine III, L.P. These notes have not been rated. The proposed transactions present a reasonable liquidity alternative for Hilite which would have been sufficient to return the company's outlook to stable absent other factors. The change to a negative outlook incorporates perceptible deterioration of industry conditions over the past several weeks that threatens to drive down Hilite's 2005 cash flow generation by about $10 million versus earlier expectations. Hilite notably has a significant concentration in excess of 20% with customer General Motors, which in mid-March materially reduced earnings forecasts for this year due to a steep drop in sales combined with high health care and pension costs. Audi and Volkswagen are also significant customers which are experiencing softness. Other key factors that will potentially hurt Hilite's near-to-intermediate performance include ongoing commodity cost concerns, rising customer inventories, and the potential for more non-contractual pricedowns and/or further declines in production levels versus plan and last year. On a more positive front, the current debt refinancing proposal will eliminate more than $55 million of scheduled principal amortization during 2005 and 2006. In addition, Hilite has been awarded in excess of $100 million of new business since year end. Management does not believe that this incremental business will require significant incremental capital spending, due the company's substantial base of existing equipment along with stepped up efforts to improve operating efficiency. Hilite's business base remains well-balanced geographically, with only about 45% of revenues generated in North America where industry conditions are weakest. The B1 ratings of the proposed guaranteed senior secured credit facilities reflect the benefits and limitations of the proposed collateral and guarantee package. Collateral to be pledged will consist of a first priority perfected lien on all existing and subsequently acquired real and personal property of the borrowers, domestic guarantors, and foreign guarantors as required by the agent. Negative pledges will be provided for all unencumbered assets (subject to customary exclusions) globally that are not pledged. Additionally to be pledged are first priority perfected liens on 100% of the common stock of the Hilite and its present and subsequently acquired material domestic subsidiaries and 65% of the common stock of Hilite's present and subsequently acquired material foreign subsidiaries (provided that, as collateral for foreign borrowings only, the agent may require a pledge of 100% of foreign subsidiaries' stock). The senior secured facilities will be guaranteed by holding company Hilite International, Inc. as well as by all existing and after-acquired domestic operating or material subsidiaries of Hilite, and by any foreign subsidiaries of the company deemed necessary by the agent. The proposed $80 million revolving credit facility will have a Euro 45 million sub-limit (limited to a maximum of $60 million equivalent) for Euro denominated borrowings by foreign subsidiaries EBEA SA and Hilite Germany GmbH & Co. KG. There will also be $7.5 million sub-limit for the issuance of standby letters of credit. Voluntary prepayments of the term loan may be made without penalty. A mandatory 50% excess cash flow recapture provision will be effective until leverage falls below prescribed levels. The receipt of $60 million of gross proceeds from the proposed mezzanine subordinated debt issuances are a condition precedent for the new bank agreement. The credit agreement additionally has potential to be increased under a $40 million accordion provision, subject to incremental lender commitments. The B3 rating of the proposed $30 million of mezzanine senior subordinated notes to be issued by Hilite Industries, Inc., are unsecured obligations that will be expressly subordinated to obligations under the proposed guaranteed senior secured credit agreement, but not to any other obligations of the borrower. These opco mezzanine notes will be expressly senior to the $30 million of proposed mezzanine debt at Hilite International, Inc. Any adjustments to the subordinated provisions versus the proposed terms that cause the ranking of these opco mezzanine notes to be more junior could result in additional downward notching of the rating. Guarantees will be provided on an unsecured basis by all domestic guarantors of the senior secured credit agreement. Hilite's opco mezzanine notes will be subject to an 11% interest rate payable semiannually in cash. The maturity date will be the earlier of the seventh anniversary of the notes, or one year following the scheduled maturity date of the senior secured credit facilities. No amortization of these opco mezzanine notes will be required prior to maturity. Optional redemption will be permitted after the fourth year, subject to a redemption premium starting at 6% and then declining over time according to a sliding scale. There will also be provisions for a change of control put at a premium of 1%, and a change of control call at a premium beginning at 11%, dropping to 6% after the fourth year, and then declining based upon a sliding scale. The unrated $30 million of proposed mezzanine senior subordinated notes to be issued by Hilite International, Inc., will be structured very similarly to the opco mezzanine notes to be issued by Hilite Industries, Inc. They will be subject to the same 11% semiannual cash interest rate and will be sold with warrants for shares of common stock in Hilite International, Inc. The key differences are that the holdco mezzanine notes and all supporting guarantees will be expressly subordinated to the opco mezzanine notes, and that they will be issued by the holding company and guaranteed by the operating company as well as a matching set of subsidiaries. The maturity date will be the earlier of the eighth anniversary of the notes, or two years following the scheduled maturity date of the senior secured credit facilities. All change of control and optional redemption features will mimic the terms of the opco mezzanine notes. Future events that could result in an unfavorable adjustment to Hilite's outlook or ratings include material declines in margins and free cash flow performance resulting in rising leverage, insufficient liquidity and weakening cash interest coverage. Continued high levels of non-contractual price give-backs, loss of market share by Hilite or its key customers, pursuit of a material acquisition which is not readily accretive to performance, inability to offset rising commodity prices, and further evidence of a reduced technological advantage versus competitors would pressure ratings. A future improvement in Hilite's outlook or ratings is viewed by Moody's as the less likely outcome but could result if margins stabilize and substantial net debt reduction occurs, liquidity is enhanced further, and/or the company is awarded significant new high-margin business with a broadened base of customers. Hilite, headquartered in Cleveland, Ohio, is a designer and manufacturer of highly-engineered, valve-based components, assemblies, and systems used principally in powertrain (engine and transmission) applications for the automotive market. Products offered include camphasers, diesel valves, cylinder deactivation valves, and emissions control units for engine applications; solenoid valves and proportioning valves for transmission applications; and brake proportioning valves, and wheel cylinders for brake applications. The majority of Hilite's equity is owned by a combination of private equity sponsors and several members of management. The company's annualized revenues approximate $400 million. HILITE INT'L: S&P Rates Planned $180M Sr. Sec. Facilities at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Hilite International Inc., assigned a negative outlook, and removed the ratings from CreditWatch where they were placed on Feb. 16, 2005. Standard & Poor's also assigned its 'BB-' debt rating and a recovery rating of '2' to the company's proposed $180 million senior secured credit facilities. The recovery rating indicates the strong likelihood that lenders will realize substantial (80%-100%) recovery of principal in the event of a payment default. "The negative outlook was assigned because of increasing industry challenges to Hilite and weaker-than-expected cash flow," said Standard & Poor's credit analyst Nancy Messer. Total balance sheet debt for the Cleveland, Ohio-based company, pro forma for the proposed transaction at Dec. 31, 2004, is expected to be about $191 million. The rating actions follow Hilite's announcement of its plan to issue $60 million of unrated senior subordinated debt to Citicorp Venture Capital and refinance existing senior secured credit facilities. The new credit facilities will consist of an $80 million revolving credit facility and a $100 million term loan, both with April 2010 maturities. Proceeds from the subordinated debt issuance and new credit facilities will be used to pay outstanding term loan balances of approximately $184 million. "Following the proposed transaction, Hilite's liquidity will improve modestly because of an extended maturity profile, access to a larger revolving credit facility, the elimination of significant near-term amortization requirements, and less strict covenants," Ms Messer said. The company operates in the highly fragmented, engineered automotive components business, and its competitors are typically Tier I suppliers for whom valve technology is not a core focus. Since mid-1999, when the current management team acquired Hilite, the company has expanded through acquisitions. Revenues from new business wins that will be launched in the intermediate term, combined with results from cost-containment initiatives, should enable Hilite to improve margins and generate free cash flow that is expected to be used primarily for debt reduction. INTERSTATE BAKERIES: Recalculating Non-Union Retiree Premiums ------------------------------------------------------------- Interstate Bakeries Corporation and its debtor-affiliates seek the U.S. Bankruptcy Court for the Western District of Missouri's authority to: -- recalculate the premiums of their non-union retirees, pursuant to the terms of the Debtors' Retiree Benefit Plan; and -- discontinue non-union active employees' contingent benefits under the Retiree Benefit Plan. The Retiree Benefit Plan provides that eligible retirees and dependents age 65 or over would get 100% of all healthcare retiree benefit costs. For eligible retirees under age 65, 40% of all retiree benefit costs are to be passed through to these retirees and dependents. The Debtors' Retiree Benefit Plan has distinct coverage for two groups of non-union retirees: (1) Shared Cost Retirees and their dependents are afforded certain medical and prescription coverage until Medicare eligibility; and (2) Medicare Carve-Out Retirees and their dependents are afforded supplemental coverage that the Debtors made available to eligible retirees and dependents age 65 or over. No additional participants will become eligible for the Medicare Carve-Out Coverage since the coverage was terminated more than a decade ago for then active employees who had not become eligible for the benefits. Monthly Premiums Effective January 1, 2004, the Debtors charged Medicare Carve-Out Retirees a monthly premium equal to 100% of the actuarially determined claims cost for the retirees and dependents. The Debtors also charged the Shared Cost Retirees a monthly premium equal to 40% of the actuarially determined claims cost for the retirees and dependents. According to J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, the Debtors wanted to ensure that they would continue to offer retiree benefits to eligible participants without incurring retiree benefit costs, accruing any liability for Medicare Carve- Out Retirees, and assuming 40% of the Shared Cost Retirees' costs. Mr. Ivester reports that monthly premiums for 2004 were set at $235 for each eligible retiree and each eligible dependent age 65 or over, and $250 for each dependent under age 65, representing the actuarially determined claims costs to be passed through to participants under the Debtors' Retirement Benefits Plan. Unfortunately, actual costs for retiree benefits were greater than projected in 2004 and more retirees than anticipated discontinued their participation in the retiree benefit plan. These circumstances resulted in the costs exceeding the premiums collected from the retirees. For the Medicare Carve-Out Retirees, 2004 costs exceeded premiums collected by approximately $1.8 million, and for Shared Cost Retirees, 40% of 2004 costs exceeded premiums collected by approximately $300,000. Mr. Ivester relates that the trends have continued in calendar 2005. Pursuant to the Retiree Benefit Plan, the Debtors must recalculate and increase the premiums to cover 2005 expected costs. To determine the appropriate premium to charge for the plan year, the Debtors' actuary estimated the size of the pool of retirees and dependents that would remain in the benefit plan. The actuary estimated that premiums for Medicare Carve-Out Retirees must increase to $912 per month effective April 1, 2005, to cover costs for the 2005 calendar year, which assumes that the pool of the retirees and dependents will shrink from approximately 1,200 to 240. The actuary also estimated that premiums for Shared Cost Retirees must increase to $388 per month effective April 1, 2005, to cover the retirees' 40% share of 2005 calendar year, which assumes that the pool of the retirees and dependents will shrink from approximately 300 to 270. While the Debtors regret that the premium increases are necessary, the increases effectuate the terms of the Retiree Benefit Plan and must be implemented. Active Employees Contingent Benefits Pursuant to the eligibility requirements of the Shared Cost Coverage, non-union employees that work for the Debtors for 10 years after age 50 and retire from their employment after age 60 are eligible to participate in the Shared Cost Coverage. Therefore, no active employee is eligible to participate in the Shared Cost Coverage until retirement. As of March 3, 2005, 288 out of the Debtors' 32,000 active employees could retire immediately and be eligible to participate in the Shared Cost Coverage. The Debtors' actuary estimates that liability attributable to the participation of the potentially eligible active employees over age 50 and their dependents in the Shared Cost Coverage is $10,000,000. The Debtors want to discontinue all active employees' contingent benefits under the Shared Cost Coverage to eliminate this liability. Non-Union Retirees Object Eleven members of the Debtors' non-union retiree health care plan object to the Debtors' request: 1. Anthony J. Makris, 2. Martha Miller, 3. Paul Porter, 4. Virginia Yount, 5. Roger Sines, 6. Ioin Lewis, 7. Lee H. Powell, 8. Robert S. Koerth, 9. Gordon A. Thomas, 10. Rudy R. Norris, and 11. Raymond F. Hert The Non-Union Retirees contend that: (1) The Debtors have not provided them sufficient notice and time to review the Debtors' proposed relief; (2) The increase in the Retirees' monthly premiums is excessive and is causing them extreme hardship; and (3) The Debtors have made faulty numerical assumptions and employed faulty mathematics in the computation of the monthly premiums. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) J.C. PENNEY: Fitch Says Capital Restructuring Won't Affect Ratings ------------------------------------------------------------------ Fitch Ratings does not anticipate any rating changes as a result of J. C. Penney Co., Inc.'s new $1 billion capital structure repositioning program. The new program comprises $750 million of share repurchases and $250 million of open market debt repurchases. The share repurchases are incremental to the $1 billion remaining on the company's previous authorization, bringing total expected repurchases this year to $1.75 billion. The debt repurchases are in addition to the expected repayment of $193 million of notes maturing on May 23, 2005, for total expected debt reduction of $443 million. These activities will be financed with the company's cash, which totaled $4.7 billion as of Jan. 29, 2005. As a result, financial leverage will continue to decline in 2005, while the company manages down its excess liquidity. Fitch currently rates Penney's $1.5 billion secured bank facility 'BBB-', senior unsecured notes 'BB+', and convertible subordinated notes 'BB'. Approximately $3.9 billion of debt is currently outstanding. The Rating Outlook is Positive, reflecting Penney's solid operating momentum and the expectation for further reductions in leverage. KRISPY KREME: Subsidiary & Officer Face ERISA Complaint in NC ------------------------------------------------------------- Krispy Kreme Doughnuts, Inc.'s (NYSE: KKD) wholly owned subsidiary, Krispy Kreme Doughnut Corporation, was served with a purported class action lawsuit filed in the U.S. District Court for the Middle District of North Carolina that asserts claims under Section 502 of the Employee Retirement Income Security Act against KKDC and certain of its current and former officers, styled Smith v. Krispy Kreme Doughnut Corporation et al., No. 1:05CV00187. Plaintiff purports to represent a class of persons who were participants in or beneficiaries of KKDC's retirement savings plan or profit sharing stock ownership plan between Jan. 1, 2003, and the present and whose accounts included investments in the Company's common stock. Plaintiff contends that defendants failed to manage prudently and loyally the assets of the plans by continuing to offer the Company's common stock as an investment option and to hold large percentages of the plans' assets in the Company's common stock; failed to provide complete and accurate information about the risks of the Company's common stock; failed to monitor the performance of fiduciary appointees; and breached duties and responsibilities as co-fiduciaries. Plaintiff seeks unspecified monetary damages and other relief. Defendants intend to deny the allegations and defend themselves vigorously. Although the Company cannot predict the outcome of this action, an adverse result could have a material adverse effect on the Company's results of operations and financial condition. About the Company Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme is a leading branded specialty retailer of premium quality doughnuts, including the Company's signature Hot Original Glazed. Krispy Kreme currently operates approximately 400 stores in 45 U.S. states, Australia, Canada, Mexico, the Republic of South Korea and the United Kingdom. Krispy Kreme can be found on the World Wide Web at http://www.krispykreme.com/ * * * As reported in the Troubled Company Reporter on Feb. 10, 2005, Krispy Kreme is reducing the number of employees in its corporate, mix plant, equipment manufacturing, and distribution facilities by approximately 25%. It is estimated that these actions will result in annual pre-tax savings of approximately $7.4 million and a cash restructuring charge of approximately $600,000 in the first fiscal quarter. The Company also recently divested a corporate airplane that was subject to an operating lease. It is estimated that this action will result in annual pre-tax savings of approximately $3 million but will involve a cash charge of approximately $300,000 in the first fiscal quarter related to the divestiture. March 25 Deadline Looms As reported in the Troubled Company Reporter on Jan. 27, 2005, the six-lender consortium under Company's Credit Facility have agreed to defer until March 25, 2005, the date on which an event of default would occur because of the Company's failure to deliver financial statements to the lenders for the quarter ended Oct. 31, 2004. Also, as previously disclosed, the Company is currently unable to borrow funds under the Credit Facility. The Company presently is working on a business plan and intends to conduct discussions with its lending banks regarding amendments to its Credit Facility. The Company's cash from operations continues to be impacted adversely by previously disclosed unfavorable sales trends, and by the substantial costs and expenses associated with ongoing litigation, regulatory and restructuring matters. In light of the foregoing, Krispy Kreme believes that it will need to obtain, by the end of the waiver period, additional credit to fund its operations and required capital expenditures. There can be no assurance that the Company will be able to reach any agreement with the banks or that funding will be available when and in the amounts needed. LIBERATE TECH: Shareholders to Vote on Asset Sale on April 5 ------------------------------------------------------------ A special meeting of the stockholders of Liberate Technologies will be held at the Hotel Sofitel San Francisco Bay, located at 223 Twin Dolphin Drive, Redwood City, California, on Tuesday, April 5, 2005, at 9:30 a.m., local time, to consider and vote on these matters: (1) to approve and adopt the Asset Purchase Agreement, dated January 14, 2005, between Liberate, Liberate Technologies Canada Ltd., its subsidiary, and Double C Technologies, LLC, a Delaware limited liability company majority owned and controlled by Comcast Corporation with a minority investment by Cox Communications, Inc., and the sale of substantially all of the assets relating to Liberate Technologies' North America business to Double C pursuant to the Asset Purchase Agreement; and (2) to transact any other business as may properly come before the special meeting or any adjournments or postponements of the special meeting. Liberate Technologies' Board of Directors has unanimously approved the Asset Purchase Agreement and the asset sale, has determined that the asset sale is expedient and for the best interests of Liberate and its stockholders and recommends a vote for the proposal to approve and adopt the asset sale and Asset Purchase Agreement. Only stockholders of record at the close of business on Feb. 11, 2005, the record date for the special meeting, may vote at the special meeting and any adjournments or postponements of the special meeting. A copy of the Asset Purchase Agreement is available for free at: http://sec.gov/Archives/edgar/data/1085776/000110465905001695/a05-1581_1ex99 d2.htm Headquartered in San Mateo, California, Liberate Technologies provides software and services for digital cable systems. The Company filed for chapter 11 protection on April 30, 2004 (Bankr. D. Del. Case No. 04-11299, transferred, May 12, 2004, to Bankr. N.D. Calif., Case No. 04-31394). When the Company filed for bankruptcy protection, it listed $257,000,000 in total assets and more than $21,700,000 in total debts. Liberate filed a proposed Plan of Reorganization providing for the payment of 100% of valid creditor claims. The Landlord for the company's former San Carlos headquarters complained that the Debtor's attempt to reject the lease under 11 U.S.C. Sec. 365 and cap his rejection claim under Sec. 506 of the Bankruptcy Code was an abuse of the system. Seeing more cash than debt, the Honorable Thomas E. Carlson agreed, and dismissed the solvent debtor's chapter 11 case on Sept. 8, 2004. Liberate appealed that ruling (N.D. Calif. Case No. 04-03854). In the Bankruptcy Court and U.S. District Court, Crista L. Morrow, Esq., Desmond J. Cussen, Esq., Fred L. Pillon, Esq., Jonathan Landers, Esq., and Jayesh Sanatkumar Hines-Shah, Esq., at Gibson Dunn & Crutcher LLP, represent Liberate. The disgruntled landlord, Circle Star Center Associates, L.P., is represented by Douglas J. McGill, Esq., Andrew C. Kassner, Esq., and Michael W. McTigue, Jr., at Drinker Biddle & Reath LLP, and Michael P. Brody, Esq., James R. Stillman, Esq., and Diane K. Hanna, Esq., at Ellman Burke Hoffman & Johnson. James L Lopes, Esq., Janet A. Nexon, Esq., and Jason Gerlach, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, represent an ad hoc equity holders' committee. The U.S. District Court for the Northern District of California issued an order pursuant to a stipulation by the parties dismissing with prejudice Liberate's appeal from the U.S. Bankruptcy Court for the Northern District of California's order dismissing its chapter 11 case. LORAL SPACE: Disagrees with Examiner on Estate's Value ------------------------------------------------------ As previously reported, Harrison J. Goldin, the appointed examiner in Loral Space & Communications Ltd. and its debtor-affiliates' chapter 11 cases, filed his report with the U.S. Bankruptcy Court for the Southern District of New York. In his report, Mr. Goldin stated that "confirmatory due diligence suggests that the value range of Loral could reasonably exceed the value range in its Disclosure Statement by $281 million to $463 million" leading, in the Examiner's view, to potential alternative low, midpoint and high enterprise valuations for Loral of $931 million, $1.072 billion and $1.263 billion, respectively. Loral did not prepare or approve the Examiner's report, and the conclusions and opinions expressed therein are not those of the Company. The Company and its financial advisor, Greenhill & Co., LLC, believe that there are material errors in the Examiner's analysis and do not agree with the conclusions stated in the report. In any event, the total amount of creditor claims against the Company and its subsidiaries, plus interest thereon, significantly exceeds even the high potential alternative enterprise valuation suggested by the Examiner. Pursuant to the absolute priority rule in bankruptcy, Loral says its common and preferred stock will be eliminated entirely, with the result that common and preferred stockholders will receive no distribution. About Loral Space Loral Space & Communications is a satellite communications company. It owns and operates a fleet of telecommunications satellites used to broadcast video entertainment programming, distribute broadband data, and provide access to Internet services and other value-added communications services. Loral also is a world-class leader in the design and manufacture of satellites and satellite systems for commercial and government applications including direct-to-home television, broadband communications, wireless telephony, weather monitoring and air traffic management. The Company and various affiliates filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-41710) on July 15, 2003. Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the company filed for bankruptcy, it listed total assets of $2,654,000,000 and total debts of $3,061,000,000. LORAL SPACE: Revised Consensual Chapter 11 Plan on the Table ------------------------------------------------------------ Loral Space & Communications Ltd. (OTC Bulletin Board: LRLSQ) filed a revised plan of reorganization in the Bankruptcy Court for the Southern District of New York yesterday. The Plan, which revises the terms of a plan previously filed on December 5, 2004, reflects an agreement among the company, the Creditors' Committee and the Ad-Hoc Committee of Space Systems/Loral trade creditors on the elements of a consensual plan of reorganization. The Plan provides, among other things, that: * Loral's two businesses, satellite manufacturing (New SS/L) and satellite services (New Skynet), will emerge intact as separate subsidiaries of reorganized Loral (New Loral). * New SS/L will emerge debt-free and continue its current activities, including completion of all satellites under construction or on order, and active pursuit of additional new awards. * New Skynet will continue to provide transponder leasing, network and professional services to current and prospective customers. * New Loral will emerge as a public company under current management and will seek listing on a major stock exchange. * Holders of allowed claims against SS/L and Loral SpaceCom will be paid in full in cash, including interest from the petition date to the effective date of the Plan. * Loral Orion unsecured creditors will receive approximately 80 percent of New Loral common stock and their pro rata share of $200 million of preferred stock to be issued by New Skynet. These creditors also will be offered the right to subscribe to purchase their pro-rata share of $120 million in new senior secured notes of New Skynet. This rights offering will be underwritten by certain Loral Orion creditors who will receive a fee which may be payable in additional New Skynet notes. * Loral bondholders and certain other unsecured creditors will receive approximately 20 percent of the common stock of New Loral. * Loral's existing common and preferred stock will be cancelled and no distribution will be made to the holders of such stock. The Plan is subject to final documentation and confirmation by the U.S. Bankruptcy Court. Copies of the revised consensual Plan are available at no charge on Loral's Web site at http://www.loral.com/ Loral Space & Communications -- http://www.loral.com/-- is a satellite communications company. It owns and operates a fleet of telecommunications satellites used to broadcast video entertainment programming, distribute broadband data, and provide access to Internet services and other value-added communications services. Loral also is a world-class leader in the design and manufacture of satellites and satellite systems for commercial and government applications including direct-to-home television, broadband communications, wireless telephony, weather monitoring and air traffic management. The Company and various affiliates filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-41710) on July 15, 2003. Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the company filed for bankruptcy, it listed total assets of $2,654,000,000 and total debts of $3,061,000,000. LORAL SPACE: Pref. Shareholders Want Official Committee Appointed ----------------------------------------------------------------- The Ad Hoc Committee of Preferred Shareholders of Loral Space & Communications, Ltd., asks the U.S. Bankruptcy Court for the Southern District of New York to appoint an Official Committee of Preferred Equity Security Holders. This is the Ad Hoc Committee's third motion to appoint an Official Committee. The Court denied in 2003 and 2004 the Ad Hoc Committee's request on the ground that Loral promised it would include the shareholders in formulating a plan of reorganization. The preferred shareholders tell the Court they were excluded from the plan negotiation process. Loral's Plan proposes to wipe out all existing equity interests in Loral and to redistribute those to creditors and senior management through a lucrative stock option program. Harrison J. Goldin, the appointed examiner of Loral, filed on Mar. 14 his report stating that the estates are undervalued by $281 million to $463 million. The shareholders are now hopeful they'll receive some distribution in these cases. The Ad Hoc Committee members own approximately 1.4 million shares. The Ad Hoc Committee assures the Court that the appointment of an official committee won't interfere or delay the Debtors' emergence from chapter 11. The Committee only wants to protect its legitimate interests. About Loral Space Loral Space & Communications is a satellite communications company. It owns and operates a fleet of telecommunications satellites used to broadcast video entertainment programming, distribute broadband data, and provide access to Internet services and other value-added communications services. Loral also is a world-class leader in the design and manufacture of satellites and satellite systems for commercial and government applications including direct-to-home television, broadband communications, wireless telephony, weather monitoring and air traffic management. The Company and various affiliates filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-41710) on July 15, 2003. Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the company filed for bankruptcy, it listed total assets of $2,654,000,000 and total debts of $3,061,000,000. MCI INC: Halts Talks; Qwest Seeks Meeting with Monitor ------------------------------------------------------ On March 21, 2005, Qwest Communications International Inc. sent a letter to the Board of Directors of MCI, Inc., emphasizing that if MCI wants to maximize value to its shareholders, MCI should seriously consider Qwest's offer: March 21, 2005 The Board of Directors MCI, Inc. Attention: Chairman, Board of Directors 22001 Loudoun County Parkway Ashburn, Virginia 20147 Dear Mr. [Nicholas] Katzenbach: Your advisors tell us that MCI has gone "dark" and refuses to continue to speak with Qwest about our proposal made to the MCI Board on March 16 and made public on March 17. When granting Mr. [Michael] Capellas's request that the MCI Board be permitted until March 28th to respond to our proposal, we did not think that MCI would refuse to talk with Qwest during the interim. The straw man being propped up to explain why MCI won't continue what has been a fruitful exchange of information with Qwest is that MCI's merger agreement with Verizon prohibits any discussions with Qwest. It is disturbing that Verizon and MCI are so concerned about allowing MCI to expeditiously and transparently evaluate Qwest's proposal fully that they do not avail themselves of the provisions in the Verizon-MCI merger agreement to do so. It is beyond dispute that allowing Qwest and MCI to discuss Qwest's proposal during the period that the MCI Board of Directors is considering that proposal would be beneficial to all interested parties. The Verizon-MCI merger agreement allows, your fiduciary duties require and fairness to the MCI stockholders dictate that MCI continue to talk with Qwest as long as the MCI Board of Directors has concluded that Qwest's proposal could "reasonably be expected to lead to a Superior Proposal." MCI and Qwest should immediately engage in negotiations to finalize the proposed merger agreement we provided to your advisors on March 16. In addition, we would like to speak with Mr. [Richard] Breeden about his role with MCI and his views on the internal controls and corporate governance at MCI. Moreover, we still have questions concerning the tax issues raised during due diligence and mentioned in MCI's recently filed 10k, questions we are confident can be answered if MCI were to resume its discussions with Qwest. In light of Qwest's significantly higher offer price, the more favorable terms of our proposed merger agreement and the better regulatory profile of a Qwest-MCI deal, Qwest's proposal goes well beyond potentially leading to a Superior Proposal, and, in fact, is a Superior Proposal. The chart below demonstrates the financial superiority of Qwest's proposal: Offer Comparison Qwest Superiority ---------------- ----------------- Qwest Verizon Offer Offer $ % ------- ------- -------- -------- Cash $10.10 $5.60 $ +4.50 +80.4 Stock 15.50 14.28 +1.22 +8.5 ------- ------- -------- -------- Offer Value $25.60 $19.88 $ +5.72 +28.8 Premium (discount) to MCI market price (as of 3/18/05) +9.2% -(15.2)% Total value of offer $8.3bn $6.5bn $ +1.8bn +28.8% ------- ------- -------- -------- If the MCI Board of Directors truly wishes to evaluate Qwest's proposal, there is no legally valid excuse not to continue the exchange of information. Verizon, who has released no details of the underlying benefits of its offer, continues in its shrill attempt to change the focus away from delivering maximum value to MCI shareholders, but ignores the one overriding issue: Qwest's offer is over 25% higher than Verizon's offer. The failure of the MCI Board to conclude that the Qwest proposal could "reasonably be expected to lead to a Superior Proposal" deprives the MCI shareholders of their right to maximize the value of their shares. The MCI Board should take the actions necessary to maximize value to MCI shareholders and insure the MCI merger process is transparent and fair by re-engaging with Qwest. Sincerely, /s/ RICHARD C. NOTEBAERT Richard C. Notebaert Chairman & Chief Executive Officer Qwest Communications International Inc. cc: Mr. Richard Breeden Mr. Michael Capellas MCI's Statement On March 21, MCI issued a press statement explaining that: "Under our merger agreement with Verizon, we were limited to a two-week window, up until March 17, to have a dialogue with Qwest. That period has expired and by honoring our agreement with Verizon we cannot have further dialogue with Qwest. After Mr. Notebaert presented to the MCI Board on March 16, it was mutually agreed that the MCI Board would respond by March 28, and they intend to do so." 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. 79; 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. MCI INC: Files Annual Report on Form 10-K with SEC -------------------------------------------------- MCI, Inc. (Nasdaq: MCIP) filed its annual report on Form 10-K for the year ended December 31, 2004, with the Securities and Exchange Commission last week. The Company reported $4 billion of net loss against $20 billion in revenues for the year ended Dec. 31, 2004. At Dec. 31, 2004, MCI Inc.'s balance sheet showed (in millions): Total Current Assets $9,093 Total Assets 17,060 Total Current Liabilities 6,203 Total Shareholders' Equity $4,230 Included in the audited financial statements is a $113 million increase in the deferred income tax provision for fourth quarter and full-year 2004 from previously announced results. MCI's income tax accounting in 2004 had significant complexity due to fresh start accounting, impairment of assets, cancellation of indebtedness, a significant reduction in the number of legal entities within MCI's consolidated group and various tax contingencies that are described in MCI's filing with the SEC. While finalizing its financial statements, the Company determined that its fourth quarter tax provision would need to be increased from the $415 million it previously reported in its earnings announcement to $528 million, increasing the Company's net loss in the fourth quarter to $145 million. The additional provision had no impact on the Company's previously reported operating income or operating income before depreciation and amortization (EBITDA) for 2004, and will have no impact on the Company's guidance for operating income or EBITDA for 2005. In addition, the change is not expected to have any impact on the purchase price adjustment mechanism in the Company's merger agreement with Verizon Communications, Inc. Additionally, management was required to assess the effectiveness of the Company's internal control over financial reporting as of December 31, 2004. While substantial progress has been made in improving the Company's internal control, management identified a material weakness in the Company's internal control over accounting for income taxes. Management has already taken, and will continue to take, significant steps to remedy the weakness, including: * hiring a new Vice President of Tax; * hiring additional full time tax accounting staff; * increased use of third party tax service providers for the more complex areas of the Company's income tax accounting; and * increased formality and rigor of controls and procedures over accounting for income taxes. As a result of other procedures put in place to improve the reliability of its accounting for income taxes, management believes that the consolidated financial statements included in its full-year 2004 financials, as well as the financial statements for each quarter in 2004, as previously reported, are fairly stated in all material respects. 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. * * * 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. MILLER EXCAVATING: Case Summary & List of Known Creditors --------------------------------------------------------- Debtor: Miller Excavating Service, Inc. 421 Almedia Road St. Rose, Louisiana 70087 Bankruptcy Case No.: 05-11993 Chapter 11 Petition Date: March 18, 2005 Court: Eastern District of Louisiana Judge: Jerry A. Brown Debtor's Counsel: Marion D. Floyd, Esq. 1213 Williams Boulevard, Suite A Kenner, Louisiana 70062 Tel: (504) 467-3010 Fax: (504) 467-3020 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Known Creditors: Entity Claim Amount ------ ------------ AmSouth Leasing Unknown P.O. Box 11407 Birmingham, AL 35246 Bank One Unknown 201 St. Charles Ave. New Orleans, LA 70170 Christopher S. Mann, Esq. Unknown for Wood Resources, Inc. Jones Walker 201 St. Charles Ave. New Orleans, LA 7017005100 Internal Revenue Service Unknown 600 S. Maestri Pl Stop 59 New Orleans, LA 70130 John Deere Capital Corp. Unknown 6400 NW 86th St. Johnston, IA 50131 Kent Enterprises Unknown P.O. Box 195 Fluker, LA 70436 La. Dept. of Revenue Unknown 1418 Tiger Dr. P.O. Box 1429 Thibodaux, LA 70302 Nortrax Unknown 10110 Daradale Ave. Baton Rouge, LA 70816 Regions Bank Unknown Commercial Loans Dept. 2521 P.O. Box 2153 Birmingham, AL 35287 The Debtor did not file a list of its 20 largest unsecured creditors. MIRANT: 9th Circuit Remands Suit Under Clayton Act to Dist. Court ----------------------------------------------------------------- On April 15, 2002, the California Attorney General, Bill Lockyer, filed a civil lawsuit against Mirant, Mirant Americas, Inc., Mirant Americas Energy Marketing and several Mirant Americas Generation subsidiaries in the United States District Court for the Northern District of California. The lawsuit alleges that the acquisition and possession of the Potrero and Delta power plants by subsidiaries of Mirant Americas Generation has substantially lessened, and will continue to substantially lessen, competition in violation of the Clayton Act of 1914, as amended and the California Unfair Competition Act. The Attorney General seeks equitable remedies in the form of divestiture of the plants and injunctive relief, as well as monetary damages in unspecified amounts to include disgorgement of profits, restitution, treble damages, statutory civil penalties and attorney fees. On March 25, 2003, the California District Court dismissed the Attorney General's state law claims and his claim for damages under the Clayton Act, but did not dismiss the claims for divestiture. Mirant filed for bankruptcy protection in July 2003. Subsequently, Mirant moved in the Bankruptcy Court for an order modifying the automatic stay to allow three suits, including two previous brought by the Attorney General to proceed in the Ninth Circuit, where they were then pending on appeal. The Bankruptcy Court granted Mirant's request, but did not determine whether the appeals were, in fact, subject to the automatic stay. Instead, the Bankruptcy Court granted the request and modified the stay only "to the extent necessary and applicable." Mirant also filed a "Suggestion of Stay" in the California District Court, advising the court to "take . . . notice that . . . actions taken in violation of the [automatic] stay are void" and may result in the "imposition of sanctions by the Bankruptcy Court." The "Suggestion of Stay" did not explicitly argue that the Attorney General's Clayton Act suit was subject to the automatic stay, nor did it request that the district court determine the automatic stay's applicability. The Attorney General argued that the suit was exempt from the automatic stay because it sought to enforce California's "police or regulatory power" within the meaning of Section 362(b)(4) of the Bankruptcy Code. Without taking a position on the applicability of Section 362(b)(4), Mirant urged the District Court to exercise its discretionary power to stay the action. The California District Court declined to decide whether the Attorney General's suit came within Section 362(b)(4). On December 3, 2003, the District Court granted a stay pursuant to Landis v. North American Co., 299 U.S. 248 (1936), pending the resolution of Mirant's Chapter 11 cases. In its decision, the California District Court relied on three factors in granting the stay. The District Court found that its jurisdiction to determine the scope of the "police or regulatory power" exception under Section 362(b)(4), and hence the applicability of the automatic stay, was doubtful under Celotex Corp. v. Edwards, 514 U.S. 300 (1995), and In re Gruntz, 202 F.3d 1074 (9th Cir. 2000) (en banc). The District Court also found that the applicability of Section 362(b)(4) raised unsettled questions of law. The District Court also noted that the stay was "efficient for [its] docket," and that it was "the fair and practical course for the parties." The Attorney General appealed the ruling to the Court of Appeals for the Ninth Circuit. 9th Circuit Remands Lawsuit On February 10, 2005, the Ninth Circuit vacated the stay and remanded the proceeding to the California District Court. The Ninth Circuit finds that the District Court had jurisdiction to determine whether the automatic stay applied to the Attorney General's suit. The Ninth Circuit holds that the Attorney General's suit comes within the "police or regulatory power" exception of Section 362(b)(4). The Ninth Circuit further holds that a Landis stay is not justified. Accordingly, the Ninth Circuit vacated the stay and remanded the case to allow the Attorney General's suit to proceed on the merits. 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. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Wants to Enter into New Trading Contracts ------------------------------------------------------ In August 2003, Mirant Corporation and its debtor-affiliates sought and obtained the U.S. Bankruptcy Court for the Northern District of Texas' authorization to assume prepetition trading contracts and provide an adequate protection package in favor of trading counterparties pursuant to the Final Trading Order. In November 2003, the Court issued an order requiring the Debtors to conduct trading and marketing activities and further comply with the terms and provisions of the amendment to the Global Risk Management Policy. The Amended Risk Management Policy (i) establishes clear definitions and protocols by which the Debtors may engage in asset hedging, marketing and optimization activities, and (ii) formalizes the creation of a legacy portfolio containing certain existing transactions that have been deemed to be non-strategic to the Debtors. In August 2004, the Court amended and restated the Final Trading Order. New Trading Contracts The Debtors ask the Court for permission to enter into new postpetition trading contracts with a small group of counterparties that contain these additional provisions: (a) If any or all provisions of the Amended Final Trading Order are stayed, modified in a manner adverse to a New Counterparty or vacated, or the Amended Final Trading Order otherwise terminates, the stay, modification, vacation, or termination will not affect the right of a New Counterparty to exercise remedies pursuant to the New Trading Contract; and (b) The automatic stay provisions of Section 362 of the Bankruptcy Code are vacated and modified to the extent necessary to allow immediate and unconditional enforcement of remedies by any New Counterparty upon the occurrence of any default under the New Trading Contracts by the Debtors and the New Counterparties' rights will not be modified, stayed, avoided or otherwise limited by order of the Bankruptcy Court or any court proceeding under the Bankruptcy Code. The Debtors waive the automatic stay provisions of Section 362 and will not seek relief, including without limitation under Section 105(a), to the extent that any relief would in any way restrict or impair the rights of any New Counterparty under the New Trading Contracts. The waiver, however, will not preclude the Debtors from contesting whether a default has occurred under any New Trading Contract. Robin Phelan, Esq., at Haynes and Boone, LLP, in Dallas, Texas, states that the New Trading Contracts include, and are limited to, only those contracts that: (a) are "forward contracts," "commodity contracts" and "swap agreements" as defined in Sections 101 or 761; (b) are with New Counterparties that are "forward contract merchants" pursuant to Section 101(26) or are otherwise entitled to the benefits of Sections 555, 556, 559, or 560; and (c) provide for liquidation or termination by a "forward contract merchant," "commodity broker," or "swap participant" under Sections 556 or 560 because of a condition of the kind specified in Section 365(e)(1). The Amended Final Trading Order furnishes certain protections to particular counterparties that are not explicitly extended to the New Counterparties. The Amended Final Trading Order contains language substantially similar to the Additional Protection Provisions that is applicable solely to postpetition trading contracts that are modified by certain postpetition assurance agreements. On the other hand, the New Trading Contracts involve, but are not limited to: -- counterparties that may have never had trading contracts with the Debtors or did not have trading contracts at the Petition Date; -- existing counterparties that did not terminate but did not execute a Prepetition or Postpetition Assurance Agreement; or -- old counterparties that have previously terminated trading contracts with the Debtors. The New Trading Contracts are within the scope of and in compliance with both the Amended Final Trading Order and the Amended Risk Management Policy. Protection Already Provided in Sections 556 and 560 The automatic stay does not prohibit the "safe harbor provisions" under Sections 556 and 560, which grant with respect to a debtor under protection of the Bankruptcy Code the right of a counter- party to certain types of commodities, derivatives, and similar contracts to cause the liquidation or termination of the contracts. Mr. Phelan assures the Court that permitting a counterparty to liquidate or terminate, notwithstanding Section 362, allows the counterparty to cover its positions with the trading debtor, thereby avoiding risk of non-performance and providing a degree of certainty that is necessary for the commodities markets to function efficiently. Non-ordinary Course Transactions Under Sections 105 and 363 The Amended Final Trading Order grants the Debtors the authority to enter into New Trading Contracts with New Counter-parties "after the Petition Date in the ordinary course of business without further order of the Court . . . and to engage in Trading Activities pursuant thereto . . ." Sections 105 and 363, moreover, mandate that the Debtors continue their trading activities without further Court order. Mr. Phelan explains that given the confidential nature of the New Trading Contracts and the flexibility required by the Debtors given the fluctuation of market conditions, it would be impracticable and counterproductive to require the Debtors to seek approval of the contacts. It is, thus, essential to the Debtors' continuing business operations that the Court authorize the Debtors' entry into the New Trading Contracts without further order. 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. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) NANOPIERCE TECH: Losses & Deficit Trigger Going Concern Doubt ------------------------------------------------------------- NanoPierce Technologies reported a $423,862 net loss of for the six months ended December 31, 2004, and an accumulated deficit of $23,055,565 as of December 31, 2004. The Company has not recognized any revenues from its business operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. In NanoPierce Technologies' last Annual Report for the fiscal year ended June 30, 2004, the Independent Registered Public Accounting Firm, GHP Horwath, P.C., raises substantial doubt about the Company's ability to continue as a going concern. To address its liquidity needs, the Company is relying on cash received from an equity placement that occurred in January 2004, of which the Company received approximately $1.8 million, net of offering costs, upon the issuance of restricted common stock. The Company is using these funds to support operations and for possible business acquisitions. Currently, the Company does not have a revolving loan agreement with any financial institution, nor can the Company provide any assurance it will be able to enter into any such agreement in the future, or be able to raise funds through a further issuance of debt or equity in the Company. Nanopierce Technologies, Inc. (NPCT : OTC BB), is a Denver-based technology company which owns the revolutionary and powerful, world class Nanopierce Interconnect Technology. The Company owns ten patents, has seven patent applications pending, two patent applications in preparation, trade names and trade secrets, as well as other intellectual properties relating to this Technology. NAVARRE CORP: Moody's Places B3 Rating on $125M Sr. Unsec. Notes ---------------------------------------------------------------- Moody's Investors Service assigned the debt rating of B3 to the prospective senior unsecured debt issue of Navarre Corporation. The debt is being issued to finance the cash portion of Navarre's acquisition of FUNimation as well as provide liquidity to the company. These ratings were assigned: * Senior implied of B2; * Senior unsecured issuer rating of B3; * $125 million senior unsecured notes maturing 2012 rated B3; * Speculative Grade Liquidity Rating of SGL-2. The rating outlook is stable. The ratings reflect the risks associated with Navarre's transformation to a business model which puts greater emphasis on: 1. publishing away from the legacy distribution business; 2. M&A integration and execution risks for the FUNimation acquisition, the company's biggest acquisition made thus far; 3. reliance on key management personnel for both existing businesses and FUNimation; 4. low barriers to entry to Navarre's relatively small distribution business; and 5. concentration risks both on the customer and vendor side for its distribution business. The ratings are supported by: 1. Navarre's track record in organically growing its distribution business; 2. relatively smooth integrations of the previous two acquisitions in publishing over the past 3 years; 3. adequate pro forma credit metrics with EBIT interest coverage exceeding 3.5x and debt to EBITDA at 2.3x; 4. Moody's expectation that Navarre's stand-alone business could support debt service at interest coverage greater than 1.5x; and 5. the company's record of healthy gross margins. The stable outlook reflects the likelihood that Navarre will not be able to de-lever in the near-term as a result of its current debt terms. The notes are non-callable for four years. The ratings or outlook could rise if the company raises equity or begins generating significant free cash flow to be used to de- lever the balance sheet. Ratings could fall if the company's liquidity declines or if the company's financial results suffer as a result of poor integration of the FUNimation acquisition. Navarre's acquisition of FUNimation reflects the company's continuing strategy of aggregating content to be sold through its distribution operations. Publishing operations, specifically FUNimation, have higher margins than traditional distribution but carry greater risk because up-front investments must be made to acquire content that may fail to generate market demand. The ratings also incorporate the risk that additional acquisitions would likely be made to further the company's aggregation strategy, in which the company may overpay for properties or simply misidentify property potential. The acquisition of FUNimation will add revenue of $70 million, or 12%, to Navarre's existing revenue. FUNimation is highly dependent on key management personnel, which are critical to generating new license agreements with original anime content producers in Japan. The loss of those management personnel would likely negatively impact the operations of FUNimation and its ability to secure future anime licenses in the future. However, Moody's notes that key licensing agreements have or will have been transferred to Navarre and will not expire for the next several years. The recent volatility in FUNimation's revenue highlights the risks associated with reliance on key properties such as DragonBall and Yu-Gi-Oh! Approximately 70% of Navarre's distribution sales are from PC software, with concentration in anti-virus products. This allows the company to occupy a market segment, software distribution to the retail market, which is currently not the key focus of some of its larger competitors. Though the company has had a track record of consistently generating organic revenue growth, barriers to entry in this niche market segment are not high, especially for other distributors that are larger in size and scale. Navarre is able to generate a gross margin in excess of 10%, consistently higher than those of its larger competitors due to the profile of its vendors; however, operating margins are thin, reflecting the lack of scale due to the small size of its distribution business. Nonetheless, the company's stand-alone operating profit is expected to cover debt service at about 1.5x. FUNimation's profit contribution would raise the company's interest coverage to greater than 3.5x. Pro forma leverage is reasonable at 2.3x fiscal 2005 EBITDA. The speculative grade liquidity rating of SGL-2 reflects good liquidity. Moody's anticipates that the company will have cash balances exceeding $20 million following the notes offering and acquisition. Backup liquidity is provided by a $40 million revolving credit facility, anticipated to be raised to $75 million as part of the acquisition. Moody's expects Navarre to generate neutral to positive free cash flow in fiscal 2006 because Moody's expects that the company will not have to invest in working capital significantly following the increase in accounts receivable and inventories in fiscal 2005. The unsecured notes are notched one below the senior implied rating due to the notes' subordinate position below the company's unrated revolving credit facility, which is secured by substantially all the company's tangible and intangible assets. The revolving credit facility is expected to be used only for seasonal working capital needs as well as to fund additional acquisition activity. Navarre, headquartered in New Hope, Minnesota, is a provider of information technology distribution and media publishing services. Revenues were approximately $600 million for the latest twelve months ended December 31, 2004. NEXSTAR BROADCASTING: Moody's Puts B3 Rating on $75M Sr. Sub. Debt ------------------------------------------------------------------ Moody's Investors Service assigned B3 ratings to Nexstar Broadcasting, Inc.'s proposed $75 million add-on offering of 7% senior subordinated notes due 2014. In addition, Moody's affirmed the existing ratings, including the B1 senior implied, and negative outlook. Nexstar will use the proceeds of the transaction in combination with its senior secured bank facilities to redeem its $160 million of 12% senior subordinated notes due 2008. Nexstar's ratings and negative outlook continue to reflect the risks posed by the company's still high debt capitalization, the potential for additional acquisitions, as well as the increased capital expenditure requirements given the company's limited approach to digital upgrades and Moody's expectations of a less robust advertising market in 2005. These factors remain slightly offset by the potential for further operating margin improvement with the integration of developing stations. For additional information, please refer to the press release issued on March 16, 2005. These ratings have been affirmed: Nexstar Holdings, Inc.: -- Caa1 rating for the 11.375% senior discount notes due 2013, -- Caa1 issuer rating, and -- B1 senior implied rating. Nexstar Broadcasting, Inc. (including Mission Broadcasting): -- Ba3 rating for the $430 million senior secured term loans due 2012, -- Ba3 rating for the $100 million revolving credit facilities due 2012, -- B3 rating for the $125 million of subordinated notes due 2014, and -- B3 rating for the $160 million of subordinated notes due 2008 (Tender in Process) In addition, Moody's assigned a B3 rating to the $75 million senior subordinated add-on notes. The rating outlook remains negative. The B3 senior subordinated notes rating reflects their contractual subordination to the $455 million in senior secured credit facilities, as well as the benefit of subsidiary and parent guarantees. Nexstar Broadcasting, based in Irving, Texas, owns and operates and provides services to 46 television stations in 27 markets and reaches approximately 7.4% of the U.S. television households. OWENS CORNING: Seeking Creditors' Compromise in Plan Confirmation ----------------------------------------------------------------- In its Annual Report for 2004, Owens Corning said that while it will look for any opportunity to engage its creditors in settlement discussions, the Company believes that it will be difficult to reach a Consensual Plan until the issues of substantive consolidation and the value of its asbestos liability are finally resolved. David T. Brown, Owens Corning's President and Chief Executive Officer, relates that an external factor that has weighed heavily on the negotiations among the various creditor groups was the proposed Federal asbestos reform legislation that was pending in the Senate for much of 2003 and 2004. The Company's non-asbestos creditors have believed that the FAIR Act would reduce the amount of asbestos liability owed by the Company, and would therefore potentially increase the recoveries of non-asbestos creditors. While the FAIR Act did not pass in 2004, there have been ongoing discussions within the Senate regarding the possible introduction of a new version of the Fair Act in 2005. "We cannot currently predict whether the FAIR Act will ultimately be enacted or, if enacted, what impact it would have on our creditors. However, as long as it remains possible that it could be enacted into law, it is likely to remain a factor in the negotiations among our various creditor groups," Mr. Brown says. Owens Corning's going forward strategy continues to be two-fold: (1) look for a compromise that will result in a Consensual Plan supported by all of our creditors, and (2) in the absence of a Consensual Plan, proceed as quickly as possible to confirm our Plan of Reorganization even if it does not have the support of all creditor groups and emerge from Chapter 11. Mr. Brown informs the Securities and Exchange Commission that the Asbestos Claimants Committee and the Asbestos Futures Representative continue to be co-plan proponents with Owens Corning with respect to the Plan of Reorganization. "While there are other non-asbestos creditors who also support our Plan, there continues to be those who have objections to it, including the holders of our bank debt. While we can emerge from Chapter 11 and discharge our current and future asbestos liability without the support of non-asbestos creditors, we continue to believe that a Consensual Plan will allow us to emerge more quickly. At this time, however, we cannot predict when the Company will be able to confirm its Plan of Reorganization and successfully emerge." Throughout 2004, Mr. Brown notes, Owens Corning profitably grew its business while operating in Chapter 11. "For the foreseeable future, we do not believe that continuing to operate in Chapter 11 will inhibit our ability to successfully run and grow our business." Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 101; Bankruptcy Creditors' Service, Inc., 215/945-7000) OWENS-ILLINOIS: Edward White Succeeds Thomas Young as CFO --------------------------------------------------------- Owens-Illinois, Inc., (NYSE: OI) named Edward C. White as chief financial officer, succeeding Thomas L. Young. "We are pleased to have an executive with Ed's breadth and experience ready to assume this key leadership role in the firm. His in-depth understanding of our global business, customers, markets, strategy, core priorities, and organization will ensure a seamless transition for O-I," said Steve McCracken, O-I Chairman and CEO. "Ed will bring continuity to O-I's financial turnaround and transformation strategies which will enable a continued focus on near-term execution, with particular emphasis on ongoing efforts to complete the integration and synergy work in Europe." Mr. White joined O-I in 1973 and has held several key assignments in the financial area including corporate controller and senior vice president of finance and administration as well as roles in commercial and operational functions. In 1999, Mr. White was elected a corporate officer of the Company and in 2003 was promoted to senior vice president of the Company. Most recently, Mr. White served as director of sales and marketing for Europe, after a period of leadership on the European Integration team. About the Company Owens-Illinois is the largest manufacturer of glass containers in the world, with leading positions in Europe, North America, Asia Pacific and South America. O-I is also a leading manufacturer of health care packaging and specialty closure systems. * * * As reported in the Troubled Company Reporter on March 2, 2005, Fitch Ratings has affirmed the ratings for Owens-Illinois (NYSE: OI) and revised the Rating Outlook to Positive from Stable. Current ratings are: -- Senior Secured Credit Facilities 'B+'; -- Senior Secured Notes 'B'; -- Senior Unsecured Notes 'CCC+'; -- Convertible Preferred Stock 'CCC'. At the same time, Fitch assigned a 'CCC' rating to OI's senior subordinated notes. OI assumed BSN's senior subordinated debentures, 10.25% due 2009 and 9.25% due 2009, at the time of the BSN acquisition. During the fourth quarter of 2004, OI's wholly owned subsidiary Owens-Brockway issued 6.75% senior unsecured notes due 2014 to refinance a large portion of BSN's subordinated notes and to repurchase a substantial portion of OI's 7.15% notes due 2005. The ratings affect approximately $5.8 billion of debt and preferred securities. PARMALAT GROUP: Citigroup Seeks Discovery in New Jersey Action -------------------------------------------------------------- Citigroup, Inc., Citibank, N.A., Vialattea LLC, Buconero LLC, and Eureka Securitisation plc, ask Judge Drain of the U.S. Bankruptcy Court for the Southern District of New York to lift the Preliminary Injunction Order entered in Parmalat Finanziaria S.p.A.'s ancillary proceeding under Section 304 of the Bankruptcy Code. The Citigroup Defendants want to assert counterclaims against Finanziaria's extraordinary administrator, Dr. Enrico Bondi. The Citigroup Defendants also want to conduct discovery of Finanziaria and the other Foreign Debtors in connection with a pending action Dr. Bondi filed against the Defendants in a New Jersey superior court, to the extent permitted by law. Madlyn Gleich Primoff, Esq., at Kaye Scholer LLP, in New York, reminds Judge Drain that although a Section 304 Injunction is typically intended to relieve a debtor from having to defend itself against claims in multiple forums around the United States, by contrast, it is the Foreign Debtors that have initiated multiple lawsuits across the country involving common, underlying factual and legal elements. The Foreign Debtors elected to sue in multiple jurisdictions to increase its chances for a favorable result, impede coordination efforts, and thwart any attempt at a streamlined adjudication. Citigroup and the other New Jersey Defendants assert that the Preliminary Injunction operates wrongfully to deprive them of fundamental due process and other substantive and procedural rights like the rights to assert counterclaims and take discovery in the New Jersey Action. In the interests of justice and fair play, the Bankruptcy Court should not facilitate a process wherein the Foreign Debtors are entitled to pursue the NJ Defendants in the New Jersey Action without enabling the NJ Defendants to fend for themselves effectively. The NJ Defendants point out that, having availed of the U.S. Courts, the Foreign Debtors should not be shielded from counterclaims and discovery. In addition, the Preliminary Injunction Order is overbroad and must be modified to permit the NJ Defendants to answer the Foreign Debtors' meritless claims. Ms. Primoff further relates that the rights sought to be enforced through the counterclaims to be asserted in the New Jersey Action differ demonstrably from the rights the parties would enjoy under Italian law. It is plain that the Court should give effect to U.S. law rather than Italian law because the Foreign Debtors, having had the option of proceeding in Italy, chose to proceed with the Action in the U.S. Accordingly, the Foreign Debtors should not be permitted to use the Preliminary Injunction Order to take away the NJ Defendants' basic right to assert counterclaims in the NJ Action. Finanziaria Consents to Discovery and Filing of Counterclaims The Foreign Debtors agree to a modification of the Preliminary Injunction to allow the NJ Defendants to seek discovery in the New Jersey Action. The Foreign Debtors also agree that, to the extent that a counterclaim by the NJ Defendants exists and would be considered compulsory under New Jersey law, the NJ Defendants should be permitted to file that counterclaim, provided that they have not already sought the same relief in the Italian insolvency proceeding. To date, the NJ Defendants have not yet identified any counterclaim. A stipulation drafted by the NJ Defendants concedes that they should not be permitted to file counterclaims that mirror those claims they have already asserted, and that have been litigated, in the Italian insolvency proceeding. Allowing those claims to be reasserted in U.S. court would undermine the goal of Section 304, which is to funnel all claims against the foreign estate into the foreign insolvency proceeding. The Foreign Debtors, however, want the NJ Defendants to inform them and the Bankruptcy Court of the counterclaims the NJ Defendants intend to assert, and allow the parties to stipulate to any proposed modification of the injunction. This procedure both furthers the goal of Section 304 to avoid piecemeal claims against the foreign estate and protects the NJ Defendants from unfair treatment. To the extent that the NJ Defendants have created a time crunch by waiting until days before their answer is due, they should explain why they did not raise the issue in December when Grant Thornton International and Bank of America, N.A., sought similar relief. In any event, the Foreign Debtors will agree to any reasonable extension of the NJ Defendants' time to assert counterclaims in New Jersey to institute this procedure. Headquartered in Wallington, New Jersey, Parmalat U.S.A. Corporation -- http://www.parmalatusa.com/-- generates more than EUR7 billion in annual revenue. The Parmalat Group's 40- some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company employs over 36,000 workers in 139 plants located in 31 countries on six continents. It filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The Bankruptcy Court confirmed the U.S. Debtors' Plan of Reorganization on March 7, 2005. (Parmalat Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEI HOLDINGS: Moody's Withdraws Low-B Ratings After Tender Offer ---------------------------------------------------------------- Moody's withdrew all ratings on PEI Holdings, Inc., following the company's successful tender offer for the senior secured notes, previously rated B1. Moody's does not rate the newly issued convertible senior subordinated notes. Ratings actions are: * 11% senior secured notes due 2010 - WR (formerly B1) * Senior implied rating - WR (formerly B1) * Senior unsecured issuer rating - WR (formerly B3) Playboy Enterprises is a brand-driven, international multimedia entertainment company that: 1. publishes Playboy magazine; 2. operates Playboy and Spice television networks and distributes programming globally via DVD and a network of Web sites including Playboy.com; and 3. licenses the Playboy and Spice trademarks internationally for a range of consumer products and services. PHILLIPS-VAN: S&P Says Outlook is Positive Due to Good Portfolio ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Manhattan-based Phillips-Van Heusen Corp., to positive from stable. Existing ratings on the company, including the 'BB' corporate credit rating, were affirmed. "The outlook revision reflects the significant progress that PVH made in improving operating results and credit protection measures in 2004, and our belief that continued gains could lead to a higher rating in the future," explained Standard & Poor's credit analyst Diane Shand. "Ratings reflect the company's participation in the highly competitive apparel retailing industry, as well as the inherent cyclicality and fashion risk of the industry. These risks are somewhat mitigated by the company's portfolio of well- known brand names, its leading position in the men's dress shirt market, and a diversified base of distribution." PVH saw consolidated operating income jump by 23% to $195 million in 2004 as a result of strength in its wholesale dress shirt and sportswear business, the rationalization and contraction of its retail business, more full-price selling, and a 24% increase in operating earnings from its Calvin Klein Inc., licensing segment. Operating margins for the consolidated company increased to 14.7% in 2004 from 12.4% in 2003; EBITDA coverage of interest increased to 3.5x from 2.7x; and debt leverage declined to 3.1x from 4.0x. Return on capital was a satisfactory 13%. Standard & Poor's expects that PVH will show moderate revenue growth in 2005, helped by increases in licensing revenue from CKI and Arrow, as well as continued strength in its dress shirt and sportswear business. In addition, we expect margins to expand because of the growth of the company's high-margin licensing businesses and good inventory controls. Further, we do not expect PVH to be materially affected by the merger of Federated Department Stores Inc., and May Department Stores Co., The two companies comprise about 12% of PVH's revenues. Although the merger will likely result in some store closings, PVH's multibrand, multichannel strategy should enable it to continue to moderately increase sales. PLY GEM: Lenders Waive Covenant Defaults Through April 2005 ----------------------------------------------------------- Ply Gem Holdings, Inc., a leading manufacturer of residential exterior building products in North America, reported fourth quarter 2004 net sales of $181.4 million, a 61.4% increase over the $112.4 million for the same period in 2003. For the combined and consolidated year ending December 31, 2004, net sales were $626.6 million or 17.9% higher than the $531.4 million of net sales for the year ending December 31, 2003. The results for 2004 include the operations of the Company's subsidiary, MWM Holdings, Inc., which was acquired by Ply Gem on August 27, 2004. MW contributed $63.1 million of net sales for the fourth quarter and $92.3 million of net sales for the year ending December 31, 2004. Operating earnings for the fourth quarter of 2004 were $11.3 million compared to $9.3 million for the fourth quarter of 2003. For the full year ending December 31, 2004, operating earnings were $62.2 million compared to $50.7 million for the year ending December 31, 2003. MW contributed $5.6 million of operating earnings for the fourth quarter and $9.6 million of operating earnings for the year ending December 31, 2004. Net loss for the fourth quarter of 2004 was $1.1 million compared to $0.4 million for the fourth quarter 2003. For the full year ending December 31, 2004, net income was $14.3 million (which included $1.5 million of after tax impact of a foreign currency gain), compared to $10.1 million for the full year ending Dec. 31, 2003. Net income for the fourth quarter of 2004 and the full year ending December 31, 2004 included $0.5 million and $1.5 million of after tax impact of a foreign currency gain, respectively. Net income in 2003 did not include any currency translation gains or losses. Adjusted EBITDA for the fourth quarter 2004 was $19.0 million compared to $13.2 million for the fourth quarter of 2003. For the full year ending December 31, 2004, Adjusted EBITDA was $83.7 million compared to $67.1 million for the full year ending December 31, 2003. MW contributed $8.2 million of Adjusted EBITDA for the fourth quarter of 2004 and $13.0 million of Adjusted EBITDA for the period from August 27, 2004 to December 31, 2004. Adjusted EBITDA for all periods presented excludes currency translation gain. Lee D. Meyer, President and CEO, said "Ply Gem's fourth quarter results reflect our Company's continued strengths in the market place while at the same time dealing with unprecedented cost increases in PVC resin, aluminum and other materials/services." Mr. Meyer continued, "During 2004, Ply Gem has created a strong synergistic platform for the future. Our strong partnerships with our customers, growing customer base and low cost manufacturing position will be key to our future success." On Feb. 12, 2004, Ply Gem Investment Holdings, Inc., through its wholly-owned subsidiary Ply Gem Holdings, Inc., acquired all of the outstanding shares of capital stock of Ply Gem Industries, Inc., in accordance with a stock purchase agreement entered into among Ply Gem Holdings, Inc., Nortek and WDS LLC on Dec. 19, 2003, for aggregate consideration of approximately $560.0 million, subject to a working capital adjustment and less net assumed indebtedness of $29.6 million, and the aggregate value of certain stock options cancelled or forfeited in conjunction with the Ply Gem Acquisition. Prior to February 12, 2004, Ply Gem Holdings, Inc. had no operations. On Aug. 27, 2004, Ply Gem Industries, Inc., acquired all of the outstanding shares of MWM Holdings, Inc., in accordance with a stock purchase agreement entered into among Ply Gem Industries, Inc., and Investcorp, on July 23, 2004, for aggregate consideration of approximately $320.0 million, subject to a working capital adjustment and the aggregate value of certain stock options cancelled or forfeited in connection with the MW Acquisition. Lenders Waive Covenant Defaults On Aug. 27, 2004, Ply Gem entered into a sale and leaseback transaction with net proceeds of approximately $36.0 million being used to fund a portion of the acquisition of MW Manufacturers Inc. It was the Company's intention that these leases meet the criteria for a sale leaseback transaction and receive accounting treatment as operating leases. Therefore, in addition to the Company's own review, its auditors review the leases to ensure that these would be accounted for as operating leases, and not as financing obligations. Following these reviews, the original lease agreements were executed and treated as a sale leaseback transaction and were accounted for as operating leases in the Company's third quarter 2004 results. Subsequently, the Company's auditors said that for the periods from Aug. 27, 2004, through Oct. 2, 2004 (Ply Gem Holdings, Inc.'s third quarter) and from Oct. 3, 2004, to Dec. 31, 2004, and Jan. 1, 2005, until an amended lease becomes effective, these leases did not meet the sale leaseback criteria. The primary discrepancy that has been identified in the leases relates to default and exchange provisions contained within the original leases. Therefore, as of Dec. 31, 2004, and the Company's third quarter ended Oct. 2, 2004, approximately $36 million of land and buildings and the related financing obligation have been recorded on the balance sheet. The Company said it is now working with its leasing company to make the necessary lease modifications in order to qualify for sale leaseback treatment and be prospectively accounted for as operating leases after amended leases are executed. Because this resulted in a default of certain debt covenants under Ply Gem's credit agreement, Ply Gem has requested and received a waiver from the Company's lenders that provides that these leases shall not constitute indebtedness under Ply Gem's credit agreement for the restriction on indebtedness covenant and any lien in connection with such leases shall not constitute a lien for the purposes of the restriction on liens covenant through April 30, 2005, and only so long as these leases do not represent more than an aggregate of $36.0 million of capital lease obligations. The impact of the correct lease accounting on our third quarter ended Oct. 2, 2004, net earnings would have been less than $50,000, however due to the impact of this issue on our third quarter balance sheet, the Company will include a revised third quarter 2004 balance sheet in its Annual Report on Form 10-K for the year ended Dec. 31, 2004. About the Company Ply Gem Industries, Inc. -- http://www.plygem.com/-- is a leading manufacturer of residential exterior building products. The company sells a broad range of vinyl siding, vinyl and wood windows, aluminum trim coil, aluminum siding and accessories, and vinyl and composite fence, railing and decking products. Ply Gem is a wholly-owned subsidiary of Ply Gem Holdings, Inc., which is controlled by affiliates of Caxton-Iseman Capital. POTLATCH CORP: Annual Shareholders Meeting Scheduled for May 2 -------------------------------------------------------------- The Annual Meeting of Stockholders of Potlatch Corporation will be held at the Hotel Lusso, North One Post Street, Spokane, Washington, on Monday, May 2, 2005, at 10:00 a.m. local time. The meeting is being held to: (1) elect three Directors to the Potlatch Corporation Board of Directors; (2) act upon a proposal to amend Potlatch Corporation's Restated Certificate of Incorporation to eliminate the time-phased voting provisions; (3) approve the Potlatch Corporation 2005 Stock Incentive Plan; (4) ratify the selection of KPMG LLP as Potlatch Corporation's independent auditor for 2005; (5) if properly presented at the meeting, act on one stockholder proposal as described in the Company's proxy statement; (6) transact any other business that properly comes before the meeting. The Potlatch Board of Directors has selected March 14, 2005, as the record date for determining stockholders entitled to notice of the meeting, and to vote at the meeting, and at any adjournment or postponement. A copy of the Stock Incentive Plan is available for free at: http://sec.gov/Archives/edgar/data/79716/000119312505037152/dex10c.htm Potlatch Corporation owns and manages approximately 1.5 million acres of timberlands and operates 13 manufacturing facilities. The Company's timberland and all of its manufacturing facilities are located within the continental United States, primarily in Arkansas, Idaho, Minnesota and Nevada. The Company is engaged principally in growing and harvesting timber and converting wood fiber into two broad product lines: (a) commodity wood products; and (b) bleached pulp products. * * * As reported in the Troubled Company Reporter on Oct. 13, 2004, Fitch Ratings removed Potlatch Corporation from Rating Watch Evolving and affirmed the company's senior unsecured debt ratings at 'BB+' and the senior subordinated ratings at 'BB'. Fitch revised the Rating Outlook to Stable. PRIME CAMPUS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Prime Campus Housing, LLC 11422 Miracle Hills Drive, Suite 400 Omaha, Nebraska 68154 Bankruptcy Case No.: 05-50311 Chapter 11 Petition Date: March 21, 2005 Court: Northern District of Texas (Lubbock) Judge: Robert L. Jones Debtor's Counsel: Joseph F. Postnikoff, Esq. Goodrich, Postnikoff & Albertson 777 Main Street, Suite 1360 Fort Worth, Texas 76102 Tel: 817-347-5261 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mission Housing Management Open account $8,866 4101 Highway 29 West Georgetown, TX 78628 Midtown Printing & Graphic Open account $3,110 1602 Texas Avenue Lubbock, TX 79401 Network Lubbock Open account $2,485 P.O. Box 64271 Lubbock, TX 79464 Watson Sysco Food Service Open account $2,399 Simplex Financial Services Open account $1,686 Gwinn & Roby Open account $1,360 Lubbock Apartment Assoc. Open account $1,190 Cintas Corporation Open account $1,039 Coca-Cola Open account $1,031 Wagner Supply Company Open account $766 Jo-Dee's T's & Caps Open account $714 SBC Open account $592 Viking Office Products Open account $572 Elevator Inspection of Texas Open account $440 Ben E. Keith Foods Open account $407 Intra-Focus, Inc. Open account $324 J.C.'s Terminix Open account $292 Bell Gandy's Dairies, Inc. Open account $281 Home Depot Open account $207 Earthgrains Baking Co. Open account $169 QWEST COMMS: Seeks Meeting with Monitor After MCI Halts Talks ------------------------------------------------------------- On March 21, 2005, Qwest Communications International Inc. sent a letter to the Board of Directors of MCI, Inc., emphasizing that if MCI wants to maximize value to its shareholders, MCI should seriously consider Qwest's offer: March 21, 2005 The Board of Directors MCI, Inc. Attention: Chairman, Board of Directors 22001 Loudoun County Parkway Ashburn, Virginia 20147 Dear Mr. [Nicholas] Katzenbach: Your advisors tell us that MCI has gone "dark" and refuses to continue to speak with Qwest about our proposal made to the MCI Board on March 16 and made public on March 17. When granting Mr. [Michael] Capellas's request that the MCI Board be permitted until March 28th to respond to our proposal, we did not think that MCI would refuse to talk with Qwest during the interim. The straw man being propped up to explain why MCI won't continue what has been a fruitful exchange of information with Qwest is that MCI's merger agreement with Verizon prohibits any discussions with Qwest. It is disturbing that Verizon and MCI are so concerned about allowing MCI to expeditiously and transparently evaluate Qwest's proposal fully that they do not avail themselves of the provisions in the Verizon-MCI merger agreement to do so. It is beyond dispute that allowing Qwest and MCI to discuss Qwest's proposal during the period that the MCI Board of Directors is considering that proposal would be beneficial to all interested parties. The Verizon-MCI merger agreement allows, your fiduciary duties require and fairness to the MCI stockholders dictate that MCI continue to talk with Qwest as long as the MCI Board of Directors has concluded that Qwest's proposal could "reasonably be expected to lead to a Superior Proposal." MCI and Qwest should immediately engage in negotiations to finalize the proposed merger agreement we provided to your advisors on March 16. In addition, we would like to speak with Mr. [Richard] Breeden about his role with MCI and his views on the internal controls and corporate governance at MCI. Moreover, we still have questions concerning the tax issues raised during due diligence and mentioned in MCI's recently filed 10k, questions we are confident can be answered if MCI were to resume its discussions with Qwest. In light of Qwest's significantly higher offer price, the more favorable terms of our proposed merger agreement and the better regulatory profile of a Qwest-MCI deal, Qwest's proposal goes well beyond potentially leading to a Superior Proposal, and, in fact, is a Superior Proposal. The chart below demonstrates the financial superiority of Qwest's proposal: Offer Comparison Qwest Superiority ---------------- ----------------- Qwest Verizon Offer Offer $ % ------- ------- -------- -------- Cash $10.10 $5.60 $ +4.50 +80.4 Stock 15.50 14.28 +1.22 +8.5 ------- ------- -------- -------- Offer Value $25.60 $19.88 $ +5.72 +28.8 Premium (discount) to MCI market price (as of 3/18/05) +9.2% -(15.2)% Total value of offer $8.3bn $6.5bn $ +1.8bn +28.8% ------- ------- -------- -------- If the MCI Board of Directors truly wishes to evaluate Qwest's proposal, there is no legally valid excuse not to continue the exchange of information. Verizon, who has released no details of the underlying benefits of its offer, continues in its shrill attempt to change the focus away from delivering maximum value to MCI shareholders, but ignores the one overriding issue: Qwest's offer is over 25% higher than Verizon's offer. The failure of the MCI Board to conclude that the Qwest proposal could "reasonably be expected to lead to a Superior Proposal" deprives the MCI shareholders of their right to maximize the value of their shares. The MCI Board should take the actions necessary to maximize value to MCI shareholders and insure the MCI merger process is transparent and fair by re-engaging with Qwest. Sincerely, /s/ RICHARD C. NOTEBAERT Richard C. Notebaert Chairman & Chief Executive Officer Qwest Communications International Inc. cc: Mr. Richard Breeden Mr. Michael Capellas MCI's Statement On March 21, MCI issued a press statement explaining that: "Under our merger agreement with Verizon, we were limited to a two-week window, up until March 17, to have a dialogue with Qwest. That period has expired and by honoring our agreement with Verizon we cannot have further dialogue with Qwest. After Mr. Notebaert presented to the MCI Board on March 16, it was mutually agreed that the MCI Board would respond by March 28, and they intend to do so." 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. SGD HOLDINGS: Creditors Must File Proofs of Claim by July 7 ----------------------------------------------------------- The United States Bankruptcy Court for the Northern District of Texas set July 7, 2005, as the deadline for all creditors owed money by SGD Holdings, Ltd., on account of claims arising prior to Jan. 20, 2005, to file their proofs of claim. Creditors must file written proofs of claim on or before the July 7 Claims Bar Date and those forms must be delivered to: Tawana C. Marshall Clerk of the Bankruptcy Court 501 W. Tenth Street Fort Worth, TX 76102 The Claims Bar Date applies to all claims except for governmental units. Headquartered in Addison, Texas, SGD Holdings, Ltd. -- http://www.sgdholdings.com/-- is a holding company engaged in acquiring and developing jewelry businesses. SGD Holdings' principal operating subsidiary, HMS Jewelry Company, Inc., is a national jewelry wholesaler, specializing in 18K, 14K and 10K gold and platinum jewelry. The Company filed for chapter 11 protection on January 20, 2005 (Bankr. D. Del. Case No. 05-10182). When the Debtor filed for protection from its creditors, it estimated $10 million in assets and estimated $50 million in debts. SGD HOLDINGS: Section 341(a) Meeting Slated for April 8 ------------------------------------------------------- The United States Trustee for Region 6 will convene a meeting of SGD Holdings Ltd.'s creditors at 2:00 p.m., on April 8, 2005, at Fritz G. Lanham Federal Building, Room 7A24, located in 819 Taylor Street in Fort Worth, Texas. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Addison, Texas, SGD Holdings, Ltd. -- http://www.sgdholdings.com/-- is a holding company engaged in acquiring and developing jewelry businesses. SGD Holdings' principal operating subsidiary, HMS Jewelry Company, Inc., is a national jewelry wholesaler, specializing in 18K, 14K and 10K gold and platinum jewelry. The Company filed for chapter 11 protection on January 20, 2005 (Bankr. D. Del. Case No. 05-10182). When the Debtor filed for protection from its creditors, it estimated $10 million in assets and estimated $50 million in debts. SOLUTIA INC: Court Okays Kirkland's Employment on Interim Basis --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved Solutia, Inc., and its debtor-affiliates' application to employ Kirkland & Ellis, LLP, as bankruptcy counsel on an interim basis. As reported in the Troubled Company Reporter on Feb. 28, 2005, the Debtors obtained the Court's authority to employ Gibson, Dunn & Crutcher, LLP, as counsel in their Chapter 11 cases. While at Gibson Dunn, Richard Cieri, Esq., was the chairperson of the restructuring practice group and the partner responsible for the Debtors' Chapter 11 cases. On February 3, 2005, Mr. Cieri joined Kirkland & Ellis, LLP, as a partner. Thus, for continuity purposes, and based on K&E's excellent reputation for providing premier legal services to clients, the Debtors sought the Court's authority to employ K&E, nunc pro tunc as of February 3, 2005, as their attorneys to perform the legal services that will be necessary during the remainder of these Chapter 11 cases. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000 SPIEGEL INC: Asks Court to Okay Work Fee Letters with Lenders ------------------------------------------------------------- Pursuant to Spiegel, Inc., and its debtor-affiliates' Plan of Reorganization filed on Feb. 18, 2005, Eddie Bauer Holdings, Inc., will become the parent company for the Eddie Bauer companies, and the Debtors' remaining assets will be transferred to a liquidating trust established for the benefit of the Official Committee of Unsecured Creditors. On the effective date of the Plan, Eddie Bauer Holdings may elect to enter into a definitive documentation with respect to a $300 million credit facility. The principal terms and conditions of the Senior Debt Facility will be included in a plan supplement to be filed within 10 days before the Voting Deadline. Eddie Bauer Holdings may, however, in consultation with the Creditors' Committee, elect not to enter into a definitive documentation with respect to the Senior Debt Facility if it finds that entering into the Senior Debt Facility would not be favorable to Eddie Bauer Holdings and its shareholders. In the event that it enters into a definitive documentation, then, on the Effective Date, Eddie Bauer Holdings will borrow funds, which will be distributed to holders of allowed general unsecured claims in accordance with the terms of the Plan. Miller Buckfire Ying & Co., the Debtors' financial advisor and investment banker, contacted 12 major financial institutions to solicit proposals for the Senior Debt Facility. Miller Buckfire distributed certain information regarding the Eddie Bauer business to the Prospective Financing Sources and answered preliminary questions. Indicative proposals from the Prospective Financing Sources for the Senior Debt Facility were submitted on February 17, 2005. Based on the indicative proposals and the recommendations of Miller Buckfire, the Debtors have determined to select GE Corporate Financial Services, Inc., Credit Suisse First Boston LLC, and JPMorgan Chase Bank or their affiliates to finalize due diligence for the Senior Debt Facility. The Prospective Lenders will simultaneously complete data room and on-site diligence. The Debtors will request detailed term sheets from the Prospective Lenders at the end of March 2005 to determine the arranger, bookrunner and any other roles in the syndicate. The Debtors anticipate that a commitment letter for the Senior Debt Facility will be finalized in early April 2005. Work Fee Letters The Prospective Lenders are willing to perform due diligence under the terms and conditions of certain work fee letters. However, the Prospective Lenders will not proceed with the due diligence unless the U.S. Bankruptcy Court for the Southern District of New York approves the work fee letters because they will incur substantial fees, costs and expenses in undertaking the due diligence. Each of the Work Fee Letters provide: (i) that each Prospective Lender will be paid a $100,000 work fee; and (ii) for the indemnification of each Prospective Lender in connection with the engagement. The Work Fee will be used for reasonable out-of-pocket expenses. The Work Fee balance will be credited against closing fees in the event that the Debtors select the Prospective Lender as the underwriter or arranger under the Senior Debt Facility. Miller Buckfire advised the Debtors that the terms of the Work Fee Letters are typical for transactions similar to the Senior Debt Facility. By this motion, the Debtors seek Judge Blackshear's permission to enter into and perform under the Work Fee Letters so that the Prospective Lenders may commence the due diligence process necessary for the Debtors to obtain the Senior Debt Facility contemplated by the Plan. The Debtors believe that their request is necessary to allow them to successfully emerge from their Chapter 11 cases and to maximize value for the benefit of their estates, their creditors, and other interested parties. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPIEGEL INC: Wants Home Store Lease Disposition Protocol Set ------------------------------------------------------------ After reviewing the financial performance of each aspect of their business, Spiegel, Inc., and its debtor-affiliates have determined that Eddie Bauer, Inc.'s furnishings and home decor division is financially under performing, as evidenced by the negative comparable store sales of 15% in the retail channel and negative year-over-year sales performance of 21% in the direct channel in fiscal 2004. In light of this relatively poor performance of the Home Division and a desire to focus on its core apparel concept, Eddie Bauer's board of directors has decided that the Home Division should be discontinued and liquidated in its entirety. James L. Garrity, Esq., at Shearman & Sterling, LLP, in New York, relates that the Home Division currently operates through 34 stores as well as through Eddie Bauer's catalog and e-commerce channels. Approximately 700 of Eddie Bauer's employees support the Home Division. A full-text copy of the list of the locations and landlords of each Home Store is available for free at: http://bankrupt.com/misc/Home_Store_Landlords_and_Location.pdf Mr. Garrity tells the U.S. Bankruptcy Court for the Southern District of New York that to give effect to the efficient closure of the Home Division, it will be necessary for the Debtors to either negotiate the disposition of or reject each lease governing a Home Store principally for the premises occupied by each Home Store, and to sell all outstanding inventory in the Home Store Premises and in some retail apparel stores governed by a Home Store Lease. The Debtors intend to close the Home Stores on a rolling basis over the course of 2005, with the majority of Home Stores being closed in the second half of the year. The timing of the closing of any particular Home Store will depend on the outcome of negotiations with its landlord regarding the disposition of the Home Store Lease. To the extent that it maximizes inventory recovery, the Debtors may also choose to liquidate some portion of the Home Division inventory via clearance catalogs or e-commerce sale programs during the second half of 2005. Historically, the Debtors have negotiated lease modifications, amendments and lease termination agreements with certain of the landlords under the Home Store Leases. Mr. Garrity states that the Debtors intend to continue that practice, albeit with the oversight of the Creditors Committee. The Debtors' goal is to dispose of the Home Store Leases on the terms most favorable to their estates, Mr. Garrity discloses. The disposition of the Home Store Leases will be determined by whether or not the Debtors can negotiate favorable modifications to or terminations of the Home Store Leases. The Debtors believe that to maximize that ability, they must be able to negotiate and execute agreements freely and without having to obtain court approval for each agreement. "Only where no consensual resolution can be reached with a Landlord will the Debtors reject a Home Store Lease," Mr. Garrity clarifies. To close the Home Division as efficiently and effectively as possible, the Debtors seek the Court's authority to dispose of the Home Store Leases without further Court order, depending on the circumstances surrounding each Home Store Lease. Specifically, the Debtors may: (1) negotiate a reduction, abatement or deferral in the base rent and other payment obligations under the Home Store Leases; (2) surrender a portion of the premises covered by the Home Store Lease and receive on account of the surrender a reduction of their rent obligations; (3) negotiate and agree to any amendment or modification to any of the terms the Home Store Leases; (4) solicit, list or market Home Store Premises to third parties to assign the Home Store Lease; (5) enter into a new lease agreement with respect to any of the Home Store Premises; (6) enter into a new retail apparel lease agreement for a new retail apparel premises in conjunction with the complete termination of a Joint Lease; (7) terminate the lease of an Eddie Bauer retail apparel store that is the subject of a separate retail apparel store lease or a Joint Lease; and (8) reject that portion relating to an Eddie Bauer apparel store, in addition to that portion relating to the Home Store. Mr. Garrity explains that a significant majority of the Home Store Leases are in locations in which the Debtors also lease space for an Eddie Bauer retail apparel store. In some cases, the Home Store Premises and retail apparel premises are governed by a single lease. Where a Home Store is going to close, Eddie Bauer may prefer to swap space by leasing the present Home Store Premises for use as an Eddie Bauer retail apparel store and vacating the existing Eddie Bauer retail apparel store premises. Eddie Bauer will seek to negotiate an agreement with the landlord to enable the Debtors to retain the premises that has the size and location which best suits Eddie Bauer's ongoing businesses. Pursuant to Section 554(a) of the Bankruptcy Code, any trade fixtures and other personal property remaining in the leased premises on the effective dates of the rejection of any Home Store Lease will be deemed abandoned by the Debtors. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPIEGEL INC: Wants Court to Compel FCNB Agent to Produce Documents ------------------------------------------------------------------ Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure, Spiegel, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to direct the Liquidating Agent of First Consumers National Bank and the individual members of the FCNB Board of Directors to: (a) produce any and all documents in their possession, custody or control relating to incentive bonuses; and (b) submit to depositions by the Debtors, pursuant to subpoenas that the Debtors will issue. Marc B. Hankin, Esq., at Shearman & Sterling LLP, in New York, tells Judge Blackshear that Spiegel, Inc., is forced to seek the Court's intervention to obtain information from one of its subsidiaries, which is acting under the control and domination of an insider. The members of the FCNB Board -- consisting of present and former FCNB employees -- have purportedly authorized enormous bonuses to themselves and their co-workers. The bonuses, amounting to at least $2.6 million, would be in addition to and far in excess of already generous amounts previously negotiated with and authorized by Spiegel, FCNB's sole shareholder. FCNB currently has 11 employees and has been almost completely wound down. The Debtors find the proposed bonuses extremely disproportionate, both to the size of the company and to the value of the services they are supposedly intended to reward. Payments of this magnitude would violate FCNB's fiduciary duties to Spiegel. If left to stand, the payments would reduce the amount of cash available to Spiegel when FCNB dissolves, and consequently, also the amount that Spiegel can pay its creditors. Spiegel seeks information about the bonuses so that it can determine whether and how best to challenge them in further court proceedings. Mr. Hankin relates that Spiegel's bankcard segment was comprised primarily of the bankcard operations of FCNB and Financial Services Acceptance Corporation. Both are wholly owned subsidiaries of Spiegel. FCNB is a special purpose national bank and is primarily regulated by the Office of the Comptroller of the Currency. Prior to the Petition Date, FCNB issued private-label credit cards to many customers of Spiegel's Merchant Companies. FCNB's ability to securitize substantially all of the private-label credit card receivables generated was a principal source of liquidity for the Spiegel Group. FCNB securitized those receivables by selling them to securitization vehicles, which, in turn, financed their purchase of those receivables by selling asset-backed securities to investors. FCNB's Liquidation On May 15, 2002, FCNB agreed to the issuance of a consent order by the OCC. The Consent Order imposed material restrictions on FCNB's operations and directed FCNB to promptly file with the OCC a Disposition Plan to either sell or merge the Bank, or liquidate the Bank in accordance with applicable federal law in a manner that would result in no loss or cost to the Bank Insurance Fund of the Federal Deposit Insurance Corporation and in accordance with the OCC's corporate manual for termination of national bank status. FCNB submitted a Disposition Plan to the OCC on November 27, 2002. The Plan called for the orderly wind-down of FCNB's business, including the repayment of an outstanding certificate of deposit, the transfer of all deposits associated with secured credit cards held by FCNB, and the sale or transfer of FCNB's bankcard portfolio. The Plan also called for FCNB to commence a statutory liquidation in accordance with federal law on May 1, 2003. Working with the OCC, FCNB then developed a liquidation plan. Among other things, the Liquidation Plan contemplates that any assets remaining after FCNB's liquidation is complete will be available for distribution to Spiegel, as the Bank's shareholder. In May 2003, the OCC approved the FCNB Liquidation Plan. By Order dated May 29, 2003, the Court authorized Spiegel to approve the plan and appoint James Huston as the liquidating agent. Mr. Huston, working with a core staff of FCNB employees, then began the task of liquidating FCNB's assets and winding up its affairs in accordance with the terms of the Liquidation Plan. FCNB's Bonus Program Historically, the salary and bonus programs offered by FCNB to its employees have been reviewed and approved by Spiegel's management prior to their implementation at FCNB. Consistent with that practice, shortly after the appointment of the Liquidating Agent, representatives of Spiegel's management commenced negotiations with the Liquidating Agent on the terms of the compensation to be paid to the Liquidating Agent and FCNB Employees to complete the Bank's liquidation. After protracted negotiations, in June 2003, Spiegel and FCNB agreed to a substantial increase of Mr. Huston's salary, and a single bonus payment as additional compensation for the Bank's liquidation. At that time, as an incentive to ensure the maximum return to shareholders and the prompt completion of the Bank's liquidation, Spiegel authorized FCNB to pay bonuses to Mr. Huston and each FCNB Employee aggregating up to $1,429,974. Bonus Payments Aren't Due Yet Mr. Hankin informs the Court that the Bank's liquidation is ongoing. Mr. Huston and the FCNB Employees are expected to earn the maximum amount payable under the Incentive Bonus. However, although the OCC has approved the Incentive Bonus, it has not yet authorized FCNB to make the payments. The FCNB Board is not an independent board, Mr. Hankin asserts. At present, Mr. Hankin relates, it consists of the Liquidating Agent, three current FCNB employees and one former FCNB employee. Spiegel has not yet authorized FCNB to award the bonuses to the Liquidating Agent and the FCNB Employees in connection with the Bank's liquidation. Nonetheless, in December 2004, the FCNB Board purportedly authorized FCNB to pay the Liquidating Agent and each FCNB Employee an additional bonus for 2003 and a bonus for 2004, aggregating approximately $2.6 million. Moreover, the FCNB Board may have authorized FCNB to pay a bonus for work to be performed in 2005. If the Unauthorized Bonuses are paid, then Mr. Huston and the other Board members will be paid the lion's share of those bonuses. Spiegel objects to the payment of the Unauthorized Bonuses. FCNB Breached Fiduciary Duties Spiegel believes that the FCNB Board acted improperly in awarding the Unauthorized Bonuses, and that in doing so, the FCNB Board breached its fiduciary duties to Spiegel. Spiegel attempted to resolve its dispute with FCNB both by engaging in negotiations with the Liquidating Agent and through discussions with the OCC. Recently, at FCNB's request, the representatives of the Official Committee of Unsecured Creditors engaged in discussions with the Liquidating Agent to resolve the dispute. Mr. Hankin informs Judge Blackshear that, to date, those efforts have not been successful. Mr. Hankin contends that Spiegel owes a fiduciary duty to its creditors to prevent the waste of corporate assets. Spiegel believes that since it cannot resolve its dispute with FCNB, it must be able to take appropriate action to prevent the payment of the Unauthorized Bonuses. To do so, the Debtors require access to all the information relating to the FCNB Board's decision to award the Unauthorized Bonuses, including, without limitation, the compensation and expenses paid to the Liquidation Agent and FCNB Employees since May 2003. The Debtors' Joint Plan of Reorganization provides that any assets remaining on the close of FCNB's liquidation will be held for the benefit of the Debtors' creditors. Consequently, any diminution in the assets, including by way of payment of the Unauthorized Bonuses or unnecessarily high compensation paid to excess employees, necessarily reduces the funds available to the Debtors' creditors. Furthermore, because the bonuses are directly tied to the timely and successful completion of the FCNB Liquidation, the Debtors have a substantial interest in ensuring that any issues regarding payments are properly and promptly resolved. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) STRUCTURED ASSET: Moody's Puts Ba2 Rating on Class M-9 Sub. Certs. ------------------------------------------------------------------ Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued by Structured Asset Securities Corporation Mortgage Pass-Through Certificates, Series 2005-NC1. In addition, ratings ranging from Aa1 to Ba2 were assigned to the subordinate certificates issued in the deal. The securitization is backed by New Century Mortgage Corporation (New Century) originated hybrid adjustable-rate (71.71%) and fixed rate (28.29%) sub-prime mortgage loans. The ratings are based primarily on the credit quality of loans, subordination, overcollateralization, excess spread, and lender-paid mortgage insurance. The credit quality of the loans backing this deal is in line with other recent securitizations of New Century collateral, without taking into account the benefit of the LPMI. The presence of LPMI on the loans with higher loan-to-value ratios reduces the severity of loss associated with many of the riskier loans, ultimately improving the credit quality of the loan pool. The credit enhancement levels reflect some benefit for due diligence performed on the collateral. JPMorgan Chase Bank, National Association will service the loans. Moody's has assigned its top servicer quality rating to JPMorgan for primary servicing of sub-prime loans. Additionally, Aurora Loan Services LLC will act as the master servicer on this transaction. The Complete Rating Actions Are: Issuer: Structured Asset Securities Corporation Securities: Mortgage Pass-Through Certificates, Series 2005-NC1 * Class A1, rated Aaa * Class A2, rated Aaa * Class A3, rated Aaa * Class A4, rated Aaa * Class A5, rated Aaa * Class A6, rated Aaa * Class A7, rated Aaa * Class A9, rated Aaa * Class A10, rated Aaa * Class A11, rated Aaa * Class M-1, rated Aa1 * Class M-2, rated Aa2 * Class M-3, rated Aa3 * Class M-5, rated A3 * Class M-6, rated Baa1 * Class M-7, rated Baa2 * Class M-8, rated Baa3 * Class M-9, rated Ba2 TELESOURCE INT'L: $15.2 Million Deficit Spurs Going Concern Doubt ----------------------------------------------------------------- On March 9, 2005, Telesource International, Inc., filed its Form 10-Q Report with the Securities and Exchange Commission for the quarter ending June 30, 2004. During the fiscal years of 1998 through 2004, Telesource experienced significant operating losses with corresponding reductions in working capital and net worth. As of June 30, 2004, the Company's current liabilities exceeded its current assets by $15.2 million. The Company relies heavily on bank financing to support is operations and its ability to refinance its existing bank debt is critical to provide funding to satisfy the Company's obligations as they mature. As of June 30, 2004 the Company had total outstanding debt of $29.0 million of which $15.3 million is due in the next twelve months. As of June 30, 2004 the Company had an accumulated deficit of $45.9 million and total stockholders' deficit of $18.1 million. The Company incurred a net loss of $8.8 million to the common stockholders for the six months ended June 30, 2004 and operating losses of $5.4 million, $3.1 million, and $4.9 million for the years ended December 31, 2003, 2002 and 2001, respectively. Cash used in operating activities during the six months ended June 30, 2004 and 2003 was $4.7 million and $3.7 million, respectively. The cash used in operating activities was principally due to the net loss incurred. Cash used in investing activities was $332,108 for the six months ended June 30, 2004, as compared to net cash used in investing activities of $514,777 for the same period in 2003. The cash used in investing activities during 2004 is attributed to purchases of equipment used in construction activities and office equipment while the cash used in investing activities during 2003 is attributed mainly to capital purchases during 2003 for bucket trucks leased on Guam and used in the super typhoon clean up efforts. Cash provided by financing activities generated $4.2 million for the six months ended June 30, 2004 as compared to cash provided by financing activities of $4.6 million for the same period in 2003. The cash generated by financing came from additional net debt borrowings and the proceeds from the sale of $5.2 million worth of common stock during 2004. The Company's net working capital deficiency, total stockholders' deficit, recurring losses and negative cash flows from operations raise substantial doubt about the Company's ability to continue as a going concern. Telesource International, Inc., has three main operating segments: construction services, brokerage of goods and services, and power generation and construction of power plants. The power generation activities commenced in March 1999. Telesource is an international engineering and construction company, engaged in constructing single family homes, airports, radio towers and in the construction and operation of energy conversion power plants. TOM'S FOODS: Renewed Warning About a Chapter 11 Filing ------------------------------------------------------ On March 14, 2005, The Bank of New York, as successor in interest to IBJ Schroder Bank & Trust Company, as trustee and collateral agent for the Company's 10.5% Senior Secured Notes due on Nov. 1, 2004, filed a Motion of Summary Judgment in Lieu of Complaint against Tom's Foods, Inc., in the Supreme Court of the State of New York, County of New York. The Motion asks the Court to enter a judgment against the Company in the amount of $60,000,000 and interest and costs due and owing under the Indenture. BNY's action against Tom's Foods triggered a cross-default under its credit facility. Both the Notes and the Credit Facility are secured by certain of Tom's Foods' assets, and the noteholders and lenders may attempt to foreclose on their collateral. Tom's Foods says it is currently exploring various alternatives. In the event that the Court orders the Company to pay the amounts requested by the Trustee, Rolland G. Divin, Tom's Foods' President and Chief Executive Officer, warns that the Company may file a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. Tom's Foods, Inc., is the borrower under a Loan and Security Agreement dated January 31, 2000, under which FLEET CAPITAL CORPORATION serves as the Agent and Sole Lender. Headquartered in Columbus, Georgia, Tom's Foods Inc. is a multi- regional snack food manufacturing and distribution company. The Company has manufactured and sold snack food products since 1925 under the widely recognized "Tom's" brand name, as well as other names. The Company's distribution network serves a variety of customers, including independent retailers, vending machines, retail supermarket chains, convenience stores, mass merchandisers, food service companies and military bases. As of January 3, 2004, the Company employed 1,583 full-time workers. At September 11, 2004, Tom's Foods' balance sheet shows $96.4 million in assets and $109.2 million in liabilities. The Troubled Company Reporter initiated coverage about Tom's Foods' financial difficulties on Sept. 10, 2003. As reported in the Troubled Company Reporter on March 3, 2005, the Heico Holdings, Inc., the Company's largest shareholder, is proposing that equityholders inject $15 million of "new money" to fund (i) a $7 million principal paydown of Noteholder claims, (ii) $3.15 million of overdue accrued interest originally due November 1, 2004, and (iii) $4.85 million of the Company's working capital needs. UAL CORPORATION: Wants to Amend Boeing Aircraft Lease ----------------------------------------------------- UAL Corporation and its debtor-affiliates seek the U.S. Bankruptcy Court for the Northern District of Illinois' permission to amend a lease for a Boeing Aircraft bearing Tail No. N379UA. The Lease was entered into on October 25, 2003, as part of a postpetition Restructuring Transaction. The Debtors now seek to amend the Lease to extend its term and modify the rates paid. Originally, the aircraft financiers for N379UA were willing to enter into a short-term lease for the Aircraft. As reflected in the Amendment, the Debtors and the aircraft financiers have negotiated a longer-term lease at rates substantially below the current market rate for that type of aircraft. Because the rate is so cheap, the Amendment conforms with the Debtors' fleet plan and business plan of reducing aircraft operating costs. Because the Amendment contains confidential information, it will be filed with the Court under seal. However, the Debtors will provide a copy of the Amendment to the professionals for the Creditors' Committee, the Aircraft Leasing Subcommittee, the DIP Lenders and any other party having a direct interest in the Aircraft, subject to acceptable confidentiality agreements. 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. 78; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNIVERSAL HOSPITAL: Dec. 31 Equity Deficit Widens to $93.1 Million ------------------------------------------------------------------ Universal Hospital Services, Inc., the leader in medical equipment lifecycle services, reported financial results for the fourth quarter and year ended Dec. 31, 2004. Total revenues were $51.7 million for the fourth quarter of 2004, representing a $7.1 million or 16% increase from total revenues of $44.6 million for the same period of 2003. For the year, total revenues increased 17% over the same period in 2003 (from $171 million to $199.6 million). Gross margin for the fourth quarter of 2004 totaled $22.0 million, representing a $2.9 million or 15% increase from total gross margin of $19.1 million for the same period of 2003. For the year, total gross margin increased 13% over the same period in 2003 (from $75.6 million to $85.8 million). Net loss for the quarter was $3.3 million, compared to net loss of $24.5 million for the same quarter last year. The net loss for the year of 2004 is $3.6 million, compared to net loss of $19.5 million last year. The change from last year is due primarily to the absence of $27.7 million of financing and reorganization charges related to our recapitalization in fourth quarter 2003, partially offset by increased interest expense also related to the recapitalization. Earnings before interest, taxes, depreciation and amortization before management and board fees for the year of 2004 were $69.2 million versus $64.5 million (excluding financing and reorganization charges) for the prior year, a $4.7 million or 7% increase. Included in the 2004 results are $0.8 million of staffing related charges in the fourth quarter, substantially related to acceleration of our sales and customer service realignment. A reconciliation of EBITDA (before management/board fees and financing and reorganization costs) to operating cash flows is included on the attached Statements of Cash Flows. "We are pleased with our performance during 2004 as we have continued to demonstrate solid growth in a year with flat to down hospital census growth. We are making excellent progress in transitioning UHS from its historical focus on supplemental rental to its future as a medical equipment lifecycle services company," said President and CEO Gary Blackford. "Our growth in 2004 was broad based across each of our business units, including our legacy supplemental outsourcing business, our resident-based programs and our less capital intensive businesses of biomedical services and equipment sales and remarketing." About the Company Based in Edina, Minnesota, Universal Hospital Services, Inc. -- http://www.uhs.com/-- is a leading medical equipment lifecycle services company. UHS offers comprehensive solutions that maximize utilization, increase productivity and support optimal patient care resulting in capital and operational efficiencies. UHS currently operates through more than 70 offices, serving customers in all 50 states and the District of Columbia. At Dec. 31, 2004, Universal Hospital's balance sheet showed a $93,120,000 stockholders' deficit, compared to an $89,903,000 deficit at Dec. 31, 2003. V-ONE CORP.: Files for Chapter 11 Protection in Maryland -------------------------------------------------------- V-ONE Corporation (OTCPK: VNEC) filed a voluntary petition for protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Maryland, Greenbelt Division. A U.S. Bankruptcy Judge has approved first day motions presented by V-ONE Corporation, including orders allowing the company to satisfy certain pre-petition obligations. The court also approved on an interim basis a debtor-in-possession credit facility from Proginet Corporation (OTCBB: PRGF). This facility is expected to provide V-ONE with the liquidity necessary to meet its obligations to its suppliers, customers and employees during the Chapter 11 reorganization process. The company is also seeking approval by the Courts to allow Proginet, on an expedited basis, to acquire the assets of V-ONE. Commenting on these orders, Margaret E. Grayson, president and chief executive officer of V-ONE, said, "We are moving forward, under Chapter 11 protection, to complete our restructuring plan and enable V-ONE to maintain its current operations and eventually join with a stronger organization like Proginet." Located in Germantown, Maryland, V-ONE (fka Virtual Open Network Environment Corp.) is a global Internet security company offering secure, cost effective and easy to manage network solutions for the remote access, wireless and satellite markets. At Sept. 30, 2004, V-ONE's balance sheet shows $1 million in assets and $4 million in liabilities. The company's accumulated deficit topped $70 million at Sept. 30, 2004. V-ONE products have been deployed by U.S. government agencies charged with homeland security, including the FBI, NSA, and Departments of Defense, Justice and the Treasury, and by Fortune 1000 companies in healthcare, banking & finance, transportation and high-tech. People rely upon V-ONE's proven track record for providing SSL VPN information security technology for use over the Internet, intranets, extranets and private networks. For further information, see http://www.v-one.com/ VALCOM INC: Losses & Deficit Trigger Going Concern Doubt -------------------------------------------------------- Valcom, Inc., reported a $5,929,714 net loss for the year ended September 30, 2004, and a $8,658,671 accumulated deficit at September 30, 2004. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Cash totaled $21,468 on September 30, 2004, compared to $211,682 at September 30, 2003. During the fiscal year 2004, net cash used by operating activities totaled $5,268,905 compared to a negative cash flow of $300,582 for the year ended September 30, 2003. A significant portion of operating activities included payments for accounting and legal fees, consulting fees, salaries, and rent. Net cash used by financing activities for fiscal year 2004 totaled $3,807,194 compared to cash provided of $16,067 for the year ended September 30, 2003. Net cash provided by investing activities during fiscal year 2004 totaled $1,404,839 compared to of $184,395 during the year ended September 30, 2003, for proceeds from sales of fixed assets and decreased expenditures for the purchase of equipment. The cash flow activities yielded a net cash increase of $56,872 during fiscal year 2004 compared to a decrease of $131,692 during the year ended September 30, 2003. Net working capital (current assets less current liabilities) was a negative $991,566 as of September 30, 2004. During the twelve months ended September 30, 2004, the Company raised $1,411,273 from private placements of common stock. The Company will need to continue to raise funds through various financings to maintain its operations until such time as cash generated by operations is sufficient to meet its operating and capital requirements. Valcom, Inc., is a diversified entertainment company with operations on studio rental, studio equipment and rental, and film and TV production. VALMONT INDUSTRIES: Moody's Says Liquidity is Good -------------------------------------------------- Moody's Investors Service upgraded Valmont Industries, Inc.'s speculative grade liquidity rating to SGL-2 from SGL-3. The upgrade reflects Moody's improved outlook for Valmont's covenant compliance in 2005, driven by our expectations for favorable demand trends in most of the company's businesses. The SGL upgrade also recognizes the company's improved revolving credit facility availability following its completion of an amendment that allows for a more flexible calculation of EBITDA. The SGL-2 rating also derives support for the company's reasonable cash balance and favorable debt maturity profile. Additionally, unlike 2004 when the company used working capital to build up inventory, Moody's expects the company will generate free cash flow in 2005. However, the rating also reflects the potential for some additional volatility in working capital and a slight increase in capital investment. Valmont's senior implied rating is Ba2 and its outlook is stable. Valmont's internal liquidity is further supported by a $30 million cash balance as of December 25, 2004 while the company maintains a $150 million unsecured revolving credit facility due 2009 as an alternate source of external liquidity. The company's revolving credit facility availability was $73 million as of fiscal-year end, after consideration of $71 million of borrowings and $6 million letters of credit. The company's availability under the revolving credit facility has improved significantly following its completion of an amendment in November 2004 that allows it to exclude transaction fees from the calculation of EBITDA for covenants. Before the amendment, Valmont's credit facility availability was only $29 million as of June 26, 2004 ($50 million was outstanding as of that date). Moody's believes that Valmont will have significant headroom under all of its financial covenants over the next 12 months. The credit facility's leverage covenant restricts total leverage to 3.75 times EBITDA. In addition to the total leverage covenant, the company must: 1. comply with a senior leverage covenant of 2.5 times; 2. interest coverage covenant of 2.5 times; 3. fixed charge covenant of 1.5 times; and 4. maximum capital expenditure limitation at $35 million. The financial covenants do not change throughout the tenor of the credit facility. The SGL rating is also supported by the fact that almost all of the company's assets are unencumbered. Nevertheless, the credit facility includes limitations on securitization transactions, which cannot exceed 10% of total assets; as well as asset dispositions, which cannot exceed 10% of consolidated tangible net worth. Valmont Industries, Inc. is an international manufacturing company with 42 plants on five continents that supply more than 100 countries with its engineered support structures, irrigation equipment, and light-wall welded tubes; the company also provides steel and aluminum coating services. Valmont is headquartered in Omaha, Nebraska, and reported revenues of $1.0 billion for 2004. VARTEC TELECOM: U.S. Trustee Amends Creditors Committee Membership ------------------------------------------------------------------ Seven creditors now serve on the Official Committee of Unsecured Creditors in Vartec Telecom, Inc., and its debtor-affiliates' chapter 11 cases. Visionquest Marketing Services, Inc., and Specialty Outsourcing Solution, Ltd., are no longer on the Committee. The seven current Committee members are: 1. MCI, Inc. Attn: Brian H. Benjet 1133 19th Street North West Washington, District of Columbia 20036 Tel: 202-736-6409, Fax: 202-0736-6320 2. SBC Industry Markets Attn: Dave Egan, CPA 722 North Broadway, Floor 11 Milwaukee, Wisconsin 53202 Tel: 414-227-6624, Fax: 414-227-3883 3. Teleglobe Telecom Corporation Attn: Kathy Morgan 11495 Commerce Park Drive Reston, Virginia 20191 Tel: 703-755-2042, Fax: 703-755-2610 4. Qwest Communications Corp. Attn: Jane Frey 1801 California Street, Suite 3800 Denver, Colorado 80202 Tel: 303-383-6480, Fax: 303-383-6665 5. AT&T Corp. Attn: Andrew Stein, Esq. 55 Corporate Drive, Room 32D48 Bridgewater, New Jersey 08807 Tel: 908-658-0615, Fax: 908-658-2346 6. BellSouth Corporation Legal Department Attn: Reginald A. Greene Suite 4300 675 W. Peachtree Stree, N.W. Atlanta, Georgia 30375-0001 Tel: 404-335-0761, Fax: 404-614-4054 7. Unipoint Holdings Attn: Lowell Feldman 830 Country Lane Houston, Texas 77024 Tel: 512-735-1200, Fax: 512-735-1210 Official creditors' committees are appointed by the United States Trustee, and 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 Dallas, Texas, Vartec Telecom Inc. -- http://www.vartec.com/-- provides local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04-81695). Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed more than $100 million in assets and debts. VERILINK CORP: Inks $10 Million Private Debt Placement Agreement ---------------------------------------------------------------- Verilink Corporation (Nasdaq: VRLK) entered into a securities purchase agreement, which provides for a private placement of $10 million of senior secured convertible debentures and warrants with certain institutional investors. The purchase agreement also provides for up to an additional $5 million of convertible debentures to be issued to the investors at the investors' option or, under certain circumstances, at the Company's option. The closing of the financing was scheduled on March 21, 2005. The Company will use the net proceeds from the financing to repay its $3,500,000 revolving line of credit with RBC Centura Bank and for working capital and general corporate purposes. The closing of the financing and repayment of the RBC line of credit will resolve the existing default conditions with respect to outstanding debt of the Company described in the Company's most recent Form 10-Q. "This investment provides us additional capital resources to execute our strategy which is focused on growth and strengthening our position in the global broadband access market," said Leigh S. Belden, President and CEO of Verilink. "With the integration of last year's acquisitions now largely completed, we believe Verilink is well positioned to address carrier requirements for today's networks while providing an elegant migration path to tomorrow's networks delivering VoIP and native Ethernet services." The debentures are convertible into common stock at a conversion price of $3.01 per share, which represents a 15% premium to the closing price of the Company's common stock on the Nasdaq National Market on Friday, March 18, 2005. The conversion price is subject to adjustment in certain circumstances. The debentures bear interest at a rate of six percent per annum and are repayable in quarterly payments in either cash or, after effectiveness of the registration statement referred to below, common stock over a period of up to three years. Verilink will have the right, beginning one year after effectiveness of the registration statement, to require conversion of the debentures to common stock if the closing price of a share of the Company's common stock exceeds 200 percent of the conversion price for 20 consecutive trading days. The debentures are secured by substantially all of the assets of the Company. The warrants are initially exercisable for 830,567 shares of the Company's common stock at a price of $3.41 per share, have a term of five years and will be exercisable beginning six months after the closing date. The Company is required to file a registration statement with the Securities and Exchange Commission to register the shares of common stock issuable in connection with the financing. The Company will seek stockholder approval for the potential issuance of shares of common stock upon conversion of the debentures and for principal and interest payments on the debentures in order to satisfy applicable Nasdaq requirements. The exercise price of the warrants is subject to adjustment in circumstances similar to the conversion price of the debentures. The debentures and the warrants sold in the private placement and the shares of common stock issuable in connection with the financing have not been registered under the Securities Act of 1933, as amended, or state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from the registration requirements. The debentures and warrants were offered and sold only to qualified institutional buyers and institutional accredited investors. This announcement is not an offer to sell or the solicitation of an offer to buy the debentures, the warrants or shares of common stock of the Company. Kaufman Bros, L.P., an investment banking firm specializing in the communication, media and technology sectors, acted as sole placement agent to the Company for the transaction. About the Company Verilink Corporation -- http://www.verilink.com/-- develops, manufactures and markets a broad suite of products that enable carriers (ILECs, CLECs, IXCs, and IOCs) and enterprises to build converged access networks to cost-effectively deliver next- generation communications services to their end customers. The company's products include a complete line of VoIP, VoATM, VoDSL and TDM-based integrated access devices (IADs), optical access products, wire-speed routers, and bandwidth aggregation solutions including CSU/DSUs, multiplexers and DACS. The company also provides turnkey professional services to help carriers plan, manage and accelerate the deployment of new services. Verilink is headquartered in Centennial, CO (metro Denver area) with operations in Madison, AL and Newark, CA and sales offices in the U.S., Europe and Asia. * * * Going Concern Doubt PricewaterhouseCoopers LLP, the Company's registered independent public accounting firm on the Company's financial statements as of July 2, 2004, express substantial doubt about the Company's ability to continue as a going concern due to uncertain revenue streams and a low level of liquidity and notes. WILLIAM TAYLOR: Case Summary & 8 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: William Anthony Taylor 4360 County Road 177 Celina, Texas 75009 Bankruptcy Case No.: 05-41327 Chapter 11 Petition Date: March 20, 2005 Court: Honorable Brenda T. Rhoades Judge: Eastern District of Texas (Sherman) Debtor's Counsel: Gregory A. Whittmore 5910 N. Central Expressway Suite 1010 Dallas, TX 75206 Tel: (214) 891-6277 Fax: (214) 891-6275 Estimated Assets: $1 Million to $10 Million Debts Estimated: $1 Million to $10 Million Debtor's 8 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ C. Kent Adams & Contract & indemnity $650,000 Lone Star Partners 11434 County Road 176 Celina, TX 75009 Attn: (214) 532-4114 Buchanan & Burke, L.L.P. Legal fees/costs $240,000 5910 N. Central Expressway Suite 200 Dallas, TX 75206 Attn: (214) 378-9500 Bill C. Hunter, Legal fees/expenses $160,000 A Professional Corp. 5400 LBJ Freeway, Suite 945 One Lincoln Centre Dallas, TX 75240 Attn: (214) 361-7007 Davis Technologies Int. Office rent $47,700 4501 Ratliff Lane Addison, TX 75001 Jerry G. & Judy L. Curtis Attorney's fees $10,000 c/o Alan S. Trust, Esq. 1201 Elm Street Dallas, TX 75270 Stanley D. & Leslie Strifler Attorneys' fees $10,000 c/o Alan S. Trust, Esq. 1201 Elm Street, Suite 5270 Dallas, TX 75270 Ed Pickett Accountant fees $265 Pickett & Maxwell, P.C. P.O. Box 38128 Dallas, TX 75238 Enderby Gas Propane $131 P.O. Box 1597 Sherman, TX 75091 YUKOS OIL: Says It Will Drop U.S. Bankruptcy Appeal --------------------------------------------------- YUKOS Oil Company yesterday said that it will no longer pursue its bankruptcy case in the U.S. Courts and will be dismissing its appeal. On March 18, the Houston District Court denied YUKOS' motion for a stay pending its appeal of the Bankruptcy Court's order dismissing YUKOS' Chapter 11 bankruptcy case. Now that YUKOS is no longer able to obtain a stay from the United States Courts, and no longer has a reasonable prospect of obtaining relief under the U.S. Bankruptcy law, YUKOS will pursue its case in other forums. "We appreciate the stay that the United States Court system has provided to YUKOS through Judge Clark's temporary restraining order and otherwise," said Steven Theede, Chief Executive Officer of YUKOS Oil Company. "This contributed significantly to YUKOS' efforts to survive as a going concern. YUKOS appreciates the fairness with which it was treated by the United States Courts." YUKOS achieved a great deal during its U.S. Bankruptcy Case to preserve the value of its estate. The Bankruptcy Court, in its December 16, 2004, Temporary Restraining Order, found that the tax assessments, which were the basis for the purported tax auction sale of Yuganskneftegaz in late December 2004, were "not conducted in accordance with Russian law." The Bankruptcy Court's TRO caused the Russian Government to admit more openly that it was expropriating YUKOS' assets, by using a 100% Russian Government- owned company to buy Yuganskneftegaz and by making public statements at the end of 2004. After the late-December 2004 auction sale, the Russian Government's efforts to expropriate assets from YUKOS subsided somewhat until YUKOS' bankruptcy case was dismissed on Feb. 24, 2005. After the dismissal, the Russian authorities resumed their campaign of threats, intimidation, arrests and seizures with renewed vigor. The U.S. Courts' decisions, which were influenced by comity toward the Russian Government, left no doubt that they understood that a wrong was being done in Russia. In its Feb. 24, 2005, order dismissing YUKOS' bankruptcy case, the Bankruptcy Court found that the Russian government had acted in a manner that "would be considered confiscatory under United States law." More recently, the District Court when denying YUKOS' last effort to obtain a stay from the U.S. Courts, made clear that it did not "endorse" what was going on in Russia. YUKOS also said yesterday that recent decisions by the U.S. Courts in Houston do not deter the Company from continuing its fight to preserve the value of its estate and protect its shareholders, creditors and employees by resisting expropriation of its assets and pursuing causes of action to recover the value of assets that are expropriated from it. YUKOS management believes they have a responsibility to pursue all legal options available in all appropriate forums to prevent the destruction of the Company at the hands of the Russian government. "The management team continues to believe strongly in the merits of our legal case and we have no choice but to aggressively pursue all the legal options available to us to right the wrongs that have been done," said Mr. Theede. "We will now focus our efforts elsewhere to survive as a going concern and obtain compensation for assets that have been improperly expropriated from us." 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 the chapter 11 proceedings. 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 OIL: Fulbright Wants to Disburse Fees from $5-Mil. Retainer ----------------------------------------------------------------- Prior to being retained as general bankruptcy counsel to Yukos Oil Company in its Chapter 11 case, Fulbright & Jaworski LLP received a $5 million retainer from Yukos. Zack A. Clement, Esq., a partner at Fulbright & Jaworski, in Houston, Texas, tells Judge Clark that since the Petition Date, Fulbright has earned professional fees for $2,611,845 and reasonable and necessary expenses of $434,080 in representing Yukos in its Chapter 11 case through February 28, 2005. Mr. Clement presents a summary of Fulbright's fees and expenses: Date No. of Hours Fees Expenses Total ---- ------------ ---- -------- ----- December 2004 1,366 $484,893 $93,522 $578,415 January 2005 2,823 1,063,789 111,936 1,175,725 February 2005 2,787 1,018,002 228,346 1,246,348 March 2005 88 45,161 276 45,437 United States Bankruptcy Court for the Southern District of Texas order dismissing Yukos' Chapter 11 case expressly retained the Court's jurisdiction "for the purposes of considering fee applications, and determining disposition of the funds paid into the Court's registry. . . ." By this motion, Fulbright seek the Bankruptcy Court's authority to take a distribution from its $5 million retainer for its professional fees and reasonable and necessary expenses incurred from the Petition Date through February 28, 2005, subject to a further Court review after a final fee application is filed. 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. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Gibson Dunn Adds Five Media & Entertainment Litigators to Firm ---------------------------------------------------------------- Gibson, Dunn & Crutcher LLP disclosed the addition of a five- lawyer media and entertainment litigation team. Orin Snyder has joined the firm's New York office as a partner from Manatt Phelps & Phillips. Formerly the head of the Manatt's Litigation Unit in New York and the East Coast, Mr. Snyder will continue his intellectual property and commercial litigation practice with an emphasis on media and entertainment industries, as well as his white-collar practice. Also joining the firm are Cynthia Arato, Ashlie Beringer, Marc Isserles and Elise Zealand. Ms. Arato joins Gibson Dunn's New York office as of counsel and focuses her practice on intellectual property, commercial and civil litigation, also with an emphasis on media and entertainment. Ms. Beringer joins the firm's Denver office as of counsel and will continue her entertainment and media law, intellectual property and general commercial litigation practice. Mr. Isserles and Ms. Zealand join the firm in New York as associates. "We are delighted to have Orin join the firm," said Ken Doran, Managing Partner of Gibson Dunn. "He has a thriving, high-profile practice that will be very complementary with our practice in New York, as well as our entertainment and media practice on the West Coast. We are also pleased to welcome Cynthia, Ashlie, Marc and Elise, who have played an integral role in that practice." "I've known Orin for many years; he is engaging, energetic and articulate," said New York litigation partner Randy Mastro. "His practice covers a broad array of complex commercial litigation, including media and entertainment, IP and white collar matters. He is a terrific addition to the firm and to our already deep New York litigation bench. We are also pleased to welcome Cynthia, Ashlie, Marc and Elise, who have worked with Orin very closely and will give us additional litigation capacity in New York." "The group will be a great fit for us," said Theodore Boutrous, Co-Chair of the Media Practice Group. "Their client base complements the firm's, and their addition enhances our profile in New York and strengthens even more our ability to handle major media and entertainment litigation from coast to coast." -- Orin Snyder Mr. Snyder represents major corporations and prominent individuals in media and entertainment, intellectual property and other commercial litigation. He also represents clients in white-collar criminal matters and internal corporate investigations. Representative clients include Time Warner, Home Box Office, Sony BMG Music Entertainment, Warner Music Group, Atlantic Records, Time Inc., American Media, Inc., Cablevision, William Morris Agency, Bob Dylan, Marc Anthony, Julie Andrews and Ozzy and Sharon Osbourne. Before joining Gibson Dunn, Mr. Snyder was a litigation partner in the New York office of Manatt, where he led that firm's New York and East Coast Litigation Unit. Before that, he practiced with Parcher, Hayes & Snyder from 1994 to 2003 (which merged with Manatt in December 2003). Mr. Snyder also served as Assistant U.S. Attorney in the U.S. Attorney's Office for the Southern District of New York from 1989 to 1994, serving in the Securities Fraud and Organized Crime Units, and as Chief of the Narcotics Unit. Mr. Snyder was named one of the top young lawyers in the country by The American Lawyer in its 2003 article, "45 Under 45: The Rising Stars of the Private Bar." He has taught trial advocacy as an adjunct professor and lecturer at various law schools and also teaches courses on copyright law, entertainment law, criminal law and litigation for continuing legal education programs and clients. He graduated from the University of Pennsylvania Law School cum laude in 1986. Mr. Snyder said, "Gibson Dunn is a powerhouse firm that uniquely can service my clients on a full-service basis around the world. New York and Los Angeles are the media and entertainment capitals of the world, and I'm delighted to be joining the leading law firm in these areas. I also look forward to expanding my white-collar practice, working with the outstanding lawyers in Gibson Dunn's Business Crimes and Investigations Practice Group." -- Cynthia Arato Ms. Arato has represented major companies and individuals in litigation involving copyright, trademark, defamation, right of publicity, employment, contract, fraud, fiduciary duty and royalty issues. In 2004, she successfully represented the Select Committee of Inquiry of the Connecticut House of Representatives before the Connecticut Supreme Court in a landmark case which held that a sitting Governor could be compelled to testify before a legislative impeachment committee. Her clients include Warner Music Group, Atlantic Records, Sony BMG Music Entertainment, Elektra Entertainment, America Media Inc., Home Box Office, Warner Bros. Records, Scholastic and Frank McCourt. She has taught legal ethics at Columbia University School of Law and copyright law seminars for continuing legal education programs and clients. She received her law degree in 1991 from Columbia University, where she was a Harlan Fiske Stone Scholar and Managing Editor of Columbia Journal of Transnational Law. -- Ashlie Beringer Ms. Beringer practices in the areas of entertainment and media, general commercial litigation and intellectual property law. She has represented several entertainment and media clients in disputes concerning contracts, copyright, trademark, defamation and privacy issues. She has significant experience in the prosecution and defense of commercial contracts, securities fraud and business tort actions. She is a 1996 graduate of Yale University School of Law, where she was Editor of Yale Law Journal and the recipient of the John Gallagher Prize for Best Trial Performance in Yale's Mock Trial Competition. -- Marc Isserles Mr. Isserles focuses his practice on civil litigation, with an emphasis on appellate and constitutional litigation. He served as a law clerk for U.S. Supreme Court Justice Stephen G. Breyer and for Judge Laurence H. Silberman, of the U.S Court of Appeals, District of Columbia Circuit. He received his law degree in 1998, magna cum laude from Harvard Law School, where he was Notes Editor of Harvard Law Review and recipient of the Joshua Montgomery Sears Prize. -- Elise Zealand Ms. Zealand's practice focuses on all aspects of entertainment litigation, and she has represented clients in the entertainment industry in various contract matters and other disputes, including copyright and licensing issues. Ms. Zealand served as a law clerk to the U.S. District Court Judge William C. Conner, Senior District Judge, Southern District of New York. She received her law degree in 1998 from Columbia University where she was a James Kent Scholar and Harlan Fiske Stone Scholar, as well as the Writing and Research Editor of the Columbia Journal of Law and Social Problems. About Gibson Dunn's New York Litigation Practice New York is host to a team of highly regarded and experienced litigators who handle complex litigation matters in securities, antitrust, commercial disputes, unfair trade practices, government contracting, First Amendment, media litigation and compliance- related investigations. Recent selected matters include representing: * Madison Square Garden in a lawsuit against New York City concerning a proposed football stadium project in Manhattan. * Bear Stearns in consolidated securities class actions involving the allocation of shares in "hot" IPOs, as well as shareholder derivative litigation alleging research analyst conflicts of interest. * Two Deloitte & Touche entities in various securities class actions and related Securities Exchange Commission and Department of Justice investigations regarding alleged improprieties at Royal Ahold, the world's third-largest supermarket group. * Merrill Lynch in litigation arising out of the collapse of Enron Corporation, including its defense in a consolidated federal securities class action and in bankruptcy proceedings. * Peerless Importers, New York State's largest wholesale liquor and wine distributor, in a major constitutional litigation over state restrictions on wine imports. About Gibson Dunn's Media and Entertainment Practice Groups Gibson, Dunn & Crutcher is unique among law firms in the depth and breadth of its media and communications practice. The Media Law Practice Group has extensive experience handling First Amendment issues in virtually all areas of free speech and press. The Group represents major newspapers, magazines, broadcasters, book publishers and other media entities engaged in domestic and international publication and broadcast. Gibson Dunn attorneys have served for many years as principal outside counsel on First Amendment issues to Dow Jones & Company, publisher of The Wall Street Journal. Gibson Dunn provides full range of services for entertainment industry disputes and transactions. The Entertainment Practice Group represents institutional clients in virtually all aspects of business, including mergers and acquisitions, financing, acquisition, licensing, development and the distribution of film, television and home video. The firm's entertainment lawyers also litigate in state and federal courts and arbitrate before guilds and other institutional forums. The Group's clients include Sony (Sony Corporation of America, Sony Pictures Entertainment, Columbia Tri-Star Home Entertainment, Fox Entertainment Group), Universal Pictures and NBC. Selected recent matters include representing: * Major media organizations (including NBC, CBS, ABC, CNN, Fox, The New York Times, Los Angeles Times, Gannett, the Associated Press, and The Washington Post) in seeking public access to secret judicial proceedings and records in the pending California criminal case against Michael Jackson. * Intertainment AG, a German film and TV show distributor in a fraud and breach of contract suit against Franchise pictures and Elie Samaha, Franchise's chief executive, resulting in an award of $106 million in compensatory and punitive damages for Intertainment. * 25 news organizations and reporters and editors groups as amicus curiae in support of New York Times reporter Judith Miller and Time Inc. and its reporter Matthew Cooper in the special counsel investigation of whether White House officials illegally leaked the name of CIA official Valerie Plame to the press. * Volkswagen in the creation of a global promotional and marketing alliance with NBC Universal valued at over $200 million. About the Firm Gibson, Dunn & Crutcher LLP -- http://www.gibsondunn.com/-- is a leading international law firm. Consistently ranking among the world's top law firms in industry surveys and major publications, Gibson Dunn is distinctively positioned in today's global marketplace with more than 800 lawyers and 13 offices, including Los Angeles, New York, Washington, D.C., San Francisco, Palo Alto, London, Paris, Munich, Brussels, Orange County, Century City, Dallas and Denver. * Chadbourne & Parke Welcomes Christopher Owen as Partner --------------------------------------------------------- The international law firm of Chadbourne & Parke LLP disclosed that Christopher Owen, 42, has joined the Firm as a partner in both Chadbourne & Parke LLP and its affiliated multinational partnership, Chadbourne & Parke in London, effective March 15. He will split his time between the Moscow and London offices. Prior to joining Chadbourne, Mr. Owen was head of the Moscow office of Lovells. Mr. Owen specializes in capital markets transactions and cross- border mergers and acquisitions. He has experience advising issuers and arrangers on the issue and underwriting of fixed income and equity securities in emerging markets and advising international clients on investing in Russia, the CIS and Central Europe. Mr. Owen also has counseled on a wide range of capital markets work, from straightforward debt to substantial international equity work, including IPOs and flotations, derivatives and synthetics. "We are pleased to welcome Chris to Chadbourne. His range of finance, capital markets and derivatives experience connected with Russian matters is a critical component of our increasingly diversified services for clients doing business in Russia," said Charles K. O'Neill, Chadbourne's managing partner. "His significant experience in Russian and cross-border financings is a key step in our continued growth in the CIS and in Chadbourne's long-term commitment to that region. With Chris on board, we are continuing to build on the growth the Firm achieved last year when we opened the Kyiv and Warsaw offices." Chadbourne's Moscow office was established in 1990, and Mr. Owen is the fourth partner there. The office provides a full range of legal services to multinational and domestic clients. "Chris's arrival at the Firm will greatly enhance our already successful track record in English law governed financings and corporate transactions," added Laura M. Brank, managing partner of Chadbourne's Moscow office. "His broad range of experience advising companies and financial institutions in complex business and capital markets transactions allows us to meet the needs of our clients looking to raise financings in both the London capital markets and U.S. markets. This puts us in a strong position to counsel clients pursuing investment opportunities." Mr. Owen is named as an expert in emerging market transactions in the Legal 500 and is recommended by PLC Which Lawyer? formerly European Counsel 3000, and is recognized by Chambers Global - The World's Leading Lawyers. "I am very pleased to have the opportunity to join the Chadbourne team in both Moscow and London as well as to become part of the Firm's overall capital markets group," Mr. Owen commented. "Chadbourne has an excellent reputation in this field, and I look forward to the opportunity to develop this practice further in Russia, for CIS and Central Europe." Mr. Owen received his B.A. Jurisprudence from Oxford University. About Chadbourne & Parke LLP Chadbourne & Parke LLP, an international law firm headquartered in New York City, provides a full range of legal services, including mergers and acquisitions, securities, project finance, corporate finance, energy, telecommunications, commercial and products liability litigation, securities litigation and regulatory enforcement, white collar defense, intellectual property, antitrust, domestic and international tax, reinsurance and insurance, environmental, real estate, bankruptcy and financial restructuring, employment law and ERISA, trusts and estates and government contract matters. The Firm has offices in New York, Washington, D.C., Los Angeles, Houston, Moscow, Kyiv, Warsaw (through a Polish partnership), Beijing and a multinational partnership, Chadbourne & Parke, in London. For additional information, visit http://www.chadbourne.com/ About the Moscow Office In Moscow, the office comprises of over 20 U.S., English and Russian qualified attorneys (each of whom is bilingual) and a total bilingual staff numbering more than 50, including paralegals, translators, secretaries and other support staff. A team of business-oriented lawyers has been assembled who have years of experience in the Russian Federation working on complex and novel transactions and on major litigation. Each of the partners has more than a decade of experience advising on transactions in Russia, and each is well-regarded in the community. These partners are frequently listed in publications such as Chamber's Global, Euromoney Expert Guides, and European Legal Experts as leading lawyers in the fields of corporate and commercial law, banking and finance, energy, and litigation. About Chadbourne & Parke, A Multinational Partnership In London, the Firm conducts its practice through Chadbourne & Parke, a multinational partnership, employing both English- qualified solicitors and U.S. lawyers who work closely with other Chadbourne offices to provide seamless service to international clients. The London partnership offers a range of legal services under both English and U.S. law and, in particular, focuses on project finance, privatization, energy, capital markets, banking, insurance and reinsurance, securitizations, structured finance, corporate finance, litigation and products liability. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- March 23, 2005 TURNAROUND MANAGEMENT ASSOCIATION TMA New Jersey Chapter Awards Ceremony Newark Club Contact: 312-578-6900 or http://www.turnaround.org/ March 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION Workout Panel [Carolinas] The Westin Hotel, NC Contact: 704-926-0359 or http://www.turnaround.org/ March 29, 2005 TURNAROUND MANAGEMENT ASSOCIATION Orlando Luncheon Citrus Club, Orlando, FL Contact: 561-882-1331 or http://www.turnaround.org/ March 29, 2005 NEW YORK INSTITUTE OF CREDIT 475 Esquire Toppers Credit Club Top Hat Award Presented to John Daly, CIT New York Hilton Contact: 212-551-7920 or info@nyic.org March 30, 2005 NEW YORK INSTITUTE OF CREDIT Factoring 2005 Arno's Ristorante, NY Contact: 212-551-7920 or info@nyic.org March 31, 2005 TURNAROUND MANAGEMENT ASSOCIATION TMA New York Chapter April Fools Party University Club, NYC Contact: 312-578-6900 or http://www.turnaround.org/ April 7-8, 2005 PRACTISING LAW INSTITUTE 27th Annual Current Developments in Bankruptcy & Reorganization San Francisco, CA Contact: 1-800-260-4PLI; 212-824-5710 or info@pli.edu April 8-9, 2005 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES The NABT Spring Seminar Don CeSar Beach Resort St. Petersburg, FL Contact: 803-252-5646 or info@nabt.com April 13, 2005 TURNAROUND MANAGEMENT ASSOCIATION Mediation in Turnarounds & Bankruptcies Milleridge Cottage Long Island, NY Contact: 312-578-6900 or http://www.turnaround.org/ April 14-15, 2005 BEARD GROUP AND RENAISSANCE AMERICAN MANAGEMENT CONFERENCES The Sixth Annual Conference on Healthcare Transactions Successful Strategies for Mergers, Acquisitions, Divestitures and Restructurings The Millennium Knickerbocker Hotel, Chicago Contact: 1-800-726-2524; 903-595-3800 or dhenderson@renaissanceamerican.com April 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION Wilbur Ross - Joint Breakfast Meeting with Association for Corporate Growth Woodbridge Hilton, Iselin, NJ Contact: 908-575-7333 or http://www.turnaround.org/ April 20, 2005 TURNAROUND MANAGEMENT ASSOCIATION TMA Florida Chapter / Finance Network Club Spring Dinner Sheraton Suites Cypress Creek, Ft. Lauderdale, FL Contact: 561-882-1331 or http://www.turnaround.org/ April 21, 2005 TURNAROUND MANAGEMENT ASSOCIATION TMA South Florida Golf Day Carolina Club, Margate, FL Contact: 561-882-1331 or http://www.turnaround.org/ April 21, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Contact: 716-440-6615 or http://www.turnaround.org/ April 21, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ April 26, 2005 TURNAROUND MANAGEMENT ASSOCIATION Tampa Luncheon The Centre Club Tampa, FL Contact: 303-457-2119 or http://www.turnaround.org/ April 28, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners (East) J.W. Marriott Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ April 28- May 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriot, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ May 4, 2005 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Meeting Union League Club, NYC Contact: 646-932-5532 or http://www.turnaround.org/ May 9, 2005 AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference Millenium Broadway New York, New York Contact: 1-703-739-0800 or http://www.abiworld.org/ May 10, 2005 TURNAROUND MANAGEMENT ASSOCIATION Errors, Omissions and Fraud Newark Club, NJ Contact: 908-575-7333 or http://www.turnaround.org/ May 12-14, 2005 ALI-ABA Fundamentals of Bankruptcy Law Washington, D.C. Contact: 1-800-CLE-NEWS or http://www.ali-aba.org/ May 12-14, 2005 ALI-ABA Fundamentals of Bankruptcy Law Santa Fe, NM Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ May 13, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners (N.Y.C.) Association of the Bar of the City of New York, New York Contact: 1-703-739-0800 or http://www.abiworld.org/ May 17, 2005 NEW YORK INSTITUTE OF CREDIT 26th Annual Credit Smorgasbord Arno's Ristorante, NYC Contact: 212-551-7920 or http://www.nyic.org/ May 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA May Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ May 19-20, 2005 BEARD GROUP AND RENAISSANCE AMERICAN MANAGEMENT CONFERENCES The Second Annual Conference on Distressed Investing Europe Maximizing Profits in the European Distressed Debt Market Le Meridien Piccadilly Hotel London UK Contact: 1-800-726-2524; 903-595-3800 or dhenderson@renaissanceamerican.com May 19-20, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2nd Annual Golf Tournament [Carolinas] Venue - TBA Contact: 704-926-0359 or http://www.turnaround.org/ May 19-20, 2005 TURNAROUND MANAGEMENT ASSOCIATION 4th Annual Great Lakes Regional Conference Peek'N Peak Resort, Findley Lake, NY Contact: 716-440-6615 or http://www.turnaround.org/ May 23, 2005 (tentative) TURNAROUND MANAGEMENT ASSOCIATION Long Island TMA Golf Outing Indian Hills, Northport, LI Contact: 516-465-2356; 631-434-9500 or http://www.turnaround.org/ May 23-26, 2005 AMERICAN BANKRUPTCY INSTITUTE Litigation Skills Symposium Tulane University Law School New Orleans, Louisiana Contact: 1-703-739-0800 or http://www.abiworld.org/ May 31, 2005 TURNAROUND MANAGEMENT ASSOCIATION Orlando Luncheon Citrus Club, Orlando, FL Contact: 561-882-1331 or http://www.turnaround.org/ June 1, 2005 (Date is tentative) TURNAROUND MANAGEMENT ASSOCIATION 12th Annual Charity Golf Tournament Venue - TBA Contact: 203-877-8824 or http://www.turnaround.org/ June 2-4, 2005 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities and Bankruptcy Omni Hotel, San Francisco Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ June 6, 2005 TURNAROUND MANAGEMENT ASSOCIATION TMA New York Golf Tournament (for members only.) Fresh Meadows Country Club, Lake Success, NY Contact: 646-932-5532 or http://www.turnaround.org/ June 7, 2005 NEW YORK INSTITUTE OF CREDIT NYIC 86th Annual Award Banquet New York Hilton and Towers, NYC Contact: 212-551-7920 or http://www.nyic.org/ June 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION TMA-LI Women's Marketing Initiative: Afternoon Tea Milleridge Inn, Long Island, NY Contact: 516-465-2356 / 631-434-9500 or http://www.turnaround.org/ June 9-10, 2005 TURNAROUND MANAGEMENT ASSOCIATION 3rd Annual Mid-Atlantic Regional Symposium Atlantic City, NJ Contact: 908-575-7333 or http://www.turnaround.com/ June 9-11, 2005 ALI-ABA Chapter 11 Business Reorganizations Charleston, South Carolina Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ June 16-19, 2005 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort Traverse City, Michigan Contact: 1-703-739-0800 or http://www.abiworld.org/ June 16, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Rochester, NY Contact: 716-440-6615 or http://www.turnaround.org/ June 16, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ June 23-24, 2005 BEARD GROUP AND RENAISSANCE AMERICAN MANAGEMENT CONFERENCES The Eighth Annual Conference on Corporate Reorganizations Successful Strategies for Restructuring Troubled Companies The Millennium Knickerbocker Hotel, Chicago Contact: 1-800-726-2524; 903-595-3800 or dhenderson@renaissanceamerican.com June 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION Tampa Luncheon The Centre Club Tampa, FL Contact: 561-882-1331 or www.turnaround.org June 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION Family Night - Somerset Patriots Baseball Commerce Bank Ballpark, Bridgewater, NJ Contact: 908-575-7333 or www.turnaround.org July 1, 2005 TURNAROUND MANAGEMENT ASSOCIATION Long Island Chapter Manhattan Cruise (In Planning - Watch for Announcement) Departing from Manhattan Contact: 516-465-2356; 631-434-9500 or http://www.turnaround.org/ July 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Body of Knowledge Law Review (in preparation for the CTP exam) [Chicago/Midwest] Venue - TBA Contact: 815-469-2935 or http://www.turnaround.org/ July 14-17, 2005 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800 or http://www.abiworld.org/ July 27-30, 2005 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Kiawah Island Resort and Spa, Kiawah Island, S.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ August 1, 2005 TURNAROUND MANAGEMENT ASSOCIATION NJTMA Annual Golf Outing Raritan Valley Country Club, Bridgewater, NJ Contact: 908-575-7333 or http://www.turnaround.org/ August 4, 2005 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Cambridge, Maryland Contact: 1-703-739-0800 or http://www.abiworld.org/ August 17-21, 2005 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES NABT Convention Marriott Marquis Times Square New York, NY Contact: 803-252-5646 or info@nabt.com August 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Fishing Trip Point Pleasant, NJ Contact: 908-575-7333 or http://www.turnaround.org/ August 19, 2005 TURNAROUND MANAGEMENT ASSOCIATION Body of Knowledge Accounting Review [Chicago/Midwest] Venue - TBA Contact: 815-469-2935 or http://www.turnaround.org/ September 8-9, 2005 TURNAROUND MANAGEMENT ASSOCIATION Golf Tournament and TMA Regional Conference Gideon Putnam Hotel, Saratoga Springs, NY Contact: 716-667-3160 or http://www.turnaround.org/ September 8-11, 2005 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference (Including Financial Advisors/Investment Bankers Program) The Four Seasons Hotel Las Vegas, Nevada Contact: 1-703-739-0800 or http://www.abiworld.org/ September 12, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual TMA-LI Chapter Board Meeting Venue - TBA Contact: 516-465-2356 or http://www.turnaround.org/ September 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION 7th Annual Lender's Forum: Surviving Bank Mergers Milleridge Cottage, Long Island, NY Contact: 516-465-2356; 631-434-9500 or http://www.turnaround.org/ September 15, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ September 16, 2005 TURNAROUND MANAGEMENT ASSOCIATION Body of Knowledge Management Review [Chicago/Midwest] Venue - TBA Contact: 815-469-2935 or http://www.turnaround.org/ September 22, 2005 TURNAROUND MANAGEMENT ASSOCIATION 3rd Annual Workout Lenders Panel Luncheon Union League Club, NYC Contact: 646-932-5532 or http://www.turnaround.org/ September 23, 2005 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Workshop London, UK Contact: 1-703-739-0800 or http://www.abiworld.org/ September 26, 2005 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Workshop Site to Be Determined London, England Contact: 1-703-739-0800 or http://www.abiworld.org/ September 28, 2005 TURNAROUND MANAGEMENT ASSOCIATION Joint CFA/RMA/TMA Networking Reception Woodbridge Hilton, Iselin, NJ Contact: 908-575-7333 or http://www.turnaround.org/ October 7, 2005 AMERICAN BANKRUPTCY INSTITUTE Views from the Bench Georgetown University Law Center Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ October 18, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Rochester, NY Contact: 716-440-6615 or http://www.turnaround.org/ October 19-23, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Annual Convention Chicago Hilton & Towers, Chicago Contact: 312-578-6900 or http://www.turnaround.org/ October 20, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ October 27, 2005 TURNAROUND MANAGEMENT ASSOCIATION Informal Networking *FREE Reception for Members* The Davenport Press Restaurant, Mineola, NY Contact: 516-465-2356 or http://www.turnaround.org/ November 1-2, 2005 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC 2005 Fall Conference San Antonio, TX Contact: http://www.iwirc.com/ November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, Texas Contact: http://www.ncbj.org/ November 11, 2005 AMERICAN BANKRUPTCY INSTITUTE Detroit Consumer Bankruptcy Workshop Wayne State University, Detroit, MI Contact: 1-703-739-0800 or http://www.abiworld.org/ November 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Workout Workshop Long Island, NY Contact: 312-578-6900 or http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION TBA [Upstate New York] Buffalo, NY Contact: 716-440-6615 or http://www.turnaround.org/ November 17, 2005 TURNAROUND MANAGEMENT ASSOCIATION Colorado TMA Breakfast The Oxford Hotel, Denver, CO Contact: 303-457-2119 or http://www.turnaround.org/ December 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners (West) Hyatt Grand Champions Resort Indian Wells, California Contact: 1-703-739-0800 or http://www.abiworld.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, Calif. Contact: 1-703-739-0800 or http://www.abiworld.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Holiday Gathering & Help for the Needy *FREE to Members* Mack Hall at Hofstra University, Hempstead, NY Contact: 516-465-2356 or http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Board of Directors Meeting Rochester, NY Contact: 716-440-6615 or http://www.turnaround.org/ March 30 - April 1, 2006 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Scottsdale, AZ Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ April 18-22, 2006 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting JW Marriott Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ June 15-18, 2006 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort Traverse City, Michigan Contact: 1-703-739-0800 or http://www.abiworld.org/ July 13-16, 2006 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Newport Marriott Newport, Rhode Island Contact: 1-703-739-0800 or http://www.abiworld.org/ July 26-29, 2006 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz Carlton Amelia Island Amelia Island, Florida Contact: 1-703-739-0800 or http://www.abiworld.org/ October 11-14, 2006 TURNAROUND MANAGEMENT ASSOCIATION 2006 Annual Conference Milleridge Cottage Long Island, NY Contact: 312-578-6900 or http://www.turnaround.org/ November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch Scottsdale, Arizona Contact: 1-703-739-0800 or http://www.abiworld.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, FL Contact: http://www.ncbj.com/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, AZ Contact: http://www.ncbj.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, NV Contact: http://www.ncbj.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, LA Contact http://www.ncbj.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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, Christian Q. Salta, Jason A. Nieva, and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***