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/raid1/www/Hosts/bankrupt/TCR_Public/050328.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, March 28, 2005, Vol. 9, No. 72 Headlines 360NETWORKS: Ill. Resident Class Files Fiber Optic Cable Lawsuit 360NETWORKS: Sells Long-Haul Assets to Level 3 Communications ADB SYSTEMS: Balance Sheet Upside-Down by CDN$1.009M at Dec. 31 AEG INC.: Case Summary & 20 Largest Unsecured Creditors AEROSTAR EXECUTIVE: Case Summary & 15 Largest Unsecured Creditors AFFINIA GROUP: Vehicle Group Closes Montreal Manufacturing Plant AGRIBIOTECH: Former CEO Files for Chapter 11 Protection ALLIED PRINTING: Case Summary & 20 Largest Unsecured Creditors ALOHA AIRLINES: Secures Court Approval of $65 Million DIP Facility AMERICAN HOMEPATIENT: Dec. 31 Balance Sheet Upside-Down by $20.7M AMES DEPARTMENT: Employs Deloitte Tax as Tax Advisors ARTHUR D. LITTLE: Settles Fraudulent Billing Claims for $6.5 Mil. ATA AIRLINES: Court OKs Chicago Xpress Key Employee Retention Plan ATA AIRLINES: Malek Proposes Chicago Express Sale as Going Concern AUTOCAM CORP: S&P Junks $140 Million Unsecured Senior Sub. Notes BALL CORPORATION: Moody's Upgrades $1.85 Billion Debt Ratings BALLY TOTAL: Hires Turnaround Expert Carl J. Landeck as New CFO BALLY TOTAL: Names Katherine Abbott as New V.P. & Treasurer BELLAIRE GENERAL: Files Schedules of Assets & Liabilities in Texas BETHLEHEM STEEL: Update on Adversary Cases v. 3,180 Creditors BEVERLY ENTERPRISES: Auction Sale Plan Cues S&P to Review Ratings BEVERLY ENTERPRISES: Moody's Affirms Low-B Ratings on $555M Debt BIOLOGICAL ENVIRONMENTAL: Creditor Sues to Get Plan Distribution BIOPHAGE PHARMA: Incurs $815,492 Net Loss in Fiscal Year 2004 CARRINGTON MORTGAGE: Moody's Rates Class M-9 Sr. Certs. at Ba1 CATHOLIC CHURCH: Bid to Disband Spokane Committee Draws Fire COLLINS & AIKMAN: Audit Committee Retains Davis, Polk & Wardwell COMM 2001-FL4: Moody's Junks $7.037M Class M-PS Certificates CYGNUS INC: Completes $10 Million Asset Sale to Animas DADE BERHING: Fitch Rates Senior Subordinated Debt at BB+ DATATEC SYSTEMS: Committee Taps Navigant as Financial Advisors DATATEC SYSTEMS: Wants Exclusive Period Extended through June 13 DELTA AIR: Standard & Poor's Says Liquidity Might Be a Problem DIMON INC: Noteholders Agree to Amend Senior Bond Indentures DOBSON COMMS: Defers Payment of Preferred Stock Dividends, Again E*TRADE ABS: Moody's Junks $5M Securities & $12.5M Pref. Shares ENRON CORP: Wants Court to Nix Long-Term Revolver Claims ENVIRONMENTAL TRUST: Case Summary & 20 Largest Unsecured Creditors EXIDE TECH: Soros Buys $5M Convertible Notes & $15M Sr. Notes FAIRFAX FINANCIAL: TIG Note Repayment Deferred to June 30, 2006 FEDERAL-MOGUL: Proposes to Settle $183MM of CCR Claims for $29MM FLEMING COMPANIES: Core-Mark Prepares to Register Stock & Warrants GARDEN RIDGE: Disclosure Statement Hearing in Wilmington Tomorrow GRAPHIC PACKAGING: S&P Revises Outlook on Low-B Ratings to Stable GSAA HOME: Moody's Assigns Ba1 Rating to Class B-4 Certificates HALIFAX REGIONAL: Moody's Chips $24M Bond Rating to Ba1 from Baa3 HAWAIIAN AIRLINES: Showdown With Pilots in Bankr. Court Tomorrow HAYES LEMMERZ: Will Discuss 2004 Year-End Financials on April 15 HAYES LEMMERZ: Bares Strategic Actions to Fuel Long-Term Growth HAYES LEMMERZ: Names Pieter Klinkers as Sales & Marketing VP HOST MARRIOTT: S&P Holds Low B-Ratings on Cert. Classes F & G INDEPENDENCE V: Fitch Rates $24.6 Million Preference Shares at BB- INTEGRATED HEALTH: Florida AG Wants Divestiture Order Enforced INTEGRATED HEALTH: Del Negro Wants Compliance with Briarwood Deal INTEGRATED HEALTH: Trust Has Until April 7 to Remove Civil Actions INTERSTATE BAKERIES: Taps Assessment Tech. as Tax Consultant IRVING TANNING: Gets Okay to Access $14.5 Mil. of Cash Collateral JP MORGAN: Fitch Upgrades $7.8 Million Class G to BB- KAISER ALUMINUM: Asks Court to Approve Erie Property Transfer KIMBERLY OREGON: Voluntary Chapter 11 Case Summary KITCHEN ETC: Clear Thinking to Administer Reorganization Plan KMART CORPORATION: Footstar Wants Retailer Held in Contempt KMART: Completes Sears Merger, Creating Nation's No. 3 Retailer LEVITZ: S&P Cuts Ratings to CCC as Competitive Pressures Increase LIONEL LLC: Has Until January 2006 to File Reorganization Plan LYNX 2002-I: Moody's Junks $20 Million Class D Floating Rate Notes MARINER HEALTHCARE: Wants Summary Judgment Against Former Officers MARTIN WRIGHT: Case Summary & 19 Largest Unsecured Creditors MIRANT CORP: Revised Plan Projects 60% Recovery for Most Creditors MIRANT CORP: Asks Court to Approve Consent Decree with EPA et al. MORGAN STANLEY: Fitch Puts Low-B Ratings on Two $8.4 Mil. Classes ORANGE COUNTY: Moody's Affirms Ba1 Rating on $7.5M Revenue Bonds OWENS CORNING: Bankr. Court Will Handle False X-Ray Readings Issue OXFORD AUTOMOTIVE: Emerges from Chapter 11 Bankruptcy PACIFIC EQUIPMENT: Case Summary & 4 Largest Unsecured Creditors PEAK ENTERTAINMENT: Forms Strategic Alliance with Maverick Ent. PENNSYLVANIA ECONOMIC: Moody's Chips $50M Bond Rating to Ba1 RCN CORPORATION: Look for Annual Report on April 30 REDDY ICE: Launches $152 Million Cash Tender Offer for Sr. Notes SEA CONTAINERS: Weak Earning Prospects Cue S&P to Revise Outlook SEMINIS VEGETABLE: Soliciting Consents to Amend Sr. Note Indenture SEPSAKOS PROPERTIES: Voluntary Chapter 11 Case Summary SGD HOLDINGS: James & Lisa Gordon Want Chap. 11 Trustee Appointed SOLUTIA INC: Court Approves Canadian Unit Settlement Agreement SOUTHWEST COOLING: Case Summary & 20 Largest Unsecured Creditors SPIEGEL INC: Hires Watson Wyatt to Craft New Employee Equity Plan SPIEGEL INC: Hires Spencer Stuart to Scout for New Directors STEPHEN M. HOUSE: Case Summary & 18 Largest Unsecured Creditors TORCH OFFSHORE: Committee Taps Alvarez & Marsal as Fin'l Advisor TORCH OFFSHORE: Committee Wants Chapter 11 Trustee Appointed UAL CORPORATION: Reports $179 Million Operating Loss in February UAL CORPORATION: Gate Gourmet Holds $2.75 Million Claim ULTIMATE ELECTRONICS: Closes 30 Retail Stores & Reduces Employees ULTIMATE ELECTRONICS: Opposes Bid for Appointment of Equity Panel ULTIMATE ELECTRONICS: Lender Waives DIP Loan Default USG CORP: FMR Corporation Discloses 12.898% Equity Stake USG CORPORATION: Wants More Time to Remove State Court Actions VIVENTIA BIOTECH: Equity Deficit Widens to CDN$21.255M at Dec. 31 VIVENTIA BIOTECH: Borrows $4.6 Million from Chairman Leslie Dan WEATHERBY FORD: Case Summary & 20 Largest Unsecured Creditors WEIGHT WATCHERS: S&P Assigns BB Rating to $150 Mil. Term Loan B WELDON F. STUMP: Four Creditors File Involuntary Petition in Ohio WHX CORP: Court Restricts Trading in Claims & Equity Securities WINN-DIXIE: Gets Court OK to Sell Inventory to Eckerd & CVS Realty WINN-DIXIE: Names Tom Robbins Sr. Vice President - Merchandising XERIUM TECH: Moody's Rates $750M Senior Secured Debt Rating at B1 XO COMMUNICATIONS: Can't Timely File Annual Report with SEC YUKOS OIL: Denies Monetary Liability to Rosneft YUKOS OIL: Inks Stipulation with Deutsche Bank Dismissing Appeal * Charles J. Sullivan, Esq., Joins Bond, Schoeneck & King * Peter Briggs Heads Alvarez & Marsal's Operations in Germany * BOND PRICING: For the week of March 21 - March 25, 2005 ********* 360NETWORKS: Ill. Resident Class Files Fiber Optic Cable Lawsuit ---------------------------------------------------------------- Madison County residents George and Ruth Schillinger initiated a class action lawsuit against a Canadian fiber optics network company, 360 Networks of Vancouver, British Columbia, for trespassing, the Madison County Record reports. The suit, filed on the day President Bush signed the Class Action Fairness Act into law, alleges that the Canadian business chose to forego time-consuming negotiations with them and other class members. Instead, 360 Networks entered into quick agreements with other companies, such as railroad, pipeline, energy and other utility companies, and paid them millions to construct its fiber optic network. The suit further alleges in their complaint that the company installed thousands of miles of telecommunication conduits or fiber optic cable throughout the United States, including Illinois, in land subject to right-of- way easements. Legal experts point out that potential class members consist of more than 1,000 current and former owners of the right-of-way land throughout the United States. The plaintiffs and the class, who are seeking a declaration that 360 Networks has no legal rights to exercise dominion and control over their right- of-way land, allege they have suffered actual damages resulting from 360 Networks' trespassing, in an amount to be proven at trial, plus punitive damages for fraud, malice, intentional, willful or wanton conduct and reckless disregard of their rights. The class is represented by: Mark Goldenberg, Esq. Elizabeth Heller, Esq. GOLDENBERG MILLER HELLER & ANTOGNOLI PC 2227 S. State Route 157 P.O. Box 959 Edwardsville, Illinois 62025 Telephone (618) 656-5150 - and - John Massopust, Esq. Daniel Millea, Esq. ZELLE, HOFMANN, VOELBEL, MASON & GETTE LLP 500 Washington Avenue South, Suite 4000 Minneapolis, Minnesota 55415 Telephone (612) 339-2020 along with firms from Washington, D.C., Indianapolis, Ind., and Waltham, Mass. Headquartered in Vancouver, British Columbia, 360networks, Inc. -- http://www.360.net/-- is a leading independent provider of fiber optic communications network products and services worldwide. The Company and its 22 debtor-affiliates filed for chapter 11 protection on June 28, 2001 (Bankr. S.D.N.Y. Case No. 01-13721), obtained confirmation of a plan on October 1, 2002, and emerged from chapter 11 on November 12, 2002. Alan J. Lipkin, Esq., and Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, represent the Company before the Bankruptcy Court. When the Debtors filed for protection from its creditors, they listed $6,326,000,000 in assets and $3,597,000,000 in liabilities. (Class Action Reporter, March 2, 2005) 360NETWORKS: Sells Long-Haul Assets to Level 3 Communications ------------------------------------------------------------- 360networks has agreed to transfer selected revenue contracts and a four-fiber, long-term IRU on the Level 3 backbone to Level 3. The transaction will generate cash for the 360networks, eliminate a cash-flow negative business, provide network capacity, and remove selected liabilities. This strategic transaction will eliminate the Company's exposure to the volatile, Tier 1, long haul, wholesale market sector. 360networks will concentrate on its western regional network that reaches the majority of the tier 1, 2 and 3 markets in that region. "We have a great opportunity to serve our customers, generate organic growth and produce strong operating margins in the less competitive regional market where we have a unique and valuable network," said Gregory B. Maffei, 360networks Chairman and CEO. "In addition, we see opportunities to acquire and consolidate attractive telecom assets in the Western market." 360networks has taken advantage of turmoil in the telecom market to add synergistic assets at a fraction of their original construction cost and current replacement value. Since restructuring in November 2002, the Company has acquired Group Telecom, the telecom assets of Dynegy, a majority of the assets of Touch America (formerly Montana Power), and Corban Communications. In November 2004, 360networks completed the sale of its Canadian operations (including Group Telecom) to Bell Canada and retired all of its debt. The Company is currently undertaking a self-tender for its common stock. The Company negotiated a comprehensive transaction with Level 3 that included terminating its IRU liability and transferring selected customer contracts including a multi-year supply agreement with T-Systems, Inc. 360networks acquired the majority of its long-haul assets in 2002 when it purchased Dynegy's US telecom assets. "We're very pleased to have executed this transaction," said Kevin O'Hara, Level 3's president and chief operating officer. "The assets we are acquiring, including the carrier contract, will further expand and enhance our long-haul transport business." "360networks informed us that they were seeking to phase out their nationwide long-haul network services business in the U.S.," said Sunit Patel, Level 3's chief financial officer. "As such, they no longer had a compelling reason to maintain their dark fiber agreement with Level 3. We believe this negotiated agreement with 360networks, through which Level 3 acquires the business and an important customer contract, is in the mutual best interest of all parties." About Level 3 Communications Level 3 (Nasdaq: LVLT) is an international communications and information services company. The company operates one of the largest Internet backbones in the world, is one of the largest providers of wholesale dial-up service to ISPs in North America and is the primary provider of Internet connectivity for millions of broadband subscribers, through its cable and DSL partners. The company offers a wide range of communications services over its 23,000-mile broadband fiber optic network including Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, and patented softswitch managed modem and voice services. Its Web address is http://www.Level3.com The company offers information services through its subsidiaries, Software Spectrum and (i)Structure. For additional information, visit their respective Web sites at http://www.softwarespectrum.comand http://www.i-structure.com Headquartered in Vancouver, British Columbia, 360networks, Inc. -- http://www.360.net/-- is a leading independent provider of fiber optic communications network products and services worldwide. The Company and its 22 debtor-affiliates filed for chapter 11 protection on June 28, 2001 (Bankr. S.D.N.Y. Case No. 01-13721), obtained confirmation of a plan on October 1, 2002, and emerged from chapter 11 on November 12, 2002. Alan J. Lipkin, Esq., and Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, represent the Company before the Bankruptcy Court. When the Debtors filed for protection from its creditors, they listed $6,326,000,000 in assets and $3,597,000,000 in liabilities. (360 Bankruptcy News, Issue No. 82; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADB SYSTEMS: Balance Sheet Upside-Down by CDN$1.009M at Dec. 31 --------------------------------------------------------------- ADB Systems International Ltd. (TSX: ADY; OTCBB: ADBYF) disclosed its interim financial results for the fourth quarter ended December 31, 2004. ADB reported revenues of CDN$1.53 million for the quarter, an increase of more than 70 percent when compared to the CDN$886,000 generated in the third quarter of 2004. In the fourth quarter of 2003, ADB generated revenues of CDN$1.49 million. Total revenues for 2004 were CDN$4.93 million. Total revenues for 2003 were CDN$5.85 million. Revenues were comprised of software license sales, service fees for software development and implementation, application hosting, maintenance, support and training, and transaction fees from on-line activities performed for customers. "Consistent with our previous guidance, we increased our revenues by 70 percent over Q3 results, which we believe now puts ADB back on track," said Jeff Lymburner, CEO of ADB Systems International Ltd. "Based on recent customer activities, ongoing cost- containment activities and the seasonal influx of customer support fees of approximately CDN$850,000, we are reconfirming our guidance that we expect to generate positive cash flow from operations of at least CDN$500,000 in Q1 of 2005 as stated previously." ADB recorded a net loss for the period of CDN$773,000 or $0.01 per basic share. This compares to a net loss of CDN$1.52 million or $0.02 per basic share in Q3 and a net loss of CDN$994,000 in Q4 of 2003 or $0.02 per basic share. As at December 31, 2004, ADB held cash and marketable securities of $453,000. Since the close of the quarter, ADB announced that it raised $575,000 through a private placement with Pinetree Capital and a group of affiliated investors. Operating Highlights In addition to its financial performance, the Company achieved a number of operating achievements in the quarter: -- ADB expanded its working relationships with a number of customers, including the Healthcare Purchasing Consortium who is using ADB's technology for a major on-line purchasing initiative. -- The Company raised $1.5 million through a number of funding arrangements, including a private placement and the issuance of convertible notes to a group of private investors. -- ADB relocated its corporate headquarters to Toronto, enabling the Company to reduce its operational expenses by more than $100,000 annually. ADB Systems International Ltd. Consolidated Balance Sheets (expressed in thousands of Canadian dollars) (Canadian GAAP, Unaudited) ------------------------------------------------------------------------ December 31 December 31 December 31 ------------------------------------- 2004 2004 2003 -------------------------------------- (unaudited) (unaudited) (audited) (in US$) translated into US$ at Cdn$ 1.2034 for convenience Cash $ 440 $ 366 $ 432 Marketable securities 13 11 13 Other current assets 1,743 1,448 1,502 Other assets 297 247 1,264 ------------------------------------- Total assets $ 2,493 $ 2,072 $ 3,211 ------------------------------------- ------------------------------------- Current liabilities $ 1,680 $ 1,396 $ 1,370 Deferred revenue 135 112 91 Other liabilities 1,684 1,400 721 Minority interest 3 2 3 Total shareholders' equity (deficiency) (1,009) (838) 1,026 ------------------------------------- Total liabilities and shareholders' equity (deficiency) $ 2,493 $ 2,072 $ 3,211 ------------------------------------- ------------------------------------- ADB Systems International Ltd. Consolidated Statements of Operations (expressed in thousands of Canadian dollars, except per share amounts) (Canadian GAAP, Unaudited) -------------------------- ------------------------- Three Months Ended Year Ended -------------------------- ------------------------- December 31 December 31 -------------------------- ------------------------- 2004 2004 2003 2004 2004 2003 -------------------------- ------------------------- translated translated into US$ at into US$ at Cdn$ 1.2034 Cdn$ 1.2034 for for convenience convenience Revenue $ 1,529 $ 1,271 $ 1,493 $ 4,930 $ 4,097 $ 5,853 -------------------------- ------------------------- General and administrative 1,020 848 1,083 4,365 3,627 4,648 Software development and technology expense 880 731 727 3,257 2,706 2,817 Sales and marketing costs 149 124 192 749 622 1,098 -------------------------- ------------------------- 2,049 1,703 2,002 8,371 6,955 8,563 -------------------------- ------------------------- Loss before interest, taxes, depreciation, amortization and employee stock options (520) (432) (509) (3,441) (2,858) (2,710) -------------------------- ------------------------- Employee stock options - - 60 39 32 193 Depreciation and amortization 94 78 376 1,190 989 1,901 Interest expense 162 135 51 439 365 289 Interest income (3) (2) (2) (6) (5) (9) -------------------------- ------------------------- 253 211 485 1,662 1,381 2,374 -------------------------- ------------------------- Loss before the undernoted (773) (643) (994) (5,103) (4,239) (5,084) -------------------------- ------------------------- Gains/(losses) on disposals of capital assets and strategic investments - - - (1) (1) 7 Gain on settlement of demand loan - - - - - 2,195 Retail activities - - - - - 67 -------------------------- ------------------------- - - - (1) (1) 2,269 -------------------------- ------------------------- -------------------------- ------------------------- Net Loss $ (773) $ (643) $ (994) $(5,104) $(4,240) $(2,815) -------------------------- ------------------------- -------------------------- ------------------------- Basic and diluted loss per share $ (0.01) $ (0.01) $ (0.02) $ (0.08) $ (0.07) (0.05) -------------------------- ------------------------- -------------------------- ------------------------- Weighted average common shares 64,417 64,417 58,546 61,938 61,938 54,324 -------------------------- ------------------------- ADB Systems International delivers asset lifecycle management solutions that help organizations source, manage and sell assets for maximum value. ADB works with a growing number of customers and partners in a variety of sectors including oil and gas, government, healthcare, manufacturing and financial services. Current customers include BP, GE Commercial Equipment Financing, Halliburton Energy Resources, the National Health Service, permanent TSB, Talisman Energy, and Vesta Insurance. Through its wholly owned subsidiary, ADB Systems USA, Inc., ADB owns a 50 percent interest in GE Asset Manager, a joint business venture with GE. ADB has offices in Toronto (Canada), Stavanger (Norway), Tampa (U.S.), Dublin (Ireland), and London (U.K.). The company's shares trade on both the Toronto Stock Exchange (TSX: ADY) and the OTC Bulletin Board (OTCBB: ADBYF). As of December 31, 2004, ADB Systems International posted a CDN$1,009,000 equity deficit compared to a $1,026,000 positive equity at December 31, 2003. AEG INC.: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: AEG, Inc. dba Austin Discount Lighting 9160-D Research Blvd Austin, TX 78758 Bankruptcy Case No.: 05-11470 Chapter 11 Petition Date: March 21, 2005 Court: Western District of Texas (Austin) Judge: Bankruptcy Judge Frank R. Monroe Debtor's Counsel: John W. Alvis Alvis & Carssow 5766 Balcones Drive Suite 201 Austin, Texas 78731 (Travis & Williamson Cos.) Tel: 512-453-7290 Fax: 512-302-0625 Estimated Assets: $500,000 to $1,000,000 Estimated Debts: $1,000,000 to $10,000,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sea Gull Lighting Trade $315,939 301 W Washington debt/judgment Riverside, NJ 08075 Quorum International Trade debt $309,237 201 Railhead Road Fort Worth, TX 76106 Darrell Brown Murray Feiss Import Trade debt $141,981 125 Rose Feiss Blvd Bronx, NY 10454 Jeff Greene Concord Fans Trade debt $130,000 250 Benjamin Drive Corona, CA 92879-6508 Monte Carlo Fans Trade $97,046 301 W Washington debt/judgment Riverside, NJ 08075 Litex Industries Trade debt $59,418 P O Box 535639 Grand Prairie, TX 75053 Kamary Investments, Ltd. Rent $47,000 811 E. Calton Rd. Laredo, TX 78041 Designers Fountain Trade debt $45,519 20101 S Santa Fe Ave Rancho Dominguez, CA 90221 American Express Bus Fin Equipment lease $38,500 c/o Roup & liability Associates 23101 Lake Center Dr #310 Lake Forest, CA 92630 Savoy House Trade debt $38,000 P O Box 491750 Lawrenceville, GA 30049 Three G Electric Trade debt $33,732 811 E Carlton Road Laredo, TX 78041 Advanta Bank Corp Revolving $23,319 PO Box 30715 business credit Salt Lake City, UT line 84130-0715 Angelo/Westinghouse Trade debt $22,000 12401 McNulty Road Philadelphia, PA 19154-1099 Thomas Industries Trade debt $20,562 10350 Ormsby Park Pl Ste 601 Louisville, KY 40223 Schonbek Trade debt $17,906 #61 Industrial Blvd West Plattsburgh, NY 12901 Citibusiness Card Revolving $16,781 PO Box 44230 business line of Jacksonville, FL credit 32231-4230 Alfredo Martinez Accounting services $15,350 Martinez & Guarneros PLLC 6423 McPherson #5 Laredo, TX 78041 SATCO Trade Debt $14,500 1202 Post & Paddock Grand Priairie, TX 75050 MBNA Platinum Plus Revolving $11,002 PO Box 15463 credit business line of Wilmington, DE 19850-5463 Citgo Petroleum Corp Trade debt $10,829 PO Box 923928 Norcross, GA 30010-3928 AEROSTAR EXECUTIVE: Case Summary & 15 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Aerostar Executive Aviation dba American Jet San Antonio 477 Sandau, Hangar B San Antonio, TX 78216 Bankruptcy Case No.: 05-51476 Type of Business: The Debtor offers charter services, fleet & contract services, ground transportation and catering services. See: http://www.aerostarexecutive.com/ Chapter 11 Petition Date: March 18, 2005 Court: Western District of Texas (San Antonio) Judge: Bankruptcy Judge Ronald B. King Debtor's Counsel: William B. Kingman Law Offices of William B. Kingman, P.C. 7801 Broadway, Suite 200, Second Floor San Antonio, Texas 78209 (Bexar Co.) Tel: 210-829-1199 Fax: 210-821-1114 Total Assets: $1,873,274 Total Debts: $3,010,649 Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ GE Capital Corporation 2 aircraft $1,331,050 Attn: John McMonagle Value of Security: 44 Old Ridgebury Rd $1,100,000 Sandy Hook, CT 06482 C.P. Schumann, CPA $21,699 2902 Hillcrest San Antonio, TX 78201 American Express-Optima $20,761 P.O. Box 360002 Ft. Lauderdale, FL 33336 Cessna Finance Corp Aircraft (Beec C90, $617,980 Attn: Dale Hannah NI39SC, LJ868) P.O. Box 306 Value of security: Wichita, KS 67201 $600,000 Aviation Brokers of San Antonio $17,155 P.O. Box 692130 San Antonio, TX 78269 Security Air Park $11,089 477 Sandau C3A San Antonio, TX 78216 Citi AAdvantage Business $10,318 P.O. Box 6309 The Lakes, NV 88901 SWBYP $8,257 P.O. Box 630052 Dallas, TX 75263 American Express - Gold $8,251 P.O. Box 650448 Dallas, TX 75265 Quickbooks MasterCARD $7,186 P.O. Box 8013 South Hackensack, NJ 07606 PFCI, Inc. $3,550 710 N. 2nd St., Suite 300N P.O. Box 8913 Saint Louis, MO 63101 Mastercard $800 P.O. Box 569100 Dallas, TX 75356 Multi Service $121 P.O. Box 930747 Kansas City, MO 64193 Bexar County Tax A/C Personal property Unknown P.O. Box 839950 San Antonio, TX 78283 Internal Revenue Service Unknown Special Procedures Staff STOP 5022 AUS 300 E. 8th Street Austin, TX 78701 AFFINIA GROUP: Vehicle Group Closes Montreal Manufacturing Plant ---------------------------------------------------------------- The Affinia Under Vehicle Group intends to close its Montreal manufacturing facility. "As we continue to review our overall service parts business in light of today's market conditions, it is clearly necessary to further reduce our operational costs. In the case of our brake pad business, we find ourselves with more manufacturing locations than we can support. Regrettably, we have decided to close our Montreal manufacturing facility", said John R. Washbish, VP and General Manager of the Affinia Under Vehicle Group. The Montreal manufacturing facility produces stamped brake pad backing plates as well as mixes and molds disc pad sets. The company will examine available alternatives in respect of the stamping of backing plates, while disc brake pad molding will be consolidated into existing remaining manufacturing locations over the next several months, stated Washbish. Affinia will offer employees outplacement support and placement services during the transition according to Joe Lavarra, VP of manufacturing, Affinia Under Vehicle Group. Affinia Group, Inc., is a global supplier of top quality automotive components for under hood and under vehicle applications. The Affinia family of brands includes Wix, Raybestos, Aimco, Spicer, McQuay-Norris, Beck/Arnley, Nakata, Urba and Quinton Hazell. Affinia has operations in 17 countries and over 13,000 people dedicated to keeping the world's wheels turning. * * * As reported in the Troubled Company Reporter on Nov. 11, 2004, Moody's Investors Service assigned initial ratings to the acquisition financing of the Cypress Group's purchase of the Automotive Aftermarket Group from Dana Corporation. The business was renamed Affinia Group Inc. The senior implied rating will be B2, which will also be applied to the $300 million seven-year, senior secured, first lien term loan and the $125 million six-year, first lien revolving credit facility. A Caa1 rating has been assigned to the $300 million senior subordinated notes due in 2014 to reflect their junior status in the capital structure. These ratings have been assigned: * Senior Implied B2 * $125 million first lien revolver B2 * $300 million first lien term loan B2 * $300 million senior subordinated notes Caa1 * Issuer B3 The subordinated notes will be issued in accordance with Rule 144A of the Securities Act. In addition to the above facilities, Affinia will have a $125 million accounts receivable securitization facility committed for five years at the closing of the acquisition. Approximately $100 million is anticipated to be utilized under the securitization facility at the close of the transaction. As reported in the Troubled Company Reporter on Nov. 4, 2004, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Toledo, Ohio-based Affinia Group Inc. At the same time, a 'BB-' senior secured bank loan rating and a '3' recovery rating were assigned to the company's proposed $425 million first-lien secured bank facility, indicating the expectation of a meaningful recovery of principal (50%-80%) in the event of a default. In addition, Standard & Poor's assigned a 'B' rating to the company's $300 million senior subordinated notes, due 2014, to be issued in accordance with SEC Rule 144A with registrations rights. The outlook is stable. AGRIBIOTECH: Former CEO Files for Chapter 11 Protection ------------------------------------------------------- Richard P. Budd, the former chairman and CEO of AgriBioTech, Inc., filed for Chapter 11 bankruptcy protection after the U.S. Bankruptcy Court for the District of Nevada entered a $14.87 million judgment against him in the company's chapter 11 proceedings. ABT Creditor Trustee Anthony Schnelling, the plaintiff in the case, proved that former CEO Budd received a preferential loan repayment of more than $10 million in June 1999, as ABT slid deeper into financial trouble. Mr. Budd was paid in full, but ABT filed for bankruptcy less than a year later, leaving hundreds of farmers in Idaho, Washington and Oregon, as well as other creditors, with more $60 million in unpaid debts. Mr. Budd delivered a chapter 11 petition to the U.S. Bankruptcy Court for the Middle District of North Carolina (Case No. 05- 50625) on March 4, 2005. Mr. Budd estimates that there will be assets available for distribution to his unsecured creditors. Mr. Budd is represented in his personal bankruptcy case by: Walter W. Pitt, Jr., Esq. Bell, David & Pitt, P.A. Post Office Box 21029 Winston-Salem, North Carolina 27120-1029 Telephone (336) 722-3700 ABT was a leading turf grass seed and forage seed supplier before filing for bankruptcy protection in January 2000, in one of the largest agricultural bankruptcies in U.S. history. The Court approved ABT's reorganization plan in 2001, appointing nationally recognized turnaround expert Anthony Schnelling to pursue claims for the benefit of creditors. ALLIED PRINTING: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Allied Printing & Mailing, Inc. P.O. Box 142708 Austin, TX 78714 Bankruptcy Case No.: 05-11407 Type of Business: The Debtor offers complete union printing and direct mail services. Chapter 11 Petition Date: March 18, 2005 Court: Western District of Texas (Austin) Judge: Bankruptcy Judge Frank R. Monroe Debtor's Counsel: Joseph D. Martinec Martinec, Winn, Vickers & McElroy, P.C. 919 Congress Avenue, Suite. 1500 Austin, TX 78701 Tel: (512)476-0750 Fax: (512)476-0753 Estimated Assets: $1,000,000 to $10,000,000 Estimated debts: $500,000 to $10,000,000 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Kelly, Tom $140,000 1322 Lost Creek Blvd. Austin, TX 78746 OK Paper Company $46,050 9715 Burnet Road Ste. 250 Austin, TX 78758 Thompson Supply Inc. $27,729 P.O. Box 15604 Austin, TX 78761 PaperTech $20,850 Wells Fargo Credit card $20,135 Arvco (Rent) $19,906 American Litho $15,657 Wells Fargo Credit Card $13,030 Wells Fargo Credit Card $12,903 Wells Fargo Credit Card $11,980 Pitman $9,466 Print Equip $8,931 Faske Lay & Co. LLP $7,715 Western Paper $6,952 Sam's Club $4,568 J and L Capital Resources $4,500 Bright Truck Leasing $4,339 Post-Edge $4,173 Shell $2,830 Ingersoll $2,145 ALOHA AIRLINES: Secures Court Approval of $65 Million DIP Facility ------------------------------------------------------------------ Aloha Airgroup, Inc. and its principal operating subsidiary, Aloha Airlines, Inc., secured U.S. Bankruptcy Court approval on Thursday evening for $65 million in financing to pay off outstanding loans and supply working capital. Following a continued hearing for the financing, the Court approved an interim financing agreement to provide Aloha with a debtor-in possession (DIP) revolving credit facility of up to $65 million. "This agreement enables Aloha to meet our financial objectives, which includes paying off the ATSB loan and our commercial bank loans, and provides us with the working capital to implement our financial restructuring and go-forward business plan for a quick exit from bankruptcy protection," said David A. Banmiller, Aloha's president and chief executive officer. "With the DIP loan and an anticipated $60 million in annual cost savings, Aloha will be well-positioned to meet its financial obligations and pursue a successful reorganization that benefits its employees, customers and business partners." As reported in the Troubled Company Reporter on Mar, 24, 2005, Ableco Finance LLC and Goldman Sachs Credit Partners LP are the new lenders. Headquartered in Honolulu, Hawaii, Aloha Airgroup, Inc. -- http://www.alohaairlines.com/-- provides air carrier service connecting the five major airports in the State of Hawaii. Aloha Airgroup and its subsidiary Aloha Airlines, Inc., filed for chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., and Simon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevansky represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors it listed more than $50 million in estimated assets and debts. AMERICAN HOMEPATIENT: Dec. 31 Balance Sheet Upside-Down by $20.7M ----------------------------------------------------------------- American HomePatient, Inc. (OTCBB:AHOM) reported net income of $8.2 million and revenues of $84.2 million for the fourth quarter ended December 31, 2004. For the year ended December 31, 2004, the Company reported net income of $13.2 million and revenues of $335.8 million. The Company's revenues of $84.2 million for the fourth quarter of 2004 represent a decrease of $2.7 million, or 3.1%, from the fourth quarter of 2003. The Company's revenues of $335.8 million for the year ended December 31, 2004 represent a decrease of $0.4 million, or 0.1%, from the prior year. Revenues in the current quarter and year were reduced by approximately $1.8 million, or 2.1%, and $7.4 million, or 2.2%, respectively, as a result of an approximate 15.8% reduction in the Medicare reimbursement rates for inhalation drugs effective January 1, 2004. The sale of inhalation drugs comprised approximately 12% of the Company's total revenues for the fourth quarter and twelve months ended December 31, 2004. The Company's net income of $8.2 million for the fourth quarter of 2004 compares to net income of $4.7 million for the fourth quarter of 2003 representing an increase of $3.5 million, or 74%. This improvement is primarily attributable to reduced operating expenses. Operating expenses decreased by approximately $5.5 million in the fourth quarter of 2004 compared to the fourth quarter of 2003 and decreased by approximately $9.9 million for the current year compared to the prior year. These decreases are primarily the result of the Company's initiatives to improve productivity and reduce personnel costs in its operating centers and billing centers. Also contributing to lower operating expenses in 2004 was the closure and consolidation of three of the Company's billing centers in 2004 and the full year impact of the closure and consolidation of eight billing centers in 2003. The Company's net income of $13.2 million for the year ended December 31, 2004 compares to net income of $14.0 million, or $0.74 per share, for the same period of 2003. Net income for the year ended December 31, 2003 excluded approximately $10.0 million in non-default interest expense prior to the Company's emergence from bankruptcy protection on July 1, 2003. Net income for the year ended December 31, 2003 included approximately $4.1 million of reorganization items compared to $0.7 million for the same period of 2004. Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a non-GAAP financial measurement that is calculated as net income excluding interest, taxes, depreciation and amortization. EBITDA for the fourth quarter of 2004 and for the fourth quarter of 2003 was $19.3 million and $15.8 million, respectively. For the fourth quarter of 2004, adjusted EBITDA (calculated as EBITDA excluding reorganization items) was $19.4 million or 23.0% of revenues. For the fourth quarter of 2003, adjusted EBITDA was $16.2 million or 18.6% of revenues. EBITDA for year ended December 31, 2004 and for year ended December 31, 2003 was $58.5 million and $47.1 million, respectively. For the current year, adjusted EBITDA was $59.2 million or 17.6% or revenues. For the prior year, adjusted EBITDA was $51.2 million or 15.2% of revenues. American HomePatient, Inc., is one of the nation's largest home health care providers with 276 centers in 35 states. Its product and service offerings include respiratory services, infusion therapy, parenteral and enteral nutrition, and medical equipment for patients in their home. American HomePatient, Inc.'s common stock is currently traded in the over-the-counter market or, on application by broker-dealers, in the NASD's Electronic Bulletin Board under the symbol AHOM or AHOM.OB. At Dec. 31, 2004, American HomePatient's balance sheet showed a $20,729,000 stockholders' deficit, compared to a $34,249,000 deficit at Dec. 31, 2003. AMES DEPARTMENT: Employs Deloitte Tax as Tax Advisors ----------------------------------------------------- Ames Department Stores sought and obtained the U.S. Bankruptcy Court for the Southern District of New York's authority to employ Deloitte Tax LLP to provide certain tax services in their Chapter 11 cases, effective August 22, 2004. Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that on May 10, 2002, the Debtors employed Deloitte & Touche LLP to provide: (a) tax compliance and reporting services; (b) services in connection with the Internal Revenue Service's audit of the Debtors' refund claim related to Section 382 of the Internal Revenue Code for certain of the Debtors' subsidiaries for the fiscal years ended January 28, 1995, and February 3, 1996; and (c) preparation of the Debtors' tax returns and other tax services. To align its organizational structure, Deloitte & Touche recently reorganized some of its business units, including the business unit providing tax services to its clients. Starting August 22, 2004, Deloitte Tax began providing tax services to Deloitte & Touche's clients, including the Debtors. While the Debtors' Tax Services engagement team has remained largely unchanged, certain members of the team have become personnel of Deloitte Tax as a result of the reorganization. The Debtors will retain the same terms and conditions they set with Deloitte & Touche, with the exception of certain fee provisions. Based on a decrease in the amount of tax services required at these stages of their Chapter 11 cases, the Debtors will reduce Deloitte Tax's fees: (a) Tax compliance services performed from August 1, 2004, through January 31, 2005, will be compensated at a fixed rate of $2,000 per month; (b) Tax return services pertaining to the preparation of the Debtors' income tax returns for the fiscal year ended January 30, 2005, will be provided by Deloitte Tax at a flat rate of $200 per hour; and (c) All tax compliance services performed for the period February 1 to June 31, 2005, will be provided at a flat rate of $200 per hour. However, the Tax Compliance Services performed for the Debtors in connection with the establishment of a liquidating trust, as contemplated in the Debtors' proposed Chapter 11 Plan dated December 6, 2004, will be provided at a flat rate of $300 per hour. The terms of Deloitte Tax's expense reimbursement will remain unchanged. Deloitte Tax will continue to maintain reasonably detailed records of any costs and expenses incurred. The Debtors believe the Deloitte Tax's services are necessary for them to carry out their statutory duties under Section 960 of the Judicial Procedures Code. John N. Evans, a member of Deloitte Tax, tells the Court that the firm's connections with the Debtors are no different than Deloitte & Touche's connections with the Debtors. Mr. Evans attests that the partners, principals, directors, and employees of the firm who have been providing or are anticipated to provide the Tax Services do not: (i) hold or represent any interest adverse to the Debtors or their estates; and (ii) have any connection with the Debtors, their professionals, their creditors, or any other party-in-interest. Mr. Evans assures the Court that Deloitte Tax is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code. Ames Department Stores filed for chapter 11 protection on August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARTHUR D. LITTLE: Settles Fraudulent Billing Claims for $6.5 Mil. ----------------------------------------------------------------- ARTHUR D. LITTLE, now known in its Chapter 11 proceedings as Dehon, Inc., has agreed to allow the United States' claim for $6.5 million to resolve civil claims arising out of ARTHUR D. LITTLE's fraudulent billings to the United States by inflating its indirect costs and overhead charges on various government contracts. United States Attorney Michael J. Sullivan says the settlement agreement was approved by a U.S. Bankruptcy Judge on March 15, 2005. In its civil claim, the United States alleged that ADL caused false and inflated claims to be submitted to the United States pursuant to its government contracts by using a rate based upon ADL's higher overhead and costs for its commercial lines of work, as compared to its government work. ADL's domestic business focused primarily on two distinct types of activities: high level management consulting for commercial clients almost exclusively, and research, development, and scientific testing activities for either commercial clients or government agencies. Much of the work performed for the government was performed pursuant to government contracts which compensated ADL on a "cost-plus fixed fee" basis, i.e., ADL was paid for its costs in performing the contract plus an agreed upon fee. Pursuant to the terms of such contracts and Federal Regulations, ADL was only permitted to charge the government for its costs expended in carrying out the government contracts, including any indirect costs such as overhead that was properly and reasonably allocable to such contracts. ADL in fact charged the United States for costs it incurred in performing its commercial work, and which were not reasonably allocable to the government contracts. ADL reported inflated indirect and overhead charges to the government by incorrectly pooling its government and commercial costs for government charging purposes. Federal regulations and applicable accounting standards require that government contractors segregate their indirect and overhead costs when they are not the same for government and other work. Federal law prohibits a contractor from charging the government for costs that solely benefit the contractor's commercial business. Thus it is improper to charge the government either directly or indirectly for costs that are specifically identified with commercial cost objectives, as ADL did here. The settlement was negotiated by Assistant U.S. Attorney Sara Miron Bloom in Sullivan's Civil Division and was investigated by the Defense Criminal Investigative Service, the Environmental Protection Agency's Office of Inspector General, the Department of Transportation's Office of Inspector General, the U.S. Army Criminal Investigative Demand and the Federal Bureau of Investigation, with the assistance of the Defense Contract Auditing Agency. Arthur D. Little, nka Dehon, Inc. -- http://www.adl.com/-- the world's first management and technology consulting firm, works at the interface of business and the technologies that drive innovation and growth. Drawing on its unique blend of knowledge and hands-on experience with a broad range of industries worldwide, the firm collaborates with its clients to achieve breakthroughs in practices, products, and processes that lead to dramatic growth and the creation of new value. Company milestones include the invention and commercialization of fiberglass, the patent for the first synthetic penicillin, the design and development of key experiments for NASA's first mission to the moon, and the creation of a non-toxic, non-hazardous decontaminant foam that neutralizes chemical and biological warfare agents. Arthur D. Little has more than 2,000 employees in 30 countries worldwide. Arthur D. Little, Inc., and its debtor-affiliates filed for chapter 11 protection on Feb. 5, 2002 (Bankr. D. Del. Case No. 02-10348), reporting assets and liabilities between $50 million and $100 million. David M. Fournier, Esq., at Pepper Hamilton LLP, and Daniel M. Glosband, Esq., represent the Debtors. ATA AIRLINES: Court OKs Chicago Xpress Key Employee Retention Plan ------------------------------------------------------------------ ATA Airlines and its debtor-affiliates sought and obtained the U.S. Bankruptcy Court for the Southern District of Indiana's authority to implement a key employee retention plan for certain employees of Chicago Express Airlines, Inc. Terry E. Hall, Esq., at Baker & Daniels, in Indianapolis, Indiana, relates that the Debtors have identified certain Chicago Express employees that they believe are necessary to: -- preserve the going concern value, specifically the effectiveness of the Air Carrier Certificate and Fitness Authority to a possible buyer of the Chicago Express business approved by the Federal Aviation Authority; and -- effect an orderly close of the business affairs of Chicago Express after a sale; and -- wind down Chicago Express' business affairs so as to maximize return to creditors. The currently scheduled termination dates for Chicago Express' key employees is April 3, 2005. Without immediate action to offer incentives to the Key Employees to remain with Chicago Express, Ms. Hall points out that the employees may accept other employment offers and may result in significant loss of value to the Debtors' estates and their creditors. Pursuant to the Retention Plan, each Key Employee that accepts the offer to remain employed through that Employee's identified termination date, and remains so employed, will receive Retention Incentive Payments payable in full at the conclusion of the last day of employment. The Key Employee will be required to execute and deliver a waiver and release. Any Key Employee terminated for cause during the Retention Period will not earn the Retention Payment. If a Sale is effected and the services of the Employee are no longer necessary to the estates under the terms of the Sale, that Employee may be terminated on two weeks' written notice and the Retention Payment will be paid on the noticed date of termination. If any Employee leaves voluntarily prior to the identified termination date without receiving a notice of termination, that Employee will not be entitled to receive the Retention Payment. The maximum cost to the estates for the Retention Plan is $214,142. The Chicago Express employees that the Debtors want to retain include: * The President of Chicago Express; * The Director of Safety; * The Director of Operations; * The Director of Maintenance; * The Chief Pilot; * The Chief Inspector; * Certain Administrative Employees to effect an orderly transfer and wind down of accounting and other business functions like payroll, accounts payable, insurance, contract termination, and record keeping; and * Certain Employees to manage the closure of passenger and aircraft maintenance stations and to liquidate rotable and expendable inventories not transferred under a Sale Ms. Hall asserts that each of the Employees identified is necessary to effect the best return of value to creditors from the disposition of Chicago Express. The Debtors have set termination dates for each Employee based on the minimum duration needed to maximize value, and have determined Retention Payments consistent with the minimum necessary to encourage continued employment. The Debtors will not disclose the identity of the Key Employees and their retention payments and further details of the Retention Plan to the public. The Debtors will provide copies of the Retention Plan to the U.S. Trustee, counsels for Southwest Airlines Co., the DIP lender, the Official Committee of Unsecured Creditors and the ATSB, or to other parties, subject to confidentiality restrictions. Ms. Hall explains that full disclosure of the Retention Plan would be detrimental to the morale of the Debtors' employees, not all of which were considered in the Retention Plan. 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 Nos. 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. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Malek Proposes Chicago Express Sale as Going Concern ------------------------------------------------------------------ Kenneth J. Malek, the Court-appointed Examiner, performed an examination on issues involving Chicago Express Airlines, Inc.: (a) The facts and circumstances that may be relevant to a judicial determination of the enforceability or avoidability of any guarantees provided by Chicago Express with respect to pre- and post-petition obligations of Debtors ATA Holdings Corp. or ATA Airlines, Inc., including the nature and value of consideration provided to Chicago Express in connection with the guarantees; (b) The basis and validity or invalidity of the approximately $16.8 million intercompany claim listed in the Non-CEA Debtors' schedules as a payable to Chicago Express from ATA Airlines as well as any postpetition intercompany claims between Chicago Express and the non-CEA Debtors; and (c) Whether it is in the best interest of Chicago Express to be sold as a going concern, as opposed to being liquidated, considering, among other factors, the resources available to Chicago Express. Mr. Malek submitted a written report on his factual findings to the United States Bankruptcy Court for the Southern District of Indiana on March 18, 2005. Guarantees Had ATA Airlines, Inc.'s management permitted, Mr. Malek believes that Chicago Express could have established a code-share arrangement in addition to or in replacement of that which it had with ATA Airlines. Whether the existence of that possibility would be sufficient to cause the upstream guarantees by Chicago Express to fail the reasonably equivalent value test, the Examiner says, is a complex legal and factual issue, which costs and time necessary for its resolution are inconsistent with the value and time sensitivities of Chicago Express' bankruptcy estate. Mr. Malek tells the Court that, if a purchaser wishes to purchase stock and have the case against Chicago Express dismissed, so that the purchaser would be buying the stock in a manner that the purchaser would assume the risk of either negotiating with the holders of the guaranteed debt or of prevailing in any legal contest of the issue, that should not be of concern to the Debtors and their counsel, so long as the purchaser would be paying at least the liquidation value of Chicago Express in cash equivalent value. The Examiner believes that, so long as a highest bidder will be providing cash equivalent value at least equal to the liquidation value, the best interest of creditors test can be met with respect to that bidder. The Examiner notes that his budget has not allowed him to study the traffic and revenue levels of ATA Airlines' and Chicago Express' routes, so as to determine when bankruptcy became imminent. Intercompany Claims Pursuant to the Debtors' financial statements, Chicago Express has intercompany account receivables from ATA Airlines from January 1, 2002, through January 31, 2005: Jan. 1, 2002 to Nov. 1, 2004 to Oct. 31, 2004 Jan. 31, 2005 ----------------- ---------------- Opening balance ($19,928,000) $0 Intercompany revenues booked, based on fixed departure fees 210,898,000 16,567,000 Cash funding for payroll and other payables (129,136,000) (10,627,000) Lease and sublease costs for Chicago Express' aircraft (17,379,000) (1,638,000) Other (26,628,000) (7,018,000) --------------- --------------- Ending balances $17,827,000 $(2,716,000) =============== =============== Chicago Express owed ATA Holdings an offsetting amount of $1,950,000. ATA Holdings funded Chicago Express' purchase of aircraft engines prior to December 31, 2001. The monthly intercompany revenue allocation from ATA Airlines to Chicago Express for the entire month does not occur until the close of the month, as part of month-end accounting. To estimate the intercompany balance as of the October 26, 2004 Petition Date, Mr. Malek subtracted 5/30th of the net November 2004 activity from the balance as of October 31, 2004. This has the effect of slightly decreasing the postpetition payable by Chicago Express to ATA Airlines and slightly decreasing the prepetition receivable by Chicago Express from ATA Airlines. The resulting balances are: Prepetition Postpetition ----------- ------------ Chicago Express' amount receivable as of 10/31/04 from ATA Airlines $17,827,000 ($2,716,000) Reclassification of five Days' activity (235,000) 235,000 Chicago Express' amount payable as of 10/26/04 to ATA Holdings (1,950,000) 0 ----------- ----------- Chicago Express' net receivables $15,642,000 ($2,481,000) =========== =========== Mr. Malek reports that Chicago Express has a valid prepetition receivable of $15,642,000. On the other hand, Chicago Express owes ATA Airlines a postpetition amount of $2,481,000. Chicago Express' Net Liquidation Value Mr. Malek reviewed Chicago Express' January 31, 2005 Balance Sheet in computing the liquidation value of Chicago Express. For purposes of establishing a cash value floor in a going-concern sale, the Examiner included a $297,422 unrestricted cash balance that Chicago Express has as of January 31, which, the Examiner finds, appears to be a reasonable operating cash balance. Mr. Malek, however, excluded a $17,592,000 prepetition intercompany receivable from ATA Airlines, on the assumption that the purchaser would not acquire the asset. Mr. Malek explains that it is easier to leave the intercompany receivable with the bankruptcy estates so as to fund potential creditor recoveries independent of the risk of business operations of Chicago Express' fleet and other business assets. Mr. Malek advises the Court that the expected proceeds of liquidation of Chicago Express is $992,486, net of all costs and expenses. Estimated Book Estimated Liquidation Value Recovery Proceeds ----- -------- --------- Cash and cash equivalents $297,422 100.00% $297,422 Accounts receivable, net 78,614 100.00% 78,614 Prepetition intercompany receivable 17,592,000 0.00% - Inventories, net 2,097,382 10.00% 209,738 Prepaid items 604,436 0.00% - Deposits and other assets 589,190 0.00% - Property and equipment 6,951,397 10.00% 695,140 Leasehold improvements 875,288 0.00% - Goodwill and going concern value 1,501,466 0.00% - ----------- Book Value Subtotal $30,587,195 Postpetition payable owed to ATA Airlines (2,480,832) ----------- Total Assets Reported as of 1/31/05 $28,106,363 ----------- Estimated Value of Net Liquidation Proceeds $1,280,914 Trustee fee (38,427) Professional fees (250,000) ----------- Estimated Net Liquidation Value $992,486 =========== Chicago Express Should Be Sold As Going Concern Mr. Malek recommends that the parties attempt to sell the Chicago Express operations, if at all practicable, on a going-concern basis under Section 363 of the Bankruptcy Code. Based on all the facts and circumstances of Chicago Express, its Federal Aviation Administration Certificate and its Department of Transportation Fitness Authority, and the possible continuing existence of significant upstream guarantee obligations, the Examiner believes that it is possible to structure the sale of Chicago Express' operations as a going concern, which could provide maximum benefit to creditors. Mr. Malek suggests that the overall architecture of the sale should have these terms: (1) Minimum cash equivalent bid for Chicago Express' assets of $1 million. If no bidder provides this level of consideration in immediate cash equivalent value, then Chicago Express should be liquidated. (2) Bidders negotiate with AMR Leasing and ATA Airlines for interim lease terms to retain the Saab 340B aircraft in regular service while the winning bidder secures commitment from the FAA and DOT that it will be able to retain Chicago Express' FAA Certificate and DOT Authority. (3) Bidders negotiate with the Debtors' bankruptcy counsel a cash collateral arrangement that would allow the winning bidder to fund and receive the benefit of operating Chicago Express' aircraft for the period between March 28 and the time of final closing of the sale. The time of final closing presumably would be on or after the date that the winning bidder would receive approval from the FAA and DOT. (4) The purchase of assets of Chicago Express can take the form of a sale under Section 363(b), so that purchasers take assets essentially free and clear. It may be helpful to also acquire Chicago Express' stock, since the Certificate and Fitness Authority are not per se transferable. However, in view of the potential upstream guarantee liabilities, the assets probably should be cleansed through the Section 363(b) sale mechanism. Once the FAA and DOT approvals are received, it may be possible, subject to advice from legal counsel, to have Chicago Express' Chapter 11 case dismissed. (5) Should a purchaser desire to purchase only stock and leave the assets in corporate solution, then that purchaser would need to address any issues relating to the upstream guarantees. However, so long as that purchaser would be willing to pay at least $1 million cash equivalent value, the fact that the purchaser wants to purchase stock and not assets should not prevent it from becoming the winning bidder. (6) Similarly, so long as a purchaser is willing to pay at least $1 million cash equivalent value that can be used to fund payments to current creditors of Chicago Express, the purchaser should not be disqualified from becoming the winning bidder merely because it has not submitted a business plan to the Debtors' counsel for the Debtors. The FAA and the DOT will do what is necessary to ensure the safety of the flying public, and it is not necessary for the Debtors or their advisors to attempt to replicate any activities of the FAA and DOT in terms of ensuring that potential bidders have capability to operate an airline. (7) The transfer of consideration could be: (a) $1 million or greater cash equivalent value paid by the winning bidder to Chicago Express' bankruptcy estate in a Section 363(b) sale; (b) Chicago Express distributes $1 million or greater and intercompany account receivable to ATA Holdings, to hold on behalf of Chicago Express' creditors; and (c) Chicago Express' stock is sold to the winning bidder, with corporate shell remaining subject to prepetition liabilities. These liabilities would eventually be dealt with under the global ATA Holdings plan of reorganization. The source of payment for these liabilities, absent a substantive consolidation plan, would be principally the $1 million or greater cash equivalent value plus the proceeds from the prepetition intercompany account receivable. 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. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) AUTOCAM CORP: S&P Junks $140 Million Unsecured Senior Sub. Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Autocam Corp. to 'B' from 'B+'. At the same time, Standard & Poor's lowered its rating on Autocam's $166 million senior secured credit facilities to 'B' and its rating on Autocam's $140 million unsecured senior subordinated notes, due 2014, to 'CCC+'. Kentwood, Michigan-based Autocam, a designer and manufacturer of high-volume, precision-machined specialty metal alloy components for high-technology automotive applications, had $289 million of total balance sheet debt at Dec. 31, 2004. The outlook is negative. "The rating actions reflect Standard & Poor's view that Autocam's aggressive leverage and marginal credit measures, which are weak relative to expectations, increases the company's vulnerability to negative surprises in the currently unstable industry environment for automotive suppliers," said Standard & Poor's credit analyst Nancy Messer. Autocam plans to seek an amendment to its senior secured credit facility, relaxing financial covenants, reducing near-term amortization payments, and enabling the company to raise incremental term loans to reduce revolving credit facility borrowings. Although these measures somewhat improve the company's liquidity position, covenants remain tight through 2005. Debt levels at year-end 2004 are higher than expected by about $37 million, because of various factors including the weak U.S. dollar relative to the euro, EBITDA weakness, a small acquisition, increased working capital requirements, and incremental capital spending to support new business wins. Manufacturing inefficiencies in the European operations and high steel costs impaired the generation of free cash flow. Revenue pressures have continued in 2005 with recently announced original equipment manufacturer (OEM) production volume cuts, in both the U.S. and Europe, continuing high material costs, and persistent pricing pressures. The ratings on Autocam reflect the company's very aggressive leverage and well-below-average business profile. High financial risk results from the company's very aggressive leverage and weak cash flow protection. The company's lack of meaningful near-term free cash flow generation constrains improvement to the capital structure through debt reduction. These risks are mitigated by the company's solid position in the markets it serves and focus on markets having growth potential. In the automotive sector (97% of sales), specifically, Autocam produces highly-engineered components for power-steering systems, fuel injectors, electric motors, airbags, and brakes. The privately held company is controlled by its owners, GS Capital Partners 2000 LP, Transportation Resource Partners LP, and Autocam's president, John Kennedy. Standard & Poor's expects that Autocam's balance sheet will remain highly leveraged and credit protection measures will remain weak for the next two years. The company should benefit in the intermediate term from ongoing restructuring of its European operations and new business wins. However, negative near-term industry fundamentals are expected to constrain meaningful improvement in cash flow generation and the company's financial profile before 2007. The ratings could be lowered if market conditions worsen or Autocam's liquidity position deteriorates. BALL CORPORATION: Moody's Upgrades $1.85 Billion Debt Ratings ------------------------------------------------------------- Moody's Investors Service upgraded the ratings for Ball Corporation, which previously had a positive ratings outlook, reflecting the company's strong performance and sound financial metrics exhibited and sustained since the closing of its largest acquisition to date of Schmalbach-Lubecca for approximately $900 million in December 2002. The upgrades express the expectation of further incremental improvements in Ball's consolidated results likely being fueled by efficiency gains, moderately sized business combinations that are accretive to cash flow, and steady yet modest volume gains. The ratings also reflect the steady improvement in profitability metrics as consolidated EBIT margins have improved to roughly 10% by fiscal year end December 31, 2004, which is good relative to its rated peers. Coverage of interest expense also strengthened during the period with EBITDA less capital expenditures coverage at over 5 times. While recognizing the benefits of Ball's scale, business, and geographic diversification, rising metal and resin costs with challenges passing those increases through to customers without material lag time (specifically concerning in the North American Metal Food business which is close to 15% of consolidated revenue) limit the ratings. Also constraining the ratings is Ball's heavy concentration in one substrate, metal (aluminum and steel), which accounts for roughly 80% of top and bottom line financial contribution. Moreover after giving consideration to the sizable amount of expected cash dividends and discretionary share repurchases anticipated throughout the intermediate term plus any modest funding of pensions liabilities, Ball's retained cash flow (after working capital changes, capital expenditures, and dividends) relative to total funded debt (including outstanding securitizations) is likely to be low for the ratings categories at roughly 10% on a run-rate basis before share repurchases. Moody's upgraded these ratings: * approximately $1 billion senior secured multi currency credit facility to Ba1 from Ba2 * $550 million guaranteed senior unsecured 6.875% notes, due 2012, to Ba2 from Ba3 * $300 million guaranteed senior unsecured 7.75% notes, due 2006, to Ba2 from Ba3 * Senior implied rating to Ba1 from Ba2 * Senior unsecured issuer rating (non-guaranteed exposure at Ball, a holding company) affirmed at Ba3 The ratings outlook is stable. In Moody's opinion, Ball's liquidity profile is expected to remain very good as cash flow generated by operations should finance working capital and non-extraordinary capital expenditures throughout the near term. Average cash on hand, expected to be consistent with 2004 at roughly $190 million, plus approximately $400 million of average effective availability under the committed $450 combined revolvers should be ample to satisfy mandatory approximately $80 million of debt maturities during 2005. Additional liquidity is provided by availability under the $200 million receivables securitization program (approximately $25 million available at the fiscal year ended December 31, 2004). The bond maturity in 2006 is not expected to present a credit concern. The absence of encumbrance for the majority of Ball's assets provides alternate liquidity from the potential sale of certain of its discrete businesses without material erosion in enterprise value. The stable ratings outlook reflects tolerance for moderate fluctuations in credit statistics before triggering a change in the outlook. The ratings outlook could be revised to positive during the near term should Ball's performance on a segment basis exceed expectations while its growth strategy is executed (mainly organic, but some opportunistic purchases likely) without resulting in overly aggressive financial policies, and the prospects for its industry fundamentals are good. Absent event risk, to date there is no foreseen expectation of the outlook moving to negative. However, material and sustained reduction in retained cash flow as a percentage of total funded debt to below 10% could result in downward pressure. Additionally, the continuation of large cash stock repurchases (the company publicly announced approximately $150 million for fiscal 2005) could further strain cash flow available for debt service and potentially cause a negative change in the ratings. Ball's approximately $1 billion credit facility (secured by stock pledges) is rated Ba1, which is at the senior implied rating, as it represents the preponderance of total debt at roughly 60% and there are obligations with secured claims on assets in the capital structure (e.g. a relatively modest amount of capital leases and receivables securitizations). The Ba2 rating for the senior unsecured notes reflects effective subordination to the sizable amount of secured debt in the capital structure and gives consideration to the significant amount of trade payables, accrued expenses, and underfunded pension liabilities (the latter contains a substantial amount of German pension liabilities, which are by law "pay as you go"). Headquartered in Broomfield, Colorado, Ball Corporation, a holding company, through its subsidiaries is a manufacturer of metal and plastic packaging, primarily for beverages and foods, and a supplier of aerospace and other technologies and services to commercial and government customers. Revenue for the last twelve months ended December 31, 2004 was approximately $5.4 billion. BALLY TOTAL: Hires Turnaround Expert Carl J. Landeck as New CFO --------------------------------------------------------------- Bally Total Fitness Holding Corporation (NYSE: BFT), North America's leader in health and fitness products and services, appointed finance veteran Carl Landeck as its new Chief Financial Officer, effective March 28, 2005. "The hiring of a new CFO is an important step in restoring investor confidence in Bally's financial statements," said Paul Toback, Chairman and Chief Executive Officer of Bally Total Fitness. "I have every confidence that Carl will be an excellent addition to the executive team, as he brings a wealth of management and financial turnaround experience and possesses the leadership skills necessary to help us chart our future on a sound financial basis." Mr. Landeck, a Certified Public Accountant, has served as the CFO of both publicly traded and privately held companies over the past ten years and in various senior financial roles spanning nearly two decades. Throughout his career, Mr. Landeck has demonstrated an ability to restore credibility and integrity to accounting and finance functions at companies where there have been inherited deficiencies. He also brings a strong reputation for integrity and accomplishment within the banking and lending communities. Comes to Bally from Levitz He most recently served as Chief Financial and Administrative Officer at Levitz Home Furnishings, Inc., one of the nation's largest home furnishings retailers and parent company to both Levitz and Seaman Furniture. At Levitz Home Furnishings, Mr. Landeck was instrumental in developing and ensuring the financial integrity of the business, establishing an effective control environment and building the organizational infrastructure necessary to efficiently and effectively support the revitalization of the company's operations. Before joining Levitz Home Furnishings, Mr. Landeck served as Chief Financial Officer of Cablevision Electronics Investments, a wholly owned subsidiary of Cablevision Systems Corporation (NYSE: CVC), where he focused on the company's successful acquisition and re-positioning of assets from Nobody Beats the Wiz, one of the largest regional retailers of consumer electronics goods during the 1990's. He was previously Vice President of Finance and Chief Accounting & Financial Officer at Herman's Sporting Goods, Incorporated. Mr. Landeck's diverse experience also includes implementing restructuring plans and extensive development of financial technology. Commenting on his new roles and responsibilities, Carl Landeck said, "I'm very impressed with the actions this new management team is taking in executing the turnaround plan for Bally. I appreciate Paul's confidence in me and look forward to helping him restore credibility and financial integrity to the business. I'm excited to join them at this important time as we work together to maximize the Company's full potential." Mr. Landeck replaces Bill Fanelli who has served as acting CFO since April 2004. Mr. Fanelli will transition to the newly created position of Senior Vice President of Planning and Development where he will leverage his more than twelve years of experience at Bally in overseeing critical areas of the business, including strategic business planning, information technology, real estate, construction and franchising. About Bally Total Fitness Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Feb. 15, 2005, Standard & Poor's Rating Services lowered its ratings on Bally Total Fitness Holding Corporation, including lowering the corporate credit rating to 'CCC+' from 'B-'. At the same time, Standard & Poor's changed its outlook on the ratings to negative from developing. Total debt outstanding at Sept. 30, 2004, was $747.7 million. "The rating actions are based on the potential for further delays in the filing of financial statements and on related uncertainties, in light of Bally's Audit Committee's recent findings," said Standard & Poor's credit analyst Andy Liu. BALLY TOTAL: Names Katherine Abbott as New V.P. & Treasurer ----------------------------------------------------------- Bally Total Fitness Holding Corporation (NYSE:BFT) appointed Katherine L. Abbott to the position of Vice President and Treasurer, effective immediately. "Kathy's financial and operational expertise, and previous treasury experience make her a great asset to Bally's revamped Finance Department," said Paul Toback, Chief Executive Officer of Bally. "We are pleased to have Kathy as Treasurer and look forward to her playing a significant role in the Company's continued turnaround efforts." In her new position, Ms. Abbott will report to Chief Financial Officer Carl Landeck and have direct responsibility for Bally Total Fitness's treasury operations. She will also oversee the company's investor relations. Comes to Bally From J.P. Morgan and Budget Group Prior to joining Bally Total Fitness, Ms. Abbott was a Vice President of the Restructuring Group for J.P. Morgan Securities, Inc. She previously served as Vice President and Treasurer for Budget Group Inc., a global car and truck rental company with revenues of over $2 billion. Ms. Abbott has also served in key positions at Credit Agricole Indosuez and the Container Corporation of America, where she served as the company's assistant treasurer. She holds a B.S. degree in Business from Indiana University and an M.B.A. from the University of Chicago. About Bally Total Fitness Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Feb. 15, 2005, Standard & Poor's Rating Services lowered its ratings on Bally Total Fitness Holding Corporation, including lowering the corporate credit rating to 'CCC+' from 'B-'. At the same time, Standard & Poor's changed its outlook on the ratings to negative from developing. Total debt outstanding at Sept. 30, 2004, was $747.7 million. "The rating actions are based on the potential for further delays in the filing of financial statements and on related uncertainties, in light of Bally's Audit Committee's recent findings," said Standard & Poor's credit analyst Andy Liu. BELLAIRE GENERAL: Files Schedules of Assets & Liabilities in Texas ------------------------------------------------------------------ Bellaire General Hospital, L.P., filed its Schedules of Assets and Liabilities with the U.S. Bankruptcy Court for the Southern District of Texas, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $ 4,385,090 B. Personal Property 6,448,466 C. Property Claimed as Exempt D. Creditors Holding $13,064,432 Secured Claims E. Creditors Holding 863,796 Unsecured Priority Claims F. Creditors Holding 5,789,235 Unsecured Nonpriority Claims ----------- ----------- Total $10,833,556 $19,717,464 Headquartered in Houston, Texas, Bellaire General Hospital, L.P. -- http://www.bellairemedicalcenter.com/-- operates a hospital. The Company filed for chapter 11 protection on January 3, 2005 (Bankr. D. Tex. Case No. 05-30089). Daniel F. Patchin, Esq., at McClain, Leppert & Maney, P.C. represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. BETHLEHEM STEEL: Update on Adversary Cases v. 3,180 Creditors ------------------------------------------------------------- As reported in the Troubled Company Reporter on June 4, 2004, within 90 days before its bankruptcy petition date, Bethlehem Steel Corporation and its debtor-affiliates made certain transfers to or for the benefit of 3,180 creditors. The 47-largest of the 3,180 creditors are: Creditor Amount -------- ------ Atlantska Plovidba $192,479 Brad Foote Gear Works, Inc. 52,672 Brandes Broker Limited 1,313,339 Chicago Flame Hardening Co. 12,122 Interamerican Zinc, Inc. 106,255 Maryland Clean Water Fund 12,500 Matlack, Inc. 16,791 MFV, Ltd. 13,697 Microbac Laboratories, Inc. 21,446 Mictec, Inc. 11,010 Mineracoes Brasileiras Reunidas SA 13,419 Penn Detroit Diesel Allison 32,495 Paling Transporter, Ltd. 9,090 Porter Wright Morris & Arthur, LLP 55,822 Rictou International 10,000 Signode Coilmaster 10,388 Simplex Time Recorder Co. 48,852 Southeastern Metal Processing 19,845 St Lawrence 99,235 Standard Steel - FFC 17,220 State of Maryland - SIF 54,143 Steel Dispatch, Inc. 12,034 Stekel, Inc. 75,309 Swift Transportation Co., Inc. 29,095 Systran Financial Services Corp. 56,317 Steel Transport, Inc. 219,054 STL - Pittsburgh Severn Trent Lab. 127,619 Svedala Industries, Inc. 34,759 Squire Sanders & Dempsey, LLP 113,848 T.C. Graham Associates 417,072 Thermo ARL U.S., LLC 13,131 Tom Peace 19,500 Tradesmen Corporation 35,436 Transportation & Equipment Division 92,785 Transport Carriers, Inc. 56,317 United Air Specialists, Inc. 34,044 United Van Lines, Inc. 23,043 Unimold 30,168 United Bulk Carriers International 480,880 U.S. Bank National Association 1,354 USe Data 33,496 USX Engineers & Consultants, Inc. 12,745 VDA 11,500 Venable Baetjer & Howard, LLP 138,858 Villa Julie College 5,375 Vitalsi 90,825 3D Inspection, Inc. 13,820 Ian J. Gazes, Esq., at Gazes & Associates, LLP, in New York, relates that the transfers were on account of antecedent debts the Debtors owed to or for the benefit of the creditors before the Petition Date. Mr. Gazes relates that the Debtors were insolvent during that time. The Debtors asked the U.S. Bankruptcy Court for the Southern District of New York for a judgment: (1) pursuant to Section 547(b), avoiding the Avoidable Transfers; (2) pursuant to Section 550(a), directing the creditors to pay to the estate an amount to be determined at trial that is not less than the Transfers, plus interest and costs; and (3) pursuant to Section 502(d), disallowing any claim filed by the creditors against the Debtors. A.M. Castle Wants Case Dismissed A.M. Castle & Co. asks Judge Lifland to dismiss the adversary proceeding the Debtors commenced against it due to insufficiency of service of process. Marvin A. Sicherman, Esq., at Dettelbach, Sicherman & Baumgart, in Cleveland, Ohio, explains that the complaint was commenced September 2003 but the summons was not issued until December 2003. Moreover, the complaint and summons were not addressed, as required by Rule 7004(b)(3) of the Federal Rules of Bankruptcy Procedure, to the attention of an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process. Mr. Sicherman notes that bankruptcy courts that have interpreted Rule 7004(b)(3) have found service was not adequate when it was addressed solely to the corporation, and not to an officer, managing agent, etc. Mr. Sicherman points out that Bankruptcy Judge May D. Scott in In re McElhaney, 1421 B.R. 311 (Bankr. E.D. Ark, 1992), held that: "[t]he Federal Rules of Bankruptcy Procedure state with some specificity the method by which and upon whom service must be effected in order to provide notice of suit. In light of the comparatively abbreviated procedure in bankruptcy, it is of great importance that persons effecting service provide correct notice in accord with the rules . . ." A.M. Castle asserts that the Bankruptcy Court has no jurisdiction over it. "It is hornbook law that a party not properly serviced is not before the Court, and thus an insufficiency with respect to service of process results in the absence of in personam jurisdiction over the person of the Defendant in the instant adversary proceeding," Mr. Sicherman says. Liquidating Trust Dismisses Cases Bethlehem Steel Corporation Liquidating Trust stipulates to dismiss the complaint against three defendants with prejudice. Each party will bear its own costs and expenses. Defendant Adversary Proceeding No. --------- ------------------------ Paling Transporter Ltd. 03-90146 ADS Logistics, LLC doing business as Area Transportation Co. 03-09236 Brandes Broker Limited d/b/a Standard Bank London 03-92592 The Liquidating Trust also dismisses 20 complaints against these defendants: Defendant Adversary Proceeding No. --------- ------------------------ A.M. Castle 03-09031 USL Environmental Services, Inc., doing business as A&A Environmental 03-09039 Chicago Finished Metals, Inc. 03-09145 Chicago Metallic Corp. 03-09146 Airtek, Inc. 03-09166 Albco Sales, Inc., doing business as Albco Foundry 03-09173 Allegheny Power Company 03-09181 Allied Systems Company, Inc. 03-09189 Amepa America, Inc. 03-09197 American Chemical Technologies, Inc. 03-09204 Aquila Energy Marketing Corporation 03-09231 Aquila, Inc. 03-09232 Astralloy Steel Products, Inc. 03-09246 Atlantic Nationwide Trucking, Inc. 03-09248 Axs-One, Inc. 03-09253 Baltimore Gas & Electric Company 03-09255 Baltimore Gas & Electric Company 03-09256 Transportation & Equipment Division 03-92609 United Van Lines, Inc. 03-92611 United Bulk Carriers International 03-92613 Hearing on June 22 in Manhattan Judge Lifland will conduct a pretrial conference with respect to over 700 complaints on June 22, 2005, at 10:00 a.m. The complaints include: Defendant Adversary Proceeding No. --------- ------------------------ Atlantska Plovidba 03-92630 A & A Packaging Products 03-09040 CLI Corporation 03-91667 Cintas Corp. 03-09258 Etkin Equities LLC 03-09275 Face USA Inc. 03-09283 Feralloy Corporation doing business as Feralloy North American Steel Co. 03-09291 Interamerican Zinc Inc., doing business as U.S. Zinc 03-92607 Maryland Clean Water 03-92624 Matlack, Inc. 03-92626 Microbac Laboratories, Inc., formerly known as Gascoyne Laboratories Inc. 03-92625 Mictec, Inc. 03-92615 Penn Detroit Diesel Allison 03-92561 Rictou International 03-92472 Signode Coilmaster 03-92577 Southeastern Metal Processing 03-92584 Standard Steel - FFC 03-92595 State of Maryland - SIF 03-92596 Steel Dispatch, Inc. 03-92597 Stekel, Inc. 03-92598 Swift Transportation Co., Inc. 03-92602 Systran Financial Services Corp. 03-92601 Steel Transport, Inc. 03-92570 Squire Sanders & Dempsey, LLP 03-92628 Thermo ARL U.S., LLC 03-92605 Tom Peace doing business as Tom's Painting 03-92606 Tradesmen Corporation 03-92608 United Air Specialists, Inc. 03-92610 Unimold 03-92612 USe Data 03-92614 USX Engineers & Consultants, Inc. 03-92617 U.S. Bank National Association 03-92634 Venable Baetjer & Howard, LLP 03-92629 Vitalsi 03-92621 A list of the complaints set for pretrial conference is available for free at: http://bankrupt.com/misc/beth_prefadvlist_defendants.pdf Pending the hearing, the Court wants the parties-in-interest to attempt an amicable resolution of the Preferential Transfer proceedings. Headquartered in Bethlehem, Pennsylvania, Bethlehem Steel Corporation -- http://www.bethlehemsteel.com/-- was the second- largest integrated steelmaker in the United States, manufacturing and selling a wide variety of steel mill products including hot- rolled, cold-rolled and coated sheets, tin mill products, carbon and alloy plates, rail, specialty blooms, carbon and alloy bars and large diameter pipe. The Company filed for chapter 11 protection on October 15, 2001 (Bankr. S.D.N.Y. Case No. 01- 15288). Jeffrey L. Tanenbaum, Esq., and George A. Davis, Esq., at WEIL, GOTSHAL & MANGES LLP, represent the Debtors in their restructuring, the centerpiece of which was a sale of substantially all of the steelmaker's assets to International Steel Group. When the Debtors filed for protection from their creditors, they listed $4,266,200,000 in total assets and $4,420,000,000 in liabilities. Bethlehem obtained confirmation of a chapter 11 plan on October 22, 2003, which took effect on Dec. 31, 2003. (Bethlehem Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) BEVERLY ENTERPRISES: Auction Sale Plan Cues S&P to Review Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Beverly Enterprises Inc. on CreditWatch with negative implications. The CreditWatch listing reflects the announcement that Beverly's board of directors has voted to sell the company through an auction process. This is in response to the possibility that an investor group, the Whitman/Appaloosa group, may take control of the company if it is successful at the upcoming board elections at the company's shareholder meeting in April. The CreditWatch listing reflects the apparent likelihood that a sale of the company will take place. Regardless of who acquires Beverly, it is likely that the company's credit profile will weaken. As reported in the Troubled Company Reporter, on June 16, 2004, Standard & Poor's Ratings Services assigned its 'B' rating to Beverly's the $225 million senior subordinated notes due 2014. The existing ratings on the company were affirmed. The company's bank facility, which is rated 'BB', or one notch above the 'BB-' corporate credit rating, has been assigned a recovery rating of '1'. "The speculative-grade ratings on nursing home and assisted-living facility operator Beverly Enterprises Inc. reflect the chronic risks the company faces in its industry, such as lower reimbursement rates and much higher insurance costs," said Standard & Poor's credit analyst David Peknay. "However, Beverly has also divested higher-risk, less strategic facilities and reduced debt, including off-balance-sheet obligations." Fort Smith, Ark.-based Beverly Enterprises is the largest operator of nursing homes in the U.S. It has 351 skilled nursing facilities and operates 18 assisted-living facilities. The company's efforts to improve its financial performance and reduce vulnerability to key industry risks include its divestiture of more than 150 nursing homes since December 2001. The company used the proceeds of these sales for debt reduction. Nevertheless, the company remains vulnerable to several factors. Changes in reimbursement remain a longer-term risk to performance. A Medicare rate cut in 2002 reduced Beverly's annual revenues by an estimated $56 million, and another rate cut could occur in 2006. Medicaid revenue, which contributes about half of the company's total, has been good, but remains risky, as many states suffer from financial difficulties. Although Beverly's management has been addressing its patient liability exposure through several operating strategies as well as through selected asset sales, this exposure remains an ongoing long-term risk as well. The company will have more insulation against this risk after it fully satisfies a settlement with the U.S. Department of Justice and the Office of the Inspector General (OIG) for alleged violations of Medicare cost allocations. Beverly began paying back its $145 million obligation (excluding an additional $25 million one-time payment) to the OIG in 2000 through reductions in its Medicare reimbursement payments. When it fulfills this obligation, in early 2008, the company will benefit from an additional $18 million in annual cash flow. More favorable reimbursement, primarily from Medicare and Medicaid, has contributed to the company's recent improvement in operating results. Unless the company is sold, funds from operations to lease-adjusted debt are expected to be at least 25% in 2005. Modest earnings growth in 2005 could reduce debt to EBITDA to about 3x in 2005 from 3.3x at the end of 2004. BEVERLY ENTERPRISES: Moody's Affirms Low-B Ratings on $555M Debt ---------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Beverly Enterprises, Inc., and changed the outlook to developing. This action follows the announcement by Beverly that its Board of Directors voted unanimously to pursue the sale of the company through an auction process. This announcement follows the expression of interest from and ensuing proxy battle with the Whitman/Appaloosa investor group. In June 2004, Moody's revised the outlook to stable from negative to reflect the company's successful operations through a challenging reimbursement environment, its focus on core markets and the selective exit of unprofitable regions, leading to improved cash flow and deleveraging of the balance sheet. The developing outlook reflects the fact that there is significant uncertainty related to who the ultimate buyer will be or what type of capital structure the company will have going forward. Moody's will continue to monitor developments as the auction process moves forward. Moody's notes that the indenture for the senior subordinated notes contains change of control language that gives the purchaser the right to put the notes back to the issuer at 101% of the principal amount of the notes plus accrued and unpaid interest and liquidated damages (if any). The indenture for the convertible notes contains a similar change of control provision that provides the note holder with the right to put the convertible notes back to the issuer at 100% of the principal amount plus accrued and unpaid interest. These ratings were affirmed: * Senior implied rating, Ba3 * Senior unsecured issuer rating, B1 * $90 million senior secured revolving credit facility due 2007, Ba3 * $135 million senior secured term loan B due 2008, rated Ba3 * $215 million 7.875% senior subordinated notes due 2014, rated B2 * $115 million 2.75% convertible subordinated notes, rated B2 Beverly Enterprises, Inc., headquartered in Fort Smith, Arkansas is a leading provider of post-acute healthcare in the United States. As of December 31, 2004, the company operated 351 nursing facilities with a total of 36,995 licensed beds. Beverly's nursing facilities are located in 23 states and the District of Columbia. The company also operated 18 assisted living centers containing 495 units, 52 hospice and home health locations and 10 outpatient clinics, and provided rehabilitation therapy services in 37 states and the District of Columbia. For the year ended December 31, 2004, Beverly reported revenues of $2 billion. BIOLOGICAL ENVIRONMENTAL: Creditor Sues to Get Plan Distribution ---------------------------------------------------------------- The River East Economic Revitalization Corp. filed a lawsuit against Biological Environmental Control Laboratories, Inc., on Feb. 15, 2005, in the Lucas County Common Pleas Court. River East says that Biological Environmental's chapter 11 plan, confirmed in July 1998, promised to pay $44,587 on account of lease obligations and delivered a Non-Negotiable Promissory Note memorializing that promise. The Note remains unpaid. River East Economic Revitalization Corp. is represented in the state court lawsuit by: Richard A. Scheich, Esq. Jones & Scheich 1600 Fifth Third Center 608 Madison Avenue Toledo, Ohio 43604-1117 Telephone (419) 241-6450 Fax (419) 241-1540 "This is about a bankruptcy debt from sometime ago that has not yet been paid back," Perrysburg, Ohio, city councilman John Kevern, a former president of the environmental control company, who is also named in the suit, tells Karamagi Rujumba at the Toledo Blade. Mr. Kevern says the debt isn't disputed. "Some sort of repayment plan will have to be put together," he said. Biological Environmental Control Laboratories, Inc., aka BEC Labs Inc., aka BEC Laboratories, Inc. -- http://www.beclabs.com/-- filed for chapter 11 protection (Bankr. N.D. Ohio Case No. 96- 33580) on October 24, 1996. The bankruptcy court confirmed the company's chapter 11 plan in July 1998, and the Honorable Richard L. Speer entered an order closing the case on May 28, 1999. BIOPHAGE PHARMA: Incurs $815,492 Net Loss in Fiscal Year 2004 ------------------------------------------------------------- Biophage Pharma Inc. (TSX.V: BUG.), reported its financial results for period ended November 30, 2004. The Corporation continues to progress in the research and development area where significant value is being realized in the biosensor asset. Biophage's continued ability to derive positive cash flow from its Contract Research division and collaborations with government agencies on funded research programs has allowed it to significantly reduce its burn rate and to be well positioned to move quickly as the market environment improves. Biophage has focused its business strategy to concentrate on enhancing value of its technology assets while increasing its revenues, controlling costs and securing additional funding. The Corporation's management will continue to seek new opportunities and additional financing in fiscal 2005. During fiscal 2004, Biophage continued to reinforce its momentum in the development of leading edge biosensor technology while enhancing the value of other core assets in phage technology and contract research services. Revenues from contract research again reached over $1 million despite competitive pressures and decreased demand in the pharmaceutical service sector. Contract revenues reached $1.05 million, a 21.9% decrease over fiscal 2003. This decrease in revenue was mainly due to cyclical demand gaps in the beryllium testing market. Fiscal 2004 saw Biophage in its continued efforts to streamline its activities in order to manage burn rate, awaiting a general improvement in the market for small-cap biotech companies. These steps protected both the integrity of the Corporation and the long-term value for its shareholders. Review of Operations Contract revenues for the year ended November 30, 2004, reached $1,051,806 compared with $1,347,291 in fiscal 2003. Other income for fiscal 2004 increased to $16,142, compared with $14,825 in fiscal 2003, resulting from higher average cash balances in the current year. Research and development costs for fiscal 2004, before tax credits, decreased to $522,630 compared with $835,205 in fiscal 2003. During fiscal 2004, management continued to rationalize spending on R&D activities to key priority areas in order to maintain its cash position. Research and development tax credits were $128,646 in fiscal 2004 and $249,388 in fiscal 2003, representing 25% and 30% of the costs for those years respectively. The reduction of tax credits for the year was again attributable to an increase in non-admissible expenses for Quebec tax credit. Costs of contracts for fiscal 2004 amounted to $662,050 compared to $814,740 in fiscal 2003, representing 63% and 60% of contract revenues, respectively. This slight increase in costs was mainly due to a smaller contribution of relatively high profit income generated through the beryllium testing activities. General and administrative expenses decreased by 18% to $744,906 in fiscal 2004, as compared to $905,871 last year. This reflected management's continued dedication to leveraging available cash. Amortization of intangible assets for fiscal 2004 decreased to $16,352 compared to $126,205 for the same period in 2003. The fiscal 2004 amount now reflects a more normalized depreciation rate as compared to management's decision to accelerate the amortization of certain intellectual property assets in fiscal 2003. Amortization of property, plant and equipment totaled $62,056 in fiscal 2004, compared with $76,746 in fiscal 2003. Biophage's net loss for the year ended November 30, 2004, amounted to $815,492 compared to a net loss of $1,152,992 for the year ended November 30, 2003. Liquidity and Capital Resources At November 30, 2004, Biophage had cash, cash equivalents and temporary investments of $649,411 compared to $848,333 at November 30, 2003. The decrease was mainly due to spending related to the operating activities for fiscal 2004. Cash flow used in operating activities averaged $60,101 per month in fiscal 2004 on a year-to-date basis, as compared to $76,480 in fiscal 2003, a 21% decrease related to the general reduction of expenses. During fiscal 2004, Biophage raised net proceeds of $503,295 through a private placement of 5,307,981 shares at. During fiscal 2004, the Corporation reduced its long-term debt by an amount of $24,550. Biophage Pharma, Inc. -- http://www.biophage.com/-- is a Canadian biopharmaceutical company developing new therapeutic and diagnostic products using phage-based technology. Founded in 1995, Biophage is located at the Biotechnology Research Institute in Montreal. Through an active research and development program, as well as collaboration agreements, Biophage is building a portfolio of promising new therapeutic and diagnostic products. BIOPHAGE PHARMA INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT Periods ended November 30 (in Canadian dollars) Three-month periods Fiscal 12 months ----------------------------------------------- 2004 2003 2004 2003 Revenues Contract revenues 295,112 351,823 1,051,806 1,347,291 Other income 6,436 4,250 16,142 14,825 ----------------------------------------------- 301,548 356,073 1,067,948 1,362,116 Expenses Research and development costs 167,466 143,998 522,630 835,205 Research and development tax credits (56,146) (47,000) (128,646) (249,388) ----------------------------------------------- 111,320 96,998 393,984 585,817 Costs of contracts 145,125 232,724 662,050 814,740 General and administrative 229,950 216,667 744,906 905,871 Amortization of intangible assets 4,121 23,826 16,352 126,205 Amortization of property, plant and equipment 15,660 19,290 62,056 76,746 Interest on long-term debt 1 103 60 1,313 Interest and other financial expenses 1,525 1,555 4,032 4,416 ----------------------------------------------- 507,702 591,163 1,883,440 2,515,108 ----------------------------------------------- Net loss for the period (206,154) (235,090) (815,492) (1,152,992) Deficit, beginning of period (6,651,391) (5,691,963) (5,927,053) (4,774,061) Repricing of warrants - - (115,000) - ----------------------------------------------- Deficit, end of period (6,857,545) (5,927,053) (6,857,545) (5,927,053) ----------------------------------------------- ----------------------------------------------- Weighted average number of common shares outstanding 32,221,312 26,371,419 28,450,615 26,314,301 ----------------------------------------------- ----------------------------------------------- Basic and diluted loss per share (0.01) (0.01) (0.03) (0.04) ----------------------------------------------- ----------------------------------------------- Biophage Pharma, Inc., is a Canadian biopharmaceutical company developing new therapeutic and diagnostic products using phage-based technology. Founded in 1995, Biophage is located at the Biotechnology Research Institute in Montreal and employs 15 people, including a team of 13 researchers. Through an active research and development program, as well as in-licensing and collaboration agreements, Biophage is building a portfolio of promising new therapeutics collaboration agreements, Biophage is building a portfolio of promising new therapeutics http://www.biophage.com/ * * * As reported in the Troubled Company Reporter on Oct. 28, 2004, the 2004 third quarter interim financial statements of Biophage Pharma include a going concern assumption note. The Company incurred a CDN$206,154 net loss for the fourth quarter, widening the accumulated deficit to CDN$6,857,545 at the end of the fourth quarter compared to a CDN$6,651,391 accumulated deficit at the beginning of the period. CARRINGTON MORTGAGE: Moody's Rates Class M-9 Sr. Certs. at Ba1 -------------------------------------------------------------- Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued by Carrington Mortgage Loan Trust 2005-NC1 and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by New Century originated adjustable- rate (86.68%) and fixed-rate (13.32%) sub-prime mortgage loans. The ratings are based primarily on the credit quality of the loans, performance of this type of collateral from this originator, and on the protection from subordination, overcollateralization, and excess spread. The credit enhancement levels reflect some benefit for due diligence performed on the collateral. The Complete Rating Actions Are: Issuer: Carrington Mortgage Loan Trust 2005-NC1 Securities: Asset Backed Pass-Through Certificates * Class A-1A, rated Aaa * Class A-1B, rated Aaa * Class A-1C1, rated Aaa * Class A-1C2, rated Aaa * Class A-2, rated Aaa * Class A-3, rated Aaa * Class M-1, rated Aa1 * Class M-2, rated Aa2 * Class M-3, rated Aa3 * Class M-4, rated A2 * Class M-5, rated A3 * Class M-6, rated Baa1 * Class M-7, rated Baa2 * Class M-8, rated Baa3 * Class M-9, rated Ba1 CATHOLIC CHURCH: Bid to Disband Spokane Committee Draws Fire ------------------------------------------------------------ As reported in the Troubled Company Reporter on Mar. 4, 2005, the Diocese of Spokane asked the U.S. Bankruptcy Court for the Eastern District of Washington to direct the U.S. Trustee to disband the Committee of Tort Litigants appointed on February 2, 2005. Objections A. U.S. Trustee Gary W. Dyer, Attorney for the United States Trustee for Region 18, informs the U.S. Bankruptcy Court for the Eastern District of Washington that the U.S. Trustee appropriately evaluated the circumstances of the Diocese of Spokane's case and properly appointed a second committee. Under any standard of Rule 2020 of the Federal Rules of Bankruptcy Procedure or Section 105 of the Bankruptcy Code, there was no abuse of discretion or any arbitrary and capricious action on the U.S. Trustee's part. For this reason, the U.S. Trustee wants Spokane's request denied in its entirety. B. Tort Claimants Committee The Official Tort Claimants' Committee argues that it is wrong for the Diocese of Spokane to seek the disbandment of the Tort Litigants Committee and force its members onto the Tort Claimants' Committee even though both Committees and, apparently, the U.S. Trustee agree that the interests of the constituents of both Committees are adverse. George E. Frasier, Esq., at Riddell Williams P.S., in Seattle, Washington, notes that although the Diocese attempts to cast its request to disband as directed to adequate representation, Spokane's arguments are directed almost exclusively to its concerns about the cost of two committees. Mr. Frasier explains that the Tort Claimants' Committee also is concerned about the costs of the case and is working diligently to control them. However, two committees are necessary because of significant adversity between the interests of their constituents. Mr. Frasier asserts that the U.S. Bankruptcy Court for the Eastern District of Washington lacks authority to review the decision of the U.S. Trustee to remove Tort Litigants from the Tort Claimants' Committee and appoint an Official Tort Litigants' Committee. Mr. Frasier notes that decisions of other courts indicating that bankruptcy courts have the authority to review the decisions of the U.S. Trustee are distinguishable or incorrectly decided. Mr. Frasier points out that in In Smith v. Wheeler Technology, Inc. (In re Wheeler Technology, Inc.), 139 B.R. 235, 239 (9th Cir. BAP 1992), the Ninth Circuit Bankruptcy Appellate Panel held the bankruptcy court did not have authority to remove a committee member, finding that the power to appoint and delete members of the creditors' committee resides exclusively with the U.S. Trustee. In In re Dow Corning Corp., 212 B.R. 258, 264 (E.D. Mich. 1997), the district court reversed the bankruptcy court's order directing the U.S. Trustee to appoint new members of a tort claimants' committee, holding that the language of Section 1102(a)(1) of the Bankruptcy Code does not give the bankruptcy courts a role in the appointment or modification of creditor committees. Section 1102(a)(1) mandates the United States Trustee appoint a committee of creditors and gives the Trustee discretion to appoint additional committees as the Trustee deems appropriate. In In re Victory Markets, Inc., 196 B.R. 1, 5-6 (Bankr. N.D.N.Y. 1995), the court found that it had no statutory authority to grant the movant's request to be appointed to a committee, noting that "[t]he juxtaposition of [Section 1102(a)(2)] with the repeal of Section 1102(c) clearly reveals Congress' intent to shift to the U.S. Trustee the administrative responsibility of appointing committees and monitoring the same." In re Drexel Burnham Lambert Group, Inc., 118 B.R. 209, 210 (Bankr.S.D.N.Y.1990), the court denied a creditor's motion for appointment to an existing committee, holding that the bankruptcy court's sole authority with respect to committees is to order appointment of an additional committee under Section 1102(a)(2) if necessary to assure adequate representation. If the Bankruptcy Court were to determine that it has authority to review the decision of the U.S. Trustee, Mr. Frasier maintains that the appropriate standard of review is whether the U.S. Trustee's decision was "arbitrary and capricious" or an "abuse of discretion", and not a "de novo" standard. Under any standard of review, however, the undisputed evidence establishes as a matter of law that the interests of the Tort Litigants are so antithetical to the interests of the Tort Claimants that the U.S. Trustee had no choice but to refuse Spokane's demand to disband the Tort Litigants' Committee and impose Tort Litigants back onto the Tort Claimants' Committee. 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 Diocese 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) COLLINS & AIKMAN: Audit Committee Retains Davis, Polk & Wardwell ---------------------------------------------------------------- Collins & Aikman Corporation's (NYSE: CKC) Audit Committee has retained independent counsel to assist it in its investigation of the Company's accounting for certain supplier rebates. The company previously reported that it had identified certain accounting for supplier rebates that led to premature or inappropriate revenue recognition or that was inconsistent with relevant accounting standards and the Company's policies and practices. The company's management immediately initiated an internal review of these matters while keeping the company's Audit Committee and outside auditors, KPMG LLP, informed of the status of its review. The Audit Committee has determined to conduct an independent investigation into these matters. It has retained independent counsel, Davis Polk & Wardwell, for that purpose, and they expect to retain such other advisors, including an accounting expert, as they deem appropriate. As previously announced, the company's internal review of vendor rebates covered an aggregate of approximately $88 million of vendor transactions in fiscal years 2002 through 2004. Of such amount, the company's management believes that net adjustments of approximately $10 - $12 million are required primarily occurring during fiscal 2004. For further clarification, the company announced that management's preliminary analysis indicates that, of such amounts, approximately $8 million to $10 million would impact the previously reported nine months ended September 30, 2004 with the balance impacting 2003. The company expects to restate its results for the nine months ended September 30, 2004 to reflect these revisions and is continuing to evaluate whether a restatement of its 2003 results will be necessary. The company's Audit Committee and the Company's outside auditors, KPMG LLP, have not commented upon management's current expectations. The company cannot presently comment upon the timing for completion of, or the ultimate scope or outcome of, the Audit Committee investigation, the audit or any necessary restatements. Nor can it comment upon whether the outcome of the investigation will impact the foregoing adjustments. As previously disclosed, the company has not yet filed its annual report on Form 10-K for 2004 due to this accounting matter and the need for additional time for completion of the 2004 audit and the review of internal controls over financial reporting under Section 404 under Sarbanes-Oxley. The company further announced that it initiated a process for obtaining waivers of the financial statement delivery requirements for a period of time from its lenders under its senior credit facility and for modifications of certain of its financial covenants. "There can be no assurance that any of the required or desirable waivers from our senior lenders, lessors or others will be received on a timely basis," the company warns, "and the failure to obtain waivers could materially and adversely affect the company and its liquidity." Collins & Aikman Corporation, a Fortune 500 company, is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. Geadquartered in Troy, Michigan, the company employs a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. Information about Collins & Aikman is available on the Internet at http://www.collinsaikman.com/ * * * As reported in the Troubled Company Reporter on Mar. 7, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Collins & Aikman Corp. to 'B' from 'B+' and placed the rating on CreditWatch with negative implications. At the same time, the senior secured, senior unsecured, and subordinated debt ratings on the company were also lowered and placed on CreditWatch. "The rating actions reflect our increased concerns about the company's liquidity and financial flexibility amid an increasingly difficult operating environment for automotive suppliers," said Standard & Poor's credit analyst Martin King. Collins & Aikman has total debt of about $2 billion. COMM 2001-FL4: Moody's Junks $7.037M Class M-PS Certificates ------------------------------------------------------------ Moody's Investors Service downgraded one class and affirmed three classes of COMM 2001-FL4 Commercial Mortgage Pass-Through Certificates as: --Class X-2, Notional, affirmed at Aaa --Class K-PS, $2,381,000, Floating, affirmed at B3 --Class L-PS, $1,163,000, Floating, affirmed at B3 --Class M-PS, $7,037,000, Floating, downgraded to Caa1 from B3 The Certificates are collateralized by an $82.0 million senior participation interest in the 100 Pine Street Loan, the only remaining loan in the trust. As of the March 15, 2005 distribution date, the transaction's aggregate certificate balance has decreased by approximately 90.5% to $82.0 million from $862.7 million at closing due to the payoffs of 10 loans originally in the pool. The 100 Pine Street Loan, which does not provide for amortization, matured on January 9, 2004. The loan is currently in its second and final extension option period with a maturity date of January 9, 2006. There is a B Note in the amount of $36.0 million held outside the trust. Moody's does not rate outstanding pooled Classes C, D and E. Classes K-PS, L-PS and M-PS pertain to the 100 Pine Street Loan. The 100 Pine Street Loan is secured by a 394,000 square foot Class A office building located in San Francisco's financial district. The property was 81.4% occupied as of December 2004, compared to 65.2% at Moody's last review in October 2004 and compared to 97.7% at securitization. Although occupancy has improved since Moody's last review, in-place rents have continued to decline. New leases have been executed at approximately $28 per square foot, significantly lower than the $70 to $80 per square foot rents of a few years ago. Total in-place rent is approximately $35 per square foot, which exceeds current market rent levels by approximately 25.0%. Moody's loan to value ratio for the portion of the debt in the trust ($208 per square foot) is in excess of 100.0%. There is a $4.5 million leasing reserve which serves as additional collateral. Total secured debt approximates $299 per square foot. The property is currently being marketed for sale. Class M-PS has been downgraded due to poor property fundamentals. Classes K-PS and L-PS are affirmed taking into account the currently strong office building sales market in San Francisco. The borrower is an affiliate of Citigroup Global Investments, WAFRA Investment Advisory, Inc. and UNICO Properties. CYGNUS INC: Completes $10 Million Asset Sale to Animas ------------------------------------------------------ Cygnus, Inc. (OTC Bulletin Board: CYGN) completed the sale of substantially all of its assets to Animas Corporation (NASDAQ:PUMP) and Animas Technologies LLC for $10 million in cash. At a special meeting of Cygnus' stockholders held on March 23, 2005, Cygnus' stockholders approved the asset sale and the dissolution of Cygnus pursuant to the Plan of Complete Liquidation and Dissolution presented to the Company's shareholders. The assets sold include the Company's: -- intellectual property; -- product development and production equipment; -- regulatory package; -- inventory and certain assumed contracts, including all supplier, manufacturing and license agreements; -- (relating to) glucose monitoring technology and GlucoWatch(R) Biographer line of products. The Asset Sale was completed in accordance with the terms of an Asset Purchase Agreement, dated Dec. 16, 2004, between Cygnus and Animas. Cygnus retains the rights to an arbitration matter pertaining to Cygnus' claims arising out of the 1999 sale of substantially all of its drug delivery business assets to Ortho-McNeil Pharmaceutical, Inc., a Johnson & Johnson company. Cygnus is seeking $34.6 million in this arbitration matter. The arbitration process is at an early stage, and the outcome is inherently uncertain. Although Cygnus believes it has meritorious claims, it is possible that Cygnus could receive no recovery at all. The parties and the arbitration panel have scheduled the arbitration hearing to occur in mid-September to early October 2005. Bankruptcy Warning "If the asset sale to Animas is not completed, whether due to the failure of stockholders to approve the transaction or to the failure to satisfy closing conditions, we would likely file for, or be forced to resort to, bankruptcy protection and it is unlikely that there would be funds available for a distribution to stockholders," the Company said in regulatory filings. "These conditions raise substantial doubt about our ability to continue as a going concern." About the Company Cygnus -- http://www.cygn.com/-- has developed, manufactured and commercialized new and improved glucose-monitoring devices. The three generations of Cygnus' GlucoWatch(R) Biographers are the only products approved by the FDA that provide frequent, automatic and non-invasive measurement of glucose levels. The Biographer is not intended to replace the common "finger-stick" or alternative site testing methods, but is indicated as an adjunctive device to supplement blood glucose testing to provide more complete, ongoing information about glucose levels. At Dec. 31, 2004, Cygnus' balance sheet showed a $7,000 stockholders' deficit, compared to $6,822,000 of positive equity at Dec. 31, 2003. DADE BERHING: Fitch Rates Senior Subordinated Debt at BB+ --------------------------------------------------------- Fitch Ratings assigned ratings of 'BBB' to Dade Behring Holdings Inc.'s senior secured debt and 'BB+' to the company's senior subordinated debt. The ratings affect approximately $442 million of debt. The Rating Outlook is Stable. The ratings reflect significant improvement of Dade Behring's credit profile since re-emergence from a prepackaged Chapter 11 bankruptcy in October 2002. The company's efforts to focus its business strategy solely on the clinical and reference lab settings has resulted in solid top-line growth and a leaner cost structure yielding continued margin expansion. The EBITDA margin improved to 22.1% in 2004 from 12.5% in 2002. Fitch expects a further improvement in margin will come from product mix, improved manufacturing efficiencies, and SG&A cost controls offset by incremental investment for research and development (R&D). Additionally, Dade Behring's commitment to strengthening the balance sheet has led to significantly reduced leverage consistent with the rating category. Total debt at the end of 2004 was lowered to $442.2 million from $771.8 million at the end of 2002. Leverage, as defined by total debt to EBITDA, decreased to 1.3 times (x) at the end of 2004 from 4.8x at the end of 2002. Total adjusted debt-to-EBITDAR was 2.3x at Dec. 31, 2004. Leverage has improved in 2005, with additional reductions in outstanding term loans by $40 million. Dade Behring intends to refinance its capital structure, centered around the first call option (on 10/3/05) for the 11.91% subordinated notes. The new capital structure is anticipated to result in reduced interest costs and a more favorable debt maturity schedule. Aftermarket sales of reagents, consumables, and services, representing approximately 90% of total company revenue in 2004, provide a continued stream of cash flow yielding positive cash impact. Future aftermarket sales growth is driven by greater placement of instrument systems and test menu expansion. Free cash flow generation has been solid for two consecutive years at $117.7 million (net cash from operating activities of $249.5 million less capital spending of $131.8 million) in 2004 (after $26 million of pension contributions) and $141.8 million in 2003. Increasing cash outflows are being devoted to capital spending, resulting from an increasing amount of customer operating leases. Fitch expects the company to use future cash inflows for further debt reduction until the debt refinancing. Beyond that time, free cash flow is anticipated to be used for additional deleveraging and business development opportunities that could include acquisitions and collaborative agreements. Fitch is concerned regarding replacement of revenues and earnings from the company's key base platforms in routine chemistry and immunodiagnostics, the Dimension RxL and Xpand, as they mature in the long-term. However, the launch of the next generation Dimension, Vista, is expected in the second half of 2006. Additionally, the company's goal of annual R&D investment in the range of 8.5%-9.5% of sales through 2009, dedicated to test menu expansion, new instrumentation architecture and software upgrades, lends assurance that the current instrument offerings and assay menu will expand. Dade Behring's product portfolio is supported by product in-licensing and partnerships, including automated front- end blood sample preparation and coagulation testing equipment. Dade Behring develops, manufactures, markets, and distributes in- vitro diagnostic products to clinical laboratories. The company's diagnostic product offering includes medical diagnostic instruments, test reagents and consumables, and maintenance services. Dade Behring's core businesses are chemistry, hemostasis, microbiology, and infectious disease testing. DATATEC SYSTEMS: Committee Taps Navigant as Financial Advisors -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave the Official Committee of Unsecured Creditors of Datatec Systems, Inc., and its debtor-affiliate, permission to employ Navigant Consulting, Inc., as its financial advisors. Navigant Consulting will: a) assist and advise the Committee in its analysis of the Debtors' business plans, cash flow projections, restructuring programs, general and administrative structure and other reports or analyses prepared by the Debtors or their professionals; b) assist and advise the Committee in its analysis of proposed transactions for which the Debtors seek Court approval, including evaluation of competing bids in connection with divestiture of corporate assets, DIP financing or use of cash collateral, assumption/rejection of leases and other executory contracts, management compensation and severance plans; c) assist and advise the Committee at meetings with the Debtors' representatives and other parties, and in its analysis of the Debtors' internally prepared financial statements and related documents; d) assist and advise the Committee and its counsel in the development, evaluation and documentation of any plans of reorganization or strategic transactions, in the analysis of the Debtors' hypothetical analyses under various scenarios, and render expert testimony on behalf of the Committee; e) provide all other financial advisory services as requested by the Committee and agreed by Navigant Consulting. Kenneth Simon, a Managing Director at Navigant Consulting, reports the Firm's professionals bill: Designation Hourly Rate ----------- ----------- Managing Director $600 - $650 Director $500 - $550 Associate Director $400 - $450 Managing Consultant $300 - $350 Senior Consultant $200 - $275 Consultant $150 - $175 Paraprofessional $100 - $125 Navigant Consulting assures the Court that it does not represent any interest adverse to the Committee, the Debtors or their estates. Headquartered in Alpharetta, Georgia, Datatec Systems, Inc. -- http://www.datatec.com/-- specializes in the rapid, large-scale market absorption of networking technologies. The Company and its debtor-affiliate filed for chapter 11 protection on Dec. 14, 2004 (Bankr. D. Del. Case No. 04-13536). John Henry Knight, Esq., at Richards, Layton & Finger, P.A. and Bruce Buechler, Esq., at Lowenstein Sandler PC represent the Debtors' restructuring. When the Company filed for protection from its creditors, it listed total assets of $26,400,000 and total debts of $47,700,000. DATATEC SYSTEMS: Wants Exclusive Period Extended through June 13 ---------------------------------------------------------------- Datatec Systems, Inc., and its debtor-affiliate, Datatec Industries, Inc., ask the U.S. Bankruptcy Court for the District of Delaware for an extension, through and including June 13, 2005, of the time within which they alone can file a chapter 11 plan. The Debtors also ask the Court for more time to solicit acceptances of that plan from their creditors, through Aug. 11, 2005. This is the Debtors' first request for an extension of their exclusive periods. The Debtors give the Court four reasons militating in favor of their request for more time to propose and file a chapter 11 plan without interference from other parties in interest: a) the Debtors' time and efforts have been concentrated with the completing the sale of substantially all of their assets to Eagle Acquisition Partners, Inc., which the Court approved on March 1, 2005, and closed on March 4, 2005; b) to avoid premature formulation of a chapter 11 plan of liquidation and ensure that the proposed plan takes into account the interests of the Debtors, their estates, their creditors and other parties in interest; c) the Debtors are pursuing an orderly liquidation of their assets to maximize the value for their creditors and are not seeking the extension to delay the plan formulation process for some speculative event or to pressure the creditors to accede to a plan that is unsatisfactory to them; and d) the requested extension is appropriate and reasonable and will not harm the Debtors' creditors or other parties in interest. Objections, if any, to the Debtors' request for an extension must be filed and served by March 31, 2005. The Court will convene a hearing at 10:30 a.m., on April 4, 2005, to consider the Debtors' request. Headquartered in Alpharetta, Georgia, Datatec Systems, Inc. -- http://www.datatec.com/-- specializes in the rapid, large-scale market absorption of networking technologies. The Company and its debtor-affiliate filed for chapter 11 protection on Dec. 14, 2004 (Bankr. D. Del. Case No. 04-13536). John Henry Knight, Esq., at Richards, Layton & Finger, P.A. and Bruce Buechler, Esq., at Lowenstein Sandler PC represent the Debtors' restructuring. When the Company filed for protection from its creditors, it listed total assets of $26,400,000 and total debts of $47,700,000. DELTA AIR: Standard & Poor's Says Liquidity Might Be a Problem -------------------------------------------------------------- Standard & Poor's Ratings Services revised the implications of its CreditWatch review of ratings on Delta Air Lines Inc. (CC/Watch Dev/--) to developing from positive last week. "The CreditWatch revision to developing reflects renewed pressure on Delta's liquidity from sharply higher fuel prices, which could add up to $1 billion in costs during 2005," said Standard & Poor's credit analyst Philip Baggaley. "Delta had obtained substantial concessions from its pilots and $1.1 billion of new secured financing in late 2004, averting bankruptcy, but now must intensify its cost-cutting efforts and seek ways to bolster liquidity," the credit analyst continued. The corporate credit rating on Delta would be lowered only upon a default or distressed debt exchange, as it is already at the lowest level consistent with a company meeting its debt obligations, but ratings of individual debt issues could be raised or lowered as a result of Standard & Poor's rating review. Ratings on Atlanta, Ga.-based Delta Air Lines, the third-largest airline in the U.S., reflect declining cash reserves ($1.8 billion unrestricted cash at Dec. 31, 2004) and heavy, though narrowing, losses. Delta is implementing substantial cost reductions to reduce losses, but high fuel prices and price competition from low-cost airlines is offsetting much of the gains. Liquidity, while bolstered over the near term by new secured credit facilities arranged in the fourth quarter of 2004, remains a concern. Unrestricted cash totaled $1.8 billion at year-end 2004, but that amount is expected to decline as Delta meets cash commitments while incurring continuing, albeit shrinking, losses during 2005. Subsequent to the year-end, Delta drew down the final $250 million available under the new facilities. For 2005, Delta faces at least $630 million of debt maturities (and potentially another $205 million, depending on various circumstances), $450 million of pension funding, and $1 billion of capital expenditures (about half of which is for regional jets that have financing commitments in place). Accordingly, there is a danger of a renewed liquidity crunch by late this year. The company has acknowledged that one possible means of raising cash would be to sell one or both of its regional airline units, but says no such sale is imminent. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at http://www.ratingsdirect.com/ All ratings affected by this rating action can be found on Standard & Poor's public Web site at http://www.standardandpoors.com/under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. At Dec. 31, 2004, Delta's balance sheet shows $21.8 billion in assets and $27.6 billion in liabilities. DIMON INC: Noteholders Agree to Amend Senior Bond Indentures ------------------------------------------------------------ DIMON Incorporated (NYSE: DMN) disclosed the results to date in its previously announced cash tender offer to purchase any and all of its outstanding: (i) $200.0 million aggregate principal amount of 9-5/8% Senior Notes due 2011 and (ii) $125.0 million aggregate principal amount of 7-3/4% Senior Notes due 2013 and solicitation of consents to proposed amendments to each of the indentures governing the Notes. As of 5:00 p.m., New York City time, on March 21, 2005, tenders and consents had been received for approximately $196.1 million in aggregate principal amount of the 9-5/8% Notes, representing approximately 98.1% of the outstanding 9-5/8% Notes, and approximately $121.6 million in aggregate principal amount of the 7-3/4% Notes, representing approximately 97.3% of the outstanding 7-3/4% Notes. The percentage of consents received for each of the 9-5/8% Notes and the 7-3/4% Notes exceeds the requisite consents needed to amend each of the indentures governing such Notes. DIMON and SunTrust Bank, the trustee under the indentures, have executed supplemental indentures to effect the proposed amendments to each of the indentures governing the Notes. However, the proposed amendments will not become operative with respect to the Notes and the indentures until the tendered Notes are accepted for purchase by DIMON. If the tender offer is terminated or withdrawn, the proposed amendments will not become operative. The proposed amendments would eliminate, among other things, the principal restrictive covenants and certain events of default in the indentures. The tender offer is being made pursuant to an Offer to Purchase for Cash and Consent Solicitation Statement and a related Letter of Transmittal and Consent, dated March 8, 2005. The tender offer is scheduled to expire at 5:00 p.m., New York City time, on April 5, 2005, unless extended or earlier terminated. The terms and conditions of the tender offer and the consent solicitation are specified in, and qualified in their entirety by, the Offer to Purchase for Cash and Consent Solicitation Statement and related materials that have been distributed to holders of the Notes, copies of which may be obtained from MacKenzie Partners, Inc., the information agent for the tender offer and the consent solicitation, at (800) 322-2885 (U.S. toll free) or (212) 929-5500 (collect). DIMON has engaged Wachovia Securities and Deutsche Bank Securities Inc. to act as the dealer managers and solicitation agents in connection with the tender offer and consent solicitation. Questions regarding the tender offer and the consent solicitation may be directed to Wachovia Securities at (866) 309-6316 (U.S. toll free) or (704) 715-8341 (collect) and Deutsche Bank Securities Inc. at (212) 250-7466 (collect). The tender offer and the consent solicitation are being conducted in connection with, and are subject to simultaneous completion of, the proposed merger of Standard Commercial Corporation with and into DIMON. DIMON will be the surviving corporation, and simultaneously with the closing of the merger, DIMON will change its name to Alliance One International, Inc. The tender offer and the consent solicitation are subject to the satisfaction of certain conditions, including DIMON having entered into arrangements satisfactory to it with respect to financing necessary to complete the tender offer, the consent solicitation and the merger between DIMON and Standard, the simultaneous closing of the merger and other customary conditions. This announcement is for informational purposes only and is not an offer to purchase, a solicitation of an offer to purchase or a solicitation of consents with respect to any securities. The tender offer is being made solely pursuant to the terms of the Offer to Purchase for Cash and Consent Solicitation Statement, dated March 8, 2005, and the related Letter of Transmittal and Consent (as they may be amended from time to time), and those documents should be consulted for additional information regarding delivery procedures and the terms and conditions of the tender offer and the consent solicitation. About the Company DIMON Incorporated -- http://www.dimon.com/-- is the world's second largest dealer of leaf tobacco with operations in more than 30 countries. * * * As reported in the Troubled Company Reporter on Nov. 15, 2004, Moody's Investors Service placed the ratings of Standard Commercial Corporation and Dimon Incorporated under review with direction uncertain, following the announcement by the two companies of a definitive merger agreement. The transaction remains subject to shareholders and regulatory approvals. Ratings placed under review with direction uncertain: * Standard Commercial Corporation -- Senior implied, at Ba3 -- Senior unsecured, at Ba3 -- Issuer rating, at B1 * Standard Commercial Tobacco Company -- Bank Credit facility, at Ba3 * Dimon Incorporated -- Senior guaranteed unsecured, at B1 -- Issuer rating, at B2 Dimon and Standard Commercial have announced their intent to merge. Under the terms of the agreement, Standard Commercial common shareholders would receive three shares of Dimon common stock per each share of Standard Commercial common stock, making Dimon the surviving entity. The merged company should have proforma annual revenue of approximately $1.9 billion, based on combined results for the twelve months ended June 30, 2004. The direction of the review reflects uncertainty on the final level of the senior implied rating of the new entity at conclusion of the review. Moody's does not believe that it has sufficient information at this stage to determine a higher likelihood for a Ba3 senior implied rating than for a B1. The direction of the review also reflects uncertainty about the ultimate structure of the new company, whether this new structure will create structural subordination of some debt, and whether -- as Dimon has indicated it might be a possibility -- Dimon's debt will be tendered. DOBSON COMMS: Defers Payment of Preferred Stock Dividends, Again ----------------------------------------------------------------- Dobson Communications Corporation (NASDAQ:DCEL) will not declare or pay the cash dividend due on April 15, 2005, on its outstanding 12-1/4% Senior Exchangeable Preferred Stock or the May 1, 2005, cash dividend on its outstanding 13% Senior Exchangeable Preferred Stock. Unpaid dividends will accrue interest at the stated dividend rates, compounded quarterly. In addition, Dobson will not declare or pay dividends due on April 15, 2005, on its outstanding Series F Convertible Preferred Stock. Unpaid dividends on the Series F will accrue interest at 7%, compounded semi-annually. This is the second semi-annual deferral on dividends for the Series F Convertible Preferred Stock. Holders of this class of preferred stock will have the right effective April 16, 2005 to elect two new directors to Dobson's board of directors. This is the third quarterly deferral on dividends for the 12-1/4% and 13% Senior Exchangeable Preferred Stock. Holders of each of these two classes of preferred stock separately have the right to elect two new directors to Dobson's board if dividends on their respective class are in arrears and unpaid for four quarterly dividend periods. About the Company Dobson Communications -- http://www.dobson.net/-- is a leading provider of wireless phone services to rural markets in the United States. Headquartered in Oklahoma City, Dobson owns wireless operations in 16 states. * * * As reported in the Troubled Company Reporter on Oct. 22, 2004, Moody's Investors Service assigned a B2 rating to the proposed first priority senior secured notes due 2011 and a B3 rating to the second priority notes due 2012 being issued by Dobson Cellular Systems, Inc., a subsidiary of Dobson Communications Corp. In addition, Moody's downgraded Dobson Communications' senior implied rating to Caa1 and its senior unsecured rating to Ca, among other ratings actions. The ratings outlook remains negative. Dobson Communications Corporation -- Senior implied rating downgraded to Caa1 from B2 -- Issuer rating downgraded to Ca from Caa1 -- $300 million 10.875% Senior Notes due 2010 downgraded to Ca from Caa1 -- $594.5 million 8.875% Senior Notes due 2013 downgraded to Ca from Caa1 -- 12.25% Senior Exchangeable Preferred Stock due 2008 downgraded to C from Caa3 -- 13% Senior Exchangeable Preferred Stock due 2009 downgraded to C from Caa3 American Cellular Corporation, (f.k.a. ACC Escrow Corp.) -- $900 million 10% Senior Notes due 2011 downgraded to Caa1 from B3 Dobson Cellular Systems, Inc. -- $75 million (reduced from $150 million) senior secured revolving credit facility due 2008 affirmed at B1 -- $550 million senior secured term loan due 2010 rating withdrawn -- $250 million (assumed proceeds) First Priority Fixed Rate Senior Secured Notes due 2011 assigned B2 -- $250 million (assumed proceeds) First Priority Floating Rate Senior Secured Notes due 2011 assigned B2 -- $200 million (assumed proceeds) Second Priority Senior Secured Notes due 2012 assigned B3 The downgrade of the senior implied rating to Caa1 reflects the much weaker than expected cash flow in 2004 and beyond for the Dobson Communications family and the resulting negative consolidated free cash flows of the company. Further, the downgrade reflects the expectation that, absent material improvement in cash flow generation from the Dobson Cellular subsidiary, Dobson Communications' capital structure is unsustainable. E*TRADE ABS: Moody's Junks $5M Securities & $12.5M Pref. Shares --------------------------------------------------------------- Moody's Investors Service downgraded these classes of securities issued by E*TRADE ABS CDO I, LTD., which were on watch for possible downgrade: (1) U.S. $25,000,000 Class B Third Priority Senior Secured Floating Rate Notes Due 2037 from Aa2 to A1; (2) U.S. $9,500,000 Class C-1 Mezzanine Secured Floating Rate Notes Due 2037 from Baa3 to B3; (3) U.S. $3,400,000 Class C-2 Mezzanine Secured Fixed Rate Notes Due 2037 from Baa3 to B3; (4) U.S. $12,500,000 Preference Shares from B3 to Ca; and (5) U.S. $5,000,000 Composite Securities from B1 to Caa2. Each of the downgraded securities, other than the Preference Shares, remain on watch for possible downgrade. The rating actions are due to continued portfolio deterioration and par erosion. Rating Action Details: Issuer: E*TRADE ABS CDO I, LTD. Tranche Description: U.S. $25,000,000 Class B Third Priority Senior Secured Floating Rate Noted Due 2037 * Prior Rating: Aa2 on watch for downgrade * Current Rating: A1 on watch for downgrade Tranche Description: U.S. $9,500,000 Class C-1 Mezzanine Secured Floating Rate Notes Due 2037 * Prior Rating: Baa3 on watch for downgrade * Current Rating: B3 on watch for downgrade Tranche Description: U.S. $3,400,000 Class C-2 Mezzanine Secured Fixed Rate Notes Due 2037 * Prior Rating: Baa3 on watch for downgrade * Current Rating: B3 on watch for downgrade Tranche Description: U.S. $12,500,000 Class Preference Shares * Prior Rating: B3 on watch for downgrade * Current Rating: Ca Tranche Description: U.S. $5,000,000 Composite Securities * Prior Rating: B1 on watch for downgrade * Current Rating: Caa2 on watch for downgrade ENRON CORP: Wants Court to Nix Long-Term Revolver Claims -------------------------------------------------------- As part of their claims reconciliation process, Enron Corp. and its reorganized affiliates object to claims based on a Long-Term Revolving Credit Agreement with Citibank and seek alternative forms of relief with respect to those claims. Long-Term Revolver On May 18, 2000, Enron, as borrower, entered into the Long-Term Revolver with Citibank, N.A. as paying agent, Citibank and The Chase Manhattan Bank as co-administrative agents, and a syndicate of bank lenders. The Lenders agreed to lend Enron up to $1,250,000,000. By October 25, 2001, Enron drew down the entire amount of the Long-Term Revolver. The Long-Term Revolver was an unsecured obligation of Enron. Enron posted no security or collateral for its obligations under the Long-Term Revolver. Agent Long-Term Revolver Claim Citibank, on October 15, 2002, filed Claim No. 14179 on the Lenders' behalf, asserting liquidated and unliquidated amounts under the Long-Term Revolver. The liquidated portion of the Claim consists of: -- $1,250,000,000 in principal outstanding as of the Petition Date; and -- $3,196,000 in accrued and unpaid interest as of the Petition Date. The unliquidated portion asserts claims for amounts that allegedly were incapable of final determination as of the filing of the Claim, including: -- costs and expenses for collecting amounts due or enforcing or protecting rights and remedies under the Long-Term Revolver; -- contract damages for unspecified breaches of representations, warranties and covenants under the Long- Term Revolver; and -- the continuing accrual of interest after the Petition Date in respect of the amounts borrowed under the Long-Term Revolver. Citibank further asserts that the Agent Long-Term Revolver Claim may be secured with respect to specific Lenders to the extent that a particular Lender has set-off rights against Enron's funds on deposit with the Lender or other amounts owed to Enron as of the Petition Date. Citibank however fails to identify any Lender, including itself, with a set-off right or the amount that any Lender may be holding subject to a set-off right, Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, states. Related Stipulations After the filing of the Agent Long-Term Revolver Claim, Enron entered into two stipulations that resolved the claims of certain Lenders that were included in the Agent Long-Term Revolver Claim: -- On April 25, 2003, the Court approved a stipulation between Enron and Standard Chartered Bank, which granted Standard a $10,416,667 allowed general unsecured claim against Enron for the principal amount Standard loaned Enron under the Long-Term Revolver. -- On December 16, 2004, the Court approved an Amended Stipulation, pursuant to which DK Acquisition Partners, LP, Kensington International Ltd., Rushmore Capital II LLC, Springfield Associates LLC and Caylon New York Branch were deemed to have filed separate claims asserting unsecured claims for each of their interest in the Long-Term Revolver. Accordingly, because the aggregate amount of DK Acquisition, et al.'s Claims has been liquidated to $598,773,254, the Agent Long-Term Revolver Claim has been liquidated to $654,422,746. Long-Term Revolver Claim Categories The Reorganized Debtors grouped the claims held by individual Lenders under the Agent Long-Term Revolver Claim and claims held by the Moving Creditors into two categories based on whether a particular Lender is a Mega-Lender. The first category consists of Challenged Revolver Claims: Claimant Claim No. Claim Amount -------- --------- ------------ DK Acquisition Partners, LP 99037 $5,012,784 Rushmore Capital II, LLC 99040 4,511,506 Rushmore Capital II, LLC 99041 27,152,580 Rushmore Capital II, LLC 99042 2,757,031 Rushmore Capital II, LLC 99043 10,025,568 Rushmore Capital II, LLC 99044 22,139,796 Citibank 14179 226,317,402 ------------ $297,916,667 The second category consists of Non-Challenged Revolver Debt Claims: Claimant Claim No. Claim Amount -------- --------- ------------ DK Acquisition Partners, LP 99036 $86,554,070 Kensington International Ltd. 99038 189,780,225 Rushmore Capital II, LLC 99039 60,153,409 Springfield Associates, LLC 99045 153,090,038 Calyon New York Branch 99046 37,596,248 Standard Chartered Bank 20065 10,416,667 Citibank 14179 417,688,677 ------------ $955,279,333 According to Mr. Troop, the Reorganized Debtors do not dispute Citibank's calculation of the principal balance and accrued and unpaid interest outstanding under the Long-Term Revolver as of the Petition Date. The Reorganized Debtors however dispute: -- the claim of any holder of a Long-Term Revolver Claim to postpetition interest, fees, charges, attorneys' fees, and the like as asserted in the Agent Long-Term Revolver Claim; -- any additional claim of any holder of a Long-Term Revolver Claim for breaches of representations and warranties under the Long-Term Revolver; and -- any claim by a Lender to a set-off right. Moreover, the Reorganized Debtors continue to dispute the right of any lender to receive any distributions pending resolution of the Debtors' adversary proceeding against certain lenders for the return of preferential and fraudulent transfers, equitable subordination and damages. Reorganized Debtors' Objection Accordingly, the Reorganized Debtors ask the Court to: a. disallow the Long-Term Revolver Claims to the extent they assert claims for: * costs and expenses for collecting amounts due or enforcing or protecting rights and remedies under the Long-Term Revolver; * contract damages for unspecified breaches of representations, warranties and covenants under the Long-Term Revolver; and * the continuing accrual of interest after the Petition Date in respect of the amounts borrowed under the Long-Term Revolver; b. reclassify the Long-Term Revolver Claims as general unsecured claims; c. defer any decision with respect to the validity and amount of the Challenged Revolver Claims, pending a further ruling by the Court setting an objection deadline with respect to the claims of the Mega-Defendants; and d. allow the Non-Challenged Revolver Claims as general unsecured claims under Class 4 of the Plan, which includes principal and interest as of the Petition Date. Enron will reflect in its claims registry and assign a claim number to that portion of the Agent Long-Term Revolver Claim that is not held by a Mega-Lender so that distributions on the Allowed Non-Challenged Revolver Claims may commence prior to resolution of the Mega-Complaint. Mr. Troop notes that Section 502(b)(2) of the Bankruptcy Code provides unequivocally that claims for "unmatured interest" cannot be allowed. Since the Long-Term Revolver was an unsecured obligation of Enron, Mr. Troop states that the Lenders are not entitled to a claim for any interest accruing after the Petition Date. Similarly, Mr. Troop continues, the Long-Term Revolver Claims must be disallowed to the extent they assert an unliquidated claim for other costs and expenses of collection, including legal fees and expenses. The Long-Term Revolver Claims must be reclassified as general unsecured claims in all respects because there is no basis to sustain any portion of any claim based on the Long-Term Revolver as a secured claim based on any set-off right, Mr. Troop explains. The viability and amount of any claim asserted by a Mega- Defendant depends, at least in part, on the resolution of the Mega-Complaint, Mr. Troop says. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 139; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENVIRONMENTAL TRUST: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: The Environmental Trust, Inc., A Non-Profit Public Benefit Corporation 4669 Murphy Canyon Road, Suite 201 San Diego, California 92123 Bankruptcy Case No.: 05-02321 Chapter 11 Petition Date: March 23, 2005 Court: Southern District of California (San Diego) Debtor's Counsel: Michael D. Breslauer, Esq. Solomon Ward Seidenwurm & Smith, LLP 401 B Street, Suite 1200 San Diego, California 92101 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Ryland Homes of CA, Inc. $297,397 5740 Fleet Street #200, Carlsbad, CA 92008 Oceanside Properties, LLC $64,180 24361 El Toro Road #100 Laguna Woods, CA 92653 Calavera Hills, LLC $49,783 2727 Hoover Ave. National City, CA 91950 Lyons Realty West, LLC $30,000 Army Corps of Engrs $18,381 Fire Prevention Services $12,399 The San Diego Foundation $10,989 Earthspan $9,430 Taylor Woodrow Homes $8,057 American Express $7,747 Pronatura $6,800 Santa Fe Irrigation District $5,994 City of Chula Vista $4,910 Lin Investment Trust $4,030 c/o Euston Homes City of Carlsbad $3,059 Dakota Ranch Partners $2,807 Don Hunsaker II $2,715 Leaf & Cole $2,215 Rilington Rancho Pacifica 22, LLC $1,924 Greystone Homes, Inc $1,832 EXIDE TECH: Soros Buys $5M Convertible Notes & $15M Sr. Notes ------------------------------------------------------------- On March 15, 2005, Soros Fund Management LLC, for the account of Quantum Partners, agreed to purchase $5,000,000 in Floating Rate Convertible Senior Subordinated Notes, due 2013, from Exide Technologies. These Convertible Notes purchased for the account of Quantum Partners can be converted into Shares at $17.37 per share for an aggregate of 287,852 Shares. Soros, for the account of Quantum Partners, also agreed to purchase $15,000,000 in 10-1/2% senior notes, due 2013 and secured by a junior lien on Exide's assets, from Exide. The notes were offered and sold by Exide pursuant to Rule 144A under the Securities Act of 1933, as amended. Soros Increases Equity Stake As of March 17, 2005, Soros Fund and George Soros may be deemed to beneficially own 1,810,152 shares of Exide common stock held for the account of Quantum Partners. The shares beneficially owned consist of: (i) 1,522,300 Shares; and (ii) 287,852 Shares issuable upon conversion of the Convertible Notes. The shares represent 7.3% of the total Exide shares issued and outstanding. Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. * * * As reported in the Troubled Company Reporter on March 22, 2005, Standard & Poor's Ratings Services assigned its 'B' rating to Exide Technologies' $290 million senior secured notes due 2013 and its 'B-' rating to the company's $60 million floating rate convertible senior subordinated notes due 2013, both to be issued under Rule 144A with registration rights. At the same time the 'B+' corporate credit rating on the company was affirmed, and the 'B' rating on its proposed $350 million senior notes was withdrawn. Lawrenceville, N.J.-based Exide, a global manufacturer of transportation and industrial batteries, has debt, including the present value of operating leases, of about $750 million. The rating outlook is negative. Exide replaced its proposed senior notes offering with the senior secured notes and convertible notes. Proceeds from the new debt issues will be used to reduce bank debt and for general corporate purposes. Security for the senior secured notes is provided by a junior lien on the assets that secured Exide's senior credit facility, including the bulk of its domestic assets and 65% of the stock of its foreign subsidiaries. "We expect earnings and cash flow improvements, provided the costs of lead remain fairly stable or decline and restructuring actions are effective," said Standard & Poor's credit analyst Martin King, "which should allow debt leverage to decline and cash flow coverage to improve over the next few years. FAIRFAX FINANCIAL: TIG Note Repayment Deferred to June 30, 2006 --------------------------------------------------------------- Fairfax Financial Holdings Limited (TSX:FFH.SV)(NYSE:FFH) has received regulatory approval to extend the maturity date of the $100 million Note payable by Fairfax to TIG Insurance Company from June 30, 2005 to June 30, 2006. Fairfax Financial Holdings Limited is a financial services holding company, which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance, investment management and insurance claims management. * * * As reported in the Troubled Company Reporter on Mar. 3, 2005, Fitch Ratings published a detailed report on Fairfax Financial Holdings Limited. Currently, Fairfax's 'B+' senior debt rating, as well as the ratings of its insurance affiliates is under review with negative implications. These have a Negative Rating Watch by Fitch: Fairfax Financial Holdings Limited -- No action on long-term issuer 'B+'; -- No action on senior debt 'B+'. Crum & Forster Holdings Corp. -- No action on senior debt 'B'. TIG Holdings, Inc. -- No action on senior debt 'B'; -- No action on trust preferred 'CCC+'. The members of the Fairfax Primary Insurance Group: Crum & Forster Insurance Co. Crum & Forster Underwriters of Ohio Crum & Forster Indemnity Co. Industrial County Mutual Insurance Co. The North River Insurance Co. United States Fire Insurance Co. Zenith Insurance Co. (Canada) -- No action on insurer financial strength 'BBB-'. The members of the Odyssey Re Group: Odyssey America Reinsurance Corp. Odyssey Reinsurance Corp. -- No action on insurer financial strength 'BBB+'. Members of the Northbridge Financial Insurance Group: Commonwealth Insurance Co. Commonwealth Insurance Co. of America Federated Insurance Co. of Canada Lombard General Insurance Co. of Canada Lombard Insurance Co. Markel Insurance Co. of Canada -- No action on insurer financial strength 'BBB-'. The members of the TIG Insurance Group: Fairmont Insurance Company TIG American Specialty Insurance Company TIG Indemnity Company TIG Insurance Company TIG Insurance Company of Colorado TIG Insurance Company of New York TIG Insurance Company of Texas TIG Insurance Corporation of America TIG Lloyds Insurance Company TIG Specialty Insurance Company -- No action on insurer financial strength 'BB+'; Ranger Insurance Co. -- No action on insurer financial strength 'BBB-'. FEDERAL-MOGUL: Proposes to Settle $183MM of CCR Claims for $29MM ---------------------------------------------------------------- Federal-Mogul Corp. is asking the U.S. Bankruptcy Court for the District of Delaware to approve a deal that will settle $183 million of asbestos-related personal injury claims with the Center for Claims Resolution for $29 million. Federal-Mogul was a CCR participant prior to 2001. The settlement agreement resolves all litigation among Federal-Mogul, the CCR, and Safeco Insurance Co. of America, Travelers Casualty and Surety Co. of America, National Fire Insurance Co. of Hartford and Continental Casualty Co. The insurance companies underwrote $250 million of surety bonds that guaranteed Federal-Mogul's obligations to the CCR. The Sureties will pay the $29 million (Safeco, 30%; Travelers, 40%, and the two others, 30%) and Federal-Mogul will reimburse the Sureties over time. Judge Fitzgerald approved a separate settlement agreement with the Insurers underpinning this agreement with the CCR at a hearing on March 16, 2005. A detailed review of that settlement pact was reported in the Troubled Company Reporter on March 9, 2005. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a $1.925 billion stockholders' deficit. FLEMING COMPANIES: Core-Mark Prepares to Register Stock & Warrants ------------------------------------------------------------------ Core-Mark Holding Company, Inc. (Pink Sheets: CMRK), one of the largest North American distributors to the convenience retail industry, announced its plans to file a Registration Statement on Form 10 with the Securities and Exchange Commission in the second quarter of 2005, subject to completion of the audit of the Company's historical financial statements. The Company recently engaged a "Big Four" independent public accounting firm to audit the Company's consolidated financial statements for the periods on and after August 23, 2004. The Company is working with this new firm on the audits, which involve various complex accounting principles. Core-Mark emerged from bankruptcy as a stand-alone company upon adoption of the Fleming Companies, Inc., Plan of Reorganization on August 23, 2004. As a result of the Fleming bankruptcy and in accordance with the Plan, significant accounting principles were implemented including, "push down," "impairment," "carve out" and "fresh start". "Push down" accounting requires that the financial statements of a subsidiary reflect the parent company's basis of the assets and liabilities in the subsidiary after the acquisition. Core-Mark's consolidated financial statements reflect the results of "push-down" accounting treatment of its acquisition by the Fleming Companies in 2002. Due to the Fleming bankruptcy, "impairments" arose under SFAS 142 and SFAS 144. "Impairments" occur when goodwill, intangibles and other long- lived assets are found to no longer have values at or greater than their book values. Core-Mark's consolidated financial statements are also reported on a "carve out" basis to reflect its performance on a stand alone basis from Fleming for the periods from acquisition to the emergence. Pursuant to the "fresh-start" accounting principles, a new reporting entity is created and the recorded assets and liabilities are adjusted to reflect their estimated fair value at the time of the emergence from bankruptcy. The timing of completion of the audits of Core-Mark's consolidated financial statements for the periods ended August 23, 2004, and December 31, 2004, depends upon the final determination of the application of these accounting principles. The shares of Core-Mark common stock and the Class 6(b) warrants are being distributed to Fleming's unsecured creditors in accordance with the Plan of Reorganization. Core-Mark expects to apply for the listing of its common stock on the Nasdaq National Market concurrent with the filing of the Registration Statement on Form 10 with the SEC. No securities are being offered to the public as part of the registration statement. About Core-Mark Core-Mark is one of the largest broad-line, full-service wholesale distributor of packaged consumer products to the convenience retail industry in North America. Founded in 1888, the Core-Mark provides distribution and logistics services as well as marketing programs to over 18,000 retail locations in 37 states and five Canadian provinces through 23 distribution centers. Core-Mark services traditional convenience retailers, grocers, mass merchandisers, drug, liquor and specialty stores, and other stores that carry consumer packaged goods. For more information, visit http://www.core-mark.com/ Headquartered in Lewisville, Texas, Fleming Companies, Inc. -- http://www.fleming.com/-- was the largest multi-tier distributor of consumer package goods in the United States. The Company filed for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No. 03-10945). Judge Walrath confirmed Fleming's Third Amended Plan on July 26, 2004, under which Core-Mark Holding Company, Inc., emerged as a rehabilitated company owned by Fleming's unsecured creditors on August 23, 2004. Richard L. Wynne, Esq., Bennett L. Spiegel, Esq., Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. GARDEN RIDGE: Disclosure Statement Hearing in Wilmington Tomorrow ----------------------------------------------------------------- Garden Ridge Corporation and its debtor-affiliates will ask the Honorable Louis H. Kornreich of the U.S. Bankruptcy Court for the District of Delaware to put his stamp of approval on a Disclosure Statement explaining their Joint Plan of Reorganization at a hearing tomorrow, Mar. 29, 2005, in Wilmington. As previously reported in the Troubled Company Reporter on March 3, 2005, Garden Ridge has proposed a chapter 11 plan that will transfer control of the deleveraged and reorganized company to unsecured creditors. Home Textiles Today reported last week that the Disclosure Statement Hearing is prefaced by positive financial news: Garden Ridge reported a 6% increase in February comparable store sales and an 8% increase in its gross margin. Additionally, the Company indicated, operating results and EBITDA exceeded management's February forecasts. Headquartered in Houston, Texas, Garden Ridge Corporation -- http://www.gardenridge.com/-- is a megastore home decor retailer that offers decorating accessories like baskets, candles, crafts, home accents, housewares, party supplies, pictures and frames, pottery, seasonal items, and silk and dried flowers. The Company and its debtor-affiliates filed for chapter 11 protection on February 2, 2004 (Bankr. D. Del. Case No. 04-10324). Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated debts and assets of over $100 million. GRAPHIC PACKAGING: S&P Revises Outlook on Low-B Ratings to Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Marietta, Georgia-based Graphic Packaging International Inc. to stable from positive. The corporate credit and bank loan ratings were affirmed at 'B+', and the senior unsecured and subordinated debt ratings were affirmed at 'B-'. "The outlook revision reflects our assessment that despite prospects for additional debt reduction in 2005, higher costs will continue to pressure Graphic Packaging's earnings more than originally expected and prevent sufficient improvement in the company's credit measures to support a higher rating over the next year or two," said Standard & Poor's credit analyst Pamela Rice. The company did reduce debt by $130 million in 2004 to $2.04 billion, including capitalized operating leases, strengthening debt to EBITDA to 5.2x, from about 5.8x at the end of 2003 on a pro forma basis. However, higher fiber, chemical, energy, and freight costs reduced operating margins (before depreciation and amortization) to about 16% in 2004, from 18% on a pro forma 2003 basis. Although Graphic Packaging is able to pass through some cost increases with a lag and continues to aggressively reduce costs, it is generally unable to fully recover these costs through price increases because of competitive pricing pressures, particularly in folding cartons, and the nature of its beverage contracts. The ratings on Graphic Packaging reflect its very aggressive capital structure, cost pressures, limited product diversity, oversupplied and highly competitive paperboard and packaging markets, and the risk of substitution from competing substrates. The ratings also reflect the company's attractive operating margins, a value-added product mix, and relatively stable earnings and cash flow. Graphic Packaging manufactures paperboard and folding cartons used in beverage and consumer products packaging as well as packaging machines that are leased to beverage manufacturers. Products include coated unbleached kraft and coated recycled paperboard, most of which is used internally to produce beverage carriers or folding cartons for food, household goods, and other consumer products. GSAA HOME: Moody's Assigns Ba1 Rating to Class B-4 Certificates --------------------------------------------------------------- Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued by GSAA Home Equity Trust 2005-2. In addition, ratings ranging from Aa1 to Ba1 were assigned to subordinate certificates issued in the deal. The securitization is backed by New Century originated hybrid adjustable-rate sub-prime mortgage loans. All loans in this securitization include an interest only payment option effective during the fixed rate period for the mortgage. The ratings are based primarily on the credit quality of the loans, past performance of collateral from this originator, and on the protection from subordination, overcollateralization, and excess spread. The credit enhancement requirements reflect some benefit for due diligence performed on the collateral. Countrywide Home Loans Servicing LP will service the loans. Moody's has assigned its top servicer quality rating to Countrywide for primary servicing of sub-prime loans. The Complete Rating Actions Are: Issuer: GSAA Home Equity Trust 2005-2 Securities: Asset-Backed Certificates, Series 2005-2 * Class 1A1, rated Aaa * Class 1A2, rated Aaa * Class 2A1, rated Aaa * Class 2A2, rated Aaa * Class 2A3, rated Aaa * Class M-1, rated Aa1 * Class M-2, rated Aa2 * Class M-3, rated Aa3 * Class M-4, rated A1 * Class M-5, rated A2 * Class M-6, rated A3 * Class B-1, rated Baa1 * Class B-2, rated Baa2 * Class B-3, rated Baa3 * Class B-4, rated Ba1 HALIFAX REGIONAL: Moody's Chips $24M Bond Rating to Ba1 from Baa3 ----------------------------------------------------------------- Moody's Investors Service has downgraded Halifax Regional Medical Center's bond rating to Ba1 from Baa3. The rating remains on Watchlist for possible downgrade. The rating action affects $24 million in outstanding Series 1998 Bonds issued through the North Carolina Medical Care Commission. Halifax's rating was lowered to Baa3 from Baa2 and placed on Watchlist for downgrade on February 1, 2005 upon receipt and initial review of FY2004 financial statements and interim statements through the end of December 2004. The current rating action has been taken after discussions with management and review of interim financial statements through the 5-month period ending February 28, 2005. The rating action reflects further weakening of Halifax's liquidity position, despite improved operating performance and reductions in accounts receivable days. However, if cash does not stabilize over the next few months and operating improvements are not maintained, the rating is likely to be lowered. Credit strengths are: * Recent management action to reverse operating losses by reducing operating expenses appear to be making headway toward balancing operating performance and improving cash flow * Limited competition in service area Credit challenges are: * Sharp declines in unrestricted cash continue, driven by thin but improved operating performance and accounts receivable challenges stemming from an information systems conversion * Economically challenged service area demonstrated by high reliance on Medicare and Medicaid * Reliance on small portion of medical staff for nearly half of admissions leaves volumes somewhat vulnerable to fluctuation Sharp Declines In Liquidity Continue, Although Some Progress Made On Accounts Receivable. Moody's concern for Halifax's liquidity position is a primary driver of the rating downgrade and Watchlist for further possible downgrade. Unrestricted cash has fallen dramatically from over $17 million (99 days) at the end of FY2003 to $9.8 million (53 days) at the end of FY2004 to just $5.9 million (31 days) at the end of February, 2005. An operating loss of $4.4 million in FY 2004, combined with a rapid rise in accounts receivable days (from 57 days at the end of FY2003 to 81 days at the end of February) contributed to the decline. At the end of calendar 2004, Halifax began to experience a rapid increase in receivables due to an information systems conversion, which brought days in accounts receivable to over 94 days in January of 2005. Management has expressed confidence that these levels will return to the 60-70 day range by the end of the fiscal year and has lowered days to 80 at the end of February. However, unrestricted cash has not grown accordingly and has continued to decline in recent months as debt service payments and other large expenses came due over the last month. Moody's believes Halifax will face substantial challenges in rebuilding liquidity as capital spending, pension contributions and operating pressures continue, but expects some increase over the remainder of the fiscal year from current levels. Operating Performance Disappointing In Fy2004, But Has Strengthened Year-To-Date Fy2005 Halifax generated an unexpectedly large operating deficit in FY2004 (-6.5% operating margin), caused by a rapid increase in bad debt and continued expense pressures from an under funded pension plan. Bad debt grew 23 percent year-over-year in FY2004, driven by growth in self-pay business, difficulty collecting co-pays and deductibles, and assumption of an emergency department physician group with a high level of bad debt expense. Management efforts to improve operating performance focus heavily on expenses controls and reductions. Halifax's defined benefit pension plan has been frozen as of May 1, 2005, which should reduce expense and cash needs modestly in FY2005 and more significantly in FY2006. Through the end of February, 2005, operating performance has improved substantially with an operating deficit of -0.5% compared to -6.9% during the same period last year. Over the long-term, Halifax is likely to face ongoing challenges stemming from poor demographics and a weak economy in its service area. Halifax and Northampton counties (combined population 80,000) comprise a primary service area characterized by higher than average unemployment, below average wealth levels, and no population growth as economic development efforts to replace the textile and paper industries have been relatively unsuccessful. The population is aging, reflected in the growing share of Medicare payments (56%) as a portion of Halifax's revenues. Medicaid accounts for an additional 20% of revenue. The service area also presents some physician recruitment challenges, although Halifax has successfully recruited several surgeons over the course of the last year in order to replace retirees and expand staff. Nearly 50% of admissions are generated by ten physicians. That Medicare and Medicaid are the source of 76% of gross revenue highlights Halifax's inability to leverage its strong 60% market share into positive operating performance. Efforts to be reclassified as a Rural Referral Center in lieu of Sole Community Provider designation (which could yield as much as $5 million annually) so far remain unsuccessful. In addition, disproportionate share add-ons are under pressure of state budgetary constraints, but have benefited Halifax in recent years. Outlook: The rating remains on Watchlist for possible downgrade. Moody's believes that Halifax may continue to face significant challenges improving operating performance and rebuilding unrestricted liquidity given a weak service area and high reliance on Medicare and Medicaid. If Halifax is not able to reverse operating losses and rebuild liquidity, the rating would likely be lowered. Key Facts: (Based on audited September 30, 2004 financial results; investment return normalized at 6%) -- Admissions: 7,775 -- Total operating revenue: $67.6 million -- Net revenue available for debt service: $3.2 million -- Total unrestricted cash: $9.8 million ($5.9 million as of February 2005) -- Total debt outstanding: $24.2 million -- Operating cash flow margin: 2.6% -- Cash-to-debt: 40.5% (21.4% as of February 2005) -- Debt-to-cash flow: 12.8 times -- Days cash on hand: 53 days (31 days as of February 2005) -- Maximum annual debt service coverage with actual investment income as reported for obligated group: 1.29 times -- Moody's adjusted maximum annual debt service coverage with investment income normalized at 6%: 1.08 times HAWAIIAN AIRLINES: Showdown With Pilots in Bankr. Court Tomorrow ---------------------------------------------------------------- Members of the Air Line Pilots Association International voted 144 to 122 to reject a proposal for a new two-year contract with Hawaiian Airlines that would tinker with retirement and disability benefits and raise medical insurance premiums. The carrier will head to Bankruptcy Court tomorrow, Tues., Mar. 29, to ask a judge to impose that new contract on ALPA members. The carrier filed its motion papers asking for authority to impose new contract terms in January. Kirk McBride, chairman of ALPA's master executive committee, told Rick Daysog at the Star Bulletin that members were outraged by $7 million of management bonuses that were paid out last year with approval from Bankruptcy Judge Robert Faris. "In general, there was a perception that interaction with management at Hawaiian does not provide for constructive problem solving and smooth employee relations," Mr. McBride said. Hawaiian Trustee Joshua Gotbaum told Mr. Daysog he was disappointed that union members rejected the contract, which he said was better than any proposal made by the airline to its pilots in the past two years. Mr. Gotbaum said the contract would have made Hawaiian's pilots among the best paid in the industry and would have kept the pilots' pension plan intact for the next seven years. Hawaiian Airlines has already struck new labor agreements with the International Association of Machinists, the Transport Workers Union, the Network Engineering Group and the Association of Flight Attendants. The Bankruptcy Court confirmed Hawaiian Airlines Inc.'s plan of reorganization, on Thursday, March 10, 2005. The Company hopes to emerge from chapter 11 by next month. A new labor contract with the Pilots is a condition to the Plan taking effect. On March 21, 2003, Hawaiian Airlines, Inc., filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Hawaii (Case No. 03-00827). Joshua Gotbaum serves as the chapter 11 trustee for Hawaiian Airlines, Inc. Mr. Gotbaum is represented by Tom E. Roesser, Esq., and Katherine G. Leonard, Esq., at Carlsmith Ball LLP and Bruce Bennett, Esq., Sidney P. Levinson, Esq., Joshua D. Morse, Esq., and John L. Jones, II, Esq., at Hennigan, Bennett & Dorman LLP. HAYES LEMMERZ: Will Discuss 2004 Year-End Financials on April 15 ---------------------------------------------------------------- Hayes Lemmerz International, Inc. (Nasdaq: HAYZ), will host a telephone conference call to discuss the Company's fiscal year 2004 year-end financial results on Friday, April 15, 2005 at 9:30 a.m. (ET). To participate by phone, please dial 10 minutes prior to the call: (800) 399-3882 from the United States and Canada (706) 634-4552 from outside the United States Callers should ask to be connected to Hayes Lemmerz earnings conference call, Conference ID#3684906. The conference call will be accompanied by a slide presentation, which can be accessed that morning through the Company's web site, in the Investor Kit presentations section at http://www.hayes-lemmerz.com/investor_kit/html/presentations.html A replay of the call will be available from 12:00 Noon (ET), April 15, 2005 until 11:59 p.m. (ET), April 22, 2005, by calling (800) 642-1687 (within the United States and Canada) or (706) 645-9291 (for international calls). Please refer to Conference ID#3684906. An audio replay of the call is expected to be available on the Company's website beginning 48 hours after completion of the call. Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Del. Case No. 01-11490) and emerged in June 2003. Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meager & Flom represent the Debtors. * * * As reported in the Troubled Company Reporter on March 14, 2005, Moody's Investors Service assigned a B2 rating for the proposed new guaranteed senior unsecured notes of HLI Operating Company, Inc., an indirect subsidiary of Hayes Lemmerz International, Inc. Half of the net proceeds of the proposed notes will be applied to prepay existing senior secured term loans, with the other half to be used to either augment cash or repay outstanding revolver debt or accounts receivable securitization usage. Moody's additionally downgraded all of the existing ratings for HLI Opco in response to Hayes Lemmerz's weaker-than-anticipated consolidated free cash flow performance since its June 2003 reorganization out of Chapter 11 bankruptcy. Hayes Lemmerz will likely once again realize negative free cash flow generation during the fiscal year ending January 31, 2006, and will therefore have to rely on either its balance sheet cash or liquidity facilities in order to finance a portion of its cash interest obligations during this period. Moody's said the outlook for HLI Opco's ratings is stable after incorporating Moody's actions above. These specific rating actions were taken by Moody's: -- Assignment of a B2 rating for HLI Operating Company, Inc.'s proposed Euro 120 million guaranteed senior unsecured notes maturing 2012, to be issued under Rule 144A with registration rights; -- Downgrade to B2, from B1, of the rating for HLI Operating Company, Inc.'s $162.5 million remaining balance of 10.5% guaranteed senior unsecured notes maturing June 2010 (the original issue amount of $250 million was reduced as a result of an equity clawback executed in conjunction with Hayes Lemmerz's February 2004 initial public equity offering); -- Downgrade to B1, from Ba3, of the ratings for HLI Operating Company, Inc.'s approximately $527 million of remaining guaranteed senior secured bank credit facilities, consisting of: -- $100 million guaranteed senior secured bank revolving credit facility due June 2008; -- $450 million ($427.3 million remaining) guaranteed senior secured bank term loan facility due June 2009 (which term loan will be prepaid by approximately $73 million through application of about half of the net proceeds from the proposed notes offering); -- Downgrade to B1, from Ba3, of the senior implied rating; and -- Downgrade to B3, from B1, of the senior unsecured issuer rating, which rating does not presume the existence of subsidiary guarantees. HAYES LEMMERZ: Bares Strategic Actions to Fuel Long-Term Growth --------------------------------------------------------------- Hayes Lemmerz International, Inc. (NASDAQ:HAYZ), disclosed strategic actions designed to fuel long-term growth, support its international expansion, strengthen its competitive capabilities and improve its financial profile. The actions reflect the Company's ongoing commitment to grow as a low-cost global automotive supplier through outstanding customer satisfaction. "The Company is committed to improving profitability over the long term for our shareholders and today's announcements are integral to fulfilling this plan," said Curtis Clawson, President, Chief Executive Officer and Chairman of the Board of Hayes Lemmerz. "This past year, we have continued to aggressively implement our strategy of growing in low-cost countries to serve our customers as they continue to expand in markets outside of the U.S. and Western Europe. By focusing on customer service, in both new and established markets, and by implementing the strategic decisions announced today, we believe that the Company will build value for our shareholders." The Company disclosed plans to: * Issue approximately $150 million of Euro denominated, senior unsecured notes in a private placement, as described in a press release issued earlier today; * Establish an accounts receivable securitization program to finance the U.S. equivalent of up to $25 million of the Company's international accounts receivable; and * Close its aluminum wheel manufacturing facility in La Mirada, California and transfer the production at this facility to the Company's Huntington, Indiana facility. The Company also reported updated guidance for fiscal year 2004 and updated its outlook for fiscal year 2005. Specific details of the announcements include: Senior Notes Offering The Company intends to offer approximately $150 million of Euro denominated, senior unsecured notes. The notes offering will be contingent upon obtaining the amendment to the Credit Agreement. International Accounts Receivable Securitization Program In order to accelerate cash flow and enhance liquidity in international locations, the Company has received a commitment from a European financial institution to establish an accounts receivable securitization program to finance the U.S. equivalent of up to $25 million of its international accounts receivable. This program will complete the $100 million accounts receivable program previously announced by the Company. The program is expected to be similar to the $75 million accounts receivable securitization facility that the Company established in the U.S. in December 2004. The Company noted that, although it expects to finalize the securitization program in the first half of 2005, there can be no assurance as to whether or when the program will be completed. Credit Agreement Amendment The Company will seek the approval of the lenders under its $450 million Senior Secured Term Loan and its $100 million Senior Secured Revolving Credit Loan of an amendment to its Credit Agreement to permit the Company to use approximately 50% of the net proceeds from the proposed divestiture of its Commercial Highway Hub and Drum business for capital expenditures; permit the Company to offer the new senior unsecured notes and retain a portion of the proceeds from the notes offering for working capital purposes; and modify certain financial covenants contained in the Credit Agreement. The Company said that, although it expects approval of the proposed amendment, no assurance can be given that the lenders will approve the proposed amendment. Ongoing Strategy The Company reiterated its strategy of focusing on actions to maximize shareholder value. "Our long-term goal has always been to maximize our shareholder value. We will continue to pursue aggressive cost reductions, investments in the right geographic markets, and focus our resources on our core strengths where we have a competitive advantage. And, we must always consider other strategic options that will maximize long-term value creation and be in the best interest of our shareholders," said Mr. Clawson. Consistent with its long-term strategy, the Company announced today that it intends to close its aluminum wheel manufacturing facility in La Mirada, California, and transfer that plant's production to the Company's facility in Huntington, Indiana, which is located closer to its customers. The La Mirada facility currently employs approximately 120 people. "Although we regret the impact this decision will have on our La Mirada employees and their families, this closure will better align our available capacity with the market, and make our overall cost structure more competitive," said Mr. Clawson. As previously reported, the Company is pursuing the sale of its Commercial Highway Hub and Drum business. The Company may also consider the divestiture of other non-core businesses. The Company's capital expenditures for fiscal year 2004 and fiscal year 2005 include significant investments in low-cost countries, such as previously announced expansions in Mexico, Turkey, Thailand, Brazil and the Czech Republic. By 2009, the Company projects that over 60% of its aluminum wheel capacity will be in low-cost countries. The Company also has other projects under consideration, which will further capitalize on this strategic advantage. "We have a thriving international wheel business with a very diverse customer base. We are very proud of the great strides taken by our international colleagues," said Mr. Clawson. Updated Guidance for Fiscal Year 2004 and Outlook for Fiscal Year 2005 The Company revised its guidance for fiscal year 2004, which ended January 31, 2005. The Company now expects to report total Adjusted EBITDA of approximately $225 million and expects free- cash flow to be about break-even. The Company's previous revenue guidance of approximately $2.2 billion and capital expenditure guidance of approximately $154 million remain unchanged. The revised guidance reflects lower U.S. production volumes; valuation adjustments of certain non-production inventories; higher than expected one-time costs associated with establishing and testing its internal controls as required by the Sarbanes- Oxley Act; costs related to the Company's implementation of SAP throughout its U.S. operations, which is expected to result in improved operational efficiency; and despite good overall productivity for 2004, the Company had lower operating efficiencies at two of its U.S. manufacturing facilities. The Company also said that, as of January 31, 2005: * Amounts financed under its U.S. accounts receivable securitization facility were $57 million; * Total debt was approximately $645 million; and * Excluding letters of credit of approximately $19 million, the Company had no cash draws on its revolving line of credit. The Company also revised its outlook for fiscal year 2005, ending January 31, 2006. The Company expects total revenue to be approximately $2.3 billion to $2.4 billion and Adjusted EBITDA to be approximately $220 million to $235 million, while free cash flow is expected to be slightly negative. The Company's estimated Adjusted EBITDA is reduced from its prior guidance for fiscal year 2005, primarily because of expected lower North American customer production requirements in the first quarter of the fiscal year. The Company noted a number of positive factors that point to a stronger second half of 2005 for the business. These include recent successful negotiations with major customers on steel recovery costs; anticipated higher OEM volumes later in the year; and the launch of significant new customer programs. "While reduced North American OEM volumes have made 2004 a challenging year for the Company and the industry, we firmly believe that our focus on low-cost, high-growth markets distinguishes us from our competitors," said Mr. Clawson. "The actions announced today are designed to fund our international growth strategy without compromising our financial position. Our international strategy has already proven to be very successful. Recently, we acquired and are expanding an aluminum wheel production facility in Mexico, launched a new joint venture in Turkey and are expanding operations in Thailand, Brazil and the Czech Republic. Each of these projects will better serve our customers in the geographies where they are growing. There are many more opportunities on the horizon and we look forward to taking advantage of them in the months and years to come." The Company will release its fiscal year 2004 financial results on Friday, April 15, 2005, and host its conference call at 9:30 a.m. (ET). Hayes Lemmerz International, Inc. Revised Guidance as of March 3, 2005 (In Millions, unless stated otherwise) Revised FY 2004(1) Revised FY 2005 ------------------ --------------- Sales $2.2 billion $2.3 - $2.4 billion Earnings from operations ~ $24 $0 - $ 35 Depreciation & amortization ~ 177 180 - 175 ---------- ----------- EBITDA ~ $201 $180 - $210 Asset impairments/ restructuring/other ~ 24 40 - 25 ---------- ----------- Adjusted EBITDA(2) ~ $225 $220 - $235 ========== =========== Capital Expenditures $154 ~ $145 (including Mexican low-pressure facility) Free Cash Flow break-even slightly negative (with A/R Securitization) (1) The Company's reported results of operations for fiscal year 2004 will reflect a change in year end for its foreign subsidiaries to January 31. Historically, the Company's foreign subsidiaries have had a fiscal year end of December 31 and the Company has reported on that 12-month period with respect to its foreign operations in its consolidated financial statements. (2) EBITDA, a measure used by management to measure operating performance, is defined as earnings from operations plus depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to exclude: (i) asset impairment losses and other restructuring charges; (ii) reorganization items; and (iii) other items. We reference these non-GAAP financial measures as a management group frequently in our decision making because they provide supplemental information that facilitates internal comparisons to historical operating performance of prior periods and external comparisons to competitors' historical operating performance. Institutional investors generally look to Adjusted EBITDA in measuring performance, among other things. We use Adjusted EBITDA to facilitate quantification of planned business activities and enhance subsequent follow-up with comparisons of actual to planned Adjusted EBITDA. In addition, incentive compensation for management is based on Adjusted EBITDA. Fiscal year 2004 Adjusted EBITDA includes approximately $11-$12 million attributable to the Company's Commercial Highway Hub and Drum business. We are disclosing these non-GAAP financial measures in order to provide transparency to investors. Adjusted EBITDA is not a recognized term under GAAP and does not purport to be an alternative to earnings from operations as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, these presentations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Del. Case No. 01-11490) and emerged in June 2003. Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meager & Flom represent the Debtors. * * * As reported in the Troubled Company Reporter on March 14, 2005, Moody's Investors Service assigned a B2 rating for the proposed new guaranteed senior unsecured notes of HLI Operating Company, Inc., an indirect subsidiary of Hayes Lemmerz International, Inc. Half of the net proceeds of the proposed notes will be applied to prepay existing senior secured term loans, with the other half to be used to either augment cash or repay outstanding revolver debt or accounts receivable securitization usage. Moody's additionally downgraded all of the existing ratings for HLI Opco in response to Hayes Lemmerz's weaker-than-anticipated consolidated free cash flow performance since its June 2003 reorganization out of Chapter 11 bankruptcy. Hayes Lemmerz will likely once again realize negative free cash flow generation during the fiscal year ending January 31, 2006, and will therefore have to rely on either its balance sheet cash or liquidity facilities in order to finance a portion of its cash interest obligations during this period. Moody's said the outlook for HLI Opco's ratings is stable after incorporating Moody's actions above. These specific rating actions were taken by Moody's: -- Assignment of a B2 rating for HLI Operating Company, Inc.'s proposed Euro 120 million guaranteed senior unsecured notes maturing 2012, to be issued under Rule 144A with registration rights; -- Downgrade to B2, from B1, of the rating for HLI Operating Company, Inc.'s $162.5 million remaining balance of 10.5% guaranteed senior unsecured notes maturing June 2010 (the original issue amount of $250 million was reduced as a result of an equity clawback executed in conjunction with Hayes Lemmerz's February 2004 initial public equity offering); -- Downgrade to B1, from Ba3, of the ratings for HLI Operating Company, Inc.'s approximately $527 million of remaining guaranteed senior secured bank credit facilities, consisting of: -- $100 million guaranteed senior secured bank revolving credit facility due June 2008; -- $450 million ($427.3 million remaining) guaranteed senior secured bank term loan facility due June 2009 (which term loan will be prepaid by approximately $73 million through application of about half of the net proceeds from the proposed notes offering); -- Downgrade to B1, from Ba3, of the senior implied rating; and -- Downgrade to B3, from B1, of the senior unsecured issuer rating, which rating does not presume the existence of subsidiary guarantees. HAYES LEMMERZ: Names Pieter Klinkers as Sales & Marketing VP ------------------------------------------------------------ Hayes Lemmerz International, Inc., has appointed Pieter Klinkers to the position of Vice President of Sales and Marketing for the Company's International Wheel Group, effective March 1, 2005. Pieter replaces Marc Hendrickx who was recently appointed as Vice President of the International Wheel Group's Aluminum Operations. Mr. Klinkers will report directly to President Fred Bentley. Mr. Pieter, 34, joins Hayes Lemmerz from Michelin's Wheel Group where he has worked since 1997. Mr. Pieter has served in a series of senior level marketing and sales positions with Michelin, most recently as Director of Sales and Marketing, based in Paris, France. Fluent in Dutch, English, German and French, Mr. Pieter holds a Masters degree in Business Administration from Maastricht University in the Netherlands. Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Del. Case No. 01-11490) and emerged in June 2003. Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meager & Flom represent the Debtors. * * * As reported in the Troubled Company Reporter on March 14, 2005, Moody's Investors Service assigned a B2 rating for the proposed new guaranteed senior unsecured notes of HLI Operating Company, Inc., an indirect subsidiary of Hayes Lemmerz International, Inc. Half of the net proceeds of the proposed notes will be applied to prepay existing senior secured term loans, with the other half to be used to either augment cash or repay outstanding revolver debt or accounts receivable securitization usage. Moody's additionally downgraded all of the existing ratings for HLI Opco in response to Hayes Lemmerz's weaker-than-anticipated consolidated free cash flow performance since its June 2003 reorganization out of Chapter 11 bankruptcy. Hayes Lemmerz will likely once again realize negative free cash flow generation during the fiscal year ending January 31, 2006, and will therefore have to rely on either its balance sheet cash or liquidity facilities in order to finance a portion of its cash interest obligations during this period. Moody's said the outlook for HLI Opco's ratings is stable after incorporating Moody's actions above. These specific rating actions were taken by Moody's: -- Assignment of a B2 rating for HLI Operating Company, Inc.'s proposed Euro 120 million guaranteed senior unsecured notes maturing 2012, to be issued under Rule 144A with registration rights; -- Downgrade to B2, from B1, of the rating for HLI Operating Company, Inc.'s $162.5 million remaining balance of 10.5% guaranteed senior unsecured notes maturing June 2010 (the original issue amount of $250 million was reduced as a result of an equity clawback executed in conjunction with Hayes Lemmerz's February 2004 initial public equity offering); -- Downgrade to B1, from Ba3, of the ratings for HLI Operating Company, Inc.'s approximately $527 million of remaining guaranteed senior secured bank credit facilities, consisting of: -- $100 million guaranteed senior secured bank revolving credit facility due June 2008; -- $450 million ($427.3 million remaining) guaranteed senior secured bank term loan facility due June 2009 (which term loan will be prepaid by approximately $73 million through application of about half of the net proceeds from the proposed notes offering); -- Downgrade to B1, from Ba3, of the senior implied rating; and -- Downgrade to B3, from B1, of the senior unsecured issuer rating, which rating does not presume the existence of subsidiary guarantees. HOST MARRIOTT: S&P Holds Low B-Ratings on Cert. Classes F & G ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on the commercial mortgage pass-through certificates from Host Marriott Pool Trust's series 1999-HMT. The affirmations reflect the rebound of the pool's overall operating performance in 2004 to levels comparable to those when Standard & Poor's lowered its ratings on five classes from this transaction in January 2003. Net cash flow (NCF) for this all-hotel portfolio increased 11% in 2004 from 2003. In addition, the loan is amortizing on a 20-year amortization schedule and has paid down by 15% to $565.2 million since issuance. The ratings also reflect the sponsorship provided by Host Marriott Corp. ('B+'), as well as the brand name recognition afforded by Marriott International Inc. ('BBB+'), Westin Hotels & Resorts (owned by Starwood Hotels & Resorts Worldwide Inc.; 'BB+'), and Hyatt Corp. This transaction comprises a single fixed-rate loan that was initially secured by eight cross-collateralized and cross- defaulted hotels including: * the New York Marriott Marquis; * the Drake Swissotel in Manhattan; * the San Francisco Airport Hyatt Regency; * the Chicago Swissotel; * the Cambridge Hyatt Regency; * the Reston Hyatt Regency; * the Boston Swissotel; and * the Atlanta Swissotel. In 2003, the management of the Boston Swissotel was changed to the Hyatt Regency brand, and management of the Atlanta Swissotel was turned over to Westin Hotels & Resorts. In addition, the borrower has requested the release of the Drake Swissotel from the mortgage pool. In its place will be the Westfields Marriott Conference Center in Chantilly, Va. and the Pentagon City Residence Inn in Arlington, Va. The largest asset is the New York Marriott Marquis (representing 41% of the pool's total NCF in 2004), which has seen revenue per available room (RevPAR) rebound to its level at ssuance. The substitution of the Drake Swissotel with two hotels from Virginia will reduce the portfolio's concentration risk to New York City to 41% from 52% of the allocated loan balance of the pool. The properties in this portfolio are full-service, business-oriented hotels located primarily in downtown central business district locations. Using results for the year ending Dec. 31, 2004 for the portfolio post the release and substitution of the Drake Swissotel and assuming a 6.0% increase in RevPAR for 2005, Standard & Poor's adjusted the royalty fees, incentive management fees, marketing and advertising expenses, and ground rent contained in the borrower's net operating income (NOI), to arrive at a stabilized NCF of $85.6 million. Utilizing a blended capitalization rate of 10.88%, the loan-to-value (LTV) is estimated at 72% and the debt service coverage ratio (DSCR) is 1.48x, based on a refinance rate of 10.25%. These levels compare to those at issuance (1999), when the LTV was 66% and the DSCR was 1.58x. While still down compared to issuance, the operating performance for this portfolio of hotels has improved during the past year (in 2004, overall occupancy was 76.5%, ADR was $178.96, and RevPAR was $141.26; this compares to 72.0%, $172.33, and $128.68, respectively, in 2003). The loan agreement calls for the servicer, Wells Fargo Bank N.A., to withhold all excess cash in the event that the base profit for any trailing 12-month period for the subject portfolio of hotels falls below $96 million (the "cash trap"). The loan went into the cash trap period as of July 3, 2002. When triggered, all excess cash flow after debt service and certain reserves is held as additional collateral. The release of the funds back to the borrower is dependent on maintaining a base profit in excess of $96 million for two consecutive quarters. As of March 2005, $52.3 million had been set aside in an escrow account. Ratings Affirmed Host Marriott Pool Trust Commercial mortgage pass-thru certs series 1999-HMT Class Rating ----- ------ A AAA C A+ D BBB+ E BBB- F BB G B INDEPENDENCE V: Fitch Rates $24.6 Million Preference Shares at BB- ------------------------------------------------------------------ Fitch Ratings affirms all classes of notes issued by Independence V CDO, Ltd. These affirmations are the result of Fitch's review process and are effective immediately: -- $378,581,395 class A-1 floating-rate notes due 2039 at 'AAA'; -- $84,000,000 class A-2A floating-rate subordinate notes due 2039 at 'AAA'; -- $15,000,000 class A-2B floating-rate subordinate notes due 2039 at 'AAA'; -- $56,400,000 class B floating-rate subordinate notes due 2039 at 'AA'; -- $25,096,500 class C floating-rate subordinate notes due 2039 at 'BBB'; -- $19,100,000 series 1 preference shares at 'BB-'; -- $5,500,000 series 2 preference shares at 'BB-'. The ratings of the class A-1, A-2A, A-2B, and B notes address the likelihood that investors will receive timely payments of quarterly interest and the ultimate repayment of principal. In addition, the rating on the class A-2A notes addresses the timely payment of monthly interest. The rating of the class C notes addresses the likelihood that investors will receive ultimate payment of scheduled and compensating interest and the ultimate repayment of principal. The rating on the series 1 preference shares addresses the ultimate payment of a 2% coupon and the ultimate repayment of principal. The rating on the series 2 preference shares addresses the ultimate payment of a 2% internal rate of return -- IRR -- and the ultimate repayment of principal. The principal and IRR of the series 2 preference shares is payable in Euros and is dependent on a deliverable currency swap transaction. Independence V is a collateralized debt obligation -- CDO -- managed by Declaration Management & Research, LLC, which closed Feb. 25, 2004. Independence V is composed of approximately 80% residential mortgage-backed securities -- RMBS, 10% commercial mortgage-backed securities -- CMBS, 5% asset-backed securities -- ABS, and 5% CDOs. Fitch discussed the current state of the portfolio with Declaration and their portfolio management strategy. Since the effective date on June 24, 2004, the collateral has continued to perform. The weighted average rating has remained stable from 4.05 (rated 'BBB' by Fitch) to 3.99 (rated 'BBB' by Fitch) as of the latest trustee report dated Feb. 28, 2005. The class A/B overcollateralization -- OC -- ratio has remained at 108.8%. The class C OC ratio has increased from 103.9% to 104.0%. As of the most recent trustee report available, Independence V contains no defaulted assets or assets rated 'CCC+' or lower. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/ INTEGRATED HEALTH: Florida AG Wants Divestiture Order Enforced -------------------------------------------------------------- In April 1999, Integrated Health Services, Inc., and its debtor-affiliates leased 14 skilled nursing facilities in Florida from Palm Garden Healthcare, Inc. Florida Convalescent Centers, Inc., guarantees Palm Garden's performance of all covenants and obligations under the Leases. However, the Leases did not identify Florida Convalescent as the owner or operator of the Florida Nursing Facilities. The IHS Debtors had sought and obtained U.S. Bankruptcy Court for the District of Delaware's approval to transfer the Facilities to new operators under an Operations Transfer Agreement, dated as of June 6, 2002. U.S. Assistant Attorney General Peter D. Keisler relates that as part of the Facilities' transfer, the Debtors and the new operators contemplated the IHS Debtors' assumption of the Facilities' Medicare provider agreements and their assignment to the new operators via a stipulation among the United States, on behalf of the Centers for Medicare & Medicaid Services, the IHS Debtors and the new operators. The Court approved the Medicare Stipulation, pursuant to which: -- the IHS Debtors and CMS each waive their rights to assert the right to further payments from the other, as the case may be, for underpayments or overpayments relating to the Medicare Provider Agreements; and -- the IHS Debtors, Transferees and CMS each will consider all cost reporting periods under the Medicare Provider Agreements prior to the Effective Date to be fully and finally closed in accordance with all applicable law. The Medicare Appeals Beginning in 2000, Florida Convalescent filed administrative appeals with the United States Department of Health and Human Services' Provider Reimbursement Review Board to challenge cost report determinations under the provider agreements for certain of the Facilities. Florida Convalescent also sought cost report adjustments resulting in amounts being due to it from CMS. The Appeals relate to cost reporting periods prior to both Palm Garden's transfer of the Facilities to the IHS Debtors and the IHS Debtors' transfer of the Facilities pursuant to the new operators. Florida Convalescent alleged to be the owner and operator of the Facilities notwithstanding the identification of Palm Garden as the owner and operator of the Facilities in the Leases and the Divestiture request. By letter dated January 26, 2005, CMS asked Florida Convalescent to withdraw the Medicare Appeals. However, Florida Convalescent ignored the request. Mr. Keisler argues that Florida Convalescent lacks standing to pursue the Medicare Appeals since it was not the provider of services during the cost reporting periods involved in the Medicare Appeals and is barred by applicable law from receiving payment from CMS. Furthermore, only the Debtors have standing to pursue the Medicare Appeals and they, under the Medicare Stipulation, have expressly waived any right to further payment from CMS under the Facilities' provider agreements and agreed that all cost reporting periods under the Facilities' provider agreements were fully and finally closed. Mr. Keisler points out that although Palm Garden and Florida Convalescent received notice of the Divestiture request, neither party objected to the Divestiture Order or the Medicare Stipulation. Thus, neither party can be heard to complain now about the effect of the Divestiture. Accordingly, the United States of America, on behalf of the United States Department of Health and Human Services, and CMS, as its designated component, ask the Court to enforce the terms of the Medicare Stipulation and the Divestiture Order. The Health Department asks Judge Walrath to compel Florida Convalescent and Palm Garden to withdraw all appeals with respect to the Facilities' Medicare provider agreements. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTEGRATED HEALTH: Del Negro Wants Compliance with Briarwood Deal ----------------------------------------------------------------- In November 2002, Nicholas Del Negro was admitted to an Integrated Health Services, Inc., facility for rehabilitation after surgery. While a patient of the facility, Mr. Del Negro developed a severe bedsore that was left untreated requiring his hospitalization in February 2003. Etta R. Wolfe, Esq., at Smith, Katzenstein & Furlow LLP, in Wilmington, Delaware, relates that Mr. Del Negro's condition had been allowed to deteriorate to an extent that six months of hospitalization care was unable to save him. Mr. Del Negro died on August 16, 2003. Pamela Del Negro, as personal representative of her husband and his Estate, brought suit for her husband's death in the Sarasota State Court in Florida, against the Debtors. On January 28, 2003, the IHS Debtors sold substantially all of their assets to Abe Briarwood Corp. Pursuant to the Stock Purchase Agreement, essentially all of the IHS Debtors' assets, except for certain excluded assets were to be transferred to a newly created entity to be named IHS Long Term Care, Inc. Briarwood was then to acquire the stock of IHS LTC. In consideration for IHS LTC, Briarwood was to pay the IHS Debtors $100,000,000, and IHS LTC was to assume essentially all of the IHS Debtors' postpetition nursing home negligence liabilities. Prior to the sale, the negligence liabilities were determined by a risk analysis company to have a value of $130,000,000. Prior to confirmation of IHS Plan of Reorganization, Briarwood guaranteed that IHS LTC would have sufficient assets to cover the $130,000,000 in postpetition nursing home negligence liabilities. The Debtors and Briarwood closed on the Stock Purchase Agreement on August 20, 2003. IHS LTC denies and has repeatedly denied that it assumed liability for the Debtors and their subsidiaries' postpetition nursing home negligence liabilities that were clearly included under the Stock Purchase Agreement. Ms. Wolfe, however, notes that representatives of IHS LTC and Briarwood have contacted plaintiffs' attorneys in postpetition nursing home negligence cases across the county there is a rapidly depleting insurance coverage or no insurance coverage, and that the plaintiff has the choice of accepting a settlement of $15,000 to $30,000 or there will be nothing left for them to recover. Pamela Del Negro believes that IHS LTC has assumed the Debtors' postpetition nursing home negligence liabilities under the Stock Purchase Agreement. By this motion, Ms. Del Negro ask the U.S. Bankruptcy Court for the District of Delaware to compel IHS LTC to comply with the IHS Debtors' Reorganization Plan and Stock Purchase Agreement. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTEGRATED HEALTH: Trust Has Until April 7 to Remove Civil Actions ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware enlarged the period within which IHS Liquidating, LLC, the successor-in-interest to Integrated Health Services, Inc., and its debtor-affiliates can file notices of removal with respect to civil actions pending on the bankruptcy petition date, through and including April 7, 2005. IHS Liquidating is responsible for, inter alia, litigating, settling or otherwise resolving disputed claims against the Debtors, some of which are the subject of actions currently pending in the courts of various states and federal districts. According to Alfred Villoch, III, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, IHS Liquidating is in the process of investigating the Prepetition Actions to determine which, if any, of these matters will be litigated, and if so, whether they should be removed pursuant to Rule 9027(a) of the Federal Rules of Bankruptcy Procedure. The extension sought, Mr. Villoch tells Judge Walrath, affords IHS Liquidating an opportunity to make more fully informed decisions concerning the removal of each Prepetition Action and will assure that IHS Liquidating does not forfeit the valuable rights afforded to it under Section 1452 of the Bankruptcy Code. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue Nos. 88 & 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERSTATE BAKERIES: Taps Assessment Tech. as Tax Consultant ------------------------------------------------------------ Interstate Bakeries Corporation and its debtor-affiliates seek the U.S. Bankruptcy Court for the Western District of Missouri's authority to employ Assessment Technologies Ltd., as their property tax consultant. Assessment Technologies is one of the largest ad valorem tax consulting firms in the Southwest with more than 40 tax professionals operating out of its offices in Houston and San Antonio, Texas. The firm's staff is comprised of economists, appraisers, tax strategists and client service professionals. Due to Assessment Technologies' excellent track record of producing significant tax savings, on February 25, 2005, the Debtors engaged the firm to assist them in appealing tax assessments and challenging tax claim amounts for certain property owned, managed or leased by the Debtors. As the Debtors' tax consultant, Assessment Technologies will: (a) review targeted tax assessments on the Debtors' properties, including supporting data, calculations and assumptions produced by the appropriate appraisal or assessing authority, together with information provided by the Debtors; (b) represent the Debtors before appropriate tax assessing, collecting and court authorities using reasonable, appropriate and available means to adjust the assessment, unclaimed tax or claimed tax amount; and (c) use local, state or federal remedies available. The Debtors will pay the firm 35% of all Net Tax Savings received for each tax year, payable within 45 days of the later of: (i) the invoice date; (ii) Court approval of the fees; or (iii) the date the Debtors realize the cash equivalent receipt of sufficient Tax Savings to satisfy, in whole or part, the amount invoiced. The Debtors will reimburse Assessment Technologies for all reasonable and customary special property tax counsel legal fees, third party appraisal fees, travel expenses and any other fees incurred by the firm in pursuing Tax Savings, at cost out of the first dollars of Tax Savings. The Debtors have authorized an initial budget of $250,000 for all Reimbursable Expenses. James F. Hausman, Jr., a Partner and President of Assessment Technologies, assures the Court that the firm's principals and professionals: -- do not have any connection with the Debtors, their creditors, or any other party-in-interest, or their attorneys or accountants; -- are "disinterested persons" under Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b); and -- do not hold or represent an interest adverse to the Debtors' estate. 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) IRVING TANNING: Gets Okay to Access $14.5 Mil. of Cash Collateral ----------------------------------------------------------------- Irving Tanning Company sought and obtained authority from the Honorable Louis H. Kornreich of the U.S. Bankruptcy Court for the District of Maine to use up to $14.5 million cash collateral securing repayment of prepetition obligations to Bank North. Judge Kornreich granted the company interim authority to use the lender's cash collateral through April 19, 2005, to honor non- salary payroll obligations, and pay postpetition operating expenses. Larry Grard, writing for the Morning Sentinel, reports that prepetiton obligations owed to Irving Tanning's salaried employees will be considered at a later date. Mr. Grard reports that Irving Tanning is, by far, the largest employer in Hartland, Maine. Operating in Hartland since 1936, Mr. Grard adds that Irving Tanning is one the few remaining tanneries in the country. Without citing a source, Mr. Grard reports that Irving Tanning's annual sales approximate $65 million. Irving Tanning filed for Chapter 11 bankruptcy protection earlier this month after Bank North cut off access to the company's working capital facility. This is Irving Tanning's second chapter 11 filing. The company emerged from a previous chapter 11 proceeding filed in 2001. Headquartered in Hartland, Maine, Irving Tanning Company, -- http://www.irvingtanning.com/-- is a leading supplier of leather to global footwear, handbag and personal leather goods industries. The Company filed for chapter 11 protection on March 17, 2005 (Bankr. D. Maine Case No. 05-10423). Michael A. Fagone, Esq., at Bernstein, Shur, Sawyer & Nelson, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $22 million and total debts of $15 million. JP MORGAN: Fitch Upgrades $7.8 Million Class G to BB- ----------------------------------------------------- Fitch Ratings upgrades JP Morgan Chase Commercial Securities Corp., series 2001-A: -- $10.8 million class D to 'AAA' from 'AA'; -- $3.4 million class E to 'A+' from 'A'; -- $5.1 million class F to 'BBB' from 'BBB-'; -- $7.8 million class G to 'BB-' from 'B+'. In addition, Fitch affirms these classes: -- $38.1 million class A-2 'AAA'; -- Interest-only class X 'AAA'; -- $6.8 million class B 'AAA'; -- $7.9 million class C 'AAA'. Fitch does not rate the $11.7 million NR class. The upgrades reflect the improved credit enhancement levels since issuance and a better-than-expected performance of the pool. As of the March 2005 distribution date, the pool's collateral balance has been reduced 20% to $91.4 million from $113.8 million at issuance. Currently, one loan (4%) is in special servicing and real estate owned -- REO. The REO loan is secured by a hotel in Dallas, Texas. The property has been listed for sale and several offers have been received. Losses are expected to be absorbed by the NR class. Fitch has concerns with the concentrations within the deal. The deal is collateralized by 64% retail properties, 9% health care, and 4% hotel. In addition, the largest loan, represents 26% of the overall transaction. The majority of the collateral in this transaction are loans that were originated for securitization but were removed from prospective conduit pools. While Fitch is also concerned with the concentrations within the pool and the anticipated losses, upgrades are warranted given the paydowns and overall stable performance. KAISER ALUMINUM: Asks Court to Approve Erie Property Transfer ------------------------------------------------------------- Kaiser Aluminum & Chemical Corporation owns real property and improvements located at 1015 East 12th Street in Erie, Pennsylvania, approximately 12 blocks away from Lake Erie. The Erie Property consists of: (1) 12 developed acres of land on which an aluminum forging plant owned and formerly operated by KACC is located; and (2) 25 undeveloped acres, a portion of which is occupied by a golf driving range owned and operated by a third-party. There also previously existed a pond on the undeveloped acres that, until 1979, was used to deposit by-products and other substances from the Forging Plant. In 1980, KACC covered the Former Pond with soil and vegetation cover, in accordance with a plan reviewed by the Pennsylvania Department of Environmental Resources, now known as the Pennsylvania Department of Environmental Protection. As a result of the historical activities of the Forging Plant and use of the Former Pond, there may still exist environmental consideration that will likely require investigation and potential remediation work to bring the Erie Property into compliance with standards under applicable environmental laws and regulations. At this time, the extent and nature of the remediation, if any, remain uncertain. Joint Venture with Accuride Corporation In 1997, KACC concluded negotiations with Accuride Corporation to form a joint venture that could conduct operations using a significant portion of the Forging Plant. Pursuant to a limited partnership agreement dated as of May 1, 1997, KACC, Accuride and its wholly owned subsidiary, Accuride Ventures, Inc., formed Accuride Erie L.P., to design, manufacture and sell heavy duty aluminum wheels, which would be produced at the Forging Plant. At the time, KACC and Accuride Ventures each held a 49% limited partnership interest in Accuride Erie, while their general partner, AKW General Partners, LLC, held the remaining 2% of the limited partnership. As a part of its contribution to the joint venture, KACC entered into a lease agreement with Accuride Erie, pursuant to which Accuride Erie was allowed to lease a substantial portion of the Forging Plant for nominal rent. The Erie Lease Agreement expires in 2012, but contains an option to extend the term for several years. Shortly after the formation of AKW Partners, KACC decided to cease its remaining operations at the Forging Plant, leaving AKW Partners as the sole user of the facility. In accordance with KACC's long-term plants, KACC, by a purchase agreement, dated April 1, 1999, subsequently sold all of its various partnership interests in Accuride Erie to Accuride and Accuride Ventures for substantial value. Pursuant to the Accuride Purchase Agreement, KACC was required to amend the Lease Agreement to permit Accuride Erie to continue its operations at the Forging Plant under certain modified terms reflecting KACC's exit from the Forging Plant. Transfer of KACC's Erie Property Interests In 1999 and 2000, the Greater Erie Industrial Development Corporation, which develops and manages industrial and business parks and buildings throughout Erie County, Pennsylvania, approached KACC regarding the potential acquisition of the undeveloped parcel of the Erie Property for re-using and, if necessary, remediating the property and subsequently redeveloping, remarketing or selling it to a third-party. While the initial discussions never materialized into a definitive proposal acceptable to both parties -- in part, because KACC wanted to complete divestment of its remaining interests in and related to the Erie Property -- the Greater Erie Corp. continued to approach KACC, from time to time, regarding a potential acquisition of the Erie Property. In 2003, after KACC had explored the possibility of marketing the Erie Property as a part of a larger sale transaction in its Chapter 11 case, the Greater Erie Corp. expressed a renewed interest in a potential transaction. Consequently, another round of negotiations continued into and progressed throughout 2004. Because of its long-term leasehold interests in the Erie Property and the Forging Plant, Accuride also participated in other negotiations. In 2004, based on the progress made by the parties in their negotiations, KACC formulated and sent to the Greater Erie Corp. and Accuride an initial draft of definitive documentation regarding the transfer of their various interests in and related to the Erie Property. The parties exchanged comments regarding the documentation for the next several months. Due to a misperception as to a delay in finalizing the terms of the definitive documentation, the Greater Erie Corp. caused a motion for relief from stay to be filed by the Erie-Western Pennsylvania Port Authority. In the Lift Stay Motion, the Erie Port Authority asked the U.S. Bankruptcy Court for the District of Delaware to allow it to commence a condemnation proceeding against KACC in state court regarding the portion of the Erie Property that the Greater Erie Corp. sought to acquire. The Erie Port Authority's intention was to ultimately convey the property to the Greater Erie Corp. Notwithstanding the Lift Stay Motion, which the Erie Port Authority agreed to continue until the April 25, 2005, omnibus hearing, KACC, the Greater Erie Corp., and Accuride met again in March 2005 to finalize the terms of a potential transaction. As a result, the parties reached an agreement regarding the principal terms of the proposed transfer of KACC's remaining interests in and related to the Erie Property. The Erie Property Transfer consists of two components: (1) The Greater Erie Corp., KACC, Accuride Erie and Erie Land Holding, Inc. -- an affiliate of Accuride -- will enter into an agreement that: (i) transfers title in the Erie Property, including the Forging Plants and related assets, to the Greater Erie Corp.; and (ii) allocates any future environmental clean-up responsibilities of the parties with respect to the assets. (2) KACC, Accuride, Accuride Erie and AKW Partners will enter into a settlement agreement that resolves any remaining issues regarding the Accuride Purchase Agreement, the Erie Lease Agreement, and any other agreements related to the Accuride Erie or the Erie Property. By this motion, the Debtors ask the Court to approve the Erie Property Agreement and the Settlement Agreement. Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) KIMBERLY OREGON: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Kimberly Oregon Realty, Inc. Aka KORI, Inc. P.O. Box 1809 Rancho Santa Fe, California 92067 Bankruptcy Case No.: 05-02313 Chapter 11 Petition Date: March 22, 2005 Court: Southern District of California (San Diego) Judge: James W. Meyers Debtor's Counsel: Thomas B. Gorrill, Esq. 401 West A Street Suite 1770 San Diego, California 92101 Tel: (619) 237-8889 Estimated Assets: $10 Million to $50 Million Estimated Debts: $1 Million to $10 Million The Debtor did file its list of 20 Largest Unsecured Creditors. KITCHEN ETC: Clear Thinking to Administer Reorganization Plan ------------------------------------------------------------- Clear Thinking Group, LLC, a retail/consumer products manufacturing consultancy headquartered here, and Joseph Myers, a partner and managing director, have been named plan administrator in a Plan of Reorganization and Disclosure Statement filed by Exeter, N.H.-based kitchenware and tabletop retailer Kitchen Etc., Inc. The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware confirmed the Second Amended Liquidating Plan of Reorganization filed by Kitchen Etc., Inc., on January 31, 2005. As reported in the Troubled Company Reporter on Dec. 27, 2004, the Plan provides for the appointment of a Plan Administrator who will act as the sole representative of the Debtor upon the Effective Date of the Plan and who will have the authority and power to make the required distributions under the Plan. In accordance with the plan, Mr. Myers and select staff from Clear Thinking Group's Creditors Rights Practice have created a liquidated assets trust to enable the debtor to pay its administrative and general unsecured claims. As plan administrator, the firm will also assist the debtor in meeting obligations established under terms of the Plan of Reorganization and Disclosure. During the height of its success, Kitchen Etc., operated 17 upscale brick- and-mortar stores in Massachusetts, New York, Delaware, Maryland, Connecticut, Virginia, New Hampshire, Pennsylvania and Rhode Island. It also maintained an online store, fulfilling orders through warehouses in Exeter as well as in Amesbury, Mass. The merchant filed for Chapter 11 bankruptcy protection in June 2004, citing weak sales (particularly in the bridal-related category) and rising warehousing and distribution costs. About Clear Thinking Group Clear Thinking Group, LLC -- http://www.clearthinkinggrp.com/-- provides a wide range of strategic consulting services to retail companies, consumer product manufacturers/distributors and industrial companies. The national advisory organization specializes in assisting small- to mid-sized companies during times of growth, opportunity, strategic change, acquisition, and crisis. Headquartered in Exeter, New Hampshire, Kitchen Etc., Inc. -- http://www.kitchenetc.com/-- was a multi-channel retailer of household cooking and dining products. Kitchen Etc. filed for chapter 11 protection on June 8, 2004 (Bankr. Del. Case No. 04- 11701) and quickly retained DJM Asset Management to dispose of all 17 Kitchen Etc. stores throughout New England, New York, Delaware, Pennsylvania, Maryland and Virginia. Bradford J. Sandler, Esq., at Adelman Lavine Gold and Levin, PC, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $32,276,000 in total assets and $33,268,000 in total debts. KMART CORPORATION: Footstar Wants Retailer Held in Contempt ----------------------------------------------------------- Pursuant to Section 365(d) of the Bankruptcy Code, Kmart Corporation asked the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay to require Footstar, Inc., to vacate certain Kmart stores. On February 3, 2005, Kmart notified Footstar that it plans to begin the reconfiguration of Stores scheduled for conversion to an alternative format in April. Kmart instructed Footstar that, by as early as February 21, 2005, Footstar could either vacate those Stores or have the footwear departments in those Stores relocated around the conversion-related construction until the conversion date -- when Footstar would be evicted. Julie A. Younglove-Webb, Vice President/Space Planning for Kmart Corporation, explains that as a result of Sears, Roebuck and Co.'s acquisition of 50 Kmart and six Wal-Mart stores finalized in the third quarter 2004, 25 Sears Essentials stores are scheduled to open this Spring. Following the opening of Sears Essentials, Sears' point-of-sale systems will track store sales and transmit this information to Sears' headquarters in Hoffman Estates, Illinois, for recording, analysis and decision-making by Sears' employees. Among other effects of this switch from Kmart to Sears POS systems is that Kmart's merchandise, including that sold by Footstar, will not be capable of being scanned in the store. Kmart also asserts that, because in the course of Footstar's Chapter 11 cases Footstar has not taken the position that Store Closings have violated the automatic stay, Footstar has waived its right to do so. Footstar Wants Court to Hold Kmart in Contempt Footstar, Inc., reminds the U.S. Bankruptcy Court for the Southern District of New York that the automatic stay is the most fundamental protection afforded to debtors under the Bankruptcy Code. The stay prohibits counterparties to executory contracts from terminating these contracts without court authorization. Kmart Corporation, Footstar's counterparty under the Master Agreement, has violated the automatic stay by seeking to terminate Footstar's rights under the Master Agreement to operate footwear departments in Kmart Stores. Paul M. Basta, Esq., at Weil, Gotshal & Manges LLP, in New York, argues that Kmart' s actions are an inexplicable flouting of the automatic stay. Undeterred by not having received the ruling from the Court on its current motion seeking relief from the automatic stay to terminate the Master Agreement wholesale, Kmart now seeks to terminate Footstar's rights with respect to each individual store it "converts" to another retail format. Kmart has no substantive basis under the Master Agreement to terminate Footstar's contractual rights and evict Footstar from Stores. Mr. Basta explains that Kmart is seeking to deprive Footstar of a very valuable property of the estate by deeming the Master Agreement terminated on a Store-by-Store basis on the theory that Kmart's decision to convert any or all Stores in which Footstar currently operate results in an automatic "lapse" of Footstar's exclusive right to operate the footwear departments. Mr. Basta asserts that those rights, however, are property of substantial value to Footstar's estates, which the stay explicitly protects. Kmart simply asserts that there is "no restraint on [its] ability to close or sell as many stores as it chooses" regardless of the impact on Footstar's property rights. Kmart is wrong. According to Mr. Basta, there is a restraint -- it is codified in Section 362 of the Bankruptcy Code. Kmart cannot just blithely ignore the law and evict Footstar on a Store-by-Store basis. Kmart's refusal to comply with the terms of the Master Agreement and its threats to immediately oust Footstar from certain Stores impedes Footstar's ability to effectively run its business. The Termination Notice provides Footstar with less than three weeks' notice of Kmart's plans to substantially disrupt -- or end -- its operations in certain Stores. Mr. Basta reminds the Court that in 48th St. Steakhouse, Inc. v. Rockefeller Group, Inc. (In re 48th St. Steakhouse, Inc.), 835 F.2d 427, 430 (2d Cir. 1987), the Second Circuit granted summary judgment in favor of a debtor sub-tenant, where the debtor sub- tenant claimed that a landlord's act of sending a lease termination notice to the non-debtor prime-tenant violated the protections afforded to the debtor under Section 362. The Second Circuit held that "a mere possessory interest in real property, without any accompanying legal interest, is sufficient to trigger the protection of the automatic stay." Agreeing with both of the lower courts, the Second Circuit found that, because landlord's attempt to terminate the prime lease would have resulted in destruction of the debtor's sub-tenancy, notice of the termination violated the automatic stay with respect to the debtor, and accordingly, was void. Mr. Basta argues that even if Kmart had the right to terminate, its ability to issue a notice of termination is stayed as a result of the commencement of Footstar's Chapter 11 case and the application of Section 362 and the principles in 48th Street Steakhouse. Accordingly, any notice of termination can be effective if and only if the Court lifts the automatic stay to authorize delivery of a termination notice. The United States Court of Appeals for the Second Circuit has held that "[for [non-individual] debtors, contempt proceedings are the proper means of compensation and punishment for willful violations of the automatic stay." Mr. Basta maintains that a finding of civil contempt is appropriate where the stay is knowingly violated in deliberate disregard of the bankruptcy rules pertaining to the requirements for relief from stay. To be held in civil contempt for violation of the automatic stay, one need only have "actual notice of the automatic stay." Mr. Basta contends that it is undeniable that Kmart knew of the automatic stay, as evidenced by, among the most obvious, Kmart's currently pending request to lift the stay to terminate the Master Agreement. Kmart has deliberately chosen to disregard Footstar's rights and has instead caused Footstar to expend significant resources in protecting its estates. Kmart should be held in contempt for violating the automatic stay. Footstar also asks the Court to assess compensatory damages, including costs and attorney's fees, as a result of Kmart's knowing, willful, and deliberate violation of the automatic stay. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 91; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART: Completes Sears Merger, Creating Nation's No. 3 Retailer --------------------------------------------------------------- Kmart Holding Corporation (NASDAQ: KMRT) and Sears, Roebuck and Co. (NYSE: S) completed the merger transaction announced on November 17, 2004, combining Sears and Kmart into a major new retail company named Sears Holdings Corporation. Sears Holdings is the nation's third largest retailer, with approximately $55 billion in annual revenues and a national footprint of nearly 3,500 retail stores in the United States, including 2,350 full- line and off-mall stores, and 1,100 specialty retail stores. Starting March 28, 2005, Sears Holdings stock will be listed for trading on the Nasdaq National Market under the ticker symbol "SHLD." Kmart and Sears shareholders approved the combination at their special shareholder meetings held this past Thursday. Edward S. Lampert, chairman of Sears Holdings, said, "This new enterprise will seek to leverage the combined strengths of Sears and Kmart to create greater long-term value than either could have generated on a stand-alone basis. Sears Holdings plans to offer customers a new, more compelling shopping experience with a differentiated and expanded product range. We believe Sears Holdings has the potential to be a great company with a truly great retail business." Alan J. Lacy, vice chairman and chief executive officer of Sears Holdings said, "This combination accelerates Sears' off-mall strategy and gives customers a complete, convenient shopping solution. Shoppers will have greater access to the leading proprietary brands of both Kmart and Sears, along with financial services products and the industry's leading service organization. With a national store base of nearly 3,500 stores, we expect to be able to leverage our scale and strategically grow the business." Aylwin B. Lewis, president of Sears Holdings and chief executive officer of Kmart and Sears Retail, said, "With the close of the merger, we will focus on successfully executing the integration plan for Sears Holdings and building the foundation for a strong future. As we go forward, we will continue to count on the dedication and hard work of Sears and Kmart associates. The hallmarks of our new enterprise will continue to be performance and dedication to quality products and customer service, and we aim to instill these traits throughout our corporate culture." Under the terms of the transaction, Kmart shareholders received one share of new Sears Holdings common stock for each Kmart share. Sears, Roebuck shareholders had the right to elect either $50.00 in cash or 0.5 of a share of Sears Holdings for each Sears, Roebuck share. Shareholder elections will be prorated to ensure that in the aggregate 55 percent of Sears, Roebuck shares are converted into Sears Holdings shares and 45 percent of Sears, Roebuck shares are converted into cash. Sears Holdings expects to announce preliminary proration calculations prior to the opening of the market on Monday, March 28, 2005. Sears Holdings, headquartered in Hoffman Estates, Ill., is the holding company for the Sears, Roebuck and Kmart businesses, which will continue to operate separately under their respective brand names. Kmart will continue to have a presence in Michigan. Sears Holdings is drawing on an accomplished group of leaders from both companies: Mr. Lampert serves as chairman of Sears Holdings; Mr. Lacy, vice chairman and chief executive officer of Sears Holdings; Mr. Lewis, president of Sears Holdings and chief executive officer of Kmart and Sears Retail; and William C. Crowley, executive vice president and chief financial officer of Sears Holdings. Messrs. Lampert, Lacy, Lewis and Crowley are joined on a 10-member Sears Holdings board of directors by Ann N. Reese, Founder and Executive Director of the Center for Adoption Policy Studies and former Chief Financial Officer of ITT Corp.; Steven T. Mnuchin, Chairman and Co-Chief Executive Officer of Dune Capital Management LP; Julian C. Day, former President and Chief Executive Officer of Kmart; Michael A. Miles, former Chairman of the Board and Chief Executive Officer of Philip Morris Companies Inc.; Donald J. Carty, former Chairman of the Board and Chief Executive Officer of AMR Corporation and American Airlines, Inc.; and Thomas J. Tisch, Managing Partner of Four Partners, a private investment firm. About Sears Holdings Corporation Sears Holdings Corporation is the nation's third largest broadline retailer, with approximately $55 billion in annual revenues, and with approximately 3,800 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. For more information, visit Sears Holdings' website at http://www.searshc.com/ About Kmart Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. LEVITZ: S&P Cuts Ratings to CCC as Competitive Pressures Increase ----------------------------------------------------------------- Standard & Poor's Ratings Services cut Levitz Home Furnishings Inc.'s debt rating to junk last week and S&P says the outlook is negative outlook. S&P credit analyst Robert Lichtenstein says the downgrade to CCC from B- was based on a "sharp decline in profitability in the fiscal third quarter (ended Dec. 31), which has narrowed its liquidity position." Clint Engel at Furniture Today reports that the news from S&P comes about four months after LHFI closed on a $130 million bond refinancing package that it said would enable the company to retire older, high-interest debt and free capital for expansion and other purposes. The November bond financing was a private placement. Levitz operates 143 Levitz and Seaman's stores in 11 states. S&P notes that Raymour & Flanigan has plans to move into metro New York, where about 50% of LHFI's stores are concentrated. LHFI President and Chief Operating Officer Mark Scott, wouldn't disclose sales or earnings to Mr. Engel, but said, "We had a bad quarter," with written sales down 2.4% and delivered business down 8.1% from the same period a year ago. Still, written business was up 2.1% on the East Coast for both Levitz and Seaman's stores, Mr. Engle relates, noting that the gain came in the face of competition from going-out-of-business sales at closing Huffman Koos stores. Mr. Engle reports that Mr. Scott said LHFI faced erratic deliveries from vendors during the period, which he attributed to fallout from the Chinese bedroom antidumping issue and manufacturers' own credit and liquidity issues after taking hits with the bankruptcy filings of Breuners Home Furnishings Corp. and Rhodes last year. LIONEL LLC: Has Until January 2006 to File Reorganization Plan -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York, overseeing Lionel L.L.C.'s reorganization, granted the Company's request to extend its exclusive period for filing a plan of reorganization through January 2006. During this period no other party-in-interest may propose a chapter 11 plan. At the same hearing, the court also denied a separate motion by Mike's Train House that would have granted MTH greater access to Lionel's historical operating documents and information. "We're extremely pleased and gratified to have received the Court's support in these two critical matters," said Jerry Calabrese, Lionel's CEO. "The judge's ruling guarantees that Lionel will continue doing business exactly as it has done in the past, by making the products our fans want, and selling them at prices people can afford. We now have all the time we need to complete our product development and sales initiatives that made 2004 our best year in recent memory, and we expect even better results this year. "As we approach the one year anniversary of the MTH verdict, Lionel is truly resurgent on all fronts, and getting stronger every day. In addition to the very real gains we've recently enjoyed in our business, the court's vote of confidence ensures that we will also continue and complete our efforts to appeal and overturn what we truly believe was an unjust verdict in favor of MTH," Mr. Calabrese concluded. In January 2005, Lionel received approval of its DIP financing and also filed its appeal of the MTH verdict. Headquartered in Chesterfield, Michigan, Lionel LLC -- http://www.lionel.com/-- is a marketer of model train products, including steam and die engines, rolling stock, operating and non- operating accessories, track, transformers and electronic control devices. The Company filed for chapter 11 protection on Nov. 15, 2004 (Bankr. S.D.N.Y. Case No. 04-17324). Abbey Walsh Ehrlich, Esq., at O'Melveny & Myers, LLP, represents the Debtors on their restructuring efforts. When the Company filed for protection from its creditors, it estimated assets between $10 million and $50 million and estimated debts more than $50 million. LYNX 2002-I: Moody's Junks $20 Million Class D Floating Rate Notes ------------------------------------------------------------------ Moody's Investors Service announced today that it had lowered the ratings of two classes of notes issued by LYNX 2002-I, LTD.: (1) to Baa3 (from Baa2 on watch for possible downgrade), the U.S. $97,000,000 Class C Floating Rate Notes, Due 2032 and (2) to Caa3 (from B3 on watch for possible downgrade), the U.S. $20,000,000 Class D Floating Rate Notes, Due 2032. Moody's noted that, as of the most recent monthly report on the transaction, the Class C Overcollateralization Test, the Class D Overcollateralization Test, and the Weighted Average Rating Factor Test were in violation. Rating Action: Downgrade Issuer: LYNX 2002-I, LTD. Tranche: U.S. $97,000,000 Class C Floating Rate Notes, Due 2032 * Prior Rating: Baa2 on watch for possible downgrade * Current Rating: Baa3 Tranche: U.S. $20,000,000 Class D Floating Rate Notes, Due 2032 * Prior Rating: B3 on watch for possible downgrade * Current Rating: Caa3 MARINER HEALTHCARE: Wants Summary Judgment Against Former Officers ------------------------------------------------------------------ As previously reported, on September 3, 2002, Arthur W. Stratton, Jr., M.D., David M. Hansen, Paul J. Diaz, and Douglas Stone, former officers and directors of Mariner Health Group, Inc., and Mariner Post-Acute Network, Inc., commenced an action against Marine Health Care, Inc., in the Court of Chancery for the State of Delaware to: (a) enforce certain alleged indemnification obligations arising under (i) a prepetition merger agreement between MHG and Paragon Health Network, Inc., (ii) MHG's prepetition bylaws and certificate of incorporation, and (iii) Delaware law; and (b) seek a determination that MHC breached a requirement in the Merger Agreement to maintain directors' and officers' insurance coverage. On September 17, 2002, MHC removed the Delaware Action to the United States Bankruptcy Court for the District of Delaware. On that same day, MHC commenced a separate action in the Bankruptcy Court seeking: (i) a declaration that the Indemnification Claims were discharged pursuant to Section 1141 of the Bankruptcy Code; (ii) a declaration that commencement of the Delaware Action violated the Plan, the Confirmation Order and Section 524(a) of the Bankruptcy Court; (iii) a preliminary and permanent injunction enjoining the Former Officers from continuing to prosecute the Delaware Action; and (iv) monetary damages for violation of the Plan, the Confirmation Order and Sections 524(a) and 1141, and the payment of monetary damages stemming from that violation. On September 25, 2002, MHC filed its answer and counterclaim in the Delaware Action. On October 17, 2002, the Former Officers filed a motion to remand the Delaware Action back to the Delaware Chancery Court. The Motion to Remand was amended on November 17, 2002. MHC objected, arguing that the entire Delaware Action was void ab initio because the Former Officer commenced the Delaware Action in violation of the discharge injunction. MHC sought that the Delaware Action be dismissed. After oral argument, the Bankruptcy Court issued a written opinion on December 16, 2003. The Opinion and the subsequent consent judgment entered on April 22, 2004, denied the Motion to Remand and dismissed the Former Officers' claims in the Delaware Action. The Court found that: (i) the confirmation of the Plan discharged the Former Officers' claims; (ii) the Former Officers had several conversations with the Debtors' counsel regarding the Plan's discharge of their prepetition claims before they filed the Delaware Action; and (iii) the Former Officers had full knowledge of the Plan and its impact when they filed the Delaware Action. Although the Bankruptcy Court dismissed all of the Former Officers' claims in the Delaware Action, the Court did not issue a final judgment with respect to MHC's counterclaim nor did the Court dismiss any of the parties' claims in the Enforcement Action. Against this backdrop, MHC asks the Court to declare that: (a) the Indemnification Claims are discharged pursuant to Section 1141; and (b) the Delaware Action violated the Plan, the Confirmation Order and Section 524(a). MHC wants the Former Officers enjoined from prosecuting the Delaware Action. MHC also seeks monetary damages for the Former Directors' violation of the Plan, the Confirmation Order and Section 524(a). MHC reserves the issue of the amount of the damages pending trial or further motion. Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, contends that the summary judgment is appropriate based on: * The express language of the Confirmation Order, which provides that "any person or entity injured by any willful violation of such injunction shall recover actual damages, including costs and attorneys' fees, and in appropriate circumstances, may recover punitive damages from the willful violator"; and * The Court's power to impose civil contempt sanctions under Section 105(a) of the Bankruptcy Code upon finding that: -- a valid order of the Court exists; -- the Former Officers had actual knowledge of the order; and -- the Former Officers disobeyed that order. Mr. Silberglied emphasizes that the Court has held in its December 16 Opinion that the Former Officers violated the discharge injunction by pursuing the Delaware Action with full knowledge of the Confirmation Order and the Plan's discharge of their claims. Former Officers Want MHC's Claims Dismissed Gregory W. Werkheiser, Esq., Morris, Nichols, Arsht & Tunnell, in Wilmington, Delaware, tells Judge Walrath that the record as of June 14, 2004, shows that: (i) there has been no finding that the Former Officers violated any order or injunction with respect to claims asserted in the Delaware Action; (ii) after putting their claims on file to preserve their rights, the Former Officers did not continue to pursue the Delaware Action; and (iii) the parties were in the process of resolving the claims in the Delaware Action and Enforcement Action when the Court entered its December 16, 2003, Opinion. Mr. Werkheiser notes that the parties entered into a Consent Judgment in April 2004 to complete their earlier negotiations, at least with respect to the Delaware Action. The Consent Judgment dismissed the Delaware Action, including dismissal of the indemnification claims with prejudice. Thus, the Consent Judgment effectively moots MHC's claims that: -- the Indemnification Claims were discharged pursuant to Section 1141; and -- the Delaware Action violated the Plan, the Confirmation Order and Section 524(a). Furthermore, since the Delaware Action has been dismissed, there is no need to enjoin the Former Officers from prosecuting the Delaware Action. Mr. Werkheiser also contends that summary judgment on MHC's claim for monetary damages should be entered in favor of the Former Officers because: * MHC does not have a private right of action for alleged violation of the discharge injunction under Section 524 or 105. The exclusive remedy for any alleged violation of the discharge injunction contained in the Confirmation Order is a finding of civil contempt. * MHC failed to show that it was injured by the filing of the Delaware Action. * There is no evidence that the Former Officers acted willfully and in bad faith. The Former Officers filed the Delaware Action defensively, in response to MHC's lawsuit against the Former Officers filed in State Court of Fulton County, in Georgia, in August 2002. Filing the Delaware Action to enforce the forum selection clause required the inclusion of all claims and defenses related to the Georgia Action, or the Former Officers risked losing their claims under the doctrine against splitting claims. Moreover, the claims asserted in the Delaware Action invoked no monetary relief against MHC and therefore involved no possible violation of the discharge injunction. * No contempt sanctions are warranted because the record shows that the Former Officers never prosecuted the Delaware Action. * * * The briefing on the Debtors' summary judgment motion and the Former Officers' cross motion has been completed. The hearing for these motions is yet to be scheduled. Mariner Post-Acute Network, Inc., Mariner Health Group, Inc., and scores of debtor-affiliates filed for chapter 11 protection on January 18, 2000 (Bankr. D. Del. Case Nos. 00-113 through 00-301). Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., represents the Reorganized Debtors, which emerged from bankruptcy under the terms of their Second Amended Joint Plan of Reorganization declared effective on May 13, 2002. (Mariner Bankruptcy News, Issue No. 66 Bankruptcy Creditors' Service, Inc., 215/945-7000) MARTIN WRIGHT: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Martin Wright Electric Company 227 W. Olmos P.O. Box 1787 San Antonio, TX 78296 Bankruptcy Case No.: 05-51436 Type of Business: The Debtor engages in residential, commercial and industrial electrical contracting Chapter 11 Petition Date: March 16, 2005 Court: Western District of Texas (San Antonio) Judge: Bankruptcy Judge Leif M. Clark Debtor's Counsel: Claiborne B. Gregory, Jr., Esq. Jackson Walker L.L.P. 112 E. Pecan, Suite 2100 San Antonio, TX 78205 Tel: (210) 978-7700 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Cosolidated Electrical Trade debt $958,753 Distributor, Inc. 102 E. Josephine San Antonio, TX 78215 Southwestern Health & Trade debt $163,978 Benefit Fund 774 E. Locust San Antonio, TX 78212 Luhn-McCain Insurance Trade debt $145,931 Agency-General Account 332 W. Sunset Rd., #3 San Antonio, TX 78209 Metroplex Control Systems Trade debt $63,557 IBEW Local Union 60 Trade debt $23,052 United Tool & Fastener Trade debt $22,235 National Electrical Trade debt $19,249 Contractors Association The Reynolds Co. Trade debt $13,308 Royall-Matthiessen Trade debt $14,891 Simplex Grinnell Trade debt $11,853 Mellon Bank The Daniel Group Trade debt $10,000 Aztec Rental Centers, Inc. Trade debt $9,672 Head & Engquist Equipment Trade debt $9,555 United Rentals Trade debt $6,205 Central Texas AMTF Trade debt $5,952 S.E. Texas Benefit Trade debt $5,662 Trust Fund South Texas Chapter, NECA Trade debt $5,384 Insurance & Bonds, Inc. Trade debt $5,135 Pacesetter Personnel Trade debt $4,952 MIRANT CORP: Revised Plan Projects 60% Recovery for Most Creditors ------------------------------------------------------------------ Mirant (OTC Pink Sheets: MIRKQ) delivered an amended proposed Disclosure Statement and proposed Plan of Reorganization to the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth division, Friday where the Honorable D. Michael Lynn is presiding over the company's restructuring case. The company filed its initial proposed Disclosure Statement and proposed Plan on January 19, 2005. It is typical in Chapter 11 cases to supplement, modify and amend these documents as required. The Disclosure Statement, which remains subject to Bankruptcy Court approval, contains information designed to enable Mirant's creditors and stockholders to make an informed decision when exercising their right to accept or reject the company's Plan. The Plan sets forth the overall structure of the company and how the claims of creditors and stockholders are to be treated. If the Bankruptcy Court finds that the Disclosure Statement contains adequate information, then the company will solicit votes on the Plan from those creditors, security holders and interest holders who are entitled to vote on the Plan. A hearing on the Disclosure Statement is currently scheduled to be held in Bankruptcy Court on April 20, 2005. Mirant notes that negotiations with its bankruptcy committees are progressing but declines additional commentary given the sensitive nature of the negotiations. Accordingly, both the proposed amended Disclosure Statement and proposed Plan remain subject to change. Mirant expects to emerge from Chapter 11 by mid-year 2005. A full-text copy of the amended Disclosure Statement is available at no charge at: http://www.mirant.com/financials/pdfs/amended_disclosure_statement_032505.pdf and a full-text copy of the amended Plan of Reorganization is available at no charge at: http://www.mirant.com/financials/pdfs/amended_por_032505.pdf The Amended Plan provides for full recovery by MAGI creditors, with interest, and projects that creditors holding $6.4 billion of unsecured debt claims against Mirant Corp. will recover 60% of what they're owed. The Company says that holders of the $345 million of 6-1/4% preferred shares issued by Mirant Trust I (the proceeds of which were used to purchase Junior Debentures) will not receive any distribution unless and until all contractually senior indebtedness is paid in full. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. 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 CORP: Asks Court to Approve Consent Decree with EPA et al. ----------------------------------------------------------------- Mirant Corporation and its debtor-affiliates manage and operate businesses that are highly regulated at both the state and federal level. The Debtors' Mid-Atlantic coal-fired fleet is no exception. In response to certain enforcement and regulatory actions with respect to the Mid-Atlantic Coal-Fired Fleet, Mirant Potomac River LLC and Mirant Mid-Atlantic LLC spent the last nine months embroiled in intense and complicated negotiations with: -- the United States of America, through the Environmental Protection Agency; -- the Commonwealth of Virginia, through its Department of Environmental Quality; and -- the State of Maryland, through its Department of Environment. The negotiations with the Environmental Agencies resulted in a comprehensive settlement that: (i) resolves certain disputes surrounding operation in 2003 of Mirant Potomac's coal-fired electricity producing plant located on the Potomac River in Virginia; (2) provides for the installation of certain pollution control systems at the Mid-Atlantic Coal-Fired Fleet; (3) allows the plants comprising the Mid-Atlantic Coal-Fired Fleet to reduce nitrogen oxide emissions on a fleet-wide basis, as opposed to on a plant-by-plant basis; and (4) establishes greater future operational certainty for the Mid-Atlantic Coal-Fired Fleet. The settlement is evidenced by a Consent Decree the parties entered into on September 24, 2004. On September 27, 2004, the U.S. Government, the State of Maryland and the Commonwealth of Virginia, Department of Environmental Quality filed a lawsuit in the United States District Court for the Eastern District of Virginia against Mirant Potomac, LLC and MirMA. On the same day, the U.S. Government lodged the Consent Decree in the District Court and published notice of the Consent Decree in the Federal Register soliciting public comments. The Debtors believe that the Consent Decree represents a fair, reasonable and equitable settlement for Mirant Potomac and MirMA and their estates. The Mid-Atlantic Coal-Fired Fleet operates in a highly regulated environment that over the past 10 years has received significant attention and scrutiny from both federal and state regulatory agencies. Federal and state regulations have been promulgated, with more contemplated, all of which are designed to change substantially the landscape in which energy producers, including both Debtors, operate their businesses. Moreover, the Consent Decree represents the Debtors' tireless efforts to negotiate a compromise that is not only consistent with their business plan and strategy but also allows the Debtors to manage and operate the Mid-Atlantic Coal-Fired Fleet as a fleet rather than on a plant-by-plant basis for environmental regulatory purposes. The fleet-level management provides the Debtors with greater operational flexibility in determining the most efficient and cost-effective methods for complying with federal and state emission standards across the entire fleet. Similarly, the Consent Decree allows the Mid-Atlantic Coal-Fired Fleet to reduce Nox emissions on a fleet-wide basis, thereby allowing Mirant Potomac and MirMA to share operational efficiencies amongst the plants in the Mid-Atlantic Coal-Fired Fleet. Accordingly, the Debtors ask the U.S. Bankruptcy Court for the Northern District of Texas to approve the Consent Decree and allow Mirant Potomac and MirMA to perform their obligations under the agreement. The relevant terms of the Consent Decree are: (A) Installation of pollution control systems at: (a) Potomac River Plant -- which consists of three 182 MW coal-fired units, located on 779 acres of land in Montgomery County, Maryland; and (b) Morgantown Plant -- which includes two 620 MW coal-fired units, located on 569 acres of land in Charles County, Maryland, and accounting for 45% of the electricity produced by the Mid-Atlantic Coal-Fired Fleet. In particular, the pollution control systems relate to the installation of: -- low NOx burners for Units 3-5 at the Potomac River Plant with an estimated $800,000 aggregate cost; -- Separated-Over-Fire-Air system for Units 3-5 at the Potomac River Plant with an estimated $9 million aggregate cost; -- Selective Catalytic Reduction system for Units 1 and 2 at the Morgantown Plant with an estimated $180 million aggregate cost; and -- additional controls -- or alternatively, the curtailment of operations -- at the discretion of the Debtors, necessary to comply with the emission standards set forth in the Consent Decree. (B) Operation of the Mid-Atlantic Coal-Fired Fleet must comply with these emission standards: (a) NOx ozone season cap for the entire Mid-Atlantic Coal- Fired Fleet of 14,700 tons beginning in 2004, and decreasing to 5,200 tons by 2010; (b) NOx annual cap for the entire Mid-Atlantic Coal-Fired Fleet of 36,500 tons beginning in 2004, and decreasing to 16,000 tons by 2010; (c) NOx ozone season cap for the Potomac River Plant of 1,750 tons beginning in 2004, and decreasing to 1,475 tons by 2010; and (d) emission rate during ozone season of 0.150 lb/Mbtu for the entire Mid-Atlantic Coal-Fired Fleet beginning in 2008. The "ozone season" runs from May through September. (C) Resolution of the alleged violations set forth in the enforcement proceedings against Mirant Potomac in connection with the "notices of violation" issued by: (a) the Virginia DEQ; and (b) the EPA. The Notices of Violation allege that Mirant Potomac operated the Potomac River Plant in violation of an operating permit, which (i) established a NOx emission cap of 1019 tons during the ozone season and (ii) provided for trading of NOx emission allowances under state and federal emissions trading rules. (D) Mirant Potomac and MirMA, collectively, would be required to make a one-time payment of $500,000, as well as invest $1 million in supplemental programs designed to reduce dust and particulate matter at the Potomac River Plant. (E) The Consent Decree provides for transferability of the obligations thereunder if the Debtors transfer any of their real property and improvements thereon or operations subject to the Consent Decree, with the Debtors being potentially released from any further obligations under the Consent Decree -- with respect to such transferred real property and improvements or operations -- with approval by the EPA, the Virginia DEQ, or the Maryland Environment Department of the successor, and the successor's agreement to assume all relevant obligations contained in the Consent Decree. (F) The Debtors are required to provide semi-annual reports to the EPA, the Maryland Environmental Department and the Virginia DEQ demonstrating compliance with the terms of the Consent Decree. (G) The Consent Decree contains provisions for remedies and stipulated fines for failure to comply. (H) Any disputes arising under the Consent Decree are to be resolved pursuant to the alternative dispute resolution procedure set forth in the Consent Decree. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. 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) MORGAN STANLEY: Fitch Puts Low-B Ratings on Two $8.4 Mil. Classes ----------------------------------------------------------------- Morgan Stanley Capital I, Inc.'s commercial mortgage pass-through certificates, series 1997-WF1, are upgraded by Fitch Ratings: -- $5.6 million class G to 'BB+' from 'BB'. In addition, Fitch affirms these classes: -- $135.4 million class A-2 at 'AAA'; -- Interest-only class X-1 at 'AAA'; -- $30.8 million class B at 'AAA'; -- $33.5 million class C at 'AAA'; -- $28 million class D at 'AAA'; -- $33.6 million class F at 'BBB-'; -- $8.4 million class H at 'B+'; -- $8.4 million class J at 'B-'. Fitch does not rate the $11.2 million class E, $5.6 million class K, or the interest-only class X-2 certificates. The class A-1 certificates have paid in full. The upgrades are a result of increased subordination due to additional loan amortization and prepayments. The transaction also benefits from the full defeasance of the largest loan (7.2%), a hotel portfolio secured by three properties. As of the March 2005 distribution date, the pool's aggregate collateral balance has been reduced by 46.1%, to $300.3 million from $559.1 million at issuance. There is currently one loan (1.3%) in special servicing. The loan is secured by an industrial property located in Albany, New York, and is 90+ days delinquent. The loan transferred to the special servicer in September 2004 due to declining occupancy resulting from the largest tenant vacating its space. Fitch is monitoring several loans (10%) with declining occupancies. ORANGE COUNTY: Moody's Affirms Ba1 Rating on $7.5M Revenue Bonds ---------------------------------------------------------------- Moody's Investors Service has affirmed the Ba1 rating on the Orange County Housing Finance Authority's $7.5 million of outstanding Multifamily Housing Revenue bonds, Series 2000A (Maitland Oaks and Hollowbrook Apartments). The outlook on the bonds remains negative. The affirmation of the rating is based upon Moody's review of unaudited 2004 financial statements and reflects improved occupancy and debt service coverage. The Series 2000A Bonds continue to maintain MBIA's bond insurance and carry MBIA's financial strength of Aaa. In conjunction with the delivery these bonds in 2000, the Issuer delivered subordinate bonds Series C and D, which Moody's does not rate. Maitland Oaks and Hollowbrook Apartments are 100 unit and 144 unit properties, respectively, located in Orlando, Florida. The project's history of weak financial performance is in large part due to the overall softening of the Orlando rental market. Recent Developments/Results 2004 financials show an improvement in concessions and vacancies, both positive signs for the project's financial performance. While debt service coverage of 1.19x in 2003 was lower than 1.43x in 2002, a small improvement occurred in 2004 with a debt service coverage of 1.29x. Weighted occupancy at the beginning of March 2005 is 95%, as compared to 2003 when the weighted average occupancy was 87%. While the debt service reserve has not been tapped for the senior bonds, the debt service reserve pledged to the unrated subordinate bonds was tapped in July 2003 for approximately $49,000, in January 2004 for $94,153.77, in July 2004 for $53,346.70 and again in January 2005. The balance of the subordinate debt service reserve is $13,974. The next payment for subordinate debt is July 1, 2005 in the amount of $94,500. Outlook The outlook for the bonds remains negative. Moody's believes that increased occupancy and improved debt service coverage are positive signs for the project's financial performance, but believes the amount of time these improvements have been measurable is brief and do not yet indicate a prolonged stabilization. OWENS CORNING: Bankr. Court Will Handle False X-Ray Readings Issue ------------------------------------------------------------------ Judge Fullam of the U.S. District Court for the District of Delaware denies Credit Suisse First Boston's request for withdrawal of the reference with regard to its proposed adversary case against certain physicians who falsely reported positive X- ray readings for asbestos-related impairment. Debtors Want Indemnity from Potential Counterclaims On February 28, 2005, at a hearing before Judge Fitzgerald, Barry Ostrager, Esq., at Simpson, Thacher & Bartlett, in New York, assured the U.S. Bankruptcy Court for the District of Delaware that the Banks will indemnify Owens Corning and its debtor- affiliates for any counterclaims interposed by the B-readers. Owens Corning's special counsel, Roger E. Podesta, Esq., at Debevoise & Plimpton LLP, in New York, says the indemnification agreement satisfies the Debtors' objection. CSFB will, therefore, bear the costs of the attorney's fees and expenses incurred in connection with the adversary litigation, and subject to potential reimbursement out of recoveries pursuant to applicable bankruptcy law. Mr. Podesta tells Judge Fitzgerald that the Debtors do not concede that there are billions of dollars that have been improperly paid. "We investigated these B-readers and tried to control what was being paid on that basis, and excluded some of them from various NSP agreements." Mr. Podesta acknowledges that the Debtors have expressed concern about the B-readers, specifically Dr. Harron. Mr. Podesta says there's strong evidence in the silica hearings of Dr. Harron reading x-rays for one group of plaintiff's lawyers for asbestosis and finding small irregular opacities, and then reading either the same x-ray or another x-ray for the same individual for silica plaintiff's lawyers and diagnosing silicosis based on large rounded opacities without ever once referencing the other. Mr. Podesta also brings up the Debtors' concern on the issue of recovery. Mr. Podesta points out that Dr. Harron would be the principal defendant, and he's a 73 year-old radiologist from West Virginia, who no longer has an active practice. "I don't think a malpractice claim is going to cover -- any malpractice insurance he may have is going to cover outright fraud," Mr. Podesta says. Judge Fitzgerald asked the lawyers who will control any settlement with potential defendants. Mr. Podesta presumes that since CSFB will be taking the lead role, CSFB will consult with the Debtors concerning potential settlements, subject to the Court's approval. Judge Fitzgerald told the lawyers to discuss the specific language to be included in the order permitting CSFB to commence an adversary case against the B-readers. As a condition to granting CSFB's request, Judge Fitzgerald required CSFB to provide an indemnity or bond or equivalent form of security to Owens Corning against potential counterclaims. Judge Fitzgerald Denies CSFB's Motion to Sue CSFB did not comply with the Bankruptcy Court's requirement that it provide an indemnity or bond to Owens Corning against potential counterclaims. Accordingly, Judge Fitzgerald denies CSFB's request to commence an adversary case, on behalf of the creditors and the Debtors' estate, against certain B-readers for fraud. Judge Fitzgerald will consider her Order upon proof that an indemnity, bond, or equivalent form of security has been provided. 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. 102; Bankruptcy Creditors' Service, Inc., 215/945-7000) OXFORD AUTOMOTIVE: Emerges from Chapter 11 Bankruptcy ----------------------------------------------------- Oxford Automotive, Inc., emerged from chapter 11 bankruptcy protection on Thursday, March 24, 2005, under a consensual Chapter 11 plan that provides for the sale and/or liquidation of its North American businesses, while preserving the company's successful European operations. Oxford Automotive will continue to operate exclusively in Europe under the direction of a newly appointed board and ownership. "Our strategy to emerge from Chapter 11 is a success," said David Treadwell, chief executive officer of Oxford. "We sold the majority of our North American plants as ongoing operations, thus retaining jobs and avoiding any disruption for our customers. Considering the challenges within the supplier industry, this is a very good resolution that was completed in an expedited process." Of Oxford's 10 U.S. plants, six have been sold and four have been or will be liquidated. The six plants that were sold continue as ongoing operations. The Plan of Reorganization names: Gary Kulesza CLOYSES PARTNERS, LLC 1625 Broadway, Suite 990 Denver, Colorado 80202 Telephone (303) 592-5700 as the plan administrator. Mr. Kulesza has served as Chief Reorganization Officer for Oxford since October 2004. Throughout the reorganization process, turnaround specialist firm Conway McKenzie & Dunleavy provided financial advisory services. "The CMD team was instrumental in enabling Oxford to move through this bankruptcy in a quick and efficient process," said Mr. Treadwell. David Treadwell, CEO of Oxford since August of 2004, will leave the company after it emerges from bankruptcy. Mr. Treadwell was named CEO to restructure the company and retain maximum value on behalf of Oxford creditors. Mr. Treadwell will serve as a director of the reorganized Oxford Europe board. "David did an outstanding job in transitioning Oxford so that it can continue as a major European supplier, while satisfying the needs of its North American customer base, and providing the value sought by Oxford's investors," Mr. Kulesza said. Headquartered in Troy, Michigan, Oxford Automotive, Inc. -- http://www.oxauto.com/-- is a Tier 1 supplier of specialized metal-formed systems, modules, assemblies, components and related services for the automotive industry. Oxford's primary products include structural modules and systems, exposed closure panels, suspension systems and vehicle opening systems, many of which are critical to the structural integrity and design of the vehicle. The Company and its debtor-affiliates filed for chapter 11 protection on December 7, 2004 (Bankr. E.D. Mich. Case No. 04-74377). I. William Cohen, Esq., at Pepper Hamilton LLP, represents the debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $727,023,000 in total assets and $771,325,000 in total debts. PACIFIC EQUIPMENT: Case Summary & 4 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Pacific Equipment & Irrigation 1305 S. Wanamaker, Unit A Ontario, California 91761 Bankruptcy Case No.: 05-12476 Chapter 11 Petition Date: March 17, 2005 Court: Central District of California (Riverside) Judge: David N. Naugle Debtor's Counsel: Lazaro E. Fernandez, Esq. 3403 Tenth Street Suite 714 Riverside, California 92501 Tel: (951) 684-4474 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 4 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Jacobsen/Textron $1,300,000 3800 Arco Corp. Drive Charlotte, NC 28273 California Bank & Trust $127,860 2399 Gateway Oats Drive #110 San Bernardino, CA 95833 Smith-Blair, Inc. $85,177 Dept. 0833 PO Box 120001 Dallas, TX 75312-0833 Lastec $53,285 7865 N. 100 E. Lizton, IN 46149 PEAK ENTERTAINMENT: Forms Strategic Alliance with Maverick Ent. --------------------------------------------------------------- Peak Entertainment Holdings Inc., (OTC Bulletin Board: PKEH), a fully integrated multimedia company dedicated to quality children's television entertainment, character licensing and consumer products, obtained the exclusive worldwide licensing rights to Maverick Entertainments Plc's intellectual property portfolio, which includes the BBC-commissioned classic retro-brand 'Muffin the Mule', which is expected to air in the fall of 2005, and the highly-rated 'Snailsbury's Tails', which aired last year. Peak Entertainment and Maverick Entertainment have entered into a mutually advantageous agreement that is expected to enhance their respective commercial marketability. The new relationship will deliver multi-continental fully-integrated entertainment, production, distribution (television and home video), publishing, merchandising and licensing capabilities. Each company's respective business activities in the entertainment arena have many common areas of synergy. Current animation projects include Peak's action adventure series 'Monster Quest', and its pre-school show 'The Wumblers', as well as, Maverick's revival of the BBC 's classic retro-brand 'Muffin the Mule' and 'Snailsbury's Tails'. The merged intellectual property portfolio will deliver a truly international broadcast proposition from which to fully exploit the highly lucrative licensing and merchandising rights that have been created. "By harnessing Peak's credentials in the worldwide exploitation of IP, brand marketing, licensing and toy manufacturing with Maverick's production, publishing, DVD and video expertise we will take our 'concept to consumer' vision to a new level," commented Wilf Shorrocks, Chief Executive Officer and co-founder of Peak. The new relationship will further provide an increased depth of management and experience. This comprehensive pool of talent will dovetail to deliver improved execution and extensive complimentary opportunities. Mike Diprose, Chief Executive of Maverick Entertainment Plc, added, "Both boards feel that this agreement will provide the business with a real competitive advantage and, as such, the rationale is obvious. The commercial opportunities are endless and with a potential to improve the trading position of both companies exponentially. It is with great anticipation that both companies have come to this decision to work together in partnership." Phil Ogden, Managing Director of Peak concluded; "Considered industry thinking suggests that commercial successes in the TV- derived children's entertainment business are a fusion of quality production to an international broadcast platform. Companies who have the ability to control and execute all these key factors from within a fully integrated business model have the opportunity to succeed". About Maverick Entertainment Maverick Entertainment Group plc -- http://www.maverickentertainment.com/-- the AIM listed company specialising in the creation, acquisition and development of IPR in children's films, television programmes, characters and related entertainment products. Mavericks' Intellectual Property Rights portfolio includes children's icon Muffin the Mule and Snailsbury Tails. Its publishing division represents characters such as Bananas in Pyjamas, Hairy Maclary, Fairly Odd Parents, 64 Zoo Lane and the Nelvana Home Video Catalogue. Muffin the Mule was the UK's first children's TV character, making his BBC premiere on 20 October 1946. Hugely successful in the 50s and 60s and now very much part of English heritage, he is due to return to the screens in 2005, just in time for his 60th birthday. Maverick will initially produce forty, 10 minute episodes to transmit on the BBC in 2005 and 2006. The animation team for Muffin was also behind the successful Snailsbury's Tales, shown on Cbeebies and CBBC last year and due to air again this year. About Peak Entertainment Peak Entertainment Holdings Inc. -- http://www.peakentertainment.co.uk/-- is a fully integrated multimedia company dedicated to quality children's television entertainment, character licensing and consumer products. The Company's unique, fully integrated business model, which includes concept creation and branding, production of entertainment programs, character licensing, and manufacturing and distribution of toys and related consumer products, gives it maximum quality control and speed-to-market while developing total brand equity. Peak's properties include Monster Quest, The Wumblers, Little Big Feet, Countin' Sheep and Mini Flora. * * * As reported in the Troubled Company Reporter on Dec. 23, 2004, Peak Entertainment reported that at Sept. 30, 2004, and for the nine months then ended, it has suffered recurring losses, negative cash flows from operations, negative working capital, an accumulated deficit of $6,336,922 and a stockholders' deficiency of $2,143,303. These factors raise substantial doubt about the Company's ability to continue as a going concern. PENNSYLVANIA ECONOMIC: Moody's Chips $50M Bond Rating to Ba1 ------------------------------------------------------------ Moody's has downgraded the rating to Ba1 from Baa3 for the Pennsylvania Economic Development Financing Authority's $50 million in outstanding revenue bonds. The rating outlook is negative. The bonds were issued in 2002 to finance the construction of a 1,525-space nine-level parking garage located adjacent to Amtrak's (rated A3 on Watchlist for possible downgrade) 30th Street Station in Philadelphia. Issued to finance construction of a single asset, non-recourse project, the bonds are secured by the net revenues of the 30th Street Station parking facilities and are not supported by either tax revenues or Amtrak financial support. The rating downgrade and negative outlook are based on the weaker- than-expected financial performance of the new garage during the first several months of operations and very narrow debt service coverage by net parking revenues projected for the fiscal year ending September 30th, 2005. The downgrade is also based on the expectation that garage access will likely continue to be limited by activities related to an adjacent office tower construction until its completion, scheduled for October 1, 2005. On-time completion of the office tower remains outside of the control of the issuer and Amtrak as garage owner. Nevertheless, Moody's expects that the timely completion of the office tower would likely result in parking revenue increases for the garage. A debt service reserve fund and excess capitalized interest provide short-term protection to bondholders in the case of unforeseen office tower completion delays or additional delays in the ramp up of garage operations. Credit Strengths: * Parking facilities are expected to enjoy strong demand from commuters once accessibility issues are resolved. * Adjacent office tower, once completed, is expected to generate significant additional parking demand from large commercial tenants under multi-year contract. * Reserves and excess capitalized interest provide interim cushion during completion of office tower and garage ramp up period. Credit Weaknesses: * Financial performance and debt service coverage are significantly weaker than forecasted. * Garage accessibility is currently constrained by activity related to the adjacent office tower construction. * Increased garage utilization is dependent upon timely construction completion and lease up of office tower. Recent Developments The new garage was completed on schedule and under budget. The new garage opened in May 2004 and is operated by Central Parking System of Pennsylvania, Inc. under a parking management agreement with a five-year initial term ending January 31, 2008. The new garage represents 71% of the total 2,134 spaces that comprise the parking facilities that generate revenues pledged to support the bonds. Additional facilities include a parking deck, below street, meters and short term spaces. Preliminary financial results indicate that total parking facility revenues for the fiscal year ending September 30, 2005 are projected to equal $5.6 million, or roughly 65% of the original forecast. Operating expenses for 2005 are expected to be slightly below the original forecast at $1.08 million. These figures are based on actual results from October through February plus budgeted results from March through the remainder of the fiscal year. Net revenues of $3.73 million plus excess capitalized interest are expected to provide 1.45 times ("x") coverage of debt service in 2005. Without capitalized interest, net revenues would cover debt service by a very narrow 1.07x. These coverage margins are significantly weaker than the 1.9x forecasted for 2005 at the time of the 2002 bond financing and contributed to the rating downgrade at this time. Parking revenues are significantly below forecast primarily due to problems with accessibility to the new garage and parking deck and are not related to train ridership levels, which continue to be strong, according to Amtrak. Access to the new garage has been limited because of activities related to construction of the adjacent 29-story office building, known as Cira Centre. Timely completion of the building is subject to significant risk factors outside of Amtrak's control, such as contractor performance, schedule delays and cost overruns. Until the building is completed, construction activities are expected to continue to result in low utilization and revenue generation from the garage. Moreover, construction of a covered pedestrian bridge connecting the garage and the station has been delayed due to the office building construction. The bridge is expected to enhance the safety and accessibility of the garage and will open in conjunction with the office tower opening. Longer term, the completed office building has potential to generate significant additional parking demand and revenues for bondholders. The building is roughly 65% leased, and its location in a Keystone Opportunity Zone gives it certain tax advantages that make it attractive to certain businesses. Amtrak cannot sign leases with commercial tenants for use of the new garage since the garage was financed with tax-exempt debt. However, Amtrak is currently in negotiations with Brandywine for the multi-year lease of parking in the underground garage. Parking revenues are also below forecast due to prolonged closure of the existing parking deck. The new garage was built on top of a portion of an existing parking deck (503 spaces). The remaining deck (187 spaces) was expected to be resurfaced at modest cost and operational prior to the garage opening. However, subsequent to the 2002 bond financing, Amtrak discovered significant unanticipated structural weaknesses that requires replacement of a portion of the deck's steel supports and other major repairs. Amtrak expects to fund this work with unspent bond proceeds ($2.9 million) and an equity contribution (roughly $4 million). The parking deck is expected to be operational by the end of 2005. In response to weak financial performance, Amtrak plans to increase parking rates as of October 1, 2005. Amtrak expects that the new rate structure, as well as improved garage access, will allow the combined parking facilities to generate net revenues to exceed the 1.25x rate covenant and return to more comfortable debt service coverage levels. Bonds are additionally secured by a debt service reserve equal to maximum annual debt service ($3.56 million), excess capitalized interest ($1.32 million) and an operating reserve equal to roughly six months of operating expenses ($549,000). These funds provide an interim cushion should there be delays in the office building completion that further limits garage's accessibility or additional problems related to ramp up of operations for the garage or the parking deck. The bonds are also secured by a mortgage lien on the property. Over the medium-term, Moody's expects the garage will return to more comfortable operating margins, given its desirable location directly across from the station, reasonable assumptions for growth in demand, limited competition, competitive parking rates, and favorable trends in train ridership. Outlook: The outlook is negative based on our expectation that the garage will maintain narrow coverage margins until construction of the adjacent office tower is completed and garage access improves. What could change the rating - UP The rating could improve if net revenues exceed current estimates and demonstrate debt service coverage levels closer to the original forecast. What could change the rating - DOWN Downward pressure on the rating could result from a significant weakening of the projected debt service coverage or protracted delays in construction completion of the adjacent office building or ramp up of the new garage operations. Key Indicators: * Security: Net revenues from parking facilities; closed lien. * Parking spaces: 2,134 spaces * Daily rate: $17 for 2-12 hours, $22 up to 24 hours * Parking facility projected net revenues, FY2005: $3.7 million * Debt service coverage, projected for FY2005: 1.45x including excess capitalized interest; 1.07x without capitalized interest * Debt Service Reserve Fund: MADS ($3.56 million in 2008) * Rate Covenant: 1.25x debt service RCN CORPORATION: Look for Annual Report on April 30 --------------------------------------------------- As reported in the Troubled Company Reporter on Dec. 23, 2004, RCN Corporation (Nasdaq: RCNIV) consummated its plan of reorganization and formally emerged from Chapter 11. The plan, confirmed on December 8, 2004, by Judge Robert Drain of the Bankruptcy Court in New York, converted approximately $1.2 billion in unsecured obligations into 100% of RCN's new equity, and eliminated approximately $1.8 billion in preferred share obligations. RCN requires time to complete fresh-start accounting associated with its emergence from Chapter 11 bankruptcy. As a result, the Company was not able to file its 2004 annual report by March 16, 2005. The Company anticipates that it will file its annual report around April 30, 2005. RCN's emergence financing was comprised principally of borrowings under a new senior secured financing facility syndicated by Deutsche Bank AG Cayman Islands Branch in the amount of $330 million. In addition, RCN issued $125 million of convertible second-lien notes to certain investors and holders of the company's prepetition bond obligations. The proceeds from the Deutsche Bank facility and the convertible second-lien notes were primarily utilized to pay in full-secured indebtedness held by a syndicate of lenders led by JPMorgan Chase Bank. RCN also completed the acquisition of PEPCO's 50% stake in the StarPower Communications, LLC joint venture, enabling RCN to take full ownership of the Washington, D.C. market for bundled telephone, cable television and high-speed Internet services. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- provides bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on May 27, 2004. The Debtors' confirmed chapter 11 Plan took effect on December 21, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. REDDY ICE: Launches $152 Million Cash Tender Offer for Sr. Notes ---------------------------------------------------------------- Reddy Ice Group, Inc., commenced a cash tender offer for its $152,000,000 aggregate principal amount of 8-7/8% senior subordinated notes due 2011. In connection with the tender offer, Reddy Ice is also soliciting consents to certain proposed amendments to the Indenture governing the Notes. The offer is scheduled to expire at 5:00 p.m., New York City time, on April 21, 2005, unless extended or earlier terminated. The total consideration for Notes validly tendered and accepted for payment by 5:00 p.m., New York City time, on April 5, 2005, will be equal to the sum of: (x) 35% of the equity claw-back price ($1,088.75 per $1,000 principal amount of Notes validly tendered); and (y) 65% of the fixed spread price. The fixed spread price is equal to the present value on the date of payment for the Notes, which will occur promptly after the Expiration Date, of all future cash flows on the Notes (minus accrued and unpaid interest up to, but not including, the Payment Date) to August 1, 2007, the first date on which the Notes are redeemable, based on: (a) the yield on the 3.25% U.S. Treasury Note due August 15, 2007, based on the bid-side price for the Reference Security, as of 2:00 p.m., New York City time, on April 6, 2005, the eleventh business day immediately preceding the scheduled expiration date, as displayed on the Bloomberg Government Pricing Monitor, Page PX5, plus (b) 75 basis points. In addition, holders who validly tender and do not validly withdraw their Notes in the tender offer will receive accrued and unpaid interest from the last interest payment date up to, but not including, the Payment Date. Of this Total Consideration, $20 per $1,000 principal amount of the Notes represents a consent payment. No consent payment will be made in respect of Notes tendered after 5:00 p.m., New York City time, on April 5, 2005. The proposed amendments to the Indenture governing the Notes would, among other things, eliminate substantially all of the restrictive covenants and certain events of default contained in the Indenture. The offer is subject to the satisfaction of certain conditions, including there being validly tendered and not validly withdrawn at least a majority of the aggregate principal amount of the Notes outstanding and Reddy Ice having available funds sufficient to pay the aggregate Total Consideration from the anticipated proceeds of a new senior credit facility and from an offering of equity by Reddy Ice Holdings, Inc., the parent of Reddy Ice, in connection with the initial public offering of its common stock. The terms of the tender offer and consent solicitation are described in Reddy Ice's Offer to Purchase and Consent Solicitation Statement, dated March 22, 2005, and the related Consent and Letter of Transmittal and other related documents. Copies of the Offer to Purchase and Consent Solicitation Statement and related documents may be obtained from the Information Agent for the tender offer and consent solicitation, Morrow & Co., Inc., at (800) 654-2468 (US toll-free) and (212) 754-8000 (collect). Credit Suisse First Boston LLC is the sole Dealer Manager and Solicitation Agent for the Offer to Purchase and Consent Solicitation. Questions regarding the Offer to Purchase and Consent Solicitation may be directed to Credit Suisse First Boston LLC, Liability Management Group, at (800) 820-1653 (US toll-free) and (212) 538-0652 (collect). This release does not constitute an offer to purchase, a solicitation of an offer to sell or a solicitation of consent with respect to any securities. The offer is being made solely by the Offer to Purchase and Consent Solicitation Statement dated March 22, 2005. Headquartered in Dallas, Texas, Reddy Ice Holdings, Inc., and its subsidiaries manufacture and distribute packaged ice in the United States serving approximately 82,000 customer locations in 32 states and the District of Columbia under the Reddy Ice brand name. The company is the largest of its kind in the United States. Typical end markets include supermarkets, mass merchants, and convenience stores. For the last twelve months ended June 30, 2004, consolidated revenue was approximately $260 million. * * * As reported in the Troubled Company Reporter on Oct. 20, 2004, Moody's Investors Service assigned a Caa1 rating to the proposed $100 million gross proceeds senior discount notes, due 2012, issued by Reddy Ice Holdings, Inc., the ultimate parent holding company of Reddy Ice Group, Inc. Moody's also affirmed the companies' existing ratings pro-forma for the proposed transactions. Moody's said outlook remains stable. SEA CONTAINERS: Weak Earning Prospects Cue S&P to Revise Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Sea Containers Ltd. to negative from stable. At the same time, the 'BB-' corporate credit rating was affirmed. "The outlook revision reflects weaker earnings prospects for Sea Containers over the near term," said Standard & Poor's credit analyst Betsy Snyder. "The company's earnings will be negatively affected by ongoing high fuel prices at its ferry operations as well as the less-favorable terms of the new 10-year franchise agreement that was awarded to GNER, Sea Containers' U.K. rail operation, yesterday." The new franchise will extend the franchise that expires April 30, 2005. The ratings on Bermuda-based Sea Containers Ltd. reflect a relatively weak financial profile and financial flexibility. However, the company does benefit from fairly strong competitive positions in its major businesses. Sea Containers is involved in passenger transport operations and marine cargo container leasing. It also has a stake of approximately 30% in Orient-Express Hotels Ltd. (OEH) after the recent sale of 4.5 million shares. Passenger transport is the largest operation, accounting for over 90% of total revenues (although a smaller percentage of earnings and cash flow). This business includes passenger and vehicle ferry services in the English Channel, the Irish Sea, and the Northern Baltic Sea; and passenger rail service between London and Scotland, GNER (Great North Eastern Railway). While Sea Containers is one of the larger ferry participants on routes it serves, this is a highly competitive business, with several participants. GNER operates under a U.K. government franchise that was renewed on March 22, 2005, for a 10-year period effective May 1, 2005. Marine cargo container leasing primarily includes Sea Containers' share of its 50/50 joint venture with General Electric Capital Corp., GE SeaCo SRL, one of the larger marine cargo container lessors in the world. Leisure investments include the company's stake in OEH, which owns and/or manages deluxe hotels, tourist trains, river cruise ships, and restaurants located around the world. Sea Containers had previously owned 100%, but has been selling its stake over the past few years, using proceeds to reduce debt. Sea Containers also owns a variety of smaller businesses. The ratings anticipate ongoing pressure on earnings over the next few quarters. However, if this trend were to continue over an extended period, ratings could be lowered. If earnings were to recover or the company continues to make progress in meeting its balance sheet debt reduction targets, the outlook could be revised to stable. SEMINIS VEGETABLE: Soliciting Consents to Amend Sr. Note Indenture ------------------------------------------------------------------ Seminis Vegetable Seeds, Inc., commenced a cash tender offer to purchase any and all of its outstanding 10.25% Senior Subordinated Notes due 2013, as well as a related consent solicitation to amend the indenture governing the Notes. The tender offer and consent solicitation are being conducted in connection with Monsanto Company's previously announced agreement to acquire Seminis, Inc., and its subsidiaries including Seminis Vegetable Seeds, Inc., and is subject to the closing of that acquisition. The total consideration to be paid for each validly tendered Note, subject to the terms and conditions of the tender offer and consent solicitation, will be paid in cash and calculated based in part on the 3.125% U.S. Treasury Note due October 15, 2008. The total consideration for each Note will be equal to the sum of: (i) the product of 65% and the present value of scheduled payments on the Note based on a fixed spread pricing formula utilizing a yield equal to the Reference Treasury Note, plus 50 basis points; plus (ii) the product of 35% and 110.25% of the principal amount of the Note, which is equal to the equity clawback price at which Seminis Vegetable Seeds is permitted to redeem up to 35% of the Notes with the proceeds of an equity offering or capital contribution. Monsanto has indicated that it intends to make a capital contribution to Seminis, Inc. in connection with the acquisition. The proceeds of such a contribution could be used to effect an equity clawback redemption under the terms of the Notes. The detailed methodology for calculating the total consideration for Notes is outlined in the Offer to Purchase and Consent Solicitation Statement dated March 22, 2005, relating to the tender offer and the consent solicitation. Seminis Vegetable Seeds, Inc., is also soliciting consents from holders of the Notes for certain amendments which would eliminate substantially all of the restrictive covenants and certain of the events of default contained in the Indenture and the Notes. Adoption of the proposed amendments requires the consent of holders of at least a majority of the aggregate principal amount of Notes outstanding. The consent solicitation will expire at 5:00 p.m., New York City time, on Monday, April 4, 2005, unless earlier terminated or extended. Holders who validly tender their Notes by the Consent Time will be eligible to receive the total consideration. Holders who validly tender their Notes after the Consent Time, and on or prior to 11:59 p.m., New York City time, April 19, 2005, will be eligible to receive the total consideration less $45.00 per $1,000 principal amount. Notes validly tendered and not withdrawn prior to the Consent Time will have a settlement date of April 5, 2005, assuming the Consent Time is not extended. Notes validly tendered after the Consent Time and on or prior to the Expiration Date will have a settlement date one business day following the expiration of the tender offer. In either case, holders whose Notes are purchased will be paid accrued and unpaid interest up to, but not including, the applicable settlement date. Holders who tender their Notes must consent to the Amendments. Holders must validly tender their Notes and deliver their consents on or prior to the Consent Time in order to be eligible to receive the total consideration; holders tendering Notes after the Consent Time will only be eligible to receive the total consideration less the Consent Amount. Tendered Notes may not be withdrawn and consents may not be revoked after the Consent Time. The tender offer and the consent solicitation are subject to the satisfaction of certain conditions, including receipt of consents in respect to at least a majority of the principal amount of Notes on or prior to the Consent Time and the completion of the acquisition by Monsanto on or prior to the Consent Time. JPMorgan is the sole Dealer Manager for the tender offer and the consent solicitation and can be contacted at (866) 834-4666 (toll free). Global Bondholder Services is the Information Agent and the Depositary for the tender offer and the consent solicitation and can be contacted at (212) 430-3774 (collect) or toll free at (866) 470-4300. About the Company Seminis Vegetable Seeds, Inc., is a wholly owned subsidiary of Seminis, Inc., the largest developer, producer and marketer of vegetable seeds in the world. The company uses seeds as the delivery vehicle for innovative agricultural technology. Its products are designed to reduce the need for agricultural chemicals, increase crop yield, reduce spoilage, offer longer shelf life, create better tasting foods and foods with better nutritional content. Seminis has established a worldwide presence and global distribution network that spans 150 countries and territories. * * * As reported in the Troubled Company Reporter on Jan. 27, 2005, Moody's Investors Service placed the ratings of Seminis Vegetable Seed, Inc., under review for possible upgrade following the announcement that Monsanto Company (Baa1 senior unsecured) has signed a definitive agreement to acquire Seminis, Inc., the holding company of Seminis Vegetable Seed, Inc., for $1.4 billion plus a performance-based payment of up to $125 million by the end of fiscal year 2007. Upon closing of the purchase by Monsanto Company, expected to be completed during the first half of 2005, and retirement of Seminis Vegetable's existing debt, Moody's will withdraw its ratings on Seminis. The ratings under review for possible upgrade: * $75 million senior secured revolver, maturing 9/08 - Ba3, * $90 million senior secured term loan, maturing 9/09 - Ba3, * $340 million 10.25% senior subordinated notes, due 2013 - B3, * Senior implied - B1, * Unsecured issuer rating - B2. SEPSAKOS PROPERTIES: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Sepsakos Properties Inc. 6580 Schamber Drive Muskegon, Michigan 49444 Bankruptcy Case No.: 05-03540 Chapter 11 Petition Date: March 17, 2005 Court: Western District of Michigan (Grand Rapids) Judge: Jo Ann C. Stevenson Debtor's Counsel: Mary F. Solis, Esq. 1060 W. Norton, Suite 2 PO Box 1391 Muskegon, Michigan 49443 Tel: (231) 780-4819 Estimated Assets: $1 Million to $10 Million Estimated Debts: $100,000 to $500,000 The Debtor did not file its list of 20 Largest Unsecured Creditors. SGD HOLDINGS: James & Lisa Gordon Want Chap. 11 Trustee Appointed ----------------------------------------------------------------- James Gregory Gordon and Lisa Kaye Gordon ask the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division, to appoint a chapter 11 Trustee in SGD Holdings, Ltd.'s chapter 11 case. James and Lisa relate that in 1999, the Debtor -- led by George David Gordon Jr. -- began to use a "pump and dump" scheme to defraud the shareholders. They allege that SGD refused to hold a shareholders' meeting during the last 6 years. The effect of SGD's refusal to hold a meeting resulted in James Gordon losing 70% of the outstanding shares in the Company. James happens to be the David's younger brother. In the "pump and dump" scheme, David Gordon along with Terry Washburn and others converted the 75,000,000 shares of James Gordon so that he didn't get any share of the common stock. Without the conversion, James would have been the supermajority shareholder of SGD. According to James, David manipulated and prevented shareholder meetings, filed false reports with the Securities and Exchange Commission, and structured debt so that only allies of David controlled SGD. James and Lisa Gordon further relate that SGD filed for bankruptcy a day before they filed a lawsuit against the Debtor and David for securities fraud, stock fraud, fraudulent conversion and legal malpractice. James says he was terminated from SGD for refusing to sign a fraudulent Form 10-K. SGD has been admonished in 2003 for filing fraudulent reports with the SEC. According to James and Lisa, some creditors in this bankruptcy case -- Harry Schmidt, Michael Pruitt, and Avene Financial Corporation -- are actually insiders working closely with David, et al., to wrest control of SGD away from the shareholders. James reminds the Court that Terry Washburn, president and CEO of SGD, admitted in a court hearing that he didn't know SGD's auditor is not a licensed certified public accountant but knew the auditor received sanctions from SEC for securities law violations. James and Lisa believe that SGD's case is going to get messy and will get worse without a disinterested administrator at the helm. They assert that the Debtor has no corporate authority to file a bankruptcy proceeding and they urge the Court to appoint a Chapter 11 Trustee as quickly as possible. 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, transferred March 8, 2005, to Bankr. N.D. Tex. Case No. 05-42392). When the Debtor filed for protection from its creditors, it estimated $10 million in assets and estimated $50 million in debts. The Debtor is represented by Donna L. Harris, Esq., at Cross & Simon, LLC, in Wilmington, Delaware. SOLUTIA INC: Court Approves Canadian Unit Settlement Agreement -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved Solutia Inc. and its debtor-affiliates' settlement with their non-debtor affiliate Solutia Canada, Inc., UCB S.A., Cytec Industries Inc., Surface Specialties, Inc., and Surface Specialties S.A. Solutia's Sale Transaction with UCB M. Natasha Labovitz, Esq., at Gibson, Dunn & Crutcher, LLP, in New York, relates that Solutia, Inc., entered into various contracts in connection with the sale of its resins, additives, and adhesive business to UCB, SA, pursuant to a Stock and Asset Purchase Agreement dated December 2, 2002. The Contracts were subsequently assigned by UCB, UCB, Inc., and UCB Chemicals Corp. to SSI and SSSA pursuant to an internal restructuring conducted by UCB. Numerous monetary disputes arose between the parties. UCB asserted a claim for $1,787,500 against Solutia relating to purchase price adjustments under the Solutia Stock and Asset Purchase Agreement. UCB also believes that it owes Solutia $1,878,500 as a result of purchase price adjustments. UCB further asserts a liquidated claim for $32.5 million for reimbursement of taxes paid and related interest on amounts due and payable to certain tax authorities as well as an unliquidated claim for future taxes, currently estimated by UCB to be $17 million. SSI's claims against Solutia are set forth in a proof of claim filed on November 29, 2004, for $6,699,053 for amounts owing under the Contracts. SSI also asserted that it owes Solutia $7,153,382. UCB's Sale of the Business to Cytec UCB and Cytec are parties to a Stock and Asset Purchase Agreement dated as of October 1, 2004 pursuant to which UCB agreed to sell certain assets, including the stock of SSI and SSSA, to Cytec. To comply with certain requirements set forth in the UCB Stock and Asset Purchase Agreement, UCB requested Solutia to assume the Contracts and that Solutia and SOCAN consent to the assignments of the Contracts and waive any rights they may have to terminate or cease to perform any of the Contracts, or modify their performance of or any terms or conditions of any of the Contracts. The parties agreed to certain amendments to certain of the Contracts that are beneficial to Solutia and its affiliates. In addition, UCB and its affiliates agreed to pay certain sums to Solutia and SOCAN, and to waive significant portions of the amounts alleged in the UCB Proof of Claim and the SSI Proof of Claim to be owed by Solutia to UCB and its affiliates. Settlement On December 30, 2004, Solutia, SOCAN, UCB, Cytec, SSI and SSSA entered into the Settlement Agreement, in which, among other things: (a) the parties agreed to amend certain Assumed Contracts; (b) Solutia agreed to assume the Assumed Contracts, as amended; (c) Solutia and SOCAN consented to UCB's assignment of the Contracts to Cytec; and (d) in settlement of certain monetary disputes under the Contracts, UCB, SSI, SSSA and Cytec agreed to: (1) pay $7.5 million to Solutia; (2) pay CN$3,948,059 to SOCAN; (3) waive $34.2 million of the UCB Proof of Claim; (4) waive $2,934,104 of the SSI Proof of Claim; and (5) waive any obligation to pay $2,753,517 allegedly due from SOCAN for accounts receivable collected on behalf of UCB, SSI or SSSA. Of these obligations, UCB, SSI and SSSA have already paid to Solutia $4,500,000 and to SOCAN CN$3,948,059. Assumed Contracts Three of the Assumed Contracts relate to Solutia's Indian Orchard Site located in Springfield, Massachusetts, at which a portion of the equipment purchased by UCB as part of the Business is located. Two of the Assumed Contracts relate to intellectual property while three other Assumed Contracts are sales agreements with UCB that Solutia entered into in connection with the sale of the Business. SOCAN and the LaSalle Toll Agreement Although SOCAN is not a debtor in these cases and therefore does not seek Court approval with respect to its actions, UCB and its affiliates requested that SOCAN consent to the assignment to Cytec of the LaSalle Toll Agreement, pursuant to which SOCAN performs certain toll conversion services to convert SSI's raw materials into products. To induce SOCAN to consent to the assignment, UCB and Cytec agreed to make certain payments to SOCAN under the LaSalle Toll 11 Agreement. UCB paid SOCAN CN$3,948,059 in satisfaction of all past due obligations under the LaSalle Toll Agreement. In addition, upon execution of the Settlement Agreement UCB paid to Solutia $141,526 Canadian representing a reimbursement of capital expenditures under the LaSalle Toll Agreement and agreed to cure any payment defaults by UCB under the LaSalle Toll Agreement. UCB and Cytec also agreed to release Solutia and SOCAN from any obligation to pay $2,753,517 allegedly due from SOCAN for accounts receivable collected on behalf of UCB. 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) SOUTHWEST COOLING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Southwest Cooling, LLC 520 Olive Avenue Holtville, California 92250 Bankruptcy Case No.: 05-02093 Chapter 11 Petition Date: March 16, 2003 Court: Southern District of California (San Diego) Judge: Peter W. Bowie Debtor's Counsel: Donald L. Scoville, Esq. 1005 State Street P.O. Box 394 El Centro, California 92244-0394 Tel: (760) 352-3130 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 3D Cooling Inc. Trade Debt $350,739 520 Olive Avenue Collateral FMV: Holtville, CA 92250 $250,000 Andrew SMith Co. Disputed $218,234 4832 El Camino Real South Salinas, CA 93908 Growers Ice Co. Trade Debt $125,552 PO Box 298 Salinas, CA 93902-0298 PG & E Trade Debt $35,719 Golden Gate Petroleum Trade Debt $26,353 Internal Revenue Service Taxes $25,258 CIM Electric Inc. Trade Debt $14,530 Food Services Ins Trade Debt $12,262 Quinn Engine Systems Trade Debt $11,634 Franchise Tax Board Taxes $7,556 Donna D. Yarnell Tax Taxes $7,337 Guadalupe Hardware Trade Debt $7,121 Yuma Equipment Trade Debt $7,059 Donna D. Yarnell Tax Taxes $6,805 Precision Electric Trade Debt $6,495 Western Exterminator Trade Debt $5,950 Praxair Dist. Trade Debt $5,582 Alta Lift Tile Trade Debt $5,068 Praxair Dist. Trade Debt $4,272 Central Coast Cases Trade Debt $4,051 Managers SPIEGEL INC: Hires Watson Wyatt to Craft New Employee Equity Plan ----------------------------------------------------------------- The Hon. Cornelius Blackshear of the U.S. Bankruptcy Court for the Southern District of New York gave Spiegel Inc., and its debtor- affiliates permission to expand the scope of employment of Watson Wyatt & Company, nunc pro tunc to January 10, 2005, to provide additional consulting services related to the development of the Debtors' Chapter 11 Plan. The Debtors' Board of Directors has determined that it is necessary to develop a post-emergence equity plan to assure the retention and continued motivation of the Debtors' key employees so that those employees continue to achieve results necessary to assure a successful emergence from Chapter 11. Specifically, Watson Wyatt will: (a) make recommendations as to the translation of past stock option data into economic value, ensuring that the emerging firm has a large enough market capitalization, the development of a management team structure with a focus on current talent, and how to deliver economic value to executives; and (b) undertake additional "ad-hoc" project work, to include holding meetings and maintaining ongoing communications with Spiegel management, the various Creditors Committees, legal counsel and bankruptcy professionals on equity pay related issues. In addition to those additional services, the parties anticipate an ongoing advisory relationship in which the Debtors may require Watson Wyatt to perform additional projects related to the rendering of employee benefits advice, including, but not limited to, annual incentive design, further post-emergence equity plan design and other general consulting services. The scope of those Ongoing Services has not yet been negotiated between the Debtors and Watson Wyatt but the pricing of the Ongoing Services will be consistent with the previous application. Pursuant to the terms and conditions of the second engagement proposal between the parties, if any of Watson Wyatt's services do not conform to the requirements of the general terms and conditions of their engagement and any applicable engagement letter, the Debtors will notify Watson Wyatt promptly, which will re-perform those services at no additional charge or, at Watson Wyatt's option, will refund the portion of the fees paid with respect to those services. If re-performance of the services or refund of the applicable fees would not provide an adequate remedy for damages arising from the performance, non-performance, or breach of the general terms of their engagement and any applicable engagement letter, Watson Wyatt's maximum total liability will be limited to direct damages not to exceed $250,000 or, if greater, the fees payable with respect to the particular engagement pursuant to which that liability arises. However, the Watson Wyatt Liability Cap does not apply to the extent that any liability arises from the gross negligence or willful misconduct of Watson Wyatt, its employees, affiliates, agents or contractors or from bodily injury, death of any person, or damage to any real or tangible personal property. 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: Hires Spencer Stuart to Scout for New Directors ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York gave Spiegel Inc., and its debtor-affiliates, and the Official Committee of Unsecured Creditors permission to employ Spencer Stuart as their consultant. Following emergence, Otto and its affiliates, which is associated with Spiegel, Inc.'s prepetition directors, will no longer be Spiegel's controlling shareholders. Therefore, Spiegel is seeking the assistance of Spencer Stuart in conducting an efficient and expedient search for new directors. Spencer Stuart has nearly 50 years of experience in the executive search field and is one of the leading executive search firms in the United States, with involvement in over half of all board recruitments handled. Moreover, Spencer Stuart has been employed to conduct executive and board searches for a number of companies emerging from bankruptcy including Federated Department Stores, Payless Cashways, Inc., and Warnaco. Spencer Stuart's services will include, among other things: (i) meeting with the Debtors and the Committee to develop background information on the significant issues and creditor to become as knowledgeable as possible about Spiegel and the relevant positions, as to obtain the full benefit of the Debtors' and the Committee's thinking, prior to approaching and meeting with candidates; (ii) working with the Debtors and the Committee to develop detailed position specifications based on, inter alia, Spencer Stuart's knowledge of the business; (iii) constructing a search strategy for the positions to define and prioritize potential candidate locations, position levels and other elements of the search focus to ensure a comprehensive search assignment; (iv) conducting an intensive search utilizing Spencer Stuart's retail networks and knowledge of the marketplace to yield qualified individuals for the Debtors and the Committee to compare and evaluate; (v) thoroughly interviewing qualified candidates to obtain a realistic understanding of their experience, accomplishments, capabilities, and potential, and preparing and presenting a comprehensive resume for review of each candidate recommended to be interviewed; (vi) presenting the best qualified and interested individuals for selection interviews; (vii) assisting as necessary in developing and negotiating the final compensation package and other terms of employment for the directors; (viii) conducting reference checks of successful candidates, including: -- speaking directly with individuals who are or have been in positions to evaluate the candidate's performance on the job; and -- verifying information like university degrees and professional qualifications; and (ix) conducting periodic progress reviews with the Debtors and the Committee to discuss the individuals contacted, candidate interest, recruiting issues, and any other matters related to the search. Spencer Stuart will be retained until the completion of the assignment unless the employment is terminated by the Debtors, the Committee or the firm itself. The Debtors and the Committee believe that Spencer Stuart's proposed compensation is reasonable in light of the services to be performed and is consistent with the industry standards for executive search firms. Spencer Stuart's retainer fee will be $330,000, which will be billed in three equal installments of $110,000. The installments are to be paid by or on January 31, 2005, February 28, 2005, and March 31, 2005, if the Retention Order has been entered. If the Retention Order is not entered prior to an Installment Date, Spencer Stuart will be paid as soon as practicable for that Installment. In addition, Spencer Stuart will be reimbursed for direct, out- of-pocket expenses, which will be billed as incurred. Mr. Deutsch states that in the event the Debtors and the Committee discontinue the firm's engagement after the first month, fees are considered earned to the date of cancellation on a 90-day pro-rated basis from the date Spencer Stuart was authorized to proceed on the project. However, the first month's fees plus associated overhead are considered earned in their entirety at the commencement of the assignment regardless of the cancellation date. The parties' Engagement Letter provides that if the Debtors decide to expand the Board and hire any candidates that Spencer Stuart presented or identified within one year from the completion or termination of the assignment for those new Board seats, Spencer Stuart will bill an additional board search fee of $65,000 per director. For those candidates who will be hired for a management position, a one-third fee will be billed of the agreed upon first year's total cash compensation plus any potential first-year bonus minus any fee paid by the Debtors for the board search for that candidate. Julie Hembrock Daum, the firm's practice leader for the North American Board Services Practice, attests that Spencer Stuart does not hold or represent an interest adverse to the Debtors in connection with their Chapter 11 cases and is a "disinterested person" as defined by Section 101(14) of the Bankruptcy Code. 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) STEPHEN M. HOUSE: Case Summary & 18 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Stephen M. House dba House And Company Certified Public Accountant And Financial Services 8155 Hampstead Way Granite Bay, California 95746 Bankruptcy Case No.: 05-22931 Chapter 11 Petition Date: March 17, 2005 Court: Eastern District Of California (Sacramento) Judge: Christopher M. Klein Debtor's Counsel: Barry H. Spitzer, Esq. 2485 Natomas Park Drive, Suite #340 Sacramento, California 95833 Tel: (916) 567-1175 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ National West Lawsuit-Alleged $3,000,000 Manufacturing, Inc. embezzlement c/o Mark A. Sirlin, Esq. 813 F Street, 2nd Floor Sacramento, CA 95814 Charles and Lillian Risley Loan/Lawsuit $600,000 6061 Golden Center Court Apartment 108 Placerville, CA 95667 Donal Fagin, Beneficiary Loan $261,500 The Barbara Hale Revocable Trust 40064 Thurston Street Fermon, CA 94538 Hazel Elizabeth Henshaw Loan $228,000 Florence Brown Trust Loan $175,000 Roseville Bank of Commerce Value of $80,000 security: $40,000 Little Dry Creek Farms, LLC Funds owed to LLC $50,000 Ronals Johnston,Beneficiary Loan $45,600 The Barbara Hale Revocable Trust Bank One Credit Card $19,500 Bankruptcy Support purchases Franchise Tax Board Income Tax $16,835 Bank of America Credit Card $13,000 purchases Equity Office Lease obligation $8,980 Rancho Caleta, LLC Quarterly $7,000 assessment Wells Fargo Bank Credit Card $7,000 purchases SureWest Utilities $1,127 Taylor Made Business $1,125 Leasing Company Water Filter Pitney Bowes Postage meter $260 Lora Richmond Lawsuit-Alleging Unknown sexual harassment TORCH OFFSHORE: Committee Taps Alvarez & Marsal as Fin'l Advisor ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of Torch Offshore, Inc., and its debtor-affiliates asks the U.S. Bankruptcy Court for the Eastern District of Louisiana for permission to retain Alvarez & Marsal, LLC, as their financial consultant. Alvarez & Marsal is expected to: a) review and evaluate the current and prospective financial and operational condition of the Debtors, including but not limited to cash receipts and disbursement forecasts; short term and long term business plans and various plans of reorganization that may be considered or pursued by the Debtors; and review appraisals, DIP financing, asset sale and plans to recapitalize or reorganize the Debtors; b) assist the Committee and its counsel in evaluating and responding to various developments or motions during the course of the chapter 11 case, including providing expert testimony; and c) provide other services that may be required by the Committee which are also acceptable to the Firm. Dean Swick, a Managing Director at Alvarez & Marsal, will be the lead professional in this engagement. Mr. Dean discloses the hourly billing rates of his Firm's professionals: Designation Billing Rate ----------- ------------ Managing Director $500 - $750 Director 350 - 450 Associate/Analyst 175 - 350 Mr. Swick's billing rate is $600 per hour. To the best of the Committee's knowledge, Alvarez & Marsal holds no interest materially adverse to the Debtors and their estates. Headquartered in Gretna, Louisiana, Torch Offshore, Inc., provides integrated pipeline installation, sub-sea construction and support services to the offshore oil and gas industry, primarily in the Gulf of Mexico. The Company and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. La. Case No. 05-10137) on Jan. 7, 2005. Jan Marie Hayden, Esq., at Heller, Draper, Hayden, Patrick & Horn, L.L.C., and Lawrence A. Larose, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $201,692,648 in total assets and $145,355,898 in total debts. TORCH OFFSHORE: Committee Wants Chapter 11 Trustee Appointed ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Torch Offshore, Inc., and its debtor-affiliates asks the U.S. Bankruptcy Court for the Eastern District of Louisiana to appoint a chapter 11 trustee in the Debtors' restructuring proceedings. The Committee explains that a chapter 11 trustee is necessary because the Debtors' management is allowing two secured lenders -- GE Credit Corporation and Regions Bank -- to control their chapter 11 cases. The Debtors' professionals, the Committee says, are being incentivized to assist in the asset sell-off. According to the Committee, if these lenders aren't stopped, any chance of a successful reorganization will be lost. The Committee also wants a disinterested person to investigate approximately $3.7 million of prepetition payments to insiders and out-of-state professionals. How the Lenders are Taking Control Regions Bank and GE Credit Corporation, the Committee says, are dictating the terms of these bankruptcy proceedings through a DIP financing facility. The Committee is puzzled that the Debtors would be needing new loans since they have $2,555,000 cash on hand. The Committee believes that what the Debtors need is only the use of cash collateral. The Committee insists that the final approval of the DIP facility should be vacated to stop GE from seizing the Debtors' three vessels. The Debtors assessed the vessels for over $43 million but, under the settlement with GE, it is unlikely that more than $18 million will be realized upon their sale. The Debtors owe Regions Bank approximately $98 million in prepetition debt. The DIP agreement, requires the Debtors to pay Regions Bank $5.7 million annually as interest on the prepetition debt. The payment must come from the DIP loan. The Committee thinks this is onerous and overreaching. The Committee discloses that out of the $6.9 million DIP loan, approximately $6.5 is allocated to pay interest to Regions Bank, the Debtors' professionals and critical vendors who didn't get Court approval to be paid. The Committee also believes that three of the Debtors' out-of- state professionals aren't disinterested: * King & Spalding LLP as general counsel, * Raymond James & Associates, Inc., as investment bankers, and * Bridge Associates LLC as restructuring advisors. The Committee is quite certain GE may be a very large K&S client. Also, K&S listed Regions Bank as a former client. K&S also surprised the Committee by asking it to withdraw its opposition against the retention of Bridge Associates and Raymond James. In fact, the Committee says, part of a proposed settlement with GE is the withdrawal of objections against Bridge and Raymond James. Headquartered in Gretna, Louisiana, Torch Offshore, Inc., provides integrated pipeline installation, sub-sea construction and support services to the offshore oil and gas industry, primarily in the Gulf of Mexico. The Company and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. La. Case No. 05-10137) on Jan. 7, 2005. Jan Marie Hayden, Esq., at Heller, Draper, Hayden, Patrick & Horn, L.L.C., and Lawrence A. Larose, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $201,692,648 in total assets and $145,355,898 in total debts. UAL CORPORATION: Reports $179 Million Operating Loss in February ---------------------------------------------------------------- UAL Corporation (OTC Bulletin Board: UALAQ), the holding company whose primary subsidiary is United Airlines, delivered its February Monthly Operating Report to the United States Bankruptcy Court last week. The company reported an operating loss of $179 million for February 2005. Fuel expense for the month was $57 million higher than February 2004 on 4% lower capacity. The company reported a net loss of $291 million, including $92 million of largely non cash reorganization expenses. Unit costs (CASM) in February increased 3% over the same month last year on 4% lower capacity. Excluding fuel, unit costs in February decreased 4% year-over-year. Mainline passenger unit revenue in February decreased 2% over the same period a year ago. UAL ended February with a cash balance of $2.2 billion, which included $870 million in restricted cash (filing entities only). The cash balance increased $183 million during the month of February, driven by strong bookings and was ahead of plan. UAL met the requirements of its debtor-in-possession (DIP) financing. "Recent fare increases have been modestly encouraging, but the industry still has a long way to go in raising fares and reducing capacity to offset burgeoning fuel costs," said Jake Brace, executive vice president and chief financial officer. "Consistent with our business plan, we still believe that termination and replacement of our defined benefit pension plans is necessary. Our goal remains to reach agreement with our unions on this issue and avoid a costly, time-consuming trial currently set to begin May 11, but there is much work left to do." 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. Employing 61,200 workers, United, United Express and Ted operate more than 3,500 flights a day to more than 200 U.S. domestic and international destinations from hubs in Los Angeles, San Francisco, Denver, Chicago and Washington, D.C. 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. UAL CORPORATION: Gate Gourmet Holds $2.75 Million Claim ------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois authorized UAL Corporation and its debtor-affiliates to enter into a Master Agreement and Ancillary Agreements with Gate Gourmet, Inc. As part of the Settlement, the Debtors agreed to file a Stipulation in acknowledgement of Gate Gourmet's Claims. The parties stipulate and agree that Gate Gourmet's Claim No. 38911 is fixed and allowed as a general unsecured claim for $2,752,796. The Claim will be paid pro rata as other general unsecured creditors. The Debtors will not object to the Claim nor seek its alteration. 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. Employing 61,200 workers, United, United Express and Ted operate more than 3,500 flights a day to more than 200 U.S. domestic and international destinations from hubs in Los Angeles, San Francisco, Denver, Chicago and Washington, D.C. 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) ULTIMATE ELECTRONICS: Closes 30 Retail Stores & Reduces Employees ----------------------------------------------------------------- Ultimate Electronics, Inc.'s Board of Directors authorized a plan to close retail store locations and reduce the number of central office employees. Under the plan, the Company will close approximately 30 of its retail store locations in Iowa, Kansas City, Missouri, South Dakota, Texas, and Utah markets. The Company is actively seeking bids from third party liquidators to manage the store closings. The plan anticipates store closing sales will begin on or about April 9, 2005, and be completed by approximately June 30, 2005. Approximately 900 employees of the Company will be impacted as a result of the store closings. "The Company expects to continue to operate 32 stores in Arizona, Kansas, Minnesota, St. Louis, Missouri, Nevada, New Mexico, and Oklahoma," the Company said in its regulatory filing. On March 22, 2005, the Company notified approximately 65 central office employees that they would be terminated. Certain terminations were effective immediately, while others will occur over the course of the store closures, as a number of employees will be needed to facilitate the store closing process. In conjunction with these plans, the Company will incur charges related to lease terminations, disposal of fixed assets, liquidation of inventory, employee severance and other exit costs. In light of the Company's current financial status, the bankruptcy filing and the ongoing reorganization efforts, the Company is currently unable to make an estimate of the costs, charges and cash outlays associated with the store closings. Director Resignation Bruce Giesbrecht, CEO of Hollywood Entertainment Corporation, has resigned as a member of the Company's Board of Directors, Audit Committee, and Nominating and Corporate Governance Committee effective March 22, 2005. Mr. Giesbrecht resigned the day after Mark J. Wattles, Chairman of the Board and CEO of the Company, sent a letter to the Board of Directors of Hollywood and Blockbuster, Inc. expressing his interest in acquiring up to 50% of Hollywood's stores. Headquartered in Thornton, Colorado, Ultimate Electronics, Inc. -- http://www.ultimateelectronics.com/-- is a specialty retailer of consumer electronics and home entertainment products located in the Rocky Mountain, Midwest and Southwest regions of the United States. The Company operates 65 stores and focuses on mid-to high-end audio, video, television and mobile electronics products. The Company and its debtor-affiliates filed for chapter 11 protection on January 11, 2005 (Bankr. D. Del. Case No. 05-10104). J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $329,106,000 and total debts of $160,590,000 ULTIMATE ELECTRONICS: Opposes Bid for Appointment of Equity Panel ----------------------------------------------------------------- On March 18, 2005, an ad hoc committee of Ultimate Electronics, Inc. shareholders filed a motion to (1) appoint an official committee of equity securityholders or (2) in the alternative, appoint a Chapter 11 trustee. The Company says that it plans to oppose the motion filed by the Ad Hoc Committee because shareholders are out of the money. As previously reported in the Company's Current Report on Form 8-K filed with the SEC on February 16, 2005, based upon testimony given by FTI Consulting at a hearing before the Bankruptcy Court on February 14, 2005, it appears unlikely that the outcome of the Company's reorganization will result in any value for the holders of the Company's common stock. "It is not currently possible to predict the length of time the Company will operate under the protection of the Bankruptcy Code and the supervision of the Bankruptcy Court, when the Company will file a plan or plans of reorganization with the Bankruptcy Court, the outcome of the Chapter 11 proceedings in general, or the effect of the proceedings on the business of the Company or on the interest of the various interested parties," David A. Carter the Debtor's Senior Vice President-Finance and Chief Financial Officer, says in a regulatory filing delivered to the Securities and Exchange Commission last week. Headquartered in Thornton, Colorado, Ultimate Electronics, Inc. -- http://www.ultimateelectronics.com/-- is a specialty retailer of consumer electronics and home entertainment products located in the Rocky Mountain, Midwest and Southwest regions of the United States. The Company operates 65 stores and focuses on mid-to high-end audio, video, television and mobile electronics products. The Company and its debtor-affiliates filed for chapter 11 protection on January 11, 2005 (Bankr. D. Del. Case No. 05-10104). J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $329,106,000 and total debts of $160,590,000 ULTIMATE ELECTRONICS: Lender Waives DIP Loan Default ---------------------------------------------------- Ultimate Electronics, Inc., and Wells Fargo Retail Finance, LLC, entered into a third amendment to the Company's debtor-in- possession loan and security agreement modifying certain terms and conditions of the DIP financing facility. Wells Fargo agrees to waive the Company's existing defaults under the loan agreement arising from the Company's failure to: (a) deposit certain proceeds received from American Express and certain vendors on or about March 15, 2005, into a Concentration Account; and (b) timely deliver to the Agent a new business plan. The Loan Agreement provides that upon the occurrence of an event of default, the Lenders holding a majority of the obligations under the Loan Agreement may, among other things, terminate the unused commitments under the Loan Agreement and declare all obligations under the Loan Agreement immediately due and payable. The amended credit agreement requires the Company to provide the Agent with certain business and financial information regarding the Company, including: 1) the Company's revised business plan, 2) identification of any liquidity shortfalls, 3) a stalking horse agency agreement for all retail locations that the Company proposes to close; 4) either commitments to provide the Company with additional funds to eliminate any liquidity shortfalls identified in its revised business plan or bid packages relating to the Company's warehouse and remaining retail locations in a form to be provided to retail inventory liquidators, and 5) evidence that the Company has entered into an agency agreement, following Court approval, relating to all retail locations proposed to be closed in connection with the Company's revised business plan. As reported in the Troubled Company Reporter on Feb. 21, 2005, the U.S. Bankruptcy Court for the District of Delaware granted Ultimate Electronics final approval of up to $118.5 million in debtor-in-possession financing provided by Wells Fargo Retail Finance and Mark Wattles. The Debtors are authorized to: -- borrow and re-borrow up to $100 million on a revolving basis; -- issue up to $5 million of new letters of credit; -- borrow $13 million under a Tranche B subfacility; and -- borrow $5.5 million under a Tranche C subfacility. Headquartered in Thornton, Colorado, Ultimate Electronics, Inc. -- http://www.ultimateelectronics.com/-- is a specialty retailer of consumer electronics and home entertainment products located in the Rocky Mountain, Midwest and Southwest regions of the United States. The Company operates 65 stores and focuses on mid-to high-end audio, video, television and mobile electronics products. The Company and its debtor-affiliates filed for chapter 11 protection on January 11, 2005 (Bankr. D. Del. Case No. 05-10104). J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $329,106,000 and total debts of $160,590,000 USG CORP: FMR Corporation Discloses 12.898% Equity Stake -------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission dated February 14, 2005, FMR Corporation discloses holding 5,548,300 shares or 12.898% of the common stock outstanding of USG Corporation: No. of Shares Percentage Beneficially Outstanding Reporting Person Owned of Shares ---------------- ------------- ----------- FMR Corp. 5,548,300 12.898% Edward C. Johnson 3d 5,548,300 12.898% Abigail P. Johnson 5,548,300 12.898% Fidelity Management & Research Company, a wholly owned subsidiary of FMR Corp. and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, is the beneficial owner of 5,387,000 shares or 12.523% of the Common Stock outstanding of USG Corporation as a result of acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. The ownership of one investment company, Fidelity Low Priced Stock Fund, amounted to 4,302,800 shares or 10.003% of the Common Stock outstanding. Edward C. Johnson 3d, FMR Corp. -- through its control of Fidelity -- and the Funds, each has sole power to dispose of the 5,387,000 shares owned by the Funds. Neither FMR Corp. nor Edward C. Johnson 3d, as Chairman of FMR Corp., has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with the Funds' Boards of Trustees. Fidelity carries out the voting of the shares under written guidelines established by the Funds' Boards of Trustees. Fidelity Management Trust Company, a wholly owned subsidiary of FMR Corp. and a bank as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, is the beneficial owner of 161,300 shares or 0.375% of the Common Stock outstanding of the Company as a result of its serving as investment manager of the institutional accounts. Edward C. Johnson 3d and FMR Corp., through its control of Fidelity Management Trust Company, each has sole dispositive power over 161,300 shares and sole power to vote or to direct the voting of 161,300 shares of Common Stock owned by the institutional accounts. Members of the Edward C. Johnson 3d family are the predominant owners of Class B shares of common stock of FMR Corp., representing approximately 49% of the voting power of FMR Corp. Mr. Johnson 3d owns 12.0% and Abigail Johnson owns 24.5% of the aggregate outstanding voting stock of FMR Corp. Mr. Johnson 3d is Chairman of FMR Corp. and Abigail P. Johnson is a Director of FMR Corp. The Johnson family group and all other Class B shareholders have entered into a shareholders' voting agreement under which all Class B shares will be voted in accordance with the majority vote of Class B shares. Accordingly, through their ownership of voting common stock and the execution of the shareholders' voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR Corp. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/--through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at Jones Day represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG Bankruptcy News, Issue No. 82; Bankruptcy Creditors' Service, Inc., 215/945-7000) USG CORPORATION: Wants More Time to Remove State Court Actions -------------------------------------------------------------- Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, tells Judge Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware that USG Corporation and its debtor-affiliates need more time to determine which among their pending asbestos products liability actions and other actions should be removed from state court and subsequently transferred to the Bankruptcy Court and the District Court. Mr. DeFranceschi explains that the Debtors do not wish to take those steps unless and until those steps are proven necessary or useful in the administration of their Chapter 11 cases. The Debtors need to retain flexibility to remove cases to federal court as their bankruptcy cases progress. In addition, the Debtors may wish to remove certain non-asbestos-related cases and, thus, need to preserve flexibility with respect to those cases as well. Accordingly, the Debtors ask the Court to extend the period within which they may file certain notices of removal through and including the date that is 30 days after the effective date of a plan of reorganization. The Debtors' request applies to: (a) any prepetition asbestos-related actions brought against U.S. Gypsum Company or any of the Debtors; (b) prepetition non-asbestos actions brought against any of the Debtors; and (c) any asbestos-related or non-asbestos-related actions brought postpetition against any of the Debtors. The Debtors further ask the Court that the extension of the Removal Period be without prejudice to any position they may take regarding whether Section 362 of the Bankruptcy Code applies to stay any Proceedings, their right to seek further extensions of the Removal Period, and any position they may take regarding the effect of the filing of a proof of claim on any Proceedings or any related matters. Mr. DeFranceschi believes that the extension will protect the Debtors' valuable right to economically adjudicate lawsuits under 28 U.S.C. Section 1452 if the circumstances warrant removal. The Court will convene a hearing on April 25, 2005, to consider the Debtors' request. By application of Del.Bankr.LR 9006-2, the Debtors' Removal Period is automatically extended through the conclusion of that hearing. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at Jones Day represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) VIVENTIA BIOTECH: Equity Deficit Widens to CDN$21.255M at Dec. 31 ----------------------------------------------------------------- Viventia Biotech, Inc., (TSX:VBI) reported financial and operational results for the year ended December 31, 2004. Highlights: -- Announced positive safety and efficacy results from a Phase I trial for Proxinium(TM) in advanced, recurrent head and neck cancer. -- Completed enrolment for a second safety and efficacy trial for Proxinium(TM) in advanced, recurrent head and neck cancer (subsequent to the end of the year). -- Granted orphan drug designation from the U.S. FDA for Proxinium(TM) for the treatment of advanced, recurrent head and neck cancer (subsequent to the end of the year). -- Initiated and subsequently expanded a Phase I trial for Proxinium(TM) for the treatment of recurrent bladder cancer. "With efficacy results from our second study with Proxinium(TM) due in the near-term and the recent granting of Orphan drug status, we are on track to initiate advanced clinical trials for this promising drug in 2005," said Dr. Nick Glover, President and CEO of Viventia. Financial Results For the year ended December 31, 2004, Viventia reported expenditures of $15.9 million compared to $12.9 million for the previous year. Total research, development and operating expenditures for 2004 increased by $2.1 million or 19.3% to $12.8 million, compared to expenditures of $10.7 million for 2003. Research related activities were $5.5 million for 2004 compared to $4.8 million for 2003, primarily due to the commencement of human clinical trials for Proxinium(TM). Salaries and benefits increased to $5.6 million for 2004 compared to $4.6 million in 2003, primarily attributable to costs related to a reorganization in January 2004. Occupancy costs associated with the leasing of space at the Company's Winnipeg manufacturing facility were unchanged from 2003 and amounted to $0.8 million for 2004 compared to $0.8 million for 2003. Other operating costs amounted to $0.8 million for 2004 compared to $0.5 million for 2003, the increase being primarily related to increased travel costs to monitor clinical trials. General and administrative expenditures increased to $1.5 million for 2004 compared to $1.1 million for the previous year, primarily attributable to expenses associated with two Special Shareholders' meetings held in 2004. Interest expense increased to $0.8 million for 2004 compared to $0.4 million in 2003, primarily attributable to interest amounts on bridge financing loans in 2004. In addition deferred financing expenses of $1.4 million related to a withdrawn public offering were written-off in 2004. For the year ended December 31, 2004, miscellaneous income consisted of the $61,000 gain on the disposition of capital assets, interest income of $19,000 and a proportionate share of a U.S. $100,000 one time access fee paid as part of an agreement whereby exclusive rights were provided to a third party to evaluate a specific collection of the Company's anti-cancer monoclonal antibodies for a period of two years. For 2004, Viventia reported a net loss of $17.2 million compared to a net loss of $12.8 million for the year ended December 31, 2003. As at December 31, 2004 the Company had cash and short-term deposits totaling $2.7 million and current liabilities of $3.8 million compared to $247,000 and $1.7 million respectively at December 31, 2003. In November 2004, the Company completed a private placement for $14 million in secured convertible debentures and converted $8.9 million (plus accrued interest of $246,711 as of November 3, 2004) of outstanding unsecured demand bridge financing loans into secured convertible debentures, all issued to Mr. Leslie Dan or persons affiliated with Mr. Dan. Since January 1, 2000, Viventia has financed substantially all of its operations through the sale of equity securities and convertible debt to Mr. Dan or persons affiliated with Mr. Dan and through bridge loan financings from Mr. Dan or persons affiliated with Mr. Dan. Although Viventia actively continues to seek additional sources of funding to finance its operations into the future, the Company cannot provide assurances that additional financing sources will be available. If adequate funds are not available from additional sources, the Company will be required to seek continued funding for its operations through a series of bridge financing loans from Mr. Dan or persons affiliated with Mr. Dan. Viventia Biotech, Inc. (TSX: VBI), is a publicly traded biopharmaceutical company developing Armed Antibodies(TM), powerful and precise anti-cancer drugs designed to overcome various forms of cancer. Viventia's lead product candidate is Proxinium(TM), which combines a cytotoxic protein payload significantly more powerful than traditional chemotherapies with the highly precise tumor-targeting characteristics of a monoclonal antibody. Proxinium(TM) is in clinical development for the treatment of head and neck cancer and bladder cancer, and is expected to enter advanced clinical trials in 2005. As of December 31, 2004, Viventia Biotech's equity deficit widens to CDN$21,255,000 compared to a CDN$4,484,000 equity deficit at December 31, 2003. VIVENTIA BIOTECH: Borrows $4.6 Million from Chairman Leslie Dan --------------------------------------------------------------- Viventia Biotech Inc.'s (TSX:VBI) board of directors has ratified two interim bridge loans, for $500,000 and $1.5 million obtained on February 17, 2005 and March 1, 2005 respectively, from Mr. Leslie Dan, the Company's Chairman. In addition, the Board of Directors approved and authorized the Company to obtain an additional interim bridge loan of $2.6 million from Mr. Dan to fund ongoing operations. All of the loans are unsecured, have an interest rate of 4.5% per year and are payable on demand. The board of directors determined, after receiving the recommendation of a special committee, that the loan arrangements entered into between the Company and Mr. Dan are reasonable given the circumstances of the Company and were obtained on reasonable commercial terms that are not less advantageous to the Company than if the loans were obtained from a person dealing at arm's length with the Company. The loans were arranged by Mr. Dan in his personal capacity in order to fund ongoing operations. The special committee, composed of independent directors of the Company, was formed and authorized by the board to review and consider the terms of the loan and to provide the board with its recommendation. Viventia Biotech, Inc. (TSX: VBI), is a publicly traded biopharmaceutical company developing Armed Antibodies(TM), powerful and precise anti-cancer drugs designed to overcome various forms of cancer. Viventia's lead product candidate is Proxinium(TM), which combines a cytotoxic protein payload significantly more powerful than traditional chemotherapies with the highly precise tumor-targeting characteristics of a monoclonal antibody. Proxinium(TM) is in clinical development for the treatment of head and neck cancer and bladder cancer, and is expected to enter advanced clinical trials in 2005. As of December 31, 2004, Viventia Biotech's equity deficit widens to CDN$21,255,000 compared to a CDN$4,484,000 equity deficit at December 31, 2003. WEATHERBY FORD: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Weatherby Ford, Inc. dba Ultimate Ford 300 North Magnolia Hubbard, TX 76648 Bankruptcy Case No.: 05-11293 Type of Business: The Debtor deals cars. Chapter 11 Petition Date: March 11, 2005 Court: Western District of Texas (Austin) Judge: Bankruptcy Judge Frank R. Monroe Debtor's Counsel: Jeffrey Wilner, Esq. 1415 Louisiana Suite 4175 Houston, TX 77002 Total Assets: $3,105,700 Total Debts: $1,760,280 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Dealer Computer Purchase money $40,000 Services, Inc. P.O. Box 4346 Dept. 527 Houston, Texas 77210 Waco Tribune Herald Non-purchase money $16,409 P.O. Box 2688 Waco, Texas 76702 Wages and Salaries Arrearage $15,000 Jeffrey L. Wilner Attorney fees $15,000 AER Manufacturing, Inc. Purchase money $11,000 IRS 940 & 941 Taxes $10,000 Reynolds and Reynolds Purchase money $7,500 The Parts Depot Purchase money $7,000 The Teague Chronicle Purchase money $6,033 The Groesbeck Journal Non-purchase money $5,277 The Jewett Messenger Fee simple $4,050 Freestone County Times Non-purchase money $3,000 AT & T Purchase money $2,500 Knes Radio Non-purchase money $2,145 Reyna Capital Corporation Purchase money $1,903 GNK Services Purchase money $1,500 Safety Kleen Systems Purchase money $1,000 Muzak Purchase money $1,000 Bonds Distribution Purchase money $1,000 Buffalo Express Non-purchase money $863 WEIGHT WATCHERS: S&P Assigns BB Rating to $150 Mil. Term Loan B --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' rating and its recovery rating of '3' to Weight Watchers International Inc.'s (WWI) new $150 million term loan B due 2010, indicating that the lenders can expect meaningful (50%-80%) recovery of principal in the event of a default or bankruptcy. At the same time, Standard & Poor's affirmed its current ratings on the commercial weight-loss service provider, including its 'BB' corporate credit rating. The 'B+' rating for the $250 million subordinated notes due 2009 was withdrawn, as the issue was paid off in full. The outlook is stable. Woodbury, N.Y.-based WWI had about $469 million of total debt outstanding at Jan. 1, 2005. Proceeds from the new $150 million loan were used to pay-off the outstanding balance on the company's $350 million secured revolver, and involves no additional debt. However, the company's borrowing capacity has increased by the $150 million because the revolver limit remains at $350 million. "The ratings on WWI reflect the company's narrow business focus, its participation in the highly competitive weight-loss industry, and its substantial debt levels," said Standard & Poor's credit analyst Susan Ding. These factors are somewhat mitigated by the company's leading market position, geographic diversity, predictable cash flows, and favorable demographic trends. WELDON F. STUMP: Four Creditors File Involuntary Petition in Ohio ----------------------------------------------------------------- Four creditors of Weldon F. Stump & Co., a used-machinery dealer based in Toledo, Ohio, filed an involuntary Chapter 11 petition against the company on March 22, 2005. Huntington National Bank says it's owed $2.2 million on account of a delinquent bank loan. Three other creditors -- Lesher Printers, Inc., Henry Gurtzweiler, Inc., and CWS Advisors Ltd. -- say they're owed another $100,000. The petitioning creditors are represented by: John J. Hunter, Jr., Esq. Hunter & Schank Co., L.P.A. One Canton Square 1700 Canton Avenue Toledo, Ohio 43624-1378 Telephone (419) 255-4300 Fax (419) 255-9121 The Toledo Blade reports that the company was founded in 1948 by Weldon F. Stump, who died in 2002. The company maintains a Web site at http://www.stumpco.com/. Thomson Gale's Goliath database reports that the company has 20 employees and reported $8.6 million in sales in 2003. Pursuant to Rule 1011 of the Federal Rules of Bankruptcy Procedure, Weldon F. Stump & Co., the Alleged Debtor, has 20 days to present any defenses and objections to the involuntary petition. WHX CORP: Court Restricts Trading in Claims & Equity Securities --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has approved notification procedures to help WHX Corp. preserve certain valuable tax attributes. The Bankruptcy Court's order, which was approved March 11, 2005, provides that "any purchase, sale or other transfer of claims against or equity securities in the Company in violation of the Notification Procedures shall be null and void and shall confer no rights on the transferee." The Interim order also states that, "Any prohibited purchase, sale, trade or other transfer of claims against or equity securities in the Company in violation of the order will be null and void and may result in the imposition of sanctions by the Bankruptcy Court." A copy of the NOTICE OF (A) ENTRY OF AN INTERIM ORDER ESTABLISHING NOTIFICATION AND HEARING PROCEDURES FOR TRADING IN CLAIMS AND EQUITY SECURITIES AND (B) HEARING TO CONSIDER ENTRY OF FINAL ORDER ON NOTIFICATION AND HEARING PROCEDURES is available at no charge at: http://www.whxcorp.com/Restructuring%20Information/Notification%20Procedures.pdf A hearing for final order approval of the Notification Procedures has been set for March 31, 2005 at 11:30 a.m. Objections must be filed with the Bankruptcy Court and served by 4:00 p.m. (EST) on March 28, 2005, on: Counsel to the Debtors: Richard H. Engman, Esq. Jones Day 222 East 41st Street New York, New York 10017 The U.S. Trustee: Greg M. Zipes, Esq. The Office of the United States Trustee One Bowling Green New York, New York 10004 Counsel to the Informal Preferred Shareholders Committee: Andrews & Kurth LLP 450 Lexington Avenue, 15th Floor New York, New York 10017 and on counsel to any statutory committee appointed in WHX Corp.'s chapter 11 case. As previously reported in the Troubled Company Reporter, WHX Corp. filed its Disclosure Statement and Plan of Reorganization with the U.S. Bankruptcy Court for the Southern District of New York on March 7, 2005. Full-text copies of the Disclosure Statement and Plan are available for a fee at: http://www.researcharchives.com/bin/download?id=050314022537 - and - http://www.researcharchives.com/bin/download?id=050314023014 Headquartered in New York City, New York, WHX Corporation -- http://www.whxcorp.com/-- is a holding company structured to acquire and operate a diverse group of businesses on a decentralized basis. WHX's primary business is Handy & Harman, a diversified industrial manufacturing company servicing the electronic materials, specialty wire and tubing, specialty fasteners and fittings, and precious metals fabrication markets. The Company filed for chapter 11 protection on March 7, 2005 (Bankr. S.D.N.Y. Case No. 05-11444). When the Debtor filed for protection from its creditors, it reported total assets of $406,875,000 and total debts of $352,852,000. WINN-DIXIE: Gets Court OK to Sell Inventory to Eckerd & CVS Realty ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York allowed Winn-Dixie Stores, Inc., and its debtor-affiliates to sell pharmaceutical prescription and inventory to Eckerd Corporation and CVS Realty Company, subject to higher and better offers. As reported in the Troubled Company Reporter on Mar. 10, 2005, D.J. Baker, Esq., at Skadden, Arps, Meagher & Flom, LLP, in New York, related that the Debtors have implemented, and will continue to implement, an asset rationalization and expense reduction plan with the goal of improving their operations and financial performance and strengthening their business. In connection with these plans, the Debtors decided to close unprofitable stores in an expeditious manner, which includes: -- retail store number 950 located in Franklin, Virginia; and -- retail store number 983 located in Rocky Mount, Virginia. The Franklin Store closed on March 9, 2005, while the Rocky Mount Store closed on March 10, 2005. Because Virginia state law requires the Debtors to properly transition customer prescriptions at the date of a store closing, the approval of the sale of the Assets on an expedited basis is necessary to permit the Debtors to: -- ensure a seamless transition of these assets for the benefit of consumers and creditors of the estate; and -- avoid potential criminal and civil penalties. The Debtors have conducted significant marketing efforts under extreme time constraints to further their goal of selling the Assets for the most attractive price attainable. The Debtors have attempted to identify and contact all third party purchasers that might be interested in purchasing the Assets. These efforts culminated in: (i) an offer from Eckerd to purchase the Assets at the Franklin Store for $215,000; and (ii) an offer from CVS to purchase the Assets at the Rocky Mount Store for $220,000. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) WINN-DIXIE: Names Tom Robbins Sr. Vice President - Merchandising ---------------------------------------------------------------- Winn-Dixie Stores, Inc. (OTC Pink Sheets: WNDXQ) reported that Tom Robbins is joining Winn-Dixie as Senior Vice President of Merchandising effective March 28. He will report directly to President and CEO Peter Lynch. Mr. Robbins is a 37-year veteran of the supermarket industry with experience at The Kroger Company, Price Chopper Supermarkets, The Great A&P Tea Company, Thriftway Food & Drug and Delchamps, Inc. "Tom's extensive industry experience, proven leadership, and ability to drive profitable sales will be a strong asset to our team, particularly during our reorganization," said Mr. Lynch. "A strong and well-seasoned merchant leading Winn-Dixie's turnaround plan is critical as we work our way through Chapter 11. We are fortunate to have Tom on our team." Throughout much of his career, Mr. Robbins has held top management positions in Sales and Merchandising, most recently serving as Executive Vice President of Sales and Marketing for Price Chopper. In his six years with that retailer, Mr. Robbins was responsible for all functions of the sales department, merchandising, marketing, procurement, consumer affairs, and advertising, including being responsible for the departments' revenue. He initiated the development of sales and marketing programs, resulting in five consecutive years of record sales growth. Mr. Robbins began working in retail in 1967 at The Kroger Company, progressing through the company in various positions, including Store Manager and Associate Grocery Sales Manager. He then went to work for The Great A&P Tea Company, ending up as Group Vice President of Merchandising for the Midwest Division. Robbins left A&P to work for Thriftway Food & Drug for 14 years, serving ultimately as Senior Vice President, Store Operations/Administrative Departments. Later at Delchamps, Inc., as Senior Vice President of Sales and Marketing, he played a significant role in the turnaround of this regional supermarket chain. Robbins's efforts helped to reposition Delchamps as a profitable, respected and growing company. Mr. Robbins has completed the Wharton Business School Executive Management Program, "Models for Management Series." Dick Judd, who has been serving for nearly two years as Senior Vice President of Supply Chain and Merchandising for Winn-Dixie, will now focus completely on supply chain management, which includes logistics, distribution and manufacturing. Mr. Judd's in-depth experience and solid leadership skills will play a critical role in managing Winn-Dixie's supply chain during this important time in the Company's turnaround. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. XERIUM TECH: Moody's Rates $750M Senior Secured Debt Rating at B1 ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Xerium Technologies, Inc.'s $650 million guaranteed senior secured term loan B and $100 million guaranteed senior secured revolving credit facility. Moody's also assigned a B1 senior implied rating, B3 issuer rating, and SGL-3 speculative grade liquidity rating to the company. The rating outlook is stable. Concurrent with the new bank facility the company will be executing an initial public offering of common equity that is expected to generate proceeds to the company of approximately $212 million from a primary offering of shares. The IPO and bank facility are contingent financings with the proceeds being used to repay approximately $808 million of Xerium's outstanding debt. Xerium is a leading manufacturer and supplier of consumable roll cover and clothing products, predominantly to the paper manufacturing industry, and estimates its market share for roll products at least 33% and clothing at approximately 15% of global demand. From 1976 to 1999, Xerium grew in part through several acquisitions and was acquired by Apax Partners (Apax), a manager of private equity funds, in December 1999. Since its acquisition by Apax, Xerium acquired three additional companies and executed two recapitalizations. The B1 senior implied rating reflects the company's relatively good operating performance, stable market position, geographic diversity, and adequate liquidity. In addition, the meaningful equity contribution will de-lever its balance sheet and lower interest costs. However, the ratings also incorporate the limited scope and modest size of the company's operations, its acquisitive nature, high customer concentration, and competitive pressures, in addition to high debt levels and potential dividend requirements. Xerium has performed reasonably well despite a weak operating environment in the paper manufacturing industry as a number of paper machines have been either shut down or idled. Over the past four years, the company has generated positive free cash flow and maintained relatively good credit metrics despite high debt levels and ongoing restructuring actions. Going forward, performance should improve as current cost initiatives take hold and the operating environment within the paper industry remains somewhat favorable. Nevertheless, the paper industry is highly cyclical and Xerium competes against companies that are larger and possess greater financial flexibility, such as Voith AG (Baa1, stable), Metso Corporation (Ba1, stable), and Albany International (not rated). Xerium stated in its most recent S-1 filing that, in 2004, pricing pressures from competitors required the company to reduce the size of a proposed price increase in North America. The contemplated transaction will have a meaningful impact on credit metrics by reducing Xerium's debt levels by approximately $143 million, to $665 million from $808 million, and gross interest costs by about $25 million (cash interest costs by about $13 million) to $42 million from $67 million. This will result in pro forma leverage on a gross debt to adjusted EBITDA (excluding one-time restructuring costs) basis declining to just over 4.0x from 4.9x, and pro forma EBITDA coverage of gross interest improving to approximately 4.0x from 2.5x for 2004. Liquidity should also remain adequate with full availability under its $50 million six and a half year revolving credit facility and the expectation that the company should remain cash flow positive. Despite the benefits from lower debt levels, a proposed dividend will negatively impact cash flow and corresponding credit metrics. Xerium is planning to pay an annual dividend of at least $40 million, which more than offsets the benefits of lower cash interest costs and could result in cash flow credits metrics that are weaker post this transaction. Xerium's balance sheet is also relatively weak with intangibles representing 34% of total assets, which has a significant impact on asset coverage of the bank facility. When looking at the guarantor group of companies, the net tangible book value of assets would be less than the anticipated $665 million of outstanding debt. Even after incorporating the non-guarantor subsidiaries, the consolidated book value of net tangible assets was approximately $667 million as of December 31, 2004. Xerium is also relatively small in size with average historical revenues of approximately $500 million, generated from two primary products, clothing and rolls, that are predominantly sold to a single industry, paper manufacturing. The company's sales to the steel, leather, and textile industries represent about 10% of total sales and 12% of sales are generated by roll cover refurbishment services and mechanical services operations in the roll segment. Xerium has been very acquisitive in the past and, while it is Moody's understanding that no acquisitions are currently being contemplated, the ratings allow for moderately- sized acquisitions as long as the acquisitions are sized commensurate with cash flow and maintain the company's current risk characteristics. Xerium is also undertaking a legal entity reorganization of its Brazilian operations, which is expected to take less than six months and involves the aggregation of three separate businesses under a single corporate structure. As part of the current refinancing, the company will have a $50 million 364-day revolving credit facility for the sole purpose of facilitating the reorganization. The 364-day revolver will not be available after the reorganization in Brazil and will not be used for anything outside the Brazilian reorganization. The B1 rating on the senior secured bank credit facility reflects the benefit derived from a secured interest in substantially all of the assets of US subsidiaries and 65% of the stock of first- tier non-domestic subsidiaries. Certain assets of non-US subsidiaries will also secure the obligations of non-US borrowers. The bank facility is also guaranteed by all US subsidiaries, while certain non-US subsidiaries will guarantee non-US borrowers. The bank credit facility will be the only debt in the capital structure, although the credit facility allows for the addition of up to $150 million in subordinated debt for acquisitions. The issuer of the bank credit facility will be Xerium, with direct co-borrowers being Xerium Italia SpA, Stowe Woodward / Mount Hope, Inc., Weavexx Corporation, and Huyck Austria GmbH. The stable outlook reflects Moody's expectation that operating performance will improve as current restructurings and cost initiatives are realized and that management will prudently manage its dividend policy, all of which should help reduce debt to more moderate levels and strengthen liquidity. The outlook assumes any acquisitions will not negatively impact Xerium's credit metrics. We also expect a successful completion of the Brazilian management reorganization without any impact to credit metrics. Factors that could negatively impact the ratings and or outlook would be a decline in credit metrics or liquidity due in part to increased competition, deterioration in paper industry fundamentals resulting in a decline in paper production, or a larger-than- anticipated debt financed acquisition. However, a sustained improvement in operating performance resulting in more moderate debt levels, improved credit metrics, and stronger liquidity would likely improve the ratings or outlook. The SGL-3 speculative liquidity rating reflects Moody's view that over the next twelve months Xerium will be able to fund all cash requirements from internal sources, except for extraordinary capex, but considers the company's $50 million revolver as modest and the cushion under its financial covenants as relatively tight. Moody's also believes cash on the balance sheet will remain modest over the next twelve months, due in part to the expected dividend payout, and the company does not currently own any assets, outside of what is secured, that can be monetized in the near term to satisfy liquidity needs. Xerium Technologies, Inc., headquartered in Westborough, Massachusetts, is a manufacturer and supplier of consumable products used primarily in the production of paper. XO COMMUNICATIONS: Can't Timely File Annual Report with SEC ----------------------------------------------------------- XO Communications, Inc.'s Annual Report could not be filed with the SEC within the prescribed time period because the Company has not yet completed its valuation analysis to assess a non-cash goodwill impairment charge under SFAS No. 142 "Goodwill and Other Intangible Assets", SFAS 142, and consequently, the Company's independent auditors have not yet completed the audit review related thereto, the Company discloses. The Company has determined that it will be required to record a non-cash impairment charge under the requirements of SFAS 142 with respect to goodwill. The requirement to assess this impairment charge is triggered under SFAS 142 because of the reduction in the Company's market capitalization (outstanding common shares multiplied by common stock trading price on the Over-the-Counter Bulletin Board) compared to the Company's book value of its net assets at December 31, 2004. The Company has not yet quantified the amount of this non-cash impairment charge, however, the Company believes that there is substantial likelihood that all of the $216.9 million of goodwill reflected on its balance sheet as of September 30, 2004 will be impaired. Headquartered in Reston, Virginia, XO Communications -- http://www.xo.com/-- provides local, long distance, and data services to small and midsize business customers as well as to national enterprise accounts. Through its acquisition of Concentric Network Corp. in June 2000, the company has been able to serve more upscale large accounts with enhanced data services such as Web hosting, virtual private networks, and high-capacity data network services, including dedicated wavelength and Ethernet services. The Company filed for chapter 11 protection on June 17, 2002 (Bankr. S.D.N.Y. Case No. 02-12947). XO's stand- alone plan of reorganization was confirmed on Nov. 15. 2002, and the company emerged from bankruptcy in January 2003. Matthew Allen Feldman, Esq., and Tonny K. Ho, Esq., at Willkie Farr & Gallagher represented the Debtors. YUKOS OIL: Denies Monetary Liability to Rosneft ----------------------------------------------- YUKOS Oil Company totally rejects any suggestion that money is owed to Rosneft from historical operations of Yukos' subsidiary, Yuganskneftegas as is being alleged by a lawsuit that has been filed against YUKOS by Rosneft in the past few days. A YUKOS Oil Company spokesperson stated on March 15: "The claims made last week by Rosneft are ridiculous and totally unfounded. YUKOS has still not received any formal notification that 77% stock ownership of Yuganskneftegaz has been acquired by Rosneft. As a result, Yukos still considers that Yuganskneftegas continues to be a legitimate asset of YUKOS, and Rosneft has illegally confiscated it and is managing it illegally. To steal our asset and then file a false and unfounded multi-billion dollar lawsuit against YUKOS accusing our company of acting unlawfully in the operation of that asset is ludicrous. These latest allegations take the insanity of the attack against YUKOS by government authorities to a new level. There seems to be no end to the extraordinary lengths that the Russian authorities and its state- owned companies will resort to in order to continue this totally unjustified assault on YUKOS and its employees. "We will defend ourselves against these claims to our fullest ability and we will use every legal avenue open to 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 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) YUKOS OIL: Inks Stipulation with Deutsche Bank Dismissing Appeal ---------------------------------------------------------------- Yukos Oil Company no longer wishes to prosecute its appeal from Judge Clark's order dismissing its chapter 11 case. Yukos Oil and Deutsche Bank AG stipulate and agree that Yukos' appeal to the U.S. District Court for the Southern District of Texas is voluntarily dismissed. The parties ask Judge Clark to approve their Stipulation of Dismissal. Yukos Oil's Battle As previously reported, Deutsche Bank accused Yukos Oil of manufacturing jurisdiction to avail of bankruptcy protection in the U.S. On February 24, 2005, the Honorable Letitia Z. Clark of the U.S. Bankruptcy Court for the Southern District of Texas dismissed the Chapter 11 case of Yukos Oil Company. The Bankruptcy Court found that Yukos is not a United States company, but a Russian company. The vast majority of the business and financial activities of Yukos continue to occur in Russia. Those activities require the continued participation of the Russian government, in its role as the regulator of production of petroleum products from Russian lands, as well as its role as the central taxing authority of the Russian Federation. The Court doubted Yukos' ability to effectuate a reorganization without the cooperation of the Russian government. Resurrection Attempts Yukos Oil asked Judge Leticia Clark to reconsider her analysis of Section 1112(b) of the U.S. Bankruptcy Code and grant a new trial. Judge Clark, however, upheld her dismissal order. This prompted Yukos Oil to ask the U.S. District Court for the Southern District of Texas to stay Judge Letitia Z. Clark's order dismissing its Chapter 11 case pending resolution of its appeal. The District Court, however, refused to grant a stay while Yukos Oil Company appeals from the U.S. Bankruptcy Court's decision dismissing its Chapter 11 case. 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. * Charles J. Sullivan, Esq., Joins Bond, Schoeneck & King --------------------------------------------------------- Charles J. Sullivan, Esq., has become a member of the law firm of Bond, Schoeneck & King, PLLC. BS&K is a 107 year old firm made up of 170 lawyers practicing in eleven offices in New York, Florida and Kansas; Mr. Sullivan is located at BS&K's main office in Syracuse. "I was presented with the opportunity to join BS&K's Business Department, where I will continue my practice representing business and agricultural clients. In addition, I will work closely with BS&K's Creditor's Rights, Bankruptcy and Workout Practice Group, along with my long-time partners Stephen Donato and Camille Hill," Mr. Sullivan says. Mr. Sullivan can be reached at: Charles J. Sullivan Bond, Schoeneck & King, PLLC One Lincoln Center Syracuse, New York 13202-1355 Tel: (315) 218-8144 Fax: (315) 218-8100 Email: csullivan@bsk.com Mr. Sullivan joins BS&K after twelve years of practice at Hancock & Estabrook, LLP, in Syracuse, N.Y. * Peter Briggs Heads Alvarez & Marsal's Operations in Germany ------------------------------------------------------------- Alvarez & Marsal, a global professional services firm, announced that Peter A. Briggs, a managing director specializing in corporate restructuring and crisis management, has been named head of Alvarez & Marsal's operations in Germany and Central and Eastern Europe. Mr. Briggs, who has more than 20 years of restructuring experience as a manager, creditor and investor in North America and Europe, will work to increase A&M's European presence by cultivating teams of in-country nationals who are focused on executing corporate turnaround and performance improvement strategies. As the concept of corporate restructuring/renewal becomes more accepted in Europe, A&M will expand its approach of working with management and stakeholders to guide organizations through operational and financial challenges to maximize value and favorably influence results. "As one of the first U.S. restructuring firms to establish a presence in Europe, A&M has led the way in hiring talented individuals with backgrounds in finance, operations or consulting and then honing their skills as world-class crisis management and turnaround professionals," said Antonio M. Alvarez III, who founded and heads A&M's European practice. "Our multi-lingual, multi-cultural teams in the U.K., Germany, Italy, France and the Netherlands have significant experience leading pan-European as well as intra-country restructurings. As we look to grow our presence in Germany and expand into Central and Eastern Europe, we intend to build on our successful track record and serve the needs of companies in many industries." "We are very pleased that Peter has agreed to return to Europe to spearhead this key growth initiative for A&M," said Bryan Marsal, A&M's co-CEO. "Given the pressure on companies to reduce their cost base and seek alternative supply in Eastern Europe and Asia, we see significant opportunity in Germany and in Central and Eastern Europe for the type of specialized, hands-on services we provide." "A growing acceptance of restructuring advisors is taking hold throughout Europe, as underperforming companies and their stakeholders begin to recognize alternatives to liquidation and as investors begin investing in companies that could be improved through a turnaround process," said Mr. Briggs. "I am excited to be returning to Europe to build on the presence A&M already has established and to expand our operations at such a dynamic time of structural change in the German economy and integration with the EU for the transition economies of Central and Eastern Europe." Prior to joining A&M, Mr. Briggs served as a senior credit officer for the Citigroup US Leveraged Finance Portfolio. During 16 years with Citigroup, his roles included managing the Asset Based Finance business in New York focused on LBO, DIP and reorganization financing, and various European management roles including leading the Citicorp Venture Capital, corporate finance and investment management businesses regionally in Central and Eastern Europe, and as corporate bank head for the Czech Republic. While with A&M, Mr. Briggs has led both in and out-of-court financial and operational restructuring projects such as strategic plan development, business unit reorganization, plant and distribution center consolidation, asset sales, and M&A transactions. He has served as the chief restructuring officer for multinational textile maker Galey & Lord, senior advisor to Mexican denim producer Parras, chief restructuring advisor to Tropical Sportswear Int'l Corporation, chief operating officer of healthcare finance company National Century Financial Enterprises, Inc., chief restructuring officer for Consumer Financial Services to retailer The Spiegel Group (Eddie Bauer), senior advisor to law firm Jenkens & Gilchrist PC, chief restructuring advisor to auditor Thomas Havey LLP, and co-chief restructuring advisor to Arthur Andersen LLP. His restructuring and corporate finance clients at Citigroup included: Exide Technologies, Amsted Industries, Wheeling- Pittsburgh Steel, Foamex, Uniroyal Chemical, United American Energy, Rolls Royce Diesel Engines, Terex, JPS Textiles, Warnaco, Donna Karan, Esprit, Proctor-Silex, Samsonite, Revlon, Caldor, Packard Bell, Tenet Healthcare, Coca-Cola Amatil, CEZ, Unipetrol, Trinecke Zelezarny, Deutsche Telecom, Cesky Telecom, Slovak Telecom and McDonald's Polska. Since opening its Frankfurt office in 2003, Alvarez & Marsal has been credited for unlocking or preserving value for stakeholders in several high profile engagements including: Fairchild Dornier GmbH, Schulte GmbH, Trevira GmbH, Bridge Information Systems Germany GmbH, Hagemeyer Germany and Ventelo Germany GmbH. Currently, A&M professionals are serving as interim CEO and interim CFO of Ihrplatz GmbH & Co. AG, interim CEO/CFO of BOG Informationstechnologie GmbH and advising Treofan Germany GmbH & Co. KG. About Alvarez & Marsal Alvarez & Marsal is a pre-eminent global professional services firm with expertise in guiding underperforming businesses through complex operational and financial challenges. Since establishing its European presence in 2000, Alvarez & Marsal has been at the forefront of leading complex turnaround and restructuring initiatives with professionals based in the UK, France, Germany, Italy and the Netherlands. The firm's ability to attract highly talented, multi-cultural and multi-lingual professionals, many of whom are hired locally, has been central to its leadership success. With a bias toward execution, Alvarez & Marsal draws on a strong operational heritage to solve problems, implement solutions and deliver results for European companies and public sector organizations. Alvarez & Marsal Europe has pioneered its hands-on approach in the areas of turnaround consulting, crisis and interim management, performance improvement, working capital management, as well as lender and investor advisory services. With professionals across Europe, the United States, Latin America and Asia, the firm also offers specialized capabilities including financial advisory, dispute analysis and forensic services, tax advisory, and business process improvement services. For more information about the firm, visit http://www.alvarezandmarsal.com/ * BOND PRICING: For the week of March 21 - March 25, 2005 --------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 12/31/04 0 Adelphia Comm. 3.250% 05/01/21 6 Adelphia Comm. 6.000% 02/15/06 5 Allegiance Tel. 11.750% 02/15/08 30 Allegiance Tel. 12.875% 05/15/08 31 Amer. Color Graph. 10.000% 06/15/10 65 Amer. Comm. LLC 12.000% 07/01/08 5 Amer. Plumbing 11.625% 10/15/08 15 Amer. Restaurant 11.500% 11/01/06 62 Amer. Tissue Inc. 12.500% 07/15/06 62 American Airline 7.379% 05/23/16 67 American Airline 8.390% 01/02/17 73 American Airline 8.800% 09/16/15 75 American Airline 9.070% 03/11/16 71 American Airline 9.850% 01/02/09 72 American Airline 10.190% 05/26/16 73 American Airline 10.610% 03/04/11 67 AMR Corp. 4.500% 02/15/24 68 AMR Corp. 9.000% 08/01/12 72 AMR Corp. 9.000% 09/15/16 72 AMR Corp. 9.200% 01/30/12 74 AMR Corp. 9.750% 08/15/21 63 AMR Corp. 9.800% 10/01/21 64 AMR Corp. 9.880% 06/15/20 62 AMR Corp. 10.000% 04/15/21 61 AMR Corp. 10.200% 03/15/20 62 AMR Corp. 10.290% 03/08/21 63 AMR Corp. 10.450% 11/15/11 57 AMR Corp. 10.550% 03/12/21 57 Anvil Knitwear 10.875% 03/15/07 64 Apple South Inc. 9.750% 06/01/06 16 Applied Extrusion 10.750% 07/01/11 59 Armstrong World 6.350% 08/15/03 71 Armstrong World 6.500% 08/15/05 70 Armstrong World 7.450% 05/15/29 71 Armstrong World 9.000% 06/15/04 70 AT Home Corp. 0.525% 12/28/18 7 AT Home Corp. 4.750% 12/15/06 10 ATA Holdings 12.125% 06/15/10 45 ATA Holdings 13.000% 02/01/09 45 Atlantic Coast 6.000% 02/15/34 33 Atlas Air Inc. 9.702% 01/02/08 51 Avado Brands Inc. 11.750% 06/15/09 20 B&G Foods Holding 12.000% 10/30/16 8 Bank New England 8.750% 04/01/99 10 Bank New England 9.500% 02/15/96 6 Bethlehem Steel 10.375% 09/01/03 0 Big V Supermarkets 11.000% 02/15/04 1 Borden Chemical 9.500% 05/01/05 1 Budget Group Inc. 9.125% 04/01/06 0 Burlington Inds. 7.250% 08/01/27 7 Burlington Inds. 7.250% 09/15/05 7 Burlington Northern 3.200% 01/01/45 59 Calpine Corp. 4.750% 11/15/23 73 Calpine Corp. 7.750% 04/15/09 67 Calpine Corp. 7.875% 02/15/11 70 Calpine Corp. 8.500% 02/15/11 70 Calpine Corp. 8.625% 08/15/10 69 Calpine Corp. 8.750% 07/15/13 75 Color Tile Inc. 10.750% 12/15/01 0 Comcast Corp. 2.000% 10/15/29 44 Cone Mills Corp. 8.125% 03/15/05 11 Continental Airlines 6.795% 08/02/18 75 CoreComm. Limited 6.000% 10/01/06 5 Delta Air Lines 2.875% 02/18/24 49 Delta Air Lines 7.700% 12/15/05 70 Delta Air Lines 7.711% 09/18/11 58 Delta Air Lines 7.779% 01/02/12 56 Delta Air Lines 7.779% 11/18/05 70 Delta Air Lines 7.900% 12/15/09 38 Delta Air Lines 7.920% 11/18/10 58 Delta Air Lines 8.000% 06/03/23 43 Delta Air Lines 8.270% 09/23/07 70 Delta Air Lines 8.300% 12/15/29 32 Delta Air Lines 8.540% 01/02/07 72 Delta Air Lines 8.950% 01/12/12 61 Delta Air Lines 9.000% 05/15/16 34 Delta Air Lines 9.200% 09/23/14 44 Delta Air Lines 9.250% 03/15/22 33 Delta Air Lines 9.300% 01/02/10 61 Delta Air Lines 9.375% 09/11/07 66 Delta Air Lines 9.750% 05/15/21 30 Delta Air Lines 9.875% 04/30/08 73 Delta Air Lines 10.000% 05/17/10 73 Delta Air Lines 10.000% 06/01/08 59 Delta Air Lines 10.000% 06/01/09 65 Delta Air Lines 10.000% 06/01/10 64 Delta Air Lines 10.000% 08/15/08 45 Delta Air Lines 10.060% 01/02/16 49 Delta Air Lines 10.125% 05/15/10 39 Delta Air Lines 10.140% 08/14/11 68 Delta Air Lines 10.140% 08/26/12 50 Delta Air Lines 10.375% 02/01/11 38 Delta Air Lines 10.375% 12/15/22 34 Delta Air Lines 10.430% 01/02/11 73 Delta Air Lines 10.500% 04/30/16 52 Delta Air Lines 10.790% 03/26/14 71 Delta Mills Inc. 9.625% 09/01/07 49 Delphi Trust II 6.197% 11/15/33 55 Duty Free Int'l 7.000% 01/15/04 25 DVI Inc. 9.875% 02/01/04 7 E. Spire Comm Inc. 10.625% 07/01/08 0 E. Spire Comm Inc. 12.750% 04/01/06 0 E. Spire Comm Inc. 13.000% 11/01/05 0 E&S Holdings 10.375% 10/01/06 51 Eagle-Picher Inc. 9.750% 09/01/13 69 Eagle Food Center 11.000% 04/15/05 0 Edison Brothers 11.000% 09/26/07 0 Encompass Service 10.500% 05/01/09 0 Enron Corp. 6.400% 07/15/06 29 Enron Corp. 6.500% 08/01/02 33 Enron Corp. 6.625% 10/15/03 32 Enron Corp. 6.625% 11/15/05 30 Enron Corp. 6.725% 11/17/08 32 Enron Corp. 6.750% 08/01/09 32 Enron Corp. 6.750% 09/01/04 33 Enron Corp. 6.750% 09/15/04 30 Enron Corp. 6.875% 10/15/07 32 Enron Corp. 6.950% 07/15/28 31 Enron Corp. 7.000% 08/15/23 25 Enron Corp. 7.125% 05/15/07 32 Enron Corp. 7.375% 05/15/19 33 Enron Corp. 7.625% 09/10/04 33 Enron Corp. 7.875% 06/15/03 30 Enron Corp. 8.375% 05/23/05 32 Enron Corp. 9.125% 04/01/03 31 Enron Corp. 9.875% 06/15/03 33 Exodus Comm. Inc. 10.750% 12/15/09 0 Exodus Comm. Inc. 11.625% 07/15/10 0 Falcon Products 11.375% 06/15/09 44 Federal-Mogul Co. 7.375% 01/15/06 30 Federal-Mogul Co. 7.500% 01/15/09 28 Federal-Mogul Co. 8.160% 03/06/03 29 Federal-Mogul Co. 8.370% 11/15/01 30 Federal-Mogul Co. 8.800% 04/15/07 31 Fibermark Inc. 10.750% 04/15/11 75 Finova Group 7.500% 11/15/09 43 Fleming Cos. Inc. 10.125% 04/01/08 33 Flooring America 9.250% 10/15/02 0 Foamex L.P. 9.875% 06/15/07 53 GMAC 5.700% 06/15/13 75 GMAC 5.900% 01/15/19 70 GMAC 5.900% 10/15/19 73 GMAC 6.000% 03/15/19 73 GMAC 6.000% 04/15/19 71 GMAC 6.000% 09/15/19 74 GMAC 6.100% 09/15/19 70 GMAC 6.250% 05/15/19 74 GMAC 7.000% 11/15/24 71 Golden Books Pub. 10.750% 12/31/04 1 Graftech Int'l 1.625% 01/15/24 75 GST Network Funding 10.500% 05/01/08 0 HNG Internorth. 9.625% 03/15/06 32 Imperial Credit 9.875% 01/15/07 0 Imperial Credit 12.000% 06/30/05 0 Impsat Fiber 6.000% 03/15/11 69 Inland Fiber 9.625% 11/15/07 49 Intermet Corp. 9.750% 06/15/09 64 Iridium LLC/CAP 10.875% 07/15/05 16 Iridium LLC/CAP 11.250% 07/15/05 16 Iridium LLC/CAP 13.000% 07/15/05 15 Iridium LLC/CAP 14.000% 07/15/05 17 IT Group Inc. 11.250% 04/01/09 1 Kaiser Aluminum & Chem. 12.750% 02/01/03 15 Kmart Corp. 6.000% 01/01/08 16 Kmart Corp. 8.990% 07/05/10 70 Kmart Corp. 9.350% 01/02/20 25 Kmart Corp. 9.780% 01/05/20 74 Kmart Funding 9.440% 07/01/18 40 Lehman Bros. Holding 6.000% 05/25/05 65 Lehman Bros. Holding 7.500% 09/03/05 58 Level 3 Comm. Inc. 2.875% 07/15/10 56 Level 3 Comm. Inc. 5.250% 12/15/11 68 Level 3 Comm. Inc. 6.000% 03/15/10 52 Level 3 Comm. Inc. 6.000% 09/15/09 53 Liberty Media 3.750% 02/15/30 63 Liberty Media 4.000% 11/15/29 68 Loral Cyberstar 10.000% 07/15/06 75 Lukens Inc. 7.625% 08/01/04 0 LTV Corp. 8.200% 09/15/07 0 MacSaver Financial 7.400% 02/15/02 9 MacSaver Financial 7.600% 08/01/07 8 MacSaver Financial 7.875% 08/01/03 5 Metamor Worldwide 2.940% 08/15/04 1 Metro Mortgage 9.000% 12/15/04 0 Mississippi Chem. 7.250% 11/15/17 5 Muzak LLC 9.875% 03/15/09 64 Nat'l Steel Corp. 8.375% 08/01/06 3 Nat'l Steel Corp. 9.875% 03/01/09 3 Northern Pacific Railway 3.000% 01/01/47 58 Northpoint Comm. 12.875% 02/15/10 1 Northwest Airlines 7.248% 01/02/12 73 Northwest Airlines 7.360% 02/01/20 66 Northwest Airlines 7.875% 03/15/08 64 Northwest Airlines 8.070% 01/02/15 65 Northwest Airlines 8.130% 02/01/14 68 Northwest Airlines 8.700% 03/15/07 74 Northwest Airlines 10.000% 02/01/09 65 Northwest Steel & Wir. 9.500% 06/15/01 0 Nutritional Src. 10.125% 08/01/09 75 Oakwood Homes 7.875% 03/01/04 41 Oakwood Homes 8.125% 03/01/09 33 Oglebay Norton 10.000% 02/01/09 75 O'Sullivan Ind. 13.375% 10/15/09 32 Orion Network 11.250% 01/15/07 55 Orion Network 12.500% 01/15/07 55 Outboard Marine 9.125% 04/15/17 1 Owens Corning 7.000% 03/15/09 65 Owens Corning 7.500% 05/01/05 68 Owens Corning 7.500% 08/01/18 65 Owens Corning 7.700% 05/01/08 61 Owens Corning Fiber 8.875% 06/01/02 65 Owens Corning Fiber 9.375% 06/01/12 65 Pegasus Satellite 9.625% 10/15/05 57 Pegasus Satellite 9.750% 12/01/06 60 Pegasus Satellite 12.375% 08/01/06 58 Pegasus Satellite 12.500% 08/01/07 60 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings Inc. 9.875% 06/15/08 64 Penn Traffic Co. 11.000% 06/29/09 56 Polaroid Corp. 6.750% 01/15/02 2 Polaroid Corp. 7.250% 01/15/07 3 Polaroid Corp. 11.500% 02/15/06 3 Primedex Health 11.500% 06/30/08 55 Primus Telecom 3.750% 09/15/10 57 Primus Telecom 8.000% 01/15/14 73 Railworks Corp. 11.500% 04/15/09 1 Read-Rite Corp. 6.500% 09/01/04 52 Realco Inc. 9.500% 12/15/07 40 Reliance Group Holdings 9.000% 11/15/00 22 Reliance Group Holdings 9.750% 11/15/03 3 RDM Sports Group 8.000% 08/15/03 0 RJ Tower Corp. 12.000% 06/01/13 54 S3 Inc. 5.750% 10/01/03 0 Safety-Kleen Corp. 9.250% 05/15/09 0 Safety-Kleen Corp. 9.250% 06/01/08 0 Salton Inc. 12.250% 04/15/08 60 Silverleaf Res. 10.500% 04/01/08 0 Specialty Paperb. 9.375% 10/15/06 75 Startec Global 12.000% 05/15/08 0 Syratech Corp. 11.000% 04/15/07 34 Teligent Inc. 11.500% 12/01/07 0 Tower Automotive 5.750% 05/15/24 18 Triton PCS Inc. 8.750% 11/15/11 72 Triton PCS Inc. 9.375% 02/01/11 73 Twin Labs Inc. 10.250% 05/15/06 18 United Air Lines 6.831% 09/01/08 8 United Air Lines 6.932% 09/01/11 43 United Air Lines 7.762% 10/01/05 3 United Air Lines 7.811% 10/01/09 35 United Air Lines 8.030% 07/01/11 23 United Air Lines 8.250% 04/26/08 21 United Air Lines 8.310% 06/17/09 53 United Air Lines 8.700% 10/07/08 48 United Air Lines 9.000% 12/15/03 8 United Air Lines 9.060% 09/26/14 46 United Air Lines 9.125% 01/15/12 8 United Air Lines 9.200% 03/22/08 45 United Air Lines 9.350% 04/07/16 48 United Air Lines 9.560% 10/19/18 38 United Air Lines 9.750% 08/15/21 8 United Air Lines 9.760% 05/13/06 48 United Air Lines 10.020% 03/22/14 45 United Air Lines 10.110% 01/05/06 41 United Air Lines 10.110% 02/19/06 38 United Air Lines 10.125% 03/22/15 45 United Air Lines 10.250% 01/15/07 8 United Air Lines 10.360% 11/20/12 54 United Air Lines 10.670% 05/01/04 7 Univ. Health Services 0.426% 06/23/20 60 United Homes Inc. 11.000% 03/15/05 0 US Air Inc. 7.500% 04/15/08 0 US Air Inc. 7.960% 04/15/08 0 US Air Inc. 8.930% 04/15/08 0 US Air Inc. 9.330% 01/01/06 42 US Air Inc. 10.250% 01/15/07 1 US Air Inc. 10.490% 06/27/05 3 US Air Inc. 10.700% 01/15/07 23 US Air Inc. 10.900% 01/01/09 5 US Air Inc. 10.900% 01/01/10 5 US Airways Pass. 6.820% 01/30/14 40 Venture Hldgs 9.500% 07/01/05 1 Westpoint Stevens 7.875% 06/15/08 0 Winn-Dixie Store 8.875% 04/01/08 59 Winsloew Furniture 12.750% 08/15/07 20 Winstar Comm Inc. 12.500% 04/15/08 0 Winstar Comm Inc. 10.000 03/15/08 1 World Access Inc. 13.250% 01/15/08 4 World Access Inc. 4.500% 10/01/02 7 Xerox Corp. 0.570% 04/21/18 50 ********* 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 ***