/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050412.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, April 12, 2005, Vol. 9, No. 85 Headlines A.B. DICK: Creditors Must File Proofs of Claim by April 15 AADCO AUTOMOTIVE: Inks Equity for Debt Swap Pact with 3 Creditors ABN AMRO: Fitch Upgrades Ratings on Three Mortgage Certificates ADELPHIA COMMS: Insists on $3.23 Billion Judgment Against Rigases AMA ENTERPRISES: Voluntary Chapter 11 Case Summary AMERICAN BANKNOTE: Del. Bankr. Court Confirms Reorganization Plan ANDRE S. TATIBOUET: Filing Stalls 246-Room Hotel Foreclosure ARMSTRONG WORLD: Court Okays Liberty Settlement & Sale Agreements ATA AIRLINES: Court Approves Wilmington Trust Term Sheet ATA AIRLINES: Wants to Reject Sabre Work Order No. 1 ATHEROGENICS INC: Registers $200M Convertible Notes for Resale BEAR STEARNS: Fitch Affirms Low-B Ratings on Three Trust Issues BILLIE & VICKI VANDEVER: Case Summary & 20 Largest Unsecured Cred. BIOPHAGE PHARMA: Appoints Dr. Diane Berry to Advisory Board BOSTON LIFE: Losses Cause PwC to Raise Going Concern Doubt BRADLEY K. MEFFORD: Voluntary Chapter 11 Case Summary BRANDT ASSOC: Voluntary Chapter 11 Case Summary CATHOLIC CHURCH: Court Okays Tucson's Grant Participation Pact CATHOLIC CHURCH: Spokane Must Request Bar Date Extension by May CENTURY/ML CABLE: Has Exclusive Right to File Plan Until June 30 CITICORP MORTGAGE: Fitch Ups Ratings on Six Mortgage Securities COEUR D'ALENE: Buying CBH Resources' Silver Reserves for $38.5M COLUMBUS HOSPITALS: Various Concerns Prompt Moody's to Hold Rating CORUS ENTERTAINMENT: Will Release 2nd Quarter Report on Thursday CRYOPAK IND: Discovery Capital Buys $250K Convertible Debentures CURON MEDICAL: Raises Initial $3.2M in Private Equity Placement DALLAS AEROSPACE: Court Converts Ch. 11 Case to Ch. 7 Liquidation DLJ MORTGAGE: Fitch Assigns BB+ Rating to $22.3MM Class B-4 Certs. DONNKENNY: Gets Court Okay to Sell Assets to Donn K Acquisition DP 8 LLC: Asks Court to Appoint Chapter 11 Trustee DURA AUTOMOTIVE: J.P. Morgan Arranges New $290MM Financing Pact DURA AUTOMOTIVE: S&P Rates Proposed $115M Second-Lien Loan at B+ DYER FABRICS: U.S. Trustee Wants Case Converted or Dismissed EAGLEPICHER INC: Files for Chapter 11 Protection in S.D. Ohio EAGLEPICHER: Case Summary & 20 Largest Unsecured Creditors EAGLEPICHER: Bankruptcy Filing Spurs S&P Ratings' Tumble to D ELENA NADOLNY: Case Summary & 5 Largest Unsecured Creditors EMPIRE FINANCIAL: Losses & Deficit Trigger Going Concern Doubt ENRON CORP: Reorganized EPMI Wants to Amend Mediation Order FEDERAL-MOGUL: Wants Center for Claims Resolution Settlement OK'd FIRST REPUBLIC: Fitch Affirms BB+ Rating on Two Bank Loans FLINTKOTE CO: Wants Exclusive Period Extended Until August 30 FLINTKOTE CO: Wants Until August 30 to Remove Civil Actions GE CAPITAL: Moody's Junks $4.23 Million Class M Certificates GLYCOGENESYS INC: Losses & Deficits Trigger Going Concern Doubt GMAC: Fitch Holds Junk & Default Ratings on 2 Certificate Classes HUFFY CORP: Has Until June 17 to File Chapter 11 Plan HUGHES NETWORK: Various Concerns Cue S&P to Assign Low-B Ratings INTERMET CORP: Workers' Union Loses Hope of Keeping Decatur Open INTERSTATE BAKERIES: Gets Court OK to Hire ATL as Tax Consultant J.C. PENNEY: Fitch Assigns BB+ Rating to New $1.2 Bil. Bank Loan J.CREW GROUP: Jan. 29 Balance Sheet Upside-Down by $581 Million J.CREW GROUP: Good Performance Prompts Moody's to Lift Ratings J.H. WHITNEY: Fitch Junks $23.7 Million Senior Subordinated Notes JEAN COUTU: Will Release Third Quarter Results Today JERE & PAULA MURPHY: Case Summary & 20 Largest Unsecured Creditors JOHN T. STRINGFELLOW: Voluntary Chapter 11 Case Summary KANSAS CITY: TFM Acquisition Prompts S&P to Hold BB- Rating KEY3MEDIA GROUP: Wants Court to Close Subsidaries' Ch. 11 Cases KNIGHTHAWK INC: Equity Deficit Narrows to $1.052 Mil. at Jan. 31 KNIGHTHAWK INC: Gets $1.24M from 1st Tranche Short Form Financing LASER FAB: Voluntary Chapter 11 Case Summary LOOK COMMS: Creates Two New Equity Classes in Reorganization MARYLEBONE ROAD: Fitch Affirms BB+ Rating on Class A-3 Notes MCCANN INC: Two Creditors Transfer $718,204 in Claims to Time Inc. MCI INC: Verizon to Purchase All Shares by Carlos Slim Affiliates MERISANT WORLDWIDE: Weak Performance Prompts S&P to Lower Ratings MIRANT CORPORATION: Valuation Hearing Starts on April 18 MIRANT CORP: Equity Committee Wants Expert Reports Made Public MIRANT CORP: U.S. Bank Says Disclosure Statement is Inadequate MIRANT CORP: Equity Committee Asks for Examiner Report Supplement MOVIE THEATER: Voluntary Chapter 11 Case Summary MUZAK HOLDINGS: 10-K Filing Delay Cues S&P to Watch Ratings NATIONAL AUDIT: Trustee Sues to Recover Fraudulent Conveyances NATIONAL RV: UPS Capital Likely to Waive Credit Facility Default NAVIGATOR GAS: Committee Has Until Sept. 15 to File Closing Report NEXEN INC: Paying Subord. Noteholders $0.459375 per Note on May 1 NORSTAN APPAREL: Case Summary & 20 Largest Unsecured Creditors NORTH AMERICAN: Moody's Rates Planned $115M Credit Facility at B2 NORTH AMERICAN: S&P Rates Proposed $115M Credit Facility at B NORTHWEST AIRLINES: Deficits Prompt Moody's to Review Ratings NUTRAQUEST INC: Has Until Oct. 10 to File a Chapter 11 Plan OGLEBAY NORTON: SEC Approves Resale of Preferred & Common Shares OWENS CORNING: 22 Creditors Transfer $3,899,952 in Claims OZARK AIR: Ch. 7 Trustee Wants to Hire Mr. Ed's as Appraiser PEGASUS SATELLITE: Plan Confirmation Hearing Continued to Apr. 14 PILLOWTEX CORP: Court Lets Committee Prosecute Avoidance Actions PUBLICARD INC: Deloitte Expresses Going Concern Doubts RAMP CORP: Auditors Express Going Concern Doubt in Annual Report RESIDENTIAL ASSET: Fitch Ups Ratings on 3 Mort. Certs. & Affirms 5 SELENA ENTERPRISES: Voluntary Chapter 11 Case Summary SHENANDOAH ASSOCIATES: Voluntary Chapter 11 Case Summary SHOPKO STORES: Acquisition Cues Fitch to Put Ratings on Watch Neg. SHOPKO STORES: $1 Bil. Goldner Hawn Sale Cues S&P to Watch Ratings SOLUTIA INC: Gets Court Nod to Shut Down Acrylic Fiber Business SOUTH BALDWIN: Case Summary & 20 Largest Unsecured Creditors SPITZERS HEBREW: Voluntary Chapter 11 Case Summary STORAGE COMPUTER: Can't Afford to Complete 2004 Financial Audit STRUCTURED FINANCE: Fund Reduction Cues Moody's to Cut Rating THISTLE MINING: Mails CCAA Plan Documents to Impaired Creditors TOM'S FOODS: Greenberg Traurig Approved as Bankruptcy Counsel TOM'S FOODS: Look for Bankruptcy Schedules on May 20 TORCH OFFSHORE: Selling Certain Assets to Cal Dive for $92 Million TRAILER DEPOT: Voluntary Chapter 11 Case Summary TRUMP HOTELS: Onyx Allowed to Pursue New Jersey Litigation U.S. FLOW: Ch. 7 Trustee Taps Stites & Harbison as Special Counsel UAL CORP: Inks Mediation Agreement with Air Wisconsin & US Airways UAL CORP: Air Wisconsin Objects to Agreement Modification UNIFIED SYSTEMS: Voluntary Chapter 11 Case Summary US AIRWAYS: Wants 2001 Credit Facility Draws Increased to $28.2M US AIRWAYS: Has Exclusive Right to File Ch. 11 Plan Until May 31 USG CORP: Wants to Employ Meckler as Special Environmental Counsel W.R. GRACE: Expands Scope of Baker Donelson's Lobbying Services WADDINGTON NORTH: Poor Liquidity Prompts S&P to Chop Ratings to CC WESTPOINT STEVENS: Has Until Aug. 31 to Solicit Plan Acceptances WINN-DIXIE: Creditors Committee Wants Cases to Stay in New York * Fitch Publishes Credit Analysis on MCI After Verizon's Purchase * Large Companies with Insolvent Balance Sheets ********* A.B. DICK: Creditors Must File Proofs of Claim by April 15 ---------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware, set at 4:00 p.m. on April 15, 2005, as the deadline for all creditors owed money by A.B. Dick Company n/k/a Blake of Chicago, Corp., and its debtor-affiliates, on account of claims arising prior to July 13, 2004, to file their proofs of claim. Creditors must file written proofs of claim on or before the April 15 Claims Bar Date and those forms must be delivered to: If sent by mail: The Trumbull Group, LLC PO Box 721 Windsor, CT 06095-0721 If sent by messenger or overnight courier: The Trumbull Group, LLC 4 Griffin Road North Windsor, CT 06095 Headquartered in Niles, Illinois, A.B. Dick Company -- http://www.abdick.com/-- is a global supplier to the graphic arts and printing industry, manufacturing and marketing equipment and supplies for the global quick print and small commercial printing markets. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Del. Case No. 04-12002) on July 13, 2004. Frederick B. Rosner, Esq., at Jaspan Schlesinger Hoffman, LLP, and H. Jeffrey Schwartz, Esq., at Benesch, Friedlander, Coplan & Aronoff, LLP, represent the Debtors in their restructuring efforts. Richard J. Mason, Esq., at McGuireWoods, LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed over $50 million in estimated assets and over $100 million in estimated liabilities. A.B. Dick Company changed its name to Blake of Chicago, Corp., in Dec. 8, 2004, as required by the terms of the APA with Presstek. AADCO AUTOMOTIVE: Inks Equity for Debt Swap Pact with 3 Creditors ----------------------------------------------------------------- AADCO Automotive Inc. has reached agreements with three creditors to settle aggregate debt of $191,069.46 by the issuance of 1,817,096 common shares. The shares issued to the creditors will have an average price of $0.105 per share and will be subject to a 4-month hold period. The debt relates to: (a) $88,111 of principal owing to a creditor under a non- convertible debenture, and (b) $102,958.46 in dividends declared and payable to holders of AADCO's Series 2 Preferred Shares. The dividends were declared on the condition that the holders of the Series 2 Preferred Shares convert into Common Shares of AADCO at the rate of one Common Share for each $1.65 of investment in the Series 2 Preferred Shares, as specifically provided for in AADCO's Articles of Incorporation, as amended. AADCO Automotive, Inc., is a growing, Canadian public company with a unique business model committee to complete vehicle dismantling to provide quality used OEM parts, recyclable core from insurance salvage and aftermarket parts to meet the needs of the collision/ mechanical repair industry. AADCO serves over 3,000 mechanical and collision repair clients across Ontario through its LKQ parts division. AADCO maintains one of the largest unbolted inventories of quality used OEM parts in Canada at its 87,000 sq. ft. facility in Brampton, Ontario. AADCO is the only auto recycler to have been awarded the Ecologo for environmental stewardship. At Dec. 31, 2004, AADCO Automotive's stockholders' deficit narrowed to $2,693,810 from a $2,928,010 deficit at June 30, 2004. ABN AMRO: Fitch Upgrades Ratings on Three Mortgage Certificates --------------------------------------------------------------- Fitch Ratings has taken rating actions on ABN AMRO residential mortgage-backed pass-through certificates: Series 2002-2 -- Class A affirmed at 'AAA'. Series 2002-8 -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AAA'; -- Class B-1 upgraded to 'AA+' from 'A+'; -- Class B-2 upgraded to 'A' from 'BBB'; -- Class B-3 upgraded to 'BBB' from 'BB'; -- Class B-4 upgraded to 'BB' from 'B'. Series 2002-10 -- Class A affirmed at 'AAA'; -- Class M upgraded to 'AA+' from 'AA'; -- Class B-1 upgraded to 'A' from 'A-'; -- Class B-2 upgraded to 'BBB' from 'BBB-'; -- Class B-3 upgraded to 'BB' from 'BB-'; -- Class B-4 affirmed at 'B'. Series 2003-1 -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA+'; -- Class B-1 affirmed at 'A+'; -- Class B-4 affirmed at 'B'. Series 2003-2 -- Class A affirmed at 'AAA'. Series 2003-3 -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AAA'; -- Class B-1 upgraded to 'AA' from 'A+'; -- Class B-2 upgraded to 'A' from 'BBB+'; -- Class B-3 affirmed at 'BB+'; -- Class B-4 affirmed at 'B'. Series 2003-4 -- Class A affirmed at 'AAA'; -- Class M upgraded to 'AAA' from 'AA+'; -- Class B-1 upgraded to 'AA' from 'A'; -- Class B-2 upgraded to 'A' from 'BBB+'; -- Class B-3 affirmed at 'BB'; -- Class B-4 affirmed at 'B'. All of the mortgage loans in the aforementioned transactions consist of 15- and 30-year fixed-rate mortgages extended to prime borrowers. The affirmations, affecting approximately $834.5 million of outstanding certificates, reflect performance and credit enhancement levels that are generally consistent with expectations. The upgrades reflect a substantial increase in CE relative to future loss expectations and affect approximately $37.9 million of outstanding certificates. The CE levels for series 2002-8, classes B-1, B-2, B-3, and B-4 have increased to approximately 8 times original enhancement levels at the closing date Sept. 24, 2002. Class B-1 currently benefits from 6.72% subordination (originally 0.75%), class B-2 currently benefits from 4.44% subordination (originally 0.50%), class B-3 currently benefits from 2.61% subordination (originally 0.30%), and class B-4 currently benefits from 1.70% subordination (originally 0.20%). There is currently 10% of the original collateral remaining in the pool (based on principal balance). The CE levels for series 2002-10, classes M, B-1, B-2, and B-3 have increased to between 2x and 3x original enhancement levels at the closing date Dec. 23, 2002. Class M currently benefits from 3.71% subordination (originally 1.25%), class B-1 currently benefits from 2.08% subordination (originally 0.70%), class B-2 currently benefits from 1.19% subordination (originally 0.40%), and class B-3 currently benefits from 0.74% subordination (originally 0.25%). There is currently 32% of the original collateral remaining in the pool (based on principal balance). The CE levels for series 2003-3, classes B-1, and B-2 have increased to greater than 2x original enhancement levels at the closing date Feb. 27, 2003. Class B-1 currently benefits from 2.18% subordination (originally 0.80%);,and class B-2 currently benefits from 1.36% subordination (originally 0.50%). There is currently 36% of the original collateral remaining in the pool (based on principal balance). The CE levels for series 2003-4, classes M, B-1, and B-2 have increased to approximately 2x original enhancement levels at the closing date March 27, 2003. Class M currently benefits from 3.87% subordination (originally 1.40%), class B-1 currently benefits from 2.07% subordination (originally 0.75%), and class B- 2 currently benefits from 1.38% subordination (originally 0.50). There is currently 35% of the original collateral remaining in the pool (based on principal balance). Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ ADELPHIA COMMS: Insists on $3.23 Billion Judgment Against Rigases ----------------------------------------------------------------- As previously reported, Adelphia Communications Corporation and its debtor-affiliates asked the U.S. Bankruptcy Court for the Southern District of New York for partial summary judgment against all the Rigas Defendants. Specifically, ACOM sought a $3,232,373,940 judgment on account of its unjust enrichment and constructive trust claim against the Rigases. In March 2005, ACOM filed a memorandum of law in further support of its partial summary judgment request and in reply to certain of the Rigas Defendants' answers. Philip C. Korologos, Esq., at Boies Schiller & Flexner LLP, in Armonk, New York, says that ACOM's motion for partial summary judgment is based on one simple fact -- the Rigases obtained more than $3.23 billion in benefits from ACOM and gave nothing of actual value in return. Based on an affidavit by witness Robert DiBella, ACOM's books and records shows that, among others, the Rigas Defendants received these benefits at ACOM's expense: -- acquired around $800 million in cable assets; -- acquired approximately $1.5 billion in ACOM securities; -- on a net basis, used over $200 million in ACOM funds to pay their own personal margin loans; -- caused ACOM to spend almost $50 million to pay third-party vendors on behalf of the Rigases' non-cable entities; and -- caused ACOM to expend in excess of $137 million for the operation of the then Rigas-owned Buffalo Sabres. Mr. Korologos notes that the answers filed by the Rigas Defendants with the Court, not only failed to rebut the DiBella Affidavit but also expressly conceded their receipt of the benefits. "[D]espite spending millions of dollars on experts and having all relevant data for months (if not years), the Rigases rely only upon conclusory assertions and have not put forward any evidence refuting any of the transactions that underlie the total of $3.23 billion." The Rigas Defendants tried to offset $2.8 billion of the $3.23 billion in benefits by reference to the reclassifications of co- borrowing debt from ACOM's books to the Rigas Defendants' books while they were at ACOM. "There can be no dispute . . . that those reclassifications provided no benefit to [ACOM]," Mr. Korologos states. The Rigases also did not book any debt reclassifications for the over $386 million of the $3.23 billion in benefits that they received from ACOM. In February 2005, the Rigas Defendants moved to strike Mr. DiBella's Affidavit claiming that it constitutes expert opinion testimony. Mr. Korologos reminds the Bankruptcy Court that U.S. District Court Judge Leonard Sand has already rejected the same assertions that the Rigas Defendants raised. "In any event, no opinion, let alone expert opinion, was required to render the findings set forth in the DiBella Declaration." The Rigas Defendants claim that Subordination Agreements and Assumption Agreements bar ACOM's unjust enrichment claim because they are express agreements that govern the rights and obligations between the parties. Mr. Korologos argues that the mere fact that there is an agreement between the parties does not bar recovery under an unjust enrichment claim. "[T]he existence of a contract will not bar recovery on a claim of unjust enrichment where . . . plaintiff's claims arise outside of the contractual relationship." The Rigas Defendants also argued that ACOM is not entitled to recover $3.23 billion for the benefits that the Rigas Defendants admittedly received because ACOM purportedly benefited from the securities acquisitions, cable asset purchases and overall operation of the Cash Management System. Mr. Korologos tells the Court that it is not relevant "whether the CMS and the co- borrowing facilities provided a benefit to Adelphia, but whether the Rigas Defendants provided a benefit in return for the $3.23 billion in value that they received." The Rigases clearly did not provide the benefit and even did not present any evidence that they did, Mr. Korologos says. As to ACOM's constructive trust claim, the Rigas Defendants assert that ACOM cannot trace the funds wrongfully held by the Rigases, and therefore, it is not entitled to the remedy of a constructive trust. Even if Adelphia could not trace the funds, Mr. Korologos points out, it would not deprive ACOM of recovery for unjust enrichment but merely limit the remedy to one for damages. Regardless, Mr. Korologos says, "ACOM sufficiently traces the benefits that the Rigas Defendants received." Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMA ENTERPRISES: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: AMA Enterprises, Inc. 4140 E. Wilder Road Bay City, Michigan 48706 Bankruptcy Case No.: 05-21374 Chapter 11 Petition Date: March 29, 2005 Court: Eastern District Of Michigan (Bay City) Judge: Walter Shapero Debtor's Counsel: Joseph H. Luplow, Esq. 314 N. Michigan Avenue, Suite 4 Saginaw, Michigan 48602 Tel: (989) 799-3270 The Debtor did not file a list of its 20 Largest Unsecured Creditors. AMERICAN BANKNOTE: Del. Bankr. Court Confirms Reorganization Plan ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware confirms American Banknote Corporation's Plan of Reorganization on Friday, April 8, 2005. Under the terms of the reorganization and based upon the elections made by debt holders, American Banknote Corporation's debt will be reduced to about $1,000,000, down from over $108,000,000 previously. At the same time, the Company raised an additional $16,000,000 of cash, in the form of new private equity investments. As a consequence, the restructured Company is expected to have approximately $120,000,000 of net equity value, on a pro forma basis. The Company expects its interest expense to decrease 99%, from more than $10,000,000 in 2004 to less than $100,000 per year on a prospective basis. Through the reorganization, the former holders of ABN's 10-3/8% debentures will own approximately 79% of the equity, the new private equity investors will own approximately 19% of the equity, and the balance will be distributed to the former equity holders. The Company will also cease to be publicly registered and traded, and will operate as a private company. According to American Banknote's Chairman and Chief Executive Officer, Steven Singer, "as ABN commemorates its 210th anniversary, we now have even greater cause to celebrate! Unlike previous efforts to strengthen ABN's financial condition, this restructuring does not merely represent a short-term improvement, but a genuine long-term 'fix' of our capital structure." Mr. Singer adds, "With virtually no debt, substantial cash, and flourishing operating businesses, ABN finally has the resources once again to invest in products, technologies, and/or strategic acquisitions - the kind of investment upon which the Company has historically thrived." Headquartered in Englewood Cliffs, New Jersey, American Banknote Corporation, -- http://www.americanbanknote.com/-- is a holding company, which operates through its subsidiary companies, principally in the United States, Brazil, Argentina, Australia, New Zealand and France. Through these subsidiaries, the Company manufactures, markets, distributes and supplies related services to, a variety of secure documents, media, and fulfillment and reconciliation systems. The Company filed for chapter 11 protection on January 19, 2005 (Bankr. D. Del. Case No. 05-10174). Adam Singer, Esq., at Cooch and Taylor and Paul N. Silverstein, Esq., at Andrews Kurth LLP represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $124,709,527 and total debts of $115,965,530. ANDRE S. TATIBOUET: Filing Stalls 246-Room Hotel Foreclosure ------------------------------------------------------------ The Associated Press reports that Waikiki hotel executive Andre S. Tatibouet's chapter 11 filing (profiled in the Troubled Company Reporter on April 7, 2005) stalled Central Pacific Bank's attempt to foreclose on the 246-room Coral Reef Hotel. The Bank says its owed $15 million. Mr. Tatibouet tells the AP he's confident he'll be back on his feet and back in business. Andre S. Tatibouet owns the Coral Reef Hotel in Hawaii. and filed for chapter 11 protection on April 5, 2005 (Bankr. D. Hawaii Case No. 05-00829). James A. Wagner, Esq., at Wagner Choi & Evers, represents Mr. Tatibouet. Mr. Tatibouet estimated assets and liabilities between $10 million and $50 million in his bankruptcy petition. ARMSTRONG WORLD: Court Okays Liberty Settlement & Sale Agreements ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved the sale and settlement agreements among Armstrong World Industries, Inc., and its debtor-affiliates and Liberty Property Holdings, LP. As reported in the Troubled Company Reporter on Feb. 25, 2005, a dispute arose between Liberty Property Holdings, LP, and Armstrong World Industries with respect to certain amounts AWI billed to Liberty for electric usage by Liberty Place, an office building located in Lancaster, Pennsylvania. Liberty Place used to house AWI's corporate headquarters before AWI sold the building to Liberty in 1997. AWI's floor plant in Lancaster and Liberty Place presently share certain utility and other services pursuant to, and as set forth, in Part 2 of a Declaration of Covenants, Easements, Licenses, Conditions and Restrictions the parties entered into as part of the sale. AWI sought to reject Part 2 of the Declaration as an executory contract pursuant to its Plan of Reorganization. Liberty objected. At the Plan Confirmation Hearing in November 2003, counsel to AWI represented to the U.S. Bankruptcy Court for the District of Delaware that the parties had reach an agreement in principle resolving the rejection issue. Liberty's objection was subsequently withdrawn. Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, related that immediately following the Confirmation Hearing, AWI's counsel was advised that Liberty had not, in fact, conceded that AWI had the right to terminate its obligations to provide utilities. Although the parties had agreed to work toward the resolution of the logistics and costs involved in severing the utilities, Liberty intended to reserve its right to come before the Bankruptcy Court on the issue of whether AWI's obligations to provide the utilities could be rejected as an executory agreement. The Liberty Objection, therefore, is still pending. To resolve the disputes among them, the parties have agreed to the terms of a Settlement Agreement and a corresponding Sale Agreement, which provide: (1) Property to be Transferred AWI will sell and convey to Liberty the five buildings and approximately 1.66 acres of parking area located at the south and east portion of AWI's Lancaster Floor Plant parking area. (2) Purchase Price The purchase price for the Buildings and the Parking Area will be $100,001, to be paid in cash or other funds acceptable to AWI at closing. (3) Easements AWI and Liberty will grant each other, as needed, cross easements for the purpose of access to existing phone lines and electrical wiring, water and sewer easements, and other utilities as necessary with respect to the premises. AWI will grant Liberty access to the garage and loading docks located on the west side of Buildings 151 and 152 as needed for reconstruction purposes for a period of six to eight weeks from the closing date. (4) Conditions Precedent Consummation of the transactions contemplated under the Sale Agreement will be subject to: (i) an environmental phase review acceptable to LPH; (ii) satisfactory construction due diligence to be completed by Liberty within 60 days of the Bankruptcy Court approval of the Sale Agreement; and (iii) approval by the City of Lancaster of the subdivision of the premises on terms and conditions mutually acceptable to AWI and Liberty. (5) Costs AWl will pay for subdivision costs related to engineering and land surveying services. Liberty will be responsible for the coordination and administration of any zoning, sub-division and land development approval processes, including the payment of any legal fees or costs attendant thereto. (6) Electricity and Steam Heat Liberty will undertake Liberty Place's conversion, the Buildings, and lighting for the Parking Area to a source of electric utility services separate from that of AWI's. In addition, Liberty will undertake the installation of its own source of steam heat supply for Liberty Place and the Buildings separate from that of AWI's. Liberty will notify AWI in writing, and will commence utilizing its own source of electric utility services, immediately at the completion of that conversion or separation. Provided that Court approval is obtained on or before April 1, 2005, the conversion or separation will be completed on or before September 1, 2005. (7) Chilled Water Liberty will continue to provide chilled water to the Floor Plant, provided that AWl meters chilled water usage at the Floor Plant and pays Liberty an amount per month representative of the actual cost of the chilled water as metered. Liberty may waive the requirement of metered chilled water usage and charge AWI a fee -- to be determined by mutual agreement of the parties -- during those months of chilled water consumption by the Floor Plant. Liberty's obligation to provide chilled water to the Floor Plant may be terminated by either party at 90 days' written notice. (8) Municipal Water and Sewer Water and sewer service will continue to be provided to Liberty Place and the Buildings via the Floor Plant for so long as AWI continues to require the existing water feed to the Floor Plant. AWI will bill Liberty, and Liberty will pay for the actual cost of its municipal water and sewer usage on a monthly basis, without credit or offset of any kind. Should the Floor Plant no longer require municipal water and sewer service via the existing water feed, then Liberty will arrange for its own water or sewer service and separation of the common water line on 180 days' written notice from AWI. (9) Past Due Amounts If the Sale Agreement is not consummated for any reason -- other than a refusal or failure of AWI to perform its obligations -- Liberty will nonetheless be required to immediately pay the Past Due Amounts, as defined in the Sale Agreement, for prior electric usage to AWI upon written demand. (10) Amended Declaration At settlement, AWI will execute and deliver to Liberty, inter alia, appropriate amendments or modifications to the Declaration consistent with and required to carry out the intention of the Sale Agreement. The amended Declaration will be separately recorded in the Recorder of Deeds Office in and for Lancaster County, Pennsylvania, and will not be subject to rejection in AWI's Chapter 11 case or under the Plan. (11) Withdrawal Or Objection The objection filed by Liberty against AWI will be deemed withdrawn with prejudice. (12) Release of AWI and Liberty As of the Closing Date, the parties will exchange mutual releases. If the closing does not occur for any reason other than: * a failure to obtain Court approval of the settlement; * a failure to obtain any and all zoning and subdivision approvals of the failure of any other condition precedent required by the Sale Agreement in connection with the transfer of the premises; or * a refusal or failure of AWI to perform any of its obligations under the Settlement Agreement or the Sale Agreement, then Liberty's remaining obligations under the Settlement Agreement will remain binding. With respect to the Parking Area, Ms. Booth informed the Court that there is no possibility that the parties may subsequently agree to amend the Sale Agreement such that an alternative parking area of the same or similar acreage and value replaces the Parking Area presently designated in the Sale Agreement. Ms. Booth told Judge Fitzgerald that even if AWI obtains a ruling in its favor on the issue of rejection, it is unclear how a practicable solution implementing rejection could be effectuated. That ruling alone would not remedy the logistical problems associated with separation of AWI's utility services from Liberty's. "As it stands right now, much of the infrastructure is interconnected, or at the very least, located at buildings presently owned by AWI," Ms. Booth noted. "The Settlement and Sale Agreements represent the most logical and cost-effective means by which the desired separation can be achieved." Moreover, even if AWI is permitted to reject Part 2 of the Declaration, Liberty is likely to pursue a rejection damage claim against AWI's estate in a substantial amount. In this regard, the proposed combined price for the Buildings and the Parking Area is extremely reasonable when one considers their present condition and status. Ms. Booth explained that the Buildings currently are not being utilized by AWI and serve no further purpose to the Floor Plant yet continue to require heat and power to sustain their existing state. The Buildings' condition continues to deteriorate as the result of deferred maintenance. Should AWI desire to occupy the Buildings again, the cost of the roof repairs and asbestos remediation alone are estimated at over $300,000. The Court permits AWI to substitute, in AWI's discretion and with Liberty's consent, a parking area of equivalent or comparable acreage and value in the vicinity of the Floor Plant -- and to amend the Sale Agreement accordingly -- prior to the closing without the necessity of additional Court approval. The Settlement and the Sale Agreements are without prejudice to: (i) Liberty's right to file a liquidated or unliquidated rejection damages claim with respect to Part 2 of the Declaration within the time provided for the Plan if the Confirmation Date occurs prior to the Closing Date; and (ii) AWI's right to object to or seek estimation of that claim, provided, however, that, if that claim is filed, it will be withdrawn immediately by Liberty when and if the closing under the Sale Agreement occurs. Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Court Approves Wilmington Trust Term Sheet -------------------------------------------------------- Prior to filing for chapter 11 protection, ATA Airlines, Inc., and Wilmington Trust Company, solely in its capacity as Aircraft Creditor, were parties to or assignees of certain aircraft leases and related financing arrangements, which respect to five Boeing model 757-23N aircraft. ATA Airlines uses the Aircraft, engines, appliances, related parts and equipment in its operations. Wilmington Trust also serves as trustee under: -- certain indentures for the benefit of holders of equipment notes issued pursuant thereto; and -- certain pass through trust agreements and a stipulation providing adequate protection with regard to the 1996/1997 Series EETC Airplane Financing for the benefit of holders of pass through trust certificates issued pursuant thereto. A complete list of the Aircraft Leases and Financing Agreements between ATA and Wilmington Trust is available at no charge at: http://bankrupt.com/misc/ata_1502_leases.pdf The Adequate Protection Stipulation was approved by the United States Bankruptcy Court for the Southern District of Indiana in January 2005. The terms of the Stipulation were not disclosed. ATA Holdings Corporation financed ATA Airline's acquisition or lease of Aircraft Equipment through a number of transactions involving Enhanced Equipment Trust Certificate programs. Wilmington Trust acted as loan trustee and as subordination agent with regard to the 2002-1, 2001-1, 1996-1 and 1997-1 series of ATA EETC programs. On February 23, 2005, ATA Airlines and the Aircraft Creditors amended the Adequate Protection Stipulation with respect to the 1996/1997 Series EETC Airplane Financing to extend the Adequate Protection Period. ATA Airlines and the Aircraft Creditors also executed a Restructuring Term Sheet. The Restructuring Term Sheet provides that on the Effective Date of the Debtors' Plan of Reorganization: (a) ATA Airlines will reject each of the Existing Leases; (b) in the exercise of remedies, the Aircraft Creditors will terminate the Existing Leases; (c) ATA Airlines will constructively return the Aircraft Equipment to the Aircraft Creditors; and (d) the applicable Indenture Trustee will direct the Lessors to enter into new leases of the Aircraft with the Reorganized Debtors. Wilmington Trust, solely in its capacity as Indenture Trustee under the Trust Indentures and Security Agreements, Subordination Agent under the Intercreditor Agreements, and Pass Through Trustee under the Pass Through Trust Agreements, signed the Term Sheet. New Lease The Debtors and Wilmington Trust agree that, under a new lease, Wilmington Trust will lease to the Reorganized Debtors the Aircraft for 15 years, for a $225,000 monthly lease rate per aircraft, payable in advance. The Reorganized Debtors will maintain hull, war, comprehensive liability insurance and spares insurance throughout the new term. Hull insurance will be in an amount not less than 110% of an agreed current value of the Aircraft, but in no event less than $35,000,000. Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, maintains that the rejection of the Existing Leases is consistent with the requirements of Section 365(a) of the Bankruptcy Code. Rejection Claim In addition to any administrative expense claim or super-priority administrative expense claim that may exist, upon the effective date of the rejection of the Existing Leases and the occurrence of the New Lease Commencement Date, the Debtors agree that Wilmington Trust will have an allowed unsecured claim, based on the entry into the New Leases, without the need to file any other or additional proof of claim. If for any reason the Term Sheet were terminated and the New Leases were not entered into, then the amount of the Rejection Claim would not be fixed. If the Existing Leases were rejected, all parties have reserved all rights, including with respect to any rejection damage claim. The Rejection Claim with respect to each Original Aircraft Lease will be equal to the sum of accrued and unpaid rent as of the Petition Date and the amounts set forth for each Aircraft Tail Number: Aircraft Amount -------- ------ N517AT $14,960,089 N518AT 12,840,147 N519AT 11,387,361 N520AT 13,939,963 N522AT 14,872,441 Extension of Adequate Protection Period The Debtors and Wilmington Trust agree to extend the Adequate Protection Period through the later of the confirmation of a Plan or the commencement of the New Leases, but no later than December 31, 2005. ATA promises to perform in full its obligations under the Term Sheet and the Adequate Protection Stipulation, including the obligation to negotiate the terms of the New Leases in good faith. Wilmington Trust agrees not to exercise any of its rights and remedies against ATA Airlines that may exist under the Aircraft Agreement, Section 1110(c) of the Bankruptcy Code, or applicable non-bankruptcy law. The hearing on Wilmington Trust's Adequate Protection Motion is deferred. Court Approves Term Sheet Mr. Nelson asserts that the settlement of each of the Rejection Claims is fair and reasonable, based on an analysis of: (i) the probability of the Debtors' success in potential litigation; (ii) the likely difficulty in collection; (iii) the complexity of the potential litigation with the attendant expense, inconvenience and delay; and (iv) the paramount interests of the Debtors' estates and creditors. At the Debtors' behest, Judge Lorch approves the Restructuring Term Sheet and the Amended Adequate Protection Stipulation, and authorizes the Debtors to enter into the contemplated transactions under the Term Sheet. A free copy of the Restructuring Term Sheet is available at no charge at: http://bankrupt.com/misc/ata_1502_term_sheet.pdf 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. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Wants to Reject Sabre Work Order No. 1 ---------------------------------------------------- ATA Airlines, Inc., and Sabre, Inc., are parties to an Information Technology Services Agreement, under which the parties agreed to enter into individual work orders for specific services and for the license of licensed or hosted software. The parties executed Work Order No. 1, effective October 2, 2003. ATA Airlines was granted the right to use certain hosted and licensed software, including the Sabre Passenger Reservation System, Sabre Reservation and Departure Control Interface, and Sabre Qik-Schedule. Jeffrey C. Nelson, at Baker & Daniels, in Indianapolis, Indiana, relates that since November 2004, ATA Airlines has not used the Software or any ancillary services provided under Work Order No. 1. However, ATA Airlines is required to pay a minimum monthly fee of almost $5,000 for the services. Mr. Nelson notes that Work Order No. 1 represents an unnecessary burden on ATA, its estate, and creditors. Pursuant to Section 365 of the Bankruptcy Code, the Debtors seek the United States Bankruptcy Court for the Southern District of Indiana's authority to reject Work Order No. 1. Mr. Nelson tells the Court that the information contained in the Master Agreement and Work Order No. 1 is highly confidential and proprietary. The Debtors will provide copies on a confidential basis to the U.S. Trustee, counsels for the DIP lender, the Official Committee of Unsecured Creditors, and the ATSB. 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. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATHEROGENICS INC: Registers $200M Convertible Notes for Resale -------------------------------------------------------------- AtheroGenics, Inc. (Nasdaq: AGIX) filed a resale registration statement on Form S-3 with the Securities and Exchange Commission relating to the resale by the holders of an aggregate principal amount of $200 million of 1.50% convertible notes due 2012 and any shares of AtheroGenics common stock issuable upon conversion of the notes. The Securities and Exchange Commission has not yet declared the registration statement effective. Once effective, the selling security holders may use the prospectus relating to the registration statement from time to time to resell the securities covered by the registration statement. AtheroGenics intends to announce when the Securities and Exchange Commission has declared the registration statement effective. AtheroGenics will not receive any of the proceeds from the resale of the securities. AtheroGenics, Inc. -- http://www.atherogenics.com/-- is focused on the discovery, development and commercialization of novel drugs for the treatment of chronic inflammatory diseases, including heart disease (atherosclerosis), rheumatoid arthritis and asthma. The Company has two drug development programs currently in the clinic. AtheroGenics' lead compound, AGI-1067, is being evaluated in the pivotal Phase III clinical trial called ARISE, as an oral therapy for the treatment of atherosclerosis. AGI-1096 is a novel, oral agent in Phase I that is being developed for the prevention of organ transplant rejection in collaboration with Fujisawa. AtheroGenics also has preclinical programs in rheumatoid arthritis and asthma using its novel vascular protectant(R) technology. As of December 31, 2004, AtheroGenics' stockholders' deficit widened to $35,942,382 compared to a $18,839,547 deficit at September 30, 2004. BEAR STEARNS: Fitch Affirms Low-B Ratings on Three Trust Issues --------------------------------------------------------------- Fitch Ratings has taken rating actions on Bear Stearns ARM Trust Issues: Series 2000-2 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA+'; -- Class B-3 affirmed at 'A+'; -- Class B-4 affirmed at 'BBB+'; -- Class B-5 affirmed at 'BB+'. Series 2001-4 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA'; -- Class B-3 affirmed at 'A'; -- Class B-4 remains at 'CCC'; -- Class B-5 remains at 'D'. Series 2001-7 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA+'; -- Class B-3 affirmed at 'A+'; -- Class B-4 affirmed at 'BB+'; -- Class B-5 affirmed at 'B+'. Series 2002-9 -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA-' from 'A'; -- Class B-3 upgraded to 'BBB+' from 'BBB'; The affirmations, affecting approximately $216 million of outstanding certificates, reflect asset performance and credit enhancement levels generally consistent with expectations. The upgrades, affecting approximately $10 million of outstanding certificates, are due to strong collateral performance and high levels of CE relative to future loss expectations. The current CE for all classes from series 2000-2 is at least 2 times original levels. As of the March distribution date, 80% of the collateral has paid down, there are no loans that are severely delinquent, and cumulative losses are zero. The collateral consists of fully amortizing COFI adjustable-rate, first lien, one- to four-family residential mortgage loans. Currently the CE for classes A, B-1, B-2, and B-3 from series 2001-4 is more than 3x the original levels. While there is $477,510 in cumulative losses, there have been no losses in over a year, there are no loans currently in 90+ delinquency, and 85% of the collateral has paid down. The mortgage pool consists of conventional 30-year, fully amortizing, adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. As of the March distribution date, the CE for classes A, B-1, B-2, B-3, B-4, and B-5 from series 2001-7 has at least doubled since origination. There is currently one loan in 90+ delinquency, one loan in foreclosure, and one loan in bankruptcy. However, the balance of these loans is only 0.89% of the current pool balance and there is almost $800,000 in the non-rated B-6 piece to absorb any losses that may result from these loans. Furthermore, there have been no losses incurred since origination with 75% of the collateral paying down. The collateral consists of traditional and hybrid adjustable-rate mortgages extended to prime borrowers. The CE for classes A, B-1, B-2, and B-3 from series 2002-9 has increased from its original levels. The CE for classes A, B-1, B- 2, and B-3 is more than 3x the original levels. While there have been some recent losses in the deal, totaling $230,441, and there is currently one loan in REO and one loan in bankruptcy, Fitch believes that there is enough in the non-rated B-6 bond to absorb any future losses. As of the March distribution, 85% of the collateral has paid down. The mortgage pool consists of adjustable-rate mortgage loans consisting of one-, three-, five-, seven-, and 10-year hybrid ARMs, secured by first liens on one- to four-family residential properties. Further information regarding current delinquency, loss and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ BILLIE & VICKI VANDEVER: Case Summary & 20 Largest Unsecured Cred. ------------------------------------------------------------------ Debtor: Billie C. & Vicki Vandever 413 South 1250 West Heyburn, Idaho 83336 Bankruptcy Case No.: 05-40664 Chapter 11 Petition Date: April 7, 2005 Court: District of Idaho (Twin Falls) Judge: Jim D. Pappas Debtor's Counsel: Brent T. Robinson, Esq. Ling, Robinson & Walker 615 H Street P.O. Box 396 Rupert, Idaho 83350 Tel: (208) 436-4717 Fax: (208) 436-6804 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ United Coop Inc. Trade debt- $180,000 P.O. Box 365 supplies Rupert, ID 833500365 Larry F. Harper Personal loan $175,000 100 South 672 West Paul, ID 83347 Rulon Whitesides Farm lease/rent $60,213 1230 West 400 South Heyburn, ID 83336 Idaho Power Company Trade debt $60,000 irrigation pump power Paul Chemical Trade debt $59,763 fertilizer and chemicals June Jensen Farm rent $54,700 BioFlora $40,098 Bruce Saunders Rent- farm lease $33,000 Magic Valley Tire Trade debt - $29,312 tires and repairs A & B Irrigation Real property $18,806 Value of security: $1,197,000 AgriCents Limited Co Legal and financial $16,846 consulting services The Sprinkler Shop Irrigation equipment $14,713 parts and repairs Discover Card Services Misc. business and $13,100 personal expenses Chase Card Services Misc. business and $11,587 personal expenses ASAP Mobile Repair Trade debt- repairs $5,864 Choice Card Services Misc. business expenses $5,381 Choice Card Services Misc. business expenses $4,990 Western Seeds Trade debt- seed $4,173 Zipfer Gas Trade debt- petroleum $4,056 products and supplies Magic Valley Equipment Trade debt- parts $3,474 and repairs BIOPHAGE PHARMA: Appoints Dr. Diane Berry to Advisory Board ----------------------------------------------------------- Biophage Pharma (TSX.V: BUG) reported the appointment of Dr. Diane L. Berry to its Scientific Advisory Board. Dr. Berry is currently a Senior Advisor at the international law firm McKenna, Long & Aldridge. "I am very pleased that Dr. Berry has decided to join our Advisory Board. Her experience in working with biodefense and government issues in the United States will bring us another strategic area of understanding that will further enhance our ability to commercialize the various biodefense technologies presently in development at Biophage", said Dr. Rosemonde Mandeville, President and Chief Executive Officer of Biophage Pharma. Dr. Berry is a skilled biochemical engineer. Her previous experience includes working at the US Department of Defense Chemical and Biological Defense Program with a focus on chemical/biological detection, protection, decontamination and medical countermeasures. Dr. Berry is currently a member of the Government Contracts Practice of McKenna Long & Aldridge LLP. "It will be a pleasure to bring my biodefense and biomedical expertise to the Biophage Scientific Advisory Board. Biophage's current development programs are uniquely suited to take advantage of my own particular skill set. I look forward to applying my blend of scientific and government experience in helping to realize the promise of Biophage technologies", stated Dr. Diane L. Berry. 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 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. * * * As reported in the Troubled Company Reporter on Oct. 28, 2004, the 2004 third quarter interim financial statements of Biophage Pharma include a note questioning the company's ability to continue as a going concern. 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. Biophage's reported a $815,492 net loss for the year ended November 30, 2004, and a net loss of $1,152,992 for the year ended November 30, 2003. BOSTON LIFE: Losses Cause PwC to Raise Going Concern Doubt ---------------------------------------------------------- Boston Life Sciences, Inc.'s (NASDAQ: BLSI) auditors, PriceWaterhouseCoopers LLP, expressed substantial doubt about the Company's ability to continue as a going concern included in the Company's Form 10-K filed with the Securities and Exchange Commission. PwC issued the going concern opinion because the Company has suffered recurring losses and negative cash flows from operations and has a net working capital deficiency for the year ended Dec. 31, 2004. As of Dec. 31, 2004, the Company has experienced total net losses since inception of approximately $105,647,000. "For the foreseeable future, the Company expects to experience continuing operating losses and negative cash flows from operations as management executes its current business plan," the Company said in it Annual Report. The Company believes that the cash, cash equivalents, and marketable securities available at December 31, 2004 will not provide sufficient working capital to meet its anticipated expenditures for the next twelve months. "The Company will need to raise additional capital in 2005 through a collaboration, merger or other transaction with other pharmaceutical or biotechnology companies, or through a debt financing or equity offerings by the Company to continue as a going concern," the Company disclosed. About the Company Boston Life Sciences, Inc., is engaged in the research and clinical development of novel diagnostic and therapeutic products for central nervous system (CNS) disorders. ALTROPANE(R), the company's lead program, is in Phase III for the diagnosis of Parkinsonian Syndromes (PS) and Phase II for the diagnosis of Attention Deficit Hyperactivity Disorder (ADHD). The Company's research and pre-clinical CNS programs include Inosine for the treatment of stroke and O-1369 for the treatment of Parkinson's disease. BLSI's current research collaborations include Harvard Medical School, Children's Hospital of Boston and the University of Massachusetts-Worcester. BRADLEY K. MEFFORD: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Bradley K. Mefford 18919 Golf Drive Carlinville, Illinois 62626 Bankruptcy Case No.: 05-71854 Chapter 11 Petition Date: April 9, 2005 Court: Central District of Illinois (Springfield) Judge: Larry Lessen Debtor's Counsel: Francis J. Giganti, Esq. 8 South Old State Capitol Plaza Springfield, Illinois 62701 Tel: (217) 492-5113 Fax: (217) 492-5129 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. BRANDT ASSOC: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Brandt Assoc. Inc. 871 Bumps River Road Centerville, Massachusetts 02632 Bankruptcy Case No.: 05-12965 Chapter 11 Petition Date: April 8, 2005 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: David K. Sykes, Esq. 172 Williams Street New Bedford, Massachusetts 02740 Tel: (508) 979-8070 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. CATHOLIC CHURCH: Court Okays Tucson's Grant Participation Pact -------------------------------------------------------------- The City of Tucson has offered to file a grant application to Arizona State Parks Heritage Fund to undertake the restoration and stabilization of the exterior of the historic Marist College Building. The Building is located on the northwest corner of Church Avenue and East Ochoa Avenue inside the campus of St. Augustine Cathedral in downtown Tucson. Pursuant to the Grant Application, the City seeks $58,721 from the Heritage Fund, which the City has agreed to match with an additional $40,000. As part of this Grant, the Heritage Fund requires the Diocese of Tucson, as third property owner and grant beneficiary, to enter into a Grant Participation Agreement and provide a 20-year preservation and conservation easement to the property to be restored. A full-text copy of the Grant Participation Agreement is available for free at: http://bankrupt.com/misc/grant_participant_agreement.pdf Accordingly, the Diocese sought and obtained Judge Marlar's permission to: (a) enter into the Grant Participation Agreement; and (b) encumber the Marist College Building with an easement in favor of the City and the Heritage Fund as required by the Grant Participation Agreement. Susan Boswell, Esq., at Quarles & Brady Streich Lang LLP, In Tucson, Arizona, relates that the Diocese's books and records show that the Marist College Building, along with the adjacent Immaculate Mary Chapel, are owned by the Diocese, but the church and remaining buildings and parking on that block belong to St. Augustine Cathedral Parish. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Spokane Must Request Bar Date Extension by May --------------------------------------------------------------- Judge Williams vacates the April 5, 2005 deadline for filing proofs of claim against the Diocese of Spokane. The Diocese is given the exclusive right to file a request to extend the Bar Date. Spokane, however, must file the request by May 16, 2005. Additionally, given that the Diocese files its request on or before May 16, 2005, the Diocese will have the exclusive right to file a request for approval of: * the form of notice of the Bar Date; * the Proof of Claim Form for tort claimants; and * the procedures for service and publication of notice. The Diocese will file a request for the establishment of a protocol for the handling Proofs of Claim filed in the future by claimants who wish to remain anonymous. This request has to be filed on or before April 15, 2005. Judge Williams clarifies that the Diocese's exclusive right to file these requests is contingent upon filings by the stated deadline. Should the Diocese fail to file a motion or motions by the deadlines, any party-in-interest may do so. Judge Williams warns that the parties should be mindful of the Court's expectation that the final hearing on any objections to any request should take place within 60 days from May 16, 2005. The Diocese stipulates that the act of filing a proof of claim in its Chapter 11 case by a person holding a personal injury tort claim will not, in and of itself, constitute a waiver of whatever rights to a jury trial that claimant may have. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTURY/ML CABLE: Has Exclusive Right to File Plan Until June 30 ---------------------------------------------------------------- Century/ML Cable Venture, ML Media Partners LP and Century Communications Corp. sought and obtained an order from the U.S. Bankruptcy Court for the Southern District of New York extending the exclusive periods in which they may: a. file a plan of reorganization, through June 30, 2005; and b. solicit and obtain plan acceptances, through August 23, 2005. The United States Trustee has no objection to the proposed extension. As reported in the Troubled Company Reporter on Aug. 5, 2004, Century Communications Corporation sought and obtained the Bankruptcy Court's authority to employ Lazard Freres & Co., LLC, as its sole investment banker to provide general restructuring advice in connection with a possible sale of Century/ML Cable Venture or any Century/ML interest or subsidiary division. Specifically, Lazard: -- assists Century Communications in identifying and evaluating candidates for a potential Century/ML sale transaction; -- advises Century Communications in connection with negotiations; and -- assists in the consummation of the Century/ML Transaction. The Century/ML Transaction may take the form of a merger or a sale of assets or equity securities or other interests. Century Communications Corporation filed for Chapter 11 protection on June 10, 2002. Century's case has been jointly administered to proceedings of Adelphia Communications Corporation. Century operates cable television services in Colorado, California and Puerto Rico. CENTURY is an indirect wholly owned subsidiary of ACOM and an affiliate of Adelphia Business Solutions, Inc. Lawyers at Willkie, Farr & Gallagher represent CENTURY. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) CITICORP MORTGAGE: Fitch Ups Ratings on Six Mortgage Securities --------------------------------------------------------------- Fitch Ratings has taken rating actions on Citicorp Mortgage Securities, Inc. issues: Series 1999-8 -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'; -- Class B-4 affirmed at 'A'. Series 2002-10 -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AAA' from 'A'; -- Class B-3 upgraded to 'AA+' from 'BBB'; -- Class B-4 upgraded to 'A+' from 'BB'; -- Class B-5 upgraded to 'BBB' from 'B'. Series 2002-11 -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA+'; -- Class B-2 upgraded to 'AA+' from 'A+'; -- Class B-3 upgraded to 'AA-' from 'BBB+'; -- Class B-4 upgraded to 'A-' from 'BB+'; -- Class B-5 upgraded to 'BB+' from 'B+'. Series 2003-2 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 upgraded to 'AA+' from 'AA'; -- Class B-3 upgraded to 'A+' from 'A'; -- Class B-4 upgraded to 'BBB+' from 'BBB'; -- Class B-5 upgraded to 'BB-' from 'B+'. Series 2003-3 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 upgraded to 'AA+' from 'AA'; -- Class B-3 upgraded to 'A+' from 'A'; -- Class B-4 upgraded to 'BBB+' from 'BBB'; -- Class B-5 upgraded to 'BB-' from 'B+'. The upgrades, affecting $30 million of outstanding certificates, are being taken as a result of increased credit support levels and low delinquencies. The affirmations, affecting approximately $490 million of outstanding certificates, are being taken as a result pool performance and credit enhancement -- CE -- consistent with expectations. The current CE for all classes from series 1999-8 is more than 15 times original levels. As of the March distribution, 94% of the collateral had paid down and there were zero cumulative losses. The mortgage pool consists of conventional, 30-year fixed-rate relocation mortgage loans secured by one- to four-family residential properties. As of the March distribution date, the CE for classes B-1, B-2, B- 3, and B-4 from series 2002-10 and 2002-11 are more than 6x their original levels. In addition, over 90% of the collateral from series 2002-10 and 85% of the collateral from series 2002-11 has paid down, there have been no losses incurred in either deal and currently no loans are severely delinquent. Series 2002-10 is secured by 15-, and 20- to 30- year mortgages extended to price borrowers. Series 2002-11 is secured by 10- to 15-, and 20- to 30- year mortgages. At origination approximately 20% of the mortgages from 2002-11 were relocation mortgages. The current CE levels for series 2003-2 and 2003-3 have also increased substantially since origination. The CE levels for classes B-1, B-2, B-3, and B-4 for both deals are more than 3x original levels. There have been no losses in either deal with 70% of the collateral balance paid down. Both deals are secured by 30-year fixed-rate mortgages extended to prime quality borrowers. Further information regarding current delinquencies, losses, and credit enhancement is available on the Fitch Ratings web site at http://www.fitchratings.com/ COEUR D'ALENE: Buying CBH Resources' Silver Reserves for $38.5M --------------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE: CDE; TSX: CDM) agreed to acquire all of the silver production and reserves contained at the Endeavor Mine in Australia, which is owned and operated by CBH Resources Ltd (ASX: CBH), for US$38.5 million. The Endeavor Mine is located 720 km northwest of Sydney in New South Wales and has been in production since 1983. In addition to principal production of lead and zinc, Endeavor is expected to produce approximately 1.3 million ounces of silver annually from mineral reserves containing approximately 24.0 million silver ounces. In total, the Endeavor Mine reports measured and indicated mineral resources containing approximately 8.2 million ounces of silver, and inferred mineral resources containing approximately 0.5 million silver ounces. Under the terms of the agreement, CDE Australia, a wholly owned subsidiary of Coeur, will pay CBH US$15.4 million of cash at the closing. In addition, CDE Australia will pay CBH US$23.1 million of cash upon the determination by Coeur that a recently installed paste backfill plant at the Endeavor Mine is operating successfully. This determination is expected to take place in the third quarter of 2005. In addition to these upfront payments, Coeur will pay CBH an operating cost contribution of US$1.00 for each ounce of payable silver plus a further increment when the silver price exceeds the twenty-year average price of US$5.23 per ounce. This further increment begins on the second anniversary of this agreement and is 50% of the amount by which the silver price exceeds US$5.23 per ounce. A cost contribution of US$0.25 per ounce is also payable in respect of new ounces of proven and probable silver reserves as they are discovered. In addition, under the terms of the agreement, Coeur is entitled to receive a maximum of 17.7 million payable silver ounces from the current contained resource at the Endeavor Mine. Based on these terms, Coeur is effectively paying US$3.26 per payable ounce of silver reserve, which equates to a total effective full cost of US$4.26 per ounce of payable silver production. "We expect this transaction will immediately increase Coeur's silver production by 1.3 million ounces annually and contribute significantly to Coeur's earnings and cash flow over an anticipated mine life of at least ten years," said Dennis E. Wheeler, Chairman, President and Chief Executive Officer of Coeur. "At current silver prices, we expect that this transaction will increase Coeur's annual estimated operating cash flow by approximately $6.2 million." "Coeur and CBH consider the exploration potential and the opportunity to expand silver production at the Endeavor Mine to be considerable. Coeur is enthusiastic about returning to Australia and seeking to grow its business in this important mining country. We also look forward to working with CBH Resources and its seasoned management team to maximize the benefits of this partnership for both parties," Mr. Wheeler added. Endeavor Mine Mineral Reserves and Resources Mineral Reserves Tons (mm) Silver Grade Contained Silver (oz/ton) Ounces (mm) Proven 6.1 2.01 12.2 Probable 6.1 1.98 12.0 Total 12.1(1) 2.00 24.2 Mineral Resources Measured 4.4 0.88 3.9 Indicated 0.7 6.10(2) 4.3 Total M & I 5.1 1.61 8.2 Inferred .22 2.1 0.5 (1) Difference in Total due to rounding (2) Includes high-grade remnant material in upper levels of mine About CBH Resources In addition to operating the Endeavor mine in New South Wales, CBH Resources Limited -- http://www.cbhresources.com.au/-- controls the central concessions of the prolific Broken Hill District in New South Wales, which contain significant zinc, lead, and silver resources, and owns and operates a concentrate shiploading facility in New South Wales. About Coeur d'Alene Mines Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. Coeur has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. * * * As reported in the Troubled Company Reporter on Oct. 4, 2004, Standard & Poor's Ratings Services affirmed its 'B-' corporate credit and senior unsecured debt ratings on Coeur D'Alene Mines Corporation and removed the ratings from CreditWatch, where they were placed on June 1, 2004, with positive implications. S&P said the outlook is stable. Coeur D'Alene, an Idaho-based silver and gold mining company, currently has about $180 million in debt. COLUMBUS HOSPITALS: Various Concerns Prompt Moody's to Hold Rating ------------------------------------------------------------------ Moody's Investors Service has confirmed the B3 rating on Columbus Hospital's outstanding Series 1991 ($29.2 million). The rating outlook is negative. The rating has been removed from Watchlist for possible downgrade where it was placed November 29, 2004. The B3 rating is attributable to: * Increasing volumes in FY 2003 and FY 2004. The sustainability of this trend remains unclear. * Stabilization in operating performance in the second half of FY 2004. Unaudited operating loss of $3.7 million is on par with losses through the first half of FY 2004, although compares unfavorably to budget. The stabilization reflects salary and other expense reductions as well as increased charity care subsidies. Revenues increased 4.7% in FY 2004 following a 1.7% decrease in FY 2003 from the prior year, in part due to higher charity care subsidies. Columbus was recently reclassified to the New York City Medicare wage index which should aid revenues beginning in October 2005. * While not legally obligated, Columbus's affiliated organization, Cathedral Healthcare System, has represented to Moody's that all necessary steps will be taken to ensure that Columbus will not miss a debt payment or withdraw monies from the debt service reserve fund. Payments of $315,000 are due on a monthly basis into the bond funds. Currently, there are minimal cash reserves at Cathedral Healthcare System. * Very poor liquidity with less than $1 million and 3.8 days cash on hand. Progress made with reductions in receivables was mitigated by a $5.5 million required repayment to Medicaid for an outstanding obligation based on stronger performance in FY 2002. Additionally, any cash flow will be needed to make debt payments and daily operating expenses. * High likelihood of not meeting the rate covenant again in FY 2004, demonstrating a continuation of poor financial performance and oversight. The FY 2004 audit is not completed at this time, although management has stated it will not be delayed. * As a required by the bond documents, a consultant was engaged following the rate covenant violation in FY 2003. The Board of Trustees adopted the consultant's report. As recommended in the report, added board oversight is required to monitor financial operations. Management has committed to providing enhanced reporting to Moody's on a go forward basis. The outlook remains negative as Columbus has not proven its ability to achieve budget, materially improve financial performance or increase cash. Failure to improve results or increase cash will result in a rating downgrade. CORUS ENTERTAINMENT: Will Release 2nd Quarter Report on Thursday ---------------------------------------------------------------- Corus Entertainment Inc. (TSX: CJR.NV.B; NYSE: CJR) will be releasing its financial results for the second quarter on Thursday, April 14, 2005. A conference call with Corus senior management is scheduled for Thursday April 14, 2005 at 4 p.m. ET. This call is for analysts and investors, however, members of the media are welcome to listen in. - The dial-in number for the Conference Call is 1-888-208- 1812. - Please call five to ten minutes before the start time. - A rebroadcast of this call will be available from Thursday April 14 at 7 p.m. ET until Wednesday, April 20 at Midnight ET by dialing 1-888-203-1112, pass code 8129394. The conference call is also available through a live webcast on the Corus Entertainment website at: http://www.corusent.com/corporate/investor_information/index.asp Corus Entertainment -- http://www.corusentertainment.com/-- is a Canadian-based media and entertainment company. Corus is a market leader in both specialty TV and Radio. Corus also owns Nelvana Limited, an internationally recognized producer and distributor of children's programming and products. The Company's other interests include music, television broadcasting and advertising services. A publicly traded company, Corus is listed on the Toronto (CJR.NV.B) and New York (CJR) Exchanges. * * * As reported on the Troubled Company Reporter on Aug. 22, 2003, Standard & Poor's Ratings Services revised its outlook on diversified Canadian media company, Corus Entertainment, Inc., to negative from stable. At the same time, the ratings on Corus, including the 'BB' long-term corporate credit rating, were affirmed. CRYOPAK IND: Discovery Capital Buys $250K Convertible Debentures ---------------------------------------------------------------- British Columbia Discovery Fund (VCC) Inc., a venture capital corporation managed by a wholly owned subsidiary of Discovery Capital Corporation, purchased $250,000 principal amount of secured subordinate convertible debentures of Cryopak Industries Inc. pursuant to a private placement announced by Cryopak on March 30, 2005. This purchase represents approximately 19% of the Debentures issued by Cryopak to date, or approximately 13% of the total Debentures anticipated to be issued if Cryopak completes its private placement as announced. The Debentures purchased by BCDF would result in the acquisition of 694,444 shares of Cryopak, on conversion at a price of $0.36 per share, or approximately 10% of the issued and outstanding shares of Cryopak after conversion (6% assuming conversion of Debentures issuable under the private placement as announced). Accordingly, if the private placement is completed as announced by Cryopak, Discovery Capital would have ownership and control or direction over approximately 22% of the issued and outstanding post-consolidated shares of Cryopak (13% assuming conversion of Debentures issuable under the private placement as announced). Discovery Capital also has control or direction over warrants for the purchase of a further 74,404 post-consolidated shares of Cryopak. BCDF's subscription was made for investment purposes. Discovery Capital may acquire ownership of or control or direction over additional securities of Cryopak, or dispose of securities of Cryopak, as circumstances or market conditions warrant or arise. About Discovery Capital Corporation With nearly 20 years of venture capital experience in British Columbia, Discovery Capital, through its wholly owned subsidiary, Discovery Capital Management Corp. -- http://www.discoverycapital.com/ -- is a venture fund manager and investor specializing in: information technology, communications, health and life sciences, and other advanced technologies. The Company has proven expertise in strategic planning, management development, innovative financing strategies, corporate governance and positioning for liquidity. Discovery Capital Management Corp. is the manager of British Columbia Discovery Fund (VCC) Inc., a British Columbia venture capital fund that has raised nearly $27.0 million to date. Cryopak Industries With facilities in Vancouver and Montreal, Cryopak -- http://www.cryopak.com/-- provides temperature-controlling products and solutions. The Company's clients include some of North America's leading retailers and consumer goods companies, as well as global pharmaceutical companies. In its retail business, the Company develops, manufactures and sells reusable ice substitutes, flexible hot and cold compresses, reusable gel ice and instant hot and cold packs. These products are marketed under such popular brand names as Ice-Pak(TM), Flexible Ice(TM) Blanket, Simply Cozy(R), and Flex Pak(TM). In its pharmaceutical business, the Company engineers solutions and supply products that help our customers safely transport their temperature sensitive pharmaceuticals. Over the past few years the Company has evolved into a recognized player in this growing segment as we assist customers in optimizing their cold chain processes. The Company's shares are listed on the TSX Venture Exchange under the symbol CII. Going Concern Doubt During the six months ended September 30, 2004, Cryopak Industries incurred a loss of $516,819. During the three-year period ended March 31, 2004, the Company incurred losses topping $5 million, and during the year ended March 31, 2004, the Company reported negative cash flows from operations of $297,883. As at September 30, 2004, the deficit is $7,009,847 and the working capital deficiency is $4,541,266. The Company continues to be in default on the repayment of the principal and accrued interest of the convertible loan, which was due on June 7, 2003. These conditions raise substantial doubt about the Company's ability to continue as a going concern. As of Dec. 31, 2004, Cryopak's balance sheet shows a 1:2 liquidity ratio, with $3.4 million in current assets available to pay $6.9 million in current liabilities. Cryopak's shareholder equity erodes as losses continue. At Dec. 31, 2004, shareholder equity stood at $2,907,944, down from $3,767,596 at March 31, 2004. CURON MEDICAL: Raises Initial $3.2M in Private Equity Placement --------------------------------------------------------------- Curon Medical, Inc. (Nasdaq: CURN) signed definitive agreements for the private placement of common stock to institutional investors for a total of $11.3 million, before transaction fees and expenses. The placement is structured to be completed in two closings, with the first closing having occurred on April 8, 2005, and the remaining closing being subject to stockholder approval. In this first closing, the Company raised approximately $3.2 million by issuing a total of 4,962,614 shares of common stock at a price of $0.65 per share, representing a 19 percent discount to the Company's April 7, 2005 $0.80 per share closing price. Investors received five-year warrants to purchase an aggregate of 2,481,298 shares of common stock at a price of $1.00 per share. SVB Alliant and The Robins Group LLC served as placement agents for the transaction. An additional amount of approximately $8.1 million has been deposited to escrow and will be released to the Company in the event that the Company obtains stockholder approval for the subsequent sale of securities. The Company intends to seek stockholder approval at its Annual Meeting next month. The terms of the subsequent closing are essentially identical to those from the first closing. Larry C Heaton II, Curon Medical's President and Chief Executive Officer, said that the proceeds will be used primarily to fund the Company's initiatives for its core business related to the use of radiofrequency energy for the treatment of acid reflux or GERD with the Stretta(R) System, and the treatment of Bowel Incontinence(TM) (BI) with the Secca(R) System, in addition to other working capital needs. "This round of funding strengthens our balance sheet and will provide capital to execute our operating plan," added Mr. Heaton. "With the addition of the funds being held in escrow pending stockholder approval, we believe that we will have satisfied the going concern issue that we raised in our year end 2004 financial statements." About The Stretta System Curon's proprietary Stretta System provides physicians with the tools to perform a minimally invasive, outpatient endoscopic procedure for the treatment of GERD. The Stretta System consists of the Stretta Catheter, which is a disposable, flexible catheter, and the Curon Control Module. Using the Stretta System, the physician delivers temperature-controlled radiofrequency energy to create thermal lesions in the muscle of the lower esophageal sphincter (LES). The tissue response to radiofrequency delivery alters LES function, which results in statistically significant improvements in GERD symptom scores, reduction in acid exposure and reduction in anti-secretory medication requirement. About The Secca System The Secca System provides physicians with devices to perform a minimally invasive outpatient procedure for the treatment of bowel incontinence in patients who have failed more conservative therapy such as diet modification and biofeedback. The Secca System utilizes the same technology and treatment concepts as the Stretta System. Using the Curon Control Module and the Company's Secca disposable handpiece, physicians deliver radiofrequency energy into the muscle of the anal sphincter to improve its barrier function. About Curon Medical, Inc. Curon Medical, Inc. -- http://www.curonmedical.com/-- develops, manufactures and markets innovative proprietary products for the treatment of gastrointestinal disorders. The Company's products and products under development consist of radiofrequency generators and single use disposable devices. Its first product, the Stretta System, received U.S. Food and Drug Administration clearance in April 2000 for the treatment of gastroesophageal reflux disease, commonly referred to as GERD. The Company's Secca System for the treatment of bowel incontinence received clearance from the FDA in March 2002. Going Concern Doubt In its Form 10-K for the fiscal year ended Dec. 31, 2004, filed with the Securities and Exchange Commission, Curon Medical's auditors, PriceWaterhouseCoopers LLP, raised substantial doubt about the Company's ability to continue as a going concern due to Curon's recurring losses and negative cash flows from operations. "As of December 31, 2004, we had cash and cash equivalents on hand of $5.9 million and working capital of $6.6 million," the Company disclosed in its Annual Report. "We intend to finance our operations primarily through our cash and cash equivalents, marketable securities, future financing and future revenues. Although we recognize the need to raise funds in the near future, there can be no assurance that we will be successful in consummating any such transaction, or, if we did consummate such a transaction, that the terms and conditions of such financing will be favorable to us. We believe that our cash balances will not be sufficient to fund planned expenditures in the third quarter of 2005." DALLAS AEROSPACE: Court Converts Ch. 11 Case to Ch. 7 Liquidation ----------------------------------------------------------------- CIS Air Corporation, one of Dallas Aerospace, Inc.'s unsecured creditors, sought and obtained an order from the U.S. Bankruptcy Court for the Northern District of Texas converting the Debtor's chapter 11 proceeding into a chapter 7 liquidation. CIS Air holds an unsecured claim in excess of $695,432. CIS Air gave the Court five reasons conversion to a chapter 7 liquidation is appropriate: a) there are no secured creditors listed in the Debtor's Schedules; b) two of the supposedly unsecured creditors listed in the Debtor's Schedule F, Banner Aerospace, Inc. and Fairchild Holding Corp. are alleged to be affiliates or insiders of the Debtor; c) investigations concluded that the Statement of Financial Affairs filed by the Debtor on October 18, 2004, indicate: (i) the Debtor has had no gross income for the years 2002, 2003, and 2004 (ii) the Debtor has no other source of income and no payments have been made to its creditors since September 2004, nor to the two alleged unsecured creditors, Banner Aerospace and Fairchild Holding, (iii) the Debtor lists only three assets, consisting of an aircraft engine with a salvage value of $50,000, and stocks in PB Hendron Aerospace, Inc. and Dallas Aerospace, Inc., but the value of these stocks is unknown, and (iv) the Debtor has no ongoing business operations and no cash flow, and a large sum owed to creditors with no apparent means of repaying the debts; d) CIS Air is the only non-insider undisputed, liquidated unsecured creditor in the Debtor's chapter 11 case and it will oppose a proposed plan of reorganization because there is no substantial infusion of cash that will fund any rehabilitation or reorganization; and e) investigations concluded that the only business activity the Debtor has been engaged in for the last three years is the ongoing litigation between it and CIS Air. The U.S. Trustee supported CIS' bid to convert the case. Headquartered in Carrollton, Texas, Dallas Aerospace, Inc., is a Texas-based aftermarket supplier of engines, engine parts, and engine management and leasing services, with facilities in Dallas, Texas, and Miami, Florida. The Company filed for chapter 11 protection on October 1, 2004 (Bankr N.D. Tex. Case No. 04-80663). John Mark Chevallier, Esq., at McGuire, Craddock & Strother, P.C., represents the Debtor in its restructuring. When the Debtor filed for protection from its creditors, it listed estimated assets of $1 million to $10 million and estimated debts of $10 million to $50 million. DLJ MORTGAGE: Fitch Assigns BB+ Rating to $22.3MM Class B-4 Certs. ------------------------------------------------------------------ Fitch Ratings upgrades DLJ Mortgage Acceptance Corp.'s commercial mortgage pass-through certificates, series 1996-CF1: -- $30.6 million class B-3 to 'A+' from 'A'. In addition, Fitch affirms these classes: -- Interest-only class S 'AAA'; -- $8.9 million class A-3 'AAA'; -- $30.5 million class B-1 'AAA'; -- $9.4 million class B-2 'AAA'; -- $22.3 million class B-4 'BB+'. Classes A-1A, A-1B, and A-2 have paid in full. Fitch does not rate the $14.5 million class C certificates. The upgrade to class B-3 is due to the increase in credit enhancement resulting from loan payoffs and amortization. As of the March 2005 distribution date, the pool has paid down 75.3% to $116.2 million from $470.1 million at issuance. Four assets (14.8%) are currently in special servicing: one real estate ownedproperty (9.1%) and three Eagle Foods loans (5.7%) that are each 90 days delinquent. The REO property is a former Holiday Inn hotel located in Irving, Texas, that was recently re- flagged as a Clarion. The property is currently being marketing for sale and losses are expected. The special servicer is working to take title to two of the 90-day delinquent loans (3.8%), via a deed-in-lieu or foreclosure. A discounted payoff is expected in the immediate future for the third 90-day delinquent loan (1.8%) and minimal losses, if any, are expected. In addition to the specially serviced loans mentioned above, seven loans (24.4%) are considered Fitch loans of concern due to decreases in debt service coverage ratio and occupancy or other performance issues. These loans' higher likelihood of default was incorporated into Fitch's analysis. The largest of these loans is the Madison Hotel loan (8%), secured by a hotel in Morristown, New Jersey, which has seen a significant drop in occupancy and net cash flow since issuance. Fifteen loans (36.0%) mature within the next 12 months. The remaining maturities are concentrated in 2011 (30.9%) and in 2016 (30.9%). DONNKENNY: Gets Court Okay to Sell Assets to Donn K Acquisition --------------------------------------------------------------- The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York put his stamp of approval on the asset purchase agreement between Donnkenny, Inc., and its debtor- affiliates and Donn K Acquisition LLC. Donn K is buying substantially all of the Debtors' assets, consisting primarily of: 1. all assets relating to the Pierre Cardin(TM), Nicole Miller(TM) and Donnkenny pant lines of business, including: (i) inventory, including on-hand and in transit, and the assumption of open letters of credit or other guarantees for such in-transit inventory relating to the Businesses, (ii) furniture, fixtures and equipment relating to the Businesses, (iii) the option to purchase Donnkenny's facility in Wytheville, Virginia, (iv) customer orders and rights under agreements with retailers relating to the Businesses, (v) rights under license agreements relating to the Businesses, including the license agreements with Pierre Cardin(TM) and Nicole Miller(TM), and (vi) other contractual rights and intellectual property rights relating to the Businesses; and 2. all of Donnkenny's computer systems, including hardware and software, and 3. any current season inventory unrelated to the Businesses, but only to the extent covered by valid confirmed purchase orders from Coldwater Creek. The sale transaction, pursuant to Section 363 of the Bankruptcy Code, is free and clear of all liens, claims and encumbrances. Donn K Acquisition has agreed to pay: (a) the estimated cost of inventory on hand and in transit with respect to the current season inventory for the Pierre Cardin(TM) and the Nicole Miler(TM) businesses and the inventory of the Donnkenny pant business and 50% of cost for all other inventory; (b) the appraised value of the Wytheville Facility; and (c) an additional cash payment of $2,500,000, which includes $500,000 that Donn K Acquisition has previously deposited in escrow as a good faith deposit. Headquartered in New York City, Donnkenny, Inc., and its debtor- affiliates design, import, and market broad lines of moderately and better priced women's clothing. The Debtors filed for chapter 11 protection on Feb. 7, 2005 (Bankr. S.D.N.Y. Case No. 05-10712 through 05-10716). Bonnie Steingart, Esq., Kalman Ochs, Esq., and Christopher R. Bryant, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $45,670,000 in total assets and $100,100,000 in total debts. DP 8 LLC: Asks Court to Appoint Chapter 11 Trustee -------------------------------------------------- DP 8, L.L.C., asks the U.S. Bankruptcy Court for the District of Arizona to appoint a Chapter 11 Trustee to administer its affairs in its chapter 11 bankruptcy proceedings. The Debtor is a manager-managed limited liability company managed by Kathy Aleman and Daryl Wolfswinkel, whose affiliated companies control approximately 13% of the economic interests in the Debtor. The LLC managers can only be removed with the consent of Ms. Aleman and Mr. Wolfswinkel, or by a unanimous vote of the members. The Debtor filed a Plan of Reorganization with no accompanying Disclosure Statement on Jan. 28, 2005. Lee Allen Johnson, Esq., of Lee Allen Johnson, PC, representing Bailey Farms, L.L.C., Vanderbilt Farms, L.L.C., Ashton A. Wolfswinkel, and Brandon D. Wolfswinkel, filed a request with the Court on March 21, 2005, to strike or dismiss the Debtor's Plan. Those four companies hold membership interests in the Debtor's business and are also allied with Mr. Wolfswinkel. The Debtor contends that those four companies are recipients of a fraudulent conveyance of its property. Candice Company contends that since the Debtor is a limited liability company, it should have been dissolved upon the filing of the chapter 11 petition, but Candice Company has been unwilling to authorize the managers to liquidate its assets in accordance with the Operating Agreement of the company. The Debtor says its proposed a Plan of Reorganization attempts to treat all creditors as unimpaired and will distribute the Debtor's assets in accordance with the respective priorities of the Debtor's creditors and members. But the Four Members say the Plan is fundamentally flawed because it contravenes the LLCs agreements. Another stumbling block to the Debtor's reorganization is Vanderbilt Farms' suggestion that the managers resign and return control of the company Mr. Wolfswinkel, but the managers are unwilling to do that because it would give majority control of the company to Mr. Wolfswinkel. The Debtor submits that a deadlock exists in resolving the problems facing its reorganization. The Debtor believes an independent chapter 11 trustee is necessary to move the bankruptcy case forward, specifically in connection with the sale of its property and confirmation of a plan of reorganization. Headquartered in Mesa, Arizona, DP 8 L.L.C., a real estate developer, filed for chapter 11 protection on July 30, 2004 (Bankr. Ariz. Case No. 04-13428). Dale C. Schian, Esq., at Schian Walker PLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection, it listed $13,626,000 in total assets and $3,663,678 in total debts. DURA AUTOMOTIVE: J.P. Morgan Arranges New $290MM Financing Pact --------------------------------------------------------------- DURA Automotive Systems, Inc. (Nasdaq: DRRA), intends to further enhance its liquidity by entering into new senior secured credit facilities with an aggregate borrowing capacity of approximately $290 million, consisting of: -- a $175 million asset based revolving credit facility and -- a $115 million senior secured second lien term loan. Borrowings under these facilities are intended to be used to refinance DURA's existing $175 million revolving credit facility and $111 million term loan C facility and pay related fees and expenses. Dura says these transactions are expected to close this month. Harris Rubinroit at Bloomberg News reports that J.P. Morgan is arranging the refinancing, citing an unnamed person familiar with the transaction as his source. DURA Automotive Systems, Inc. -- http://www.duraauto.com-- is a leading independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive and recreation & specialty vehicle industries. DURA sells its products to every major North American, Asian and European automotive original equipment manufacturer (OEM) and many leading Tier 1 automotive suppliers. DURA is headquartered in Rochester Hills, Mich. DURA AUTOMOTIVE: S&P Rates Proposed $115M Second-Lien Loan at B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' senior secured rating and '1' recovery rating to Dura Operating Corp.'s proposed $115 million second-lien term loan. The recovery rating indicates the strong likelihood of full recovery of principal in the event of a payment default. At the same time, the 'B' corporate credit rating of Dura Automotive Systems Inc., the parent of Dura Operating Corp., was affirmed. Rochester Hills, Michigan-based Dura, a manufacturer of automotive components, has total debt of about $1.2 billion. The outlook is negative. Dura's balance sheet is highly leveraged, and credit protection measures are weak. "Although Dura is expected to focus on improving its operating results and strengthening its balance sheet, the company's credit statistics will remain weak for at least the next two years," said Standard & Poor's credit analyst Martin King. "The ratings could be lowered if the company fails to improve EBITDA or generate sufficient free cash flow to reduce debt levels over the next few years, or sooner if market conditions remain soft and liquidity becomes more constrained." Proceeds from the new term loan will be used to fully repay the company's existing first-lien term loan. In addition, Dura will put in place a $175 million asset-backed revolving credit facility (unrated), replacing its existing $175 secured million first-lien revolving credit facility. The new asset-backed loan will have less restrictive financial covenant requirements, which will enhance Dura's available liquidity. Existing ratings on the first-lien term loan and revolving credit facility will be withdrawn following the close of the proposed transactions. Dura is one of the largest manufacturers of automotive cables, parking-brake mechanisms, transmission-shifter mechanisms, and complex glass systems. Its products range in complexity from commodity-like to highly differentiated in nature. DYER FABRICS: U.S. Trustee Wants Case Converted or Dismissed ------------------------------------------------------------ The United States Trustee for Region 8 asks the U.S. Bankruptcy Court for the Western District of Tennessee, Western Division, to dismiss Dyer Fabrics, Inc.'s chapter 11 case or, in the alternative, convert it into a chapter 7 liquidation. According to the U.S. Trustee: a) the Debtor hasn't filed a disclosure statement or plan; b) the Debtor owes $5,000 in unpaid UST quarterly fees due Jan. 31, 2005; c) the Debtor's January 2005 monthly operating report hasn't been filed; d) the figures in the Debtor's February 2005 MOR are highly suspicious: * the Debtor's total inventory is the same amount which appeared on its July 2004 MOR; * the total receipt balance ($400,628) doesn't tally with the bank account balance schedule ($367,433); * the disbursement balance ($364,512) doesn't agree with total disbursements amount on the bank account balance ($344,435); and e) the Debtor's November 2004 and December 2004 inventory are the same. The U.S. Trustee is concerned about the Debtor's inability to track its own inventory. Improper monitoring of inventory, the Trustee stresses, could result in bad pricing. The U.S. Trustee has also discovered that the Debtor: -- is behind in its tax and utility payments, -- has cancelled its workers compensation insurance and -- had payroll expenses of over $115,000 but sales of below $18,000 in August-September 2004. The U.S. Trustee urges the Court to either convert Dyer's case or dismiss it in view of the apparent mismanagement of its affairs and its failure to demonstrate the viability of the business. Headquartered in Dyersburg, Tennessee, Dyer Fabrics Inc., a textile wholesaler and manufacturer, filed for chapter 11 protection on July 9, 2004 (Bankr. W.D. Tenn. Case No. 04-30609). Steven N. Douglas, Esq., at Harris, Shelton, Dunlap represent the Debtor in its restructuring. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. EAGLEPICHER INC: Files for Chapter 11 Protection in S.D. Ohio ------------------------------------------------------------- EaglePicher Inc., and several of its affiliates voluntarily filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of Ohio in Cincinnati, in order to implement their strategic initiatives and position the company for the future. EaglePicher said the filing will facilitate its previously planned divestiture of a number of its operating units and enable it to more effectively restructure its business. In papers filed with the U.S. Bankruptcy Court in the Southern District of Ohio in Cincinnati, the company said it has received a commitment for up to $50 million in debtor-in-possession financing from a group of lenders led by Harris Trust and Savings Bank, subject to court approval and certain limitations and conditions. Under the terms of the proposed DIP agreement, EaglePicher's existing receivables securitization would be replaced and the DIP would provide the company with substantial additional liquidity. According to EaglePicher President and CEO Bert Iedema, a number of factors combined to severely limit both the company's liquidity and borrowing ability. "While we would have preferred to restructure out of court, recent events have deprived us both of the time and resources to do so," Mr. Iedema said, adding that continuing deterioration at its Hillsdale automotive unit and high commodity costs in metal and energy have left the company with insufficient cash to continue to operate without additional borrowing. "Over the past several weeks it has become clear to management that in order to maximize value for creditors, EaglePicher must preserve the value of its various operating divisions and, at the same time, focus the company's resources where they will provide the greatest return," Mr. Iedema said. "The company looked at several alternatives, including various recapitalization and refinancing options. However, mounting liquidity problems have left us with little choice but to file Chapter 11 as a means to continue to operate while we seek the best and highest offers for the businesses we decide to sell." Mr. Iedema said that the company expects day-to-day operations to continue as usual during the Chapter 11 process. "We appreciate the past support of our suppliers and expect that, with the availability of the DIP financing and the protections afforded under the Bankruptcy Code, they will have the assurance they need to continue to work with us going forward." He added that management has sought authority from the Bankruptcy Court to pay employees and retirees and continue benefits without interruption or delay. "We deeply appreciate the loyalty of our employees, retirees and customers. We intend to fulfill our commitments to them without interruption while we reorganize under court protection. Moreover, we remain committed to providing our customers with high quality products, supported by superior customer and technical service. Meeting their needs remains our highest priority." The company's operations outside the United States were not included in the filing, and there should be no impact whatsoever on their ability to serve customers, pay employees and fulfill their financial obligations to suppliers. EaglePicher Holdings, Inc., is the parent of EaglePicher Incorporated. EaglePicher(TM) is a trademark of EaglePicher Incorporated. Headquartered in Phoenix, Arizona, EaglePicher Incorporated -- http://www.eaglepicher.com/-- is a diversified manufacturer and marketer of innovative, advanced technology and industrial products and services for space, defense, environmental, automotive, medical, filtration, pharmaceutical, nuclear power, semi-conductor and commercial applications worldwide. The company has 4,200 employees and operates more than 30 plants in the U.S., Canada, Mexico, Korea, and Germany. The Company and its debtor- affiliates filed chapter 11 petitions on April 11, 2005 (Bankr. S.D. Ohio Case Nos.: 05-12601 through 05-12609). Stephen D Lerner, Esq., at Squire, Sanders & Dempsey L.L.P. represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and liabilities. * * * As reported in the Troubled Company Reporter on March 29, 2005, Standard & Poor's Ratings Services lowered its ratings on Eagle Picher Inc. and Eagle Picher Holdings Inc., including the corporate credit ratings to 'CCC+' from 'B-', and kept all ratings on CreditWatch with negative implications. The ratings were originally placed on CreditWatch on Dec. 28, 2004. The rating action is based on a combination of several factors: * Extremely tight liquidity, cash and availability on its credit agreement totaled only $11 million at March 10, 2005; Forbearance agreement with senior lenders expires June 10, 2005; * "Going concern" opinion from auditors; * Continued challenges associated with its automotive supplier businesses; * Potential tightening of credit from vendors; * Possibility of alternative financing that could result in coercive exchange or possible bankruptcy filing; * Challenges in selling and obtaining sufficient proceeds from possible divestitures in a timely manner. "The ratings reflect Eagle Picher's vulnerable business position and weak financial profile, including extremely tight liquidity and near-term risk of default," said Standard & Poor's credit analyst John R. Sico. Eagle Picher also has operating challenges because of heavy exposure to the intensely competitive auto supplier market, including uncertain prospects for production levels in 2005. EAGLEPICHER: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: EaglePicher Incorporated 3402 East University Drive Phoenix, Arizona 85034 Bankruptcy Case No.: 05-12601 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- EaglePicher Holdings, Inc. 05-12602 Eagle-Picher Far East, Inc. 05-12603 EaglePicher Technologies, LLC 05-12604 EaglePicher Pharmaceutical Services, LLC 05-12605 EaglePicher Filtration & Minerals, Inc. 05-12606 EaglePicher Automotive, Inc. 05-12607 Daisy Parts, Inc. 05-12608 Carpenter enterprises Limited 05-12609 Type of Business: The Debtor is a diversified manufacturer and marketer of innovative, advanced technology and industrial products for space, defense, automotive, filtration, pharmaceutical, environmental and commercial applications worldwide. See: http://www.eaglepicher.com/ Chapter 11 Petition Date: April 11, 2005 Court: Southern District of Ohio (Cincinnati) Judge: J. Vincent Aug Debtor's Counsel: Stephen D Lerner, Esq. Squire, Sanders & Dempsey L.L.P. 312 Walnut Street Suite 3500 Cincinnati, Ohio 45202-4036 Tel: 513-361-1200 Estimated Assets: More than $100,000,000 Estimated Debts: More than $100,000,000 A. Lead Debtor's List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Bank, N.A. Senior unsecured $248,200,000 Attn: Jeanie Mar notes Plus 707 Willshire Blvd., interest 17th Floor Los Angeles, CA 90017 Merrill Lynch Bond Fund, Senior unsecured In excess of Inc. notes $20,000,000 High Income Portfolio 800 Scudders Mill Rd., Area 1 B Plainsboro, NJ 08536 Tennenbaum Capital Senior unsecured In excess of Partners, LLC notes $20,000,000 Attn: David A. Hollander 2951 28th St., Ste. 1000 Santa Monica, CA 90405 Worthington Steel Industries Trade debt $2,185,475 PROTIVITI Trade debt $580,827 Ashland Distribution Trade debt $454,779 Allegheny Rodney Trade debt $378,934 GE Silicone Products Trade debt $298,620 Excel Polymers(Polyone) Trade debt $251,852 Gardner International Trade debt $237,328 Aluminum Company of America Trade debt $162,804 MEGTEC Systems Trade debt $153,385 Chemicals Technologies Inc Trade debt $115,773 Xpedx Trade debt $101,936 Suburban Boltm & Supply Trade debt $97,360 Boston Consulting Group Trade debt $95,000 Hexcel Schwebel Trade debt $83,532 Plexus Systems LLC Trade debt $75,751 Ludlow Coated Products Trade debt $75,572 Precision Specialty Metals Trade debt $66,694 B. Consolidated List of 50 Largest Unsecured Creditors of: Carpenter Enterprises Limited Daisy Parts, Inc. EaglePicher Automotive, Inc. Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Bank, N.A. Senior unsecured $248,200,000 Attn: Jeanie Mar notes Plus 707 Willshire Blvd., interest 17th Floor Los Angeles, CA 90017 Merrill Lynch Bond Fund, Senior unsecured In excess of Inc. notes $20,000,000 High Income Portfolio 800 Scudders Mill Rd., Area 1 B Plainsboro, NJ 08536 Tennenbaum Capital Senior unsecured In excess of Partners, LLC notes $20,000,000 Attn: David A. Hollander 2951 28th St., Ste. 1000 Santa Monica, CA 90405 Honda of America Mfg. Inc. Trade debt $6,788,475 Auburn Foundry, Inc. Trade debt $1,329,929 Grede Foundries Inc. Trade debt $1,016,947 Osco Industries, Inc. Trade debt $571,381 CONTECH Trade debt $498,537 Metal Tech-Dock Foundry Trade debt $431,507 Liancheng Metal Prod. Co Trade debt $413,865 Nichols Portland Division Trade debt $298,430 Belcher Corporation LLC Trade debt $295,120 GM of Canada-St. Cath. Pit Trade debt $273,144 GKN Sinter Metals-St. Thomas Trade debt $267,757 Mosey Manufacturing Co. Trade debt $252,790 Paragon Metals, Inc. Trade debt $243,039 Excel Polymers Trade debt $203,073 Production Saw & Machine Trade debt $197,576 Adv.Met.Serv/Dock Foundry Trade debt $196,538 Mazak Corp.-North Central Trade debt $177,379 Len Industries Trade debt $176,258 Textron Automotive Co/CWC Trade debt $170,303 Consumers Energy Trade debt $161,760 PLASTECH Trade debt $157,526 Xpedx Trade debt $146,582 Houghton International Trade debt $142,433 Changchun Huifeng Trade debt $141,970 Boehm Pressed Steel Co. Trade debt $139,387 Precision Gage Inc. Trade debt $133,780 Haggard $ Stock.-Fort Wayne Trade debt $130,795 X/Y Tool & Die, Inc. Trade debt $130,331 CISCO-CARPENTER IND.SUP. Trade debt $128,760 FAG Bearings Limited Trade debt $121,257 Metal Tech-Ravenna Casting Trade debt $118,531 Cutting Tools-Louis .KY Trade debt $117,081 Grede Foundries-St Cloud Trade debt $109,212 Indexable Cutting Tools Trade debt $103,549 Toledo Tool & Die Co. Inc. Trade debt $101,232 Kennametal Inc. Trade debt $99,513 ESK Ceramics Trade debt $99,360 Nissan Trading Corp., USA Trade debt $98,755 General Electric Capital Trade debt $98,172 Kennametal Inc-Windsor CT Trade debt $94,509 Valenite Inc. Trade debt $92,167 A.J. Rose Mfg. Co. Trade debt $90,145 Macsteel Trade debt $84,411 Harris Thomas Ind., Inc. Trade debt $81,146 Trostel Trade debt $80,762 Grede Foundries-Vassar Trade debt $76,897 Dana Corporation-GV Trade debt $75,887 C. EaglePicher Holdings Inc.'s 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Bank, N.A. Senior unsecured $248,200,000 Attn: Jeanie Mar notes Plus 707 Willshire Blvd., interest 17th Floor Los Angeles, CA 90017 Merrill Lynch Bond Fund, Senior unsecured In excess of Inc. notes $20,000,000 High Income Portfolio 800 Scudders Mill Rd., Area 1 B Plainsboro, NJ 08536 Tennenbaum Capital Senior unsecured In excess of Partners, LLC notes $20,000,000 Attn: David A. Hollander 2951 28th St., Ste. 1000 Santa Monica, CA 90405 D. EaglePicher Filtration & Minerals, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Bank, N.A. Senior unsecured $248,200,000 Attn: Jeanie Mar notes Plus 707 Willshire Blvd., interest 17th Floor Los Angeles, CA 90017 Merrill Lynch Bond Fund, Senior unsecured In excess of Inc. notes $20,000,000 High Income Portfolio 800 Scudders Mill Rd., Area 1 B Plainsboro, NJ 08536 Tennenbaum Capital Senior unsecured In excess of Partners, LLC notes $20,000,000 Attn: David A. Hollander 2951 28th St., Ste. 1000 Santa Monica, CA 90405 Hood Packaging Corp Trade debt $248,516 Union Pacific Railroad Trade debt $191,074 Fundis Company Inc. Trade debt $180,528 George's Shop & Rock Trade debt $168,703 FMC Wyoming Corp Trade debt $124,535 Bulk-Pack Incorporated Trade debt $116,893 Berry-Hinckley Inc Trade debt $109,581 Hub Group Associates Trade debt $108,562 Werner Enterprises Trade debt $94,629 Exopack, LLC Trade debt $89,098 Stone Container Trade debt $88,988 GE Capital Rail Service Trade debt $76,568 Temple-Inland Trade debt $67,583 Schneider National Trade debt $59,705 Ro Market Pallet Trade debt $56,947 Poly-Flex Trade debt $54,590 Devine Intermodal Trade debt $54,513 E. EaglePicher Pharmaceutical Services, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Bank, N.A. Senior unsecured $248,200,000 Attn: Jeanie Mar notes Plus 707 Willshire Blvd., interest 17th Floor Los Angeles, CA 90017 Merrill Lynch Bond Fund, Senior unsecured In excess of Inc. notes $20,000,000 High Income Portfolio 800 Scudders Mill Rd., Area 1 B Plainsboro, NJ 08536 Tennenbaum Capital Senior unsecured In excess of Partners, LLC notes $20,000,000 Attn: David A. Hollander 2951 28th St., Ste. 1000 Santa Monica, CA 90405 Davos Chemical Trade debt $136,393 American Radiolabled Trade debt $37,104 Chemicals Sigma Aldrich Trade debt $25,602 Cleary Myers Calibration Trade debt $22,624 Shelton & Sons Trade debt $21,706 Cres Professionals Trade debt $16,000 Environmental Management Trade debt $15,184 Alternatives City of Harrisonville Trade debt $13,073 Waters Corporation Trade debt $9,267 Oneok Energy Marketing Trade debt $9,222 Fisher Scientific Trade debt $7,995 Missouri Gas Energy Trade debt $7,905 Chemical Abstract Trade debt $6,750 National Fire Suppression Trade debt $4,080 Pharmo Products Trade debt $3,894 Midland Thermal Trade debt $3,417 Allied Refrigeration Trade debt $2,870 F. EaglePicher Far East, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Bank, N.A. Senior unsecured $248,200,000 Attn: Jeanie Mar notes Plus 707 Willshire Blvd., interest 17th Floor Los Angeles, CA 90017 Merrill Lynch Bond Fund, Senior unsecured In excess of Inc. notes $20,000,000 High Income Portfolio 800 Scudders Mill Rd., Area 1 B Plainsboro, NJ 08536 Tennenbaum Capital Senior unsecured In excess of Partners, LLC notes $20,000,000 Attn: David A. Hollander 2951 28th St., Ste. 1000 Santa Monica, CA 90405 Japan Business Lease Trade debt $9,935 Tohmatsu Tax Co. Trade debt $9,694 Nissan Financial Service Trade debt $8,414 Co., Ltd. Ozone Social Insurance Trade debt $5,954 Office ADECO Co., Ltd. Trade debt $3,904 Nagoya Higashi National Trade debt $3,258 Tax Office Mitsui Sumitomo Trade debt $2,411 Card Co., Ltd. Credit Saison Co., Ltd. Trade debt $2,390 Otsuka Shokai Co., Ltd. Trade debt $498 T-NET Co., Ltd. Trade debt $485 KDDI Network & Solutions Trade debt $350 Suginami Ward Office Trade debt $308 Daiei Real Estates Co., Ltd. Trade debt $282 Usen Co., Ltd. Trade debt $213 Federal Express Corporation Trade debt $160 Nippon Telegraph and Trade debt $149 Telephone East Corporation Nagoya Zebra Bldg. Trade debt $135 Managing Office EAGLEPICHER: Bankruptcy Filing Spurs S&P Ratings' Tumble to D ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Eagle Picher Inc. and Eagle Picher Holdings Inc., including the corporate credit ratings, to 'D' from 'CCC+' and removed all ratings from CreditWatch where they were placed on Dec. 28, 2004. "The rating action is due to the company's filing of Chapter 11 bankruptcy protection today," said Standard & Poor's credit analyst John Sico. "The filing resulted from several factors, including extremely tight liquidity, with little cash and availability on its credit agreement. We expect to withdraw the ratings in a few days." At Nov. 30, 2004, the Phoenix, Ariz.-based industrial manufacturer had about $426 million of total debt outstanding. Eagle Picher provides products to the automotive, aerospace, defense, telecommunications, and pharmaceutical markets. ELENA NADOLNY: Case Summary & 5 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Elena Nadolny 11 Crest Hollow Lane Albertson, New York 11507 Bankruptcy Case No.: 05-82393 Type of Business: The Debtor is a certified hairloc stylist. See http://www.hairlocs.com/stylistlocator.html#_Click_a_link Chapter 11 Petition Date: April 11, 2005 Court: Eastern District of New York (Central Islip) Debtor's Counsel: Norman M. Mendelson, Esq. Mendelson & Associates PLLC 233 East Shore Road, Suite 210 Great Neck, New York 11023 Tel: (516) 482-8228 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ NYCTL Investment property $207,813 c/o Certilman, Balin,etal in Brooklyn, NY 90 Merrick Avenue 3285 & 3287 Fulton East Meadow, NY 11554 Street, Brooklyn, NY Marcella Nadolny Personal loan $10,000 931 Palm View Drive Naples, FL 34110 Macy's Credit card purchases $900 4605 Duke Drive Mason, OH 45040 Cablevision Services $400 One Media Crossways Drive Woodbury, NY 11797 IRS Special Procedures $0 625 Fulton Street 10 Metro Tech Center Brooklyn, NY 11212 EMPIRE FINANCIAL: Losses & Deficit Trigger Going Concern Doubt -------------------------------------------------------------- Empire Financial Holding Company (Amex: EFH), a financial brokerage services firm serving retail and institutional clients, reported financial results for the fourth quarter and the year ended December 31, 2004. For the year ended December 31, 2004, the Company reported an increase in revenues from operations of 24% to $21.6 million. Net loss from operations for 2004 was $1.6 million compared to a net loss from continuing operations of $1.9 million, or $0.41 per basic and diluted share, for 2003. President Donald A. Wojnowski Jr. stated, "We believe that the continued execution of our business plan and an improved business environment will yield positive results during 2005 through expansion of our market making and order execution services, as well as increasing our independent registered representatives. In addition, with the expected closing of the transaction announced last month between Empire Financial and EFH Partners, LLC, the Company will have greater financial resources to implement its business plan." Financial Condition The Company's net loss for 2004 included costs related to pending regulatory investigations, severance agreements with former executives and employees, the relocation of the Company's principal offices and losses related to the disruption of our business from severe weather conditions that occurred in Central Florida. The Company's net loss resulted in an increase in stockholders' deficit from $0.8 million as of December 31, 2003, to a stockholders deficit of $1.9 million as of December 31, 2004. Going Concern Doubt The audit report contained in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2004, and December 31, 2003, contains an explanatory paragraph that raises substantial doubt about the Company's ability to continue as a going concern, because the Company had substantial losses from operations during 2004 and 2003, had a stockholders' deficit as of December 31, 2004, of $1.9 million and has uncertainties in connection with ongoing regulatory investigations. Assuming that the previously announced agreement between Empire Financial and EFH Partners, LLC and the other related agreements are consummated, the Company anticipates that it will eliminate its stockholders' deficit and have positive stockholders' equity. Financial Results Total revenues from operations for the three months ended December 31, 2004 increased 31% to $6.4 million from $4.9 million reported for the same period in 2003. Total operating expenses from operations for the three months ended December 31, 2004 increased 33% to $6.8 million from $5.1 million reported for the same period in 2003. The Company reported a net loss of $0.4 million, from operations for the fourth quarter ended December 31, 2004 compared with a net loss from continuing operations of $0.2 million, or $0.05 per basic and diluted share, reported for the same period in 2003. Total revenues from operations for the year ended December 31, 2004 increased 24% to $21.6 million from $17.4 million reported for the same period in 2003. Total operating expenses from operations for the year ended December 31, 2004 increased 20% to $23.2 million from $19.3 million reported for the same period in 2003. The Company reported a net loss of $1.6 million, or $0.50 per share, from operations for the year ended December 31, 2004 compared with a net loss from continuing operations of $1.9 million, or $0.41 per basic and diluted share, for the year ended December 31, 2003. About the Company Empire Financial Holding Company, through its wholly owned subsidiary, Empire Financial Group, Inc., provides full-service retail brokerage services through its network of independently owned and operated offices and discount retail securities brokerage via both the telephone and the Internet. Through its market-making and trading division, the Company offers securities order execution services for unaffiliated broker dealers and makes markets in domestic and international securities. Empire Financial also provides turn-key fee based investment advisory and registered investment advisor custodial services through its wholly owned subsidiary, Empire Investment Advisors, Inc. At Dec. 31, 2004, Empire Financial's balance sheet showed a $1,897,607 stockholders' deficit. ENRON CORP: Reorganized EPMI Wants to Amend Mediation Order ----------------------------------------------------------- On March 20, 2003, the U.S. Bankruptcy Court for the Southern District of New York entered an order governing mediation of trading cases. The Mediation Order expressly applied to three adversary cases filed by Enron Power Marketing, Inc., against: * Santa Clara; * Public Utility District No. 1 of Snohomish County; and * Valley Electric Association, Inc. Subsequently, EPMI filed another adversary case against Metropolitan Water District, which became subject to the Mediation Order. On March 11, 2005, the Federal Energy Regulatory Commission entered an "Order for Clarification" in what is known as the Partnership and Gaming Proceeding. The Clarification Order potentially permits four counterparties to trading contracts with EPMI to have the FERC determine whether the termination payments owed pursuant to the terms of those contracts should be paid. Each of the four counterparties and each of the trading contracts is also the subject of the four adversary cases covered by the Mediation Order. By this motion, Reorganized EPMI seeks to redress an inequitable and unanticipated litigation imbalance resulting from the four proceedings involving the four trading contract counterparties before the FERC. The Mediation Order stays EPMI, as well as all other Reorganized Debtor parties and counterparties, from advancing the trading case adversary proceedings in the Court. However, Edward A. Smith, Esq., at Cadwalader, Wickersham & Taft, in New York, points out, the four counterparties are freely conducting one- sided litigation at the FERC. The FERC litigation could both determine issues that should properly be decided by the Court in the adversary proceedings and infringe on the exclusive jurisdiction of the Court over the Reorganized Debtors' estates, Mr. Smith says. When the Court established a mediation process and stayed all pending litigation related to the trading cases in 2003, Mr. Smith explains that it intended to divert the parties' energies and attention to dispute resolution and away from litigation. "The regime did not anticipate that substantial litigation on precisely the same issues as those presented in the trading cases would be proceeding in other fora." EPMI believes that ideally, apart from mediation, there would have been no litigation activity related to the trading cases. "But suspending litigation in the Bankruptcy Court -- while litigation instituted by the counterparties proceeds hammer and tong at [the] FERC -- creates an imbalance that prejudices the movants, undermines the mediation process and undercuts [the] Court's jurisdiction," Mr. Smith argues. Accordingly, EPMI asks the Court to amend the Mediation Order to permit the four trading adversary proceedings to proceed in the Court unencumbered by any stay, while also permitting the mediation process to continue. The amendment, Mr. Smith says, would allow the prospect for a mediated settlement to remain alive, allow EPMI to protect its rights as a Reorganized Debtor and protect the Court's jurisdiction in light of the competing proceedings at the FERC. Mr. Smith clarifies that EPMI specifically does not ask the Court to terminate the mediation process. Rather, EPMI is prepared to continue to attempt resolution of all matters with the four counterparties through mediation. 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. FEDERAL-MOGUL: Wants Center for Claims Resolution Settlement OK'd ----------------------------------------------------------------- Federal-Mogul Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve a proposed compromise and settlement between: (a) Debtors Federal-Mogul Corporation, T&N Limited, Gasket Holdings, Inc., and Ferodo America, Inc.; certain other Plan Proponents; Safeco Insurance Company of America, Travelers Casualty and Surety Company of America, National Fire Insurance Company of Hartford, and Continental Casualty Company; and (b) the Center for Claims Resolution, Inc., and CCR members Amchem Products, Inc., Certainteed Corp., Dana Corp., I.U. North America, Inc., Maremont Corp., National Service Industries, Inc., Nosroc Corp., Pfizer, Inc., and Union Carbide Corp., on the terms and conditions set forth in a Surety Claims Settlement Agreement approved by the Bankruptcy Court on March 16, 2005. A full-text copy of the Settlement Agreement is available at no charge at http://bankrupt.com/misc/CCRSettlement.pdf The CCR Litigation Before the Petition Date, Debtors T&N Limited, Gasket Holdings, and Ferodo America were members of the CCR. The CCR entered into a series of settlements or protocols for settlements of asbestos personal injury and wrongful death claims on behalf of CCR's then existing members, including the three Debtors. As of the Petition Date, the Debtors' obligations under certain CCR Settlements or Protocols remained unfunded or only partially funded. As a result of the Debtors' failure to pay their shares of the required settlement amounts, asbestos personal injury claimants who are parties to the CCR Settlements or Protocols asserted their unsatisfied claims against CCR and other CCR members to recover the portions of the settlement consideration attributable to the Debtors. In December 2000, pursuant to Federal-Mogul's request, the Sureties issued performance bonds aggregating $250 million on behalf of T&N Limited, Gasket Holdings, and Ferodo America, in favor of the CCR. As of the Petition Date, the aggregate penal amount of the Bonds was reduced to $225 million. Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., in Wilmington, Delaware, relates that the CCR Debtors subsequently terminated their memberships in 2001. Notwithstanding the terminations and the commencement of the Chapter 11 cases, the CCR notified the Debtors and made demands on the Sureties postpetition for a $183 million payment under the Bonds. As a result, the Debtors, T&N Limited, Gasket Holdings and Ferodo America commenced an adversary proceeding against the CCR and the Sureties in order to prevent a draw on the Bonds until the Court could determine all disputes relating to the CCR's entitlement to payment under the Bonds. The District Court consolidated the CCR Litigation with similar adversary proceedings that were filed in the Delaware Chapter 11 cases of Armstrong World Industries and U.S. Gypsum. As of March 21, 2005, no final judgment has been entered in the CCR Litigation. The Creditors Committee commenced a preference action against the CCR in the Debtors' cases. The CCR disputes the Creditors Committee's allegations in the Preference Action. The Preference Action is now awaiting trial. The CCR and the CCR Members subsequently asserted 27 claims against the Debtors. As a result of extensive arm's-length negotiations, the parties have settled: -- their disputes and differences regarding the CCR's entitlement to draw on the Bonds, -- their rights and obligations with respect to the CCR Surety Bonds, -- the cancellation and discharge of the Bonds, and -- all other claims, counterclaims, cross-claims, and defenses asserted or capable of being asserted in or related to the CCR Litigation as well as the Preference Action. The CCR Settlement Together, the Surety Claims Settlement approved on March 16, 2005, and the CCR Settlement will settle $183 million in claims against the Debtors and their estates for $29 million, to be advanced and paid by the Sureties. The Debtors will repay the Settlement Amount over time. The proposed CCR Settlement will resolve the CCR Litigation without further expenditure of the Debtors' estate resources, and without the risk of potential adverse determinations by the trial court or appellate courts. The salient terms of the CCR Settlement Agreement are: A. Payment of Settlement Amount The CCR will be paid $29.0 million in full, complete and final settlement and discharge of all claims held by it against the Debtors and their estates, and the Sureties. The Settlement Amount will be paid directly by the Sureties to the CCR: a. The Settlement Amount will be paid on the later of: (1) May 2, 2005; or (2) the third business day after the Settlement Effective Date -- that is when both orders approving the Surety Settlement and the CCR Settlement have become final and non-appealable; b. The Settlement Amount will be funded by the Sureties based on their liability under the Bonds: Surety Liability ------ --------- Safeco Insurance 30% National Fire Insurance 30% Travelers 40% Twenty percent of Travelers' liability is in its capacity as successor-in-interest to Reliance Insurance Company. Each Surety will have a claim for indemnification against the Debtors and certain of their affiliates resulting from the payment of the Settlement Amount, in accordance with the terms of the Contract of Indemnity under the Surety Claims Settlement, relating to each Bond; and c. The Sureties will wire transfer the Settlement Amount to the CCR into a separate trust account established and maintained by the CCR for the sole purpose of administering settlement proceeds. B. Cancellation of Bonds When the Settlement Amount has been funded into the Trust Account, the Bonds are deemed cancelled, and the Sureties will have no further obligations under the Bonds. C. Disbursements from Trust Amount The CCR is entitled to withdraw portions of the Settlement Amount from the Trust Account from time to time, and to disburse and apply the settlement proceeds. D. Dismissal of Pending Actions The CCR Litigation, the Preference Action, and any and all claims asserted or capable of being asserted will be dismissed with prejudice. E. Withdrawal of CCR Proofs of Claim Each of the CCR Proofs of Claim is deemed withdrawn with prejudice. F. Waiver of Confirmation Objections The CCR and the CCR Members will be deemed to have waived and released any objections to confirmation of the Plan that have been filed or could be filed by the CCR or the CCR Members. The Court will convene a hearing on April 12, 2005, to consider the Debtors' request. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., Represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a $1.925 billion stockholders' deficit. (Federal-Mogul Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIRST REPUBLIC: Fitch Affirms BB+ Rating on Two Bank Loans ---------------------------------------------------------- Fitch Ratings has affirmed First Republic Bank issues: Series 2000-FRB1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AA'; -- Class B-4 affirmed at 'A'; -- Class B-5 affirmed at 'BB+'. Series 2000-FRB2 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA+'; -- Class B-3 affirmed at 'AA'; -- Class B-4 affirmed at 'A'; -- Class B-5 affirmed at 'BB+'. The affirmations, affecting approximately $206 million of outstanding certificates, are being taken as a result of pool performance and credit enhancement -- CE -- consistent with expectations. As of the March distribution date, the CE for classes A, B-1, B-2, B-3, B-4, and B-5 from series 2000-FRB1 are more than twice their original levels. In addition, there have been no losses incurred, currently no loans are delinquent, and over 80% of the collateral balance has paid down. The mortgage pool consists of negative amortizing COFI adjustable-rate mortgages, and fully amortizing LIBOR, CMT, and prime-based adjustable-rate, first lien, one- to four-family residential mortgages. The current CE levels for classes A, B-1, B-2, B-3, B-4, and B-5 from series 2000-FRB2 are more than double their original levels. As of the March distribution date, over 50% of the original collateral balance has paid down, and there have been no losses to the certificates. In addition, there are no delinquent loans. The mortgage pool consists of fully amortizing COFI, LIBOR, CMT, and prime-based adjustable-rate, first lien, one- to four-family residential mortgage loans. Further information regarding current delinquencies, losses, and credit enhancement is available on the Fitch Ratings web site at http://www.fitchratings.com/ FLINTKOTE CO: Wants Exclusive Period Extended Until August 30 ------------------------------------------------------------- The Flintkote Company and its debtor-affiliate ask the U.S. Bankruptcy Court for the District of Delaware for an extension, through and including Aug. 30, 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 Oct. 29, 2005. The Debtors explain that they are defendants in approximately 155,000 asbestos related personal injury claims pending in various jurisdictions in the U.S. and Canada. The Debtors give the Court four reasons militating in favor of their request for more time to file a chapter 11 plan without interference from other parties in interest: a) to give the Debtors, the Creditors Committee and the Futures Representative for Asbestos Claimants more time to pursue negotiations with various insurers regarding potential coverage settlements and to properly assess the Debtors' liabilities and propose a fair and equitable treatment for those liabilities in the proposed joint plan of reorganization; b) the Creditors Committee and the Futures Representative are still in the process of retaining their respective experts to evaluate the current and future asbestos-related personal injury liabilities against the Debtors, and the Debtors are continuing to provide historical claims to the Committee and the Futures Representative to allow them to perform their respective analysis; c) the Debtors are still in the process of assessing and reviewing all non-Asbestos Personal Injury Claims filed in the U.S. and Canada, and they are also paying all postpetition obligations as they become due; and d) the Debtors, the Creditors Committee and the Futures Representative are working consensually to formulate a joint plan that addresses all of the Debtors' liabilities. The Court will convene a hearing at 8:45 a.m., on April 25, 2005, to consider the merits of the Debtors' request. Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The Company and its affiliates filed for chapter 11 protection on April 30, 2004 (Bankr. Del. Case No. 04-11300). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. FLINTKOTE CO: Wants Until August 30 to Remove Civil Actions ----------------------------------------------------------- The Flintkote Company and its debtor-affiliate ask the U.S. Bankruptcy Court for the District of Delaware for an extension, through and including Aug. 30, 2005, to file notices of removal with respect to prepetition civil actions pursuant to 28 U.S.C. Section 1452 and Rules 9006 and Rules 9027 of the Federal Rules of Bankruptcy Procedure. The Debtors explain they are defendants in numerous prepetition asbestos-related personal injury actions, as well as a limited number of other prepetition actions unrelated to asbestos. The Debtors present three reasons in support of their request: a) the Debtors in consultation with the Creditors Committee and the Futures Representative for Asbestos Claimants may find it appropriate and beneficial to remove certain of the Prepetition Actions to the federal courts, but the Debtors and their creditor constituencies have not yet completed their analysis of that proposal; b) the Debtors, the Creditors Committee and the Futures Representative are still in the process of working together in formulating a consensual joint plan of reorganization that will address all the Debtors liabilities; and c) the requested extension of the removal period will not prejudice the Debtors' adversaries and other parties in interest in the Civil Actions. The Court will convene a hearing at 8:45 a.m., on April 25, 2005, to consider the merits of the Debtors' request. Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The Company and its affiliates filed for chapter 11 protection on April 30, 2004 (Bankr. Del. Case No. 04-11300). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. GE CAPITAL: Moody's Junks $4.23 Million Class M Certificates ------------------------------------------------------------ Moody's Investors Service upgraded the ratings of three classes, downgraded the ratings of two classes and affirmed the ratings of eleven classes of GE Capital Commercial Mortgage Corporation, Commercial Mortgage Pass-Through Certificates, Series 2001-1 as: -- Class A-1, $127,487,263, Fixed, affirmed at Aaa; -- Class A-2, $703,045,000, Fixed, affirmed at Aaa; -- Class X-1, Notional, affirmed at Aaa; -- Class X-2, Notional, affirmed at Aaa; -- Class B, $45,157,000, Fixed, upgraded to Aaa from Aa2; -- Class C, $49,390,000, Fixed, upgraded to A1 from A2; -- Class D, $15,523,000, Fixed, upgraded to A2 from A3; -- Class E, $15,522,000, Fixed, affirmed at Baa1; -- Class F, $15,523,000, Fixed, affirmed at Baa2; -- Class G, $14,112,000, Fixed, affirmed at Baa3; -- Class H, $25,400,000, Fixed, affirmed at Ba1; -- Class I, $18,345,000, Fixed, affirmed at Ba2; -- Class J, $9,878,000, Fixed, affirmed at Ba3; -- Class K, $9,878,000, Fixed, affirmed at B1; -- Class L, $14,112,000, Fixed, downgraded to B3 from B2; and -- Class M, $4,233,000, Fixed, downgraded to Caa1 from B3. As of the March 15, 2005 distribution date, the transaction's aggregate balance has decreased by approximately 4.0% to $1.083 billion from $1.129 billion at securitization. The Certificates are collateralized by 150 mortgage loans secured by commercial and multifamily properties. The loans range in size from less than 1.0% to 4.4% of the pool, with the top ten loans representing 27.3% of the pool. The pool includes two investment grade shadow rated loans representing 7.3% of the pool. Three loans, representing 1.6% of the pool, have defeased and have been replaced with U.S. Government securities. One loan has been liquidated from the trust resulting in a realized loss of approximately $1.1 million. Three loans, representing 2.4% of the pool, are in special servicing. Moody's has estimated aggregate losses of approximately $5.9 million for all of the specially serviced loans. Moody's was provided with year-end 2003 operating results for 100.0% of the performing loans and partial year 2004 operating results for 66.0% of the performing loans. Moody's loan to value ratio for the conduit component is 88.6%, compared to 89.2% at securitization. The upgrade of Classes B, C and D is primarily due to stable overall pool performance and increased subordination levels. The downgrade of Classes L and M is due to realized and projected losses from specially serviced loans and LTV dispersion. Based on Moody's analysis, 9.5% of the conduit pool has a LTV greater than 100.0%, compared to 0.0% at securitization. Thirteen loans, representing 9.7% of the conduit pool, have debt service coverage ratios of 0.9x or less based on the borrowers' reported operating performance and the actual constant. The largest shadow rated loan is the 59 Maiden Lane Loan ($48.0 million - 4.4%), which is secured by a 1.1 million square foot Class B office building located in the financial district sub-market of New York, New York. The building is 97.0% occupied as of September 2004, compared to 87.0% at securitization. Approximately 25.0% of the building is occupied by several of New York City and New York State government agencies under leases expiring in 2020. The loan is shadow rated Aaa, the same as at securitization. The second shadow rated loan is the EII Portfolio Loan ($31.2 million - 2.9%), which is secured by seven limited service hotels operating as Hampton Inn (5), Comfort Inn (1) and Homewood Suites (1). The hotels total 579 rooms. The portfolio's performance has declined since securitization largely due to increased expenses. Overall occupancy and RevPAR for 2004 were 65.0% and $52.16, compared to 66.8% and $54.03 at securitization. The loan is shadow rated Baa2, compared to Baa1 at securitization. The top three conduit loan exposures represent 9.5% of the outstanding pool balance. The largest conduit loan is the Long Wharf Maritime Center I Loan ($36.1 million - 3.3%), which is secured by a 416,000 square foot Class A office building located in the harbor area immediately south of downtown New Haven, Connecticut. The property has maintained 98.0% occupancy since securitization. The major tenant is SBC Communications, Inc. (58.0% NRA; expiration January 2008). Moody's LTV is 83.6%, compared to 91.0% at securitization. The second largest conduit exposure is the Synergy Business Park I and II Loans ($34.1 million -- 3.2%), which consists of two cross collateralized loans secured by eight multi-tenanted office buildings located in an office park in Columbia, South Carolina. The portfolio's performance has declined since securitization due to a decline in occupancy. The portfolio's overall occupancy is 79.2%, compared to 92.0% at securitization. Moody's LTV is 97.2%, compared to 91.9% at securitization. The third largest conduit loan is the 818 West Seventh Street Loan ($32.5 million - 3.0%), which is secured by a 378,000 square foot office building located in downtown Los Angeles, California. The property is largely tenanted by technology related tenants. The largest tenant is Level C Communications, which occupies 75,000 square feet under a lease expiring in January 2008. The property is 89.3% occupied, compared to 100.0% at securitization. Moody's LTV is 82.9%, compared to 86.5% at securitization. The pool's collateral is a mix of: * office (42.3%); * retail (26.0%); * multifamily (16.4%); * industrial; * self storage (7.6%); * lodging (6.1%); and * U.S. Government securities (1.6%). The collateral properties are located in 35 states, the District of Columbia and Puerto Rico. The highest state concentrations are: * California (19.9%); * Florida (9.2%); * Texas (7.8%); * New York (7.7%); and * Georgia (6.4%). All of the loans are fixed rate. GLYCOGENESYS INC: Losses & Deficits Trigger Going Concern Doubt --------------------------------------------------------------- GlycoGenesys, Inc. (NASDAQ:GLGS) reported results from its recently filed Form 10-K for the year-ended December 31, 2004. The net loss applicable to common stock for the years ended December 31, 2004, and 2003 was $10,582,301, and $8,048,682 respectively. The loss applicable to common stock for the years ended December 31, 2004, and 2003, included a $457,585 and $426,481 charge for the accretion of dividends on Series B preferred stock, respectively. "The full year loss increased by approximately $2.5 million in 2004 compared to 2003, excluding the accretion of preferred stock dividends. This increase was primarily attributable to higher legal, consulting, payroll, GCS-100LE production, clinical trial, public and investor relations and preclinical expenses. These expense increases were partially offset by a reduction in expenses for the agriculture area as the Elexa product line was sold and the development of Bb447 was terminated during 2004. During 2004, we made preparations for several new clinical trials, the first of which was initiated just recently in March," stated John W. Burns, Senior Vice President and Chief Financial Officer of GlycoGenesys, Inc. Mr. Burns added that, "In 2004 we raised $8.5 million and in March 2005 we closed on $1.9 million in net proceeds from new and existing institutional and accredited investors. In addition, we received commitments to close on an additional $4.2 million in net proceeds subject to shareholder approval, a meeting for which is scheduled on May 10, 2005. At this meeting, the Board of Directors has recommended shareholders vote for the necessary approvals required by Nasdaq for us to close on the $4.2 million tranche. These funds will provide us the capital to fund operations through the third quarter. We are committed to consummating a strategic alliance or partnership with a larger biotech or pharmaceutical company by then, aimed in part toward securing the resources to develop GCS-100LE without the dilution shareholders have experienced in the past." Going Concern Doubt Deloitte & Touche LLP issued their report dated March 29, 2005, that includes an explanatory paragraph relating to the Company's ability to continue as a going concern stating that the Company's recurring losses from operations, accumulated deficit of $94.5 million as of Dec. 31, 2004, and the Company's expectation that it will incur substantial additional operating costs for the foreseeable future, including costs related to ongoing research and development activities, preclinical studies and clinical trials, among other things, raise substantial doubt about glycoGenesys' ability to continue as a going concern. The Company received a similar opinion from its independent auditors for the past four years. About GlycoGenesys, Inc. GlycoGenesys, Inc. -- http://www.glycogenesys.com/-- is a biotechnology company focused on carbohydrate-based drug development. The Company currently is conducting a Phase I dose escalation trial of GCS-100LE, a unique compound to treat cancer, in patients with solid tumors at Sharp Memorial Hospital, Clinical Oncology Research in San Diego, California and the Arizona Cancer Center at Tucson and at Scottsdale, Arizona. In addition, the Company is conducting a Phase I/II dose escalation trial of GCS- 100LE in multiple myeloma at the Dana-Farber Cancer Institute in Boston, Massachusetts. Further clinical trials are planned for 2005. The Company's headquarters are located in Boston, Massachusetts with a laboratory in Cambridge, Massachusetts. GMAC: Fitch Holds Junk & Default Ratings on 2 Certificate Classes ----------------------------------------------------------------- Fitch Ratings affirms GMAC Commercial Mortgage Securities, Inc.'s mortgage pass-through certificates, series 2000-C2: -- $83.2 million class A-1 'AAA'; -- $485.5 million class A-2 'AAA'; -- Interest only classes X 'AAA'; -- $31 million class B 'AA'; -- $28 million class C 'A'; -- $10.6 million class D 'A-'; -- $19.3 million class E 'BBB'; -- $9.7 million class F 'BBB-'; -- $4.8 million class M remains 'C'; -- $4.1 million class N remains 'D'. Fitch does not rate classes G, H, J, K, L, and O certificates. The rating affirmations reflect the consistent loan performance and scheduled amortization of the pool's collateral balances. As of the March 2005 distribution date, the pool's aggregate certificate balance has been reduced 17.22% to $723.2 million from $773.7 million at issuance. There are 125 mortgage loans remaining in the transaction. Currently, seven loans (6.6%) are in special servicing. The largest loan (2.5%) is secured by a 363,562 square feet -- sf -- office property located in Corpus Christi, Texas. The loan initially transferred to special servicing when the borrower failed to make debt service payments. The property became REO in September 2004. A listing broker has been hired to market the property and a number of unsolicited offers have been received. Losses are possible from the disposition of this asset. The second largest loan in special servicing is secured by a 188,981 sf retail property in Meriden, Conn. The loan transferred to the special servicer when Ames, the property's anchor tenant, rejected its lease after filing for bankruptcy, significantly reducing occupancy to 47%. The special servicer and the borrower are currently in negotiations for a possible workout. Fitch is closely monitoring the resolution of this loan. The Fitch expected losses on specially serviced loans are expected to significantly impact the principal balance of class M. HUFFY CORP: Has Until June 17 to File Chapter 11 Plan ----------------------------------------------------- Huffy Corp. and its debtor-affiliates sought and obtained an extension from the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division, of the time in which they alone can file a chapter 11 plan. The Debtors explain that due to the complexity and size of their businesses, they need more time to formulate a viable plan. The Debtors want their plan to take into account the best interest of all parties-in-interest. The Court notes that the Debtors' have made good progress in their restructuring through the: * successful sale of non-core bulk inventory; * successful sale of non-core business lines; and * review of their license agreement with various licensors. The Court gives the Debtors until June 17, 2005, to file a plan and until August 16, 2005, to solicit acceptances of that plan. Headquartered in Miamisburg, Ohio, Huffy Corporation -- http://www.huffy.com/-- designs and supplies wheeled and related products, including bicycles, scooters and tricycles. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 20, 2004 (Bankr. S.D. Ohio Case No. 04-39148). Kim Martin Lewis, Esq., and Donald W. Mallory, Esq., at Dinsmore & Shohl LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $138,700,000 in total assets and $161,200,000 in total debts. HUGHES NETWORK: Various Concerns Cue S&P to Assign Low-B Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to satellite services provider Hughes Network Systems LLC. The rating outlook is stable. At the same time, a 'B-' rating was assigned to the company's proposed $325 million senior unsecured notes due 2013, offered under Rule 144A with registration rights. The senior unsecured debt rating is one notch lower than the corporate credit rating, recognizing potential significant priority obligations represented by substantial satellite transponder operating leases. In addition, a 'BB-' bank loan rating was assigned to HNS's proposed $50 million six-year senior secured revolving credit facility, which will be undrawn at transaction closing. A recovery rating of '1' also was assigned to the revolver, indicating a high expectation for full recovery of principal in the event of a payment default. Senior note proceeds plus $50 million cash equity from SkyTerra Communications Inc. will be used to finance SkyTerra's $255.9 million cash purchase of 50% of HNS from its current 100% owner, The DIRECTV Group Inc. DIRECTV will retain a 50% stake in HNS. Remaining proceeds will provide $99 million in balance sheet cash and pay transaction expenses. SkyTerra is controlled by investment firm Apollo Management L.P. and will manage HNS. According to Standard & Poor's credit analyst Eric Geil, the ratings reflect: (1) competitive telecommunications industry conditions characterized by declining pricing; (2) mature revenue prospects for core enterprise services; (3) uncertain growth potential for small business and consumer applications given rising competition from faster, more economical phone and cable TV company data alternatives; (4) a leveraged financial profile from acquisition-related debt; (5) low profitability compared with other telecommunications companies; (6) a lack of near-term discretionary cash flow generation due to capital expenditures needed to complete the Spaceway broadband satellite project, as well as associated operating risk; and (7) potential satellite failure risk. Tempering factors include: (1) HNS's leading position in the very small aperture terminal (VSAT) industry; (2) a degree of revenue stability from three- to five-year contracts with large enterprise customers; (3) VSAT technology's ability to provide economical, quickly deployable, ubiquitous, point-to-multipoint connectivity, which partly buffers competitive pressure from terrestrial networks; and (4) good customer and geographic diversity. INTERMET CORP: Workers' Union Loses Hope of Keeping Decatur Open ---------------------------------------------------------------- As previously reported, Intermet Corporation announced its intention to close its ductile-iron foundry in Decatur, Illinois. Company representatives met with three members of Local 6-728 of the Paper, Allied-Industrial, Chemical & Energy Workers International Union, which represents hourly employees at the plant, to discuss the closure, Tony Reid at the Herald & Review reports. Mr. Reid relates that the union negotiating team came to a meeting at the Wingate Inn in Forsyth ready to negotiate and make concessions. But, they were told by Intermet's representatives that what the plant needs is $50 million in sales. The Union's concluded that the plant is doomed and there is nothing the union can do to save it, Mr. Reid reports. The Intermet Decatur Foundry currently has 320 active employees. The Decatur Foundry is scheduled to close on December 31, 2005. "All they wanted to talk about was closing the plant," Union president Robert Swinehart told Mr. Reid. "They stated that when they first came in; they have no interest in keeping the Decatur plant open." A stenographer the union hired to record the discussions was asked to leave by Intermet representatives, Mr. Reid relates. And Julie Moore, Central Region manager for the Illinois Department of Commerce and Economic Opportunity, was asked by Intermet people to wait in the hotel's lobby. Headquartered in Troy, Michigan, Intermet Corporation -- http://www.intermet.com/-- provides machining and tooling services for the automotive and industrial markets specializing in the design and manufacture of highly engineered, cast automotive components for the global light truck, passenger car, light vehicle and heavy-duty vehicle markets. Intermet, along with its debtor-affiliates, filed for chapter 11 protection on Sept. 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP represents the Debtors. When the Debtors filed for protection from their creditors, they listed $735,821,000 in total assets and $592,816,000 in total debts. INTERSTATE BAKERIES: Gets Court OK to Hire ATL as Tax Consultant ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Missouri gave Interstate Bakeries Corporation and its debtor-affiliates permission to employ Assessment Technologies Ltd., as their property tax consultant. 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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) J.C. PENNEY: Fitch Assigns BB+ Rating to New $1.2 Bil. Bank Loan ---------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to J. C. Penney Co., Inc.'s new $1.2 billion senior unsecured bank facility and has withdrawn the 'BBB-' rating on the company's $1.5 billion senior secured bank facility, which has now been replaced. The Rating Outlook is Positive. Fitch rates Penney's existing senior unsecured notes 'BB+'. Approximately $3.9 billion of debt is currently outstanding. Penney's new $1.2 billion bank facility is unsecured, ranking pari passu with the company's existing senior unsecured debt, and replaces the company's $1.5 billion secured facility that was due to mature in May 2005. The facility may be used for general corporate purposes, including letters of credit. The ratings consider Penney's strong liquidity, with $4.7 billion of cash as of Jan. 29, 2005, its substantial reduction in leverage, and progress with the turnaround at the department stores, as well as the competitive retail environment and the company's longer term ability to sustain sales and profitability improvements. The Positive Rating Outlook reflects Penney's solid operating momentum and the expectation for further reductions in leverage. As the company manages down its excess liquidity through debt reduction and share repurchases, Fitch expects financial leverage will continue to decline in 2005. J.CREW GROUP: Jan. 29 Balance Sheet Upside-Down by $581 Million --------------------------------------------------------------- J.Crew Group, Inc., reported its preliminary financial results for the fourth quarter and fiscal year ended Jan. 29, 2005. Millard Drexler, Chairman and CEO, said, "We are pleased with both our fourth quarter and full year results. Our obsessive focus on quality, style and design along with endless attention to our customers' needs, is reflected in J.Crew's performance." Fourth Quarter Results Consolidated revenues for the thirteen weeks ended January 29, 2005 were $264 million, an increase of 26% from the same period last year. Retail sales (including Factory) for the quarter increased to $183 million from $154 million last year with comparable store sales up 17%. Revenues of the Direct business (Internet and catalog) increased by 47% to $72 million from $49 million last year. Gross margin for the fourth quarter of 2004 was 39%, comparable to last year. Selling, general and administrative expenses during the quarter were $82 million, or 31% of revenues, compared to $80 million, or 38% of revenues in the prior year. The decrease as a percentage of revenues was driven primarily by operating leverage due to the significant increase in comparable store sales. Operating income increased to $20 million, an increase of $19 million over the corresponding period in fiscal 2003. During the fourth quarter, the Company redeemed $319 million of its long-term debt consisting of $150 million of 10-3/8% Senior Subordinated Notes due 2007 and $169 million of 16% Senior Discount Contingent Principal Notes due 2008. Funds used for the redemption consisted of $275 million in new term loans borrowed by the Company and internally available funds. The new term loans were subsequently converted into equivalent 9-3/4% Senior Subordinated Notes due in 2014. These transactions will reduce annual interest expense by $16 million in 2005. As a result of these transactions, the Company recognized a loss of $50 million resulting from early redemption fees, and the write-off of unamortized debt issuance discount and related fees. Net loss for the fourth quarter was $52 million (including the $50 million loss from the debt refinancing) compared to a loss of $20 million last year. Adjusted for the loss on debt refinancing, the fourth quarter net loss would have been $2 million, an $18 million decrease in the loss over the fourth quarter last year. Full Year Results For the full year, consolidated revenues increased 17% to $804 million from $690 million last year. Retail sales increased to $580 million from $487 million, primarily as a result of a comparable store sales increase of 16%. Revenues of the Direct business increased by 14% to $198 million in fiscal 2004. Gross margin for the fiscal year increased to 40% from 36% last year due to improvements resulting from higher full price sell- through. Last year's gross margin was negatively impacted by the liquidation of obsolete inventories. Selling, general and administrative expenses during the year were $287 million, or 36% of revenues, compared to $281 million, or 41% of revenues in the prior year. The decrease as a percentage of revenues was driven primarily by operating leverage due to the significant increase in comparable store sales and a reduction in catalog selling expenses. For the fifty-two weeks ended Jan. 29, 2005, operating income increased by $69 million to $38 million compared to an operating loss of $31 million last year. Net loss for 2004 was $100 million compared to a loss of $50 million last year. However, fiscal 2004 included a loss from debt refinancing of $50 million, while 2003 included a gain on exchange of debt of $41 million. Adjusted for these financing transactions, the net loss in 2004 would have been $50 million, compared to a net loss of $91 million last year. Accounting for Lease Transactions As previously reported, the Company will classify proceeds from landlord construction allowances as operating activities in its consolidated statement of cash flows in fiscal 2004 and will restate its prior year cash flow statements to reclassify such allowances from investing activities to operating activities to conform to the 2004 presentation. This change will not have any material effect on the Company's balance sheet or consolidated statement of operations. About the Company J.Crew Group, Inc., is a leading multi-channel retailer of women's and men's apparel, shoes and accessories. The Company operates 157 retail stores, the J.Crew catalog business, jcrew.com, and 41 factory outlet stores. At Jan. 29, 2005, J.Crew Group's balance sheet showed a $581 million stockholders' deficit, compared to a $468 million deficit at Jan. 31, 2004. J.CREW GROUP: Good Performance Prompts Moody's to Lift Ratings -------------------------------------------------------------- Moody's Investors Service upgraded J. Crew Group, Inc. senior discount notes and issuer rating to Caa2, affirmed the senior implied rating of B3, and changed the outlook to stable from negative. The upgrade of the senior notes and the change in outlook reflect the stabilization of J. Crew's business as a result of improved operating performance and its recapitalization in December 2004 and January 2005. J. Crew's operating performance improved greatly during 2004. Comparable store sales for the year were 16%. Total revenues for the year increased to $804 million versus $688.3 million in the prior fiscal year. EBIT increased to $38 million generating a 4.7% EBIT margin versus ($27.9) and -4.1% in the prior year. This improved operating performance has increased enterprise value of the company. At the end of December 2004, J. Crew borrowed $275MM in term loans under a senior subordinated loan agreement with entities managed by Black Canyon and entered into a new $170 million asset based revolving credit facility due in 2009 led by Wachovia. The proceeds from the notes were used to redeem in full the company's 10 3/8% Senior Subordinated Notes due 2007 and in part its 16% senior discount notes due 2008. In January 2005, the company redeemed the remaining outstanding 16% senior discount notes with internally generated cash flow. The Black Canyon term loans were subsequently converted to 9 3/4% senior subordinated notes due 2014, which are unrated. These recapitalization transactions extended the maturities, reduced the principal due at maturity (the 16% senior discount notes were accretive), and lowered the company's interest expense. The two notch upgrade of the senior notes reflects an improvement in the likely recovery rate for the senior notes as a result of the increased enterprise value of the company and a reduction in the indebtedness of the company. The change in outlook to stable from negative reflects the improved operating performance and the more stable capital structure as a result of the recapitalization. In addition, the stable outlook reflects Moody's expectation that J. Crew will be able to fund capital expenditures and cash interest payments out of internally generated cash flow. The B3 senior implied rating reflects the fact that, despite the significant operating improvements, leverage and coverage metric remain very weak. In addition, J. Crew still faces an intermediate term capital structure challenge given that in October 2009 J. Crew is required to redeem the series B preferred stock and to pay all accumulated dividends on the Series A preferred stock. While the company's performance is continuing to improve, it is hard to consider the performance improving to a level such that it would have the liquidity to fully redeem the preferred stock and accumulated dividends without a change in the composition of the capital structure. The rating also reflects the highly competitive specialty apparel segment in which the company operates. A rating upgrade would require an improvement in the capital structure or further improvements in operating performance such that adjusted debt/EBITDAR falls below 6.5x and EBITDA/Total Interest rises above 1.0x. Conversely, ratings could move downward should there be a significant deterioration in liquidity and operating performance that would hinder J. Crew's ability to meet its obligations. These ratings are upgraded: * senior discount notes to Caa2 from Ca; and * issuer rating to Caa2 from Ca. This rating is affirmed: * Senior Implied of B3. J.H. WHITNEY: Fitch Junks $23.7 Million Senior Subordinated Notes ----------------------------------------------------------------- Fitch Ratings downgrades one class of notes issued by J.H. Whitney Market Value Fund, L.P., a market value collateralized debt obligation -- CDO. This rating action is effective immediately: -- $23,700,000 class C second senior subordinated secured notes downgraded to 'CCC' from 'B'; -- $25,000,000 class D junior subordinated participating secured notes remain at 'C'. Since the previous rating action, the class A and B notes of J.H. Whitney Market Value Fund, L.P. have been paid in full, and the class C noteholders assumed the position of senior and controlling class. Due to the event of default which occurred in March 2002, only the senior class is entitled to interest and principal payments. On April 1, 2005, the class C notes received interest due and $1 million in principal repayments. In total, the class C notes have received $1.3 million in principal payments and all current and deferred interest due. The class D notes are currently deferring interest and are not expected to receive any future payments of interest or principal. As of the March 25, 2005 compliance statement, the class C overcollateralization -- OC -- test was 59.4%, compared to 95.8% as of the report one year prior. In addition, the March 25, 2005, report showed a market value of $18.1 million of collateral, including cash, to support the then remaining balance class C balance of $24.7 million (before the April 1st $1 million dollar redemption). The class C notes are scheduled to mature in April 2006. Given that one year remains until maturity, the prospects for full recovery are hindered by current market values as well as uncertainty regarding liquidity. Whitney Market Value Management Co., the collateral manager, continues to review alternatives with the controlling class to look for opportunities to maximize the value of the assets. As a result of this analysis, Fitch has determined that the current ratings assigned to the class C notes no longer reflect the current risk to noteholders. 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/ JEAN COUTU: Will Release Third Quarter Results Today ---------------------------------------------------- The Jean Coutu Group (PJC) Inc. will release results for the third quarter ended February 26, 2005, today, April 12, 2005. The company will also hold a conference call this morning. Financial analysts are invited to attend the conference call during which the financial results of the third quarter of fiscal 2004-2005 will be presented: Time and date: Tuesday, April 12, 2005 at 9:00 A.M. ET Dial number: 1 888 345-1250 Conference call name: The Jean Coutu Group (PJC) Inc. Media and other interested individuals are invited to listen to the live or deferred broadcast on the Jean Coutu Group corporate website at http://www.jeancoutu.com/ A full replay will also be available by dialling 1 800 408-3053 until May 13, 2005 (access code 3146569 (pound key)). The Jean Coutu Group's United States operations employ over 46,000 persons and comprise 1,904 corporate owned stores located in 18 states of the Northeastern, mid-Atlantic and Southeastern United States. The Jean Coutu Group's Canadian operations and drugstores affiliated to its network employ over 14,000 people and comprise 321 PJC Jean Coutu franchised stores in Quebec, New Brunswick and Ontario. * * * As reported in the Troubled Company Reporter on July 21, 2004, Standard & Poor's Ratings Services rated Jean Coutu Group, Inc.'s US$250 million senior unsecured notes 'B'. The 'BB' bank loan ratings and the '1' recovery rating indicate that lenders can expect full recovery of principal in the event of a default. S&P says the outlook is negative. JERE & PAULA MURPHY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Jere D. & Paula V. Swedas- Murphy P.O. Box 452 Osterville, Massachusetts 02655 Bankruptcy Case No.: 05-12916 Chapter 11 Petition Date: April 7, 2005 Court: District of Massachusetts (Boston) Debtor's Counsel: Richard J. Cohen, Esq. Richard J. Cohen, P.C. 1185 Falmouth Road Centerville, Massachusetts 02632 Tel: (508) 771-6401 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service 2002 - $3,813 $47,813 Special Revenue Service 2003 - $44,000 PO Box 9112 2004 - unliquidated JFK Building and unknown Boston, MA 02203 American Express Credit card $46,857 PO Box 360002 3737-457783-05002: Ft. Lauderdale, FL 33336 $28,326 3725-092378-63006: $18,531 MBNA Credit card: $36,346 PO Box 15137 Acct# Wilmington, DE 19886 4500-6600-1155-3292: $15,014 Acct# 5401-2603-9201-9117-$ $15,110 Acct# 5490-3550-2639-6600 $6,222 USAA Savings Bank Credit card: $27,085 5416-3050-2107-3788: $14,931 5491-2370-0204-7390: $12,154 Citibank Credit card $23,899 American Express Credit card $23,146 MBNA Credit Card $21,924 Intro West 1 week time share $14,000 British Columbia Value of Security: $8,000 US Department of Education Student loan $12,925 Town of Barnstable Real estate taxes $12,000 Chase Credit card $11,965 MBNA America Credit card $11,615 National City Credit card $10,501 Alliant Visa Credit card $9,938 Household Credit Services Credit card: $9,780 5407-0700-1124-7229 $9,780 Sears Gold Mastercard Credit card $8,675 American Express Credit card $5,717 Macy's Credit card $5,817 AAA Financial Service Credit card $5,353 Target Retailers Credit card $5,981 National Bank JOHN T. STRINGFELLOW: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: John T. Stringfellow 2400 Poticaw Bayou Road Vancleave, Mississippi 39565 Bankruptcy Case No.: 05-51448 Chapter 11 Petition Date: April 8, 2005 Court: Southern District of Mississippi (Gulfport Division) Judge: Edward Gaines Debtor's Counsel: Robert Gambrell, Esq. Gambrell & Associates, P.A. 2462 Pass Road, P.O. Drawer 8299 Biloxi, Mississippi 39535 Tel: (228) 388-9316 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. KANSAS CITY: TFM Acquisition Prompts S&P to Hold BB- Rating ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including the 'BB-' corporate credit ratings, on Kansas City Southern and unit Kansas City Southern Railway Co., and removed the ratings from CreditWatch, where they were placed on Dec. 15, 2004. At the same time, Standard & Poor's raised the corporate credit rating of unit TFM S.A. de C.V. to 'BB-' from 'B' and removed the rating from CreditWatch, where it was placed on Dec. 15, 2004. In addition, Standard & Poor's assigned its 'B+' rating to TFM's $460 million senior unsecured notes due 2012 and 2015. Proceeds from the notes offering will be used to repay existing debt. The rating actions follow our review of the operating outlook for both companies and the impact of Kansas City Southern's acquisition of a controlling interest in Grupo TFM (TFM's parent) on each company's credit profile. The outlook on Kansas City Southern, Kansas City Southern Railway Co., and TFM is negative. "The upgrade of TFM reflects Standard & Poor's expectation that the financial profile of TFM will improve over the near to intermediate term due to the planned refinancing of high interest rate debt, marketing and cost benefits from the recent transaction, and favorable industry conditions" said Standard & Poor's credit analyst Lisa Jenkins. "The affirmation of Kansas City Southern ratings reflects Standard & Poor's belief that the TFM transaction has improved Kansas City Southern's business profile and that favorable industry conditions will enable Kansas City Southern to improve its currently extended financial profile to levels consistent with its rating over the near to intermediate term." On April 1, 2005, Kansas City Southern completed its acquisition of a controlling interest in Grupo TFM, which owns TFM, the largest Mexican freight railroad. TFM operates a rail network in northeast Mexico. Ratings assume that credit protection measures will improve at both entities over the next two years as a result of benefits from the acquisition and from continuing healthy market fundamentals. In addition, ratings reflect the expectation that the long-running value-added-tax (VAT) dispute with the Mexican government and the put option that the Mexican government can exercise to sell its remaining ownership interest in Grupo TFM will be resolved without a material impact on credit quality. Should Kansas City Southern be forced to pay the full amount of the put option with no offsetting VAT proceeds, ratings could be reviewed for a downgrade. Conversely, if the improvement in credit protection measures does occur as expected, and if the VAT and put issues are resolved without adverse financial consequences, the outlook would likely be revised to stable. KEY3MEDIA GROUP: Wants Court to Close Subsidaries' Ch. 11 Cases --------------------------------------------------------------- Key3Media Group, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to enter a final decree closing Key3Media subsidiaries' chapter 11 cases pursuant to Section 350(a) of the Bankruptcy Code, Bankruptcy Rule 3022 and Rule 5009-1 of the Local Rules of Bankruptcy Practice and Procedure of the Bankruptcy Court. The Reorganized Debtors also ask the Court to revise the case caption for the lead case, Key3Media Group, Inc., which will remain open. The subsidiary cases are: Reorganized Debtor Case No. ------------------ -------- Key3Media Events, Inc. 03-10324 Key3Media VON Events, Inc. 03-10325 Key3Media BCR Events, Inc. 03-10326 Key3Media Advertising, Inc. 03-10327 Key3Media Bio Sec Corp 03-10328 The Court confirmed the Debtors' joint plan of reorganization on June 4, 2003, allowing the Debtors to emerge from bankruptcy protection on Feb. 28, 2004, and which effected a "deemed consolidation" of the Debtors' bankruptcy estates. According to the Reorganized Debtors, the subsidiary cases should be closed since the Plan has been substantially consummated as to the subsidiary cases. The Debtors give the Court five additional reasons militating in favor of their request: a) the order confirming the Plan has become final; b) most cash payments required by the Plan have been made; c) most of the property proposed to be transferred under the Plan has been transferred; d) the Reorganized Debtors have assumed management of the business and its assets; and e) distributions to unsecured creditors under the Plan have commenced. While a limited number of motions, contested matters, and adversary proceedings remain pending, these matters, the Reorganized Debtors said, do not foreclose a determination that the subsidiary cases have been fully administered. The Reorganized Debtors propose to keep the lead case open for purposes of resolving any remaining disputed claims and adversary proceedings. With respect to pending avoidance actions, the Reorganized Debtor in the lead case is the lead plaintiff in these adversary proceedings. The Debtors said the entry of a final decree in the subsidiary cases will preserve the funds of the Reorganized Debtors to the benefit of creditors who receive distributions of Transferable Warrants. The Debtors also believe it is prudent to close the subsidiary cases to avoid the possible accrual of substantial additional post-confirmation fees. Headquartered in Los Angeles, California, Key3Media Group, Inc., produces, manages and promotes a portfolio of trade shows, conferences and other events for the information technology industry. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 3, 2003. Christina M. Houston, Esq., at Richards, Layton & Finger, P.A., and Etta Rena Wolfe, Esq., at Smith Katzenstein & Furlow LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $241,202,000 in total assets and $441,033,000 in total liabilities. KNIGHTHAWK INC: Equity Deficit Narrows to $1.052 Mil. at Jan. 31 ---------------------------------------------------------------- KnightHawk Inc.'s revenue for the three months ended January 31, 2005, totaled $3,065,000 compared with $3,163,000 recorded in the same period of fiscal 2004. Net Income for the first quarter of fiscal 2005 was $117,000 compared with $244,000 during the same period in 2004. Earnings before Interest, Taxes, Depreciation and Amortization were $268,000 or $.03 per share in the first quarter of fiscal 2005 compared to EBITDA of $594,000 or $.08 per share during the same period in 2004. Net income for the first quarter of 2005 from air freight operations was negatively impacted by continuing weakness in the U.S. dollar, the loss of one air route in the fourth quarter of 2004, and an unexpected increase in subcharter costs. The increase in subcharter costs was the result of third party damage to one of the aircraft which, due to the nature of the damage and location of the aircraft, could not be repaired for several days. While revenue for the three months ended January 31, 2005, from rail freight operations showed a significant increase over the same period in 2004, it was largely offset by persistently higher locomotive fuel prices compared to the same period in 2004. During the quarter and subsequent to January 31, 2005, the Company announced plans to raise up to $3,000,000 with Research Capital Corporation acting as agent on a commercially reasonable best efforts basis. If successful, the net proceeds from the sale of the units will serve to strengthen the Company's balance sheet and working capital position and allow the Company to further invest in its income producing assets. Financing Plans On January 25, 2005, the Company announced plans to raise up to $2,000,000 by way of a Short Form Offering Document with Research Capital Corporation acting as agent on a commercially reasonable best efforts basis. The offering will consist of a maximum of 4,000,000 units at a price of $0.50 per unit. Each unit will consist of one common share and one non-transferable common share purchase warrant. Each common share purchase warrant will entitle the holder to purchase one additional common share at an exercise price of $0.60 per common share for a period of eighteen months from the closing date. If the common shares close at or above $0.75 per common share for a period of 30 consecutive trading days, then the warrant holders must exercise their warrants during the following 90 day period, otherwise the warrants will expire at the end of the 90 day period. If successful, the net proceeds from the sale of the units will be used to fund major aircraft engine overhauls, for improvements to the rail lines and for working capital purposes. On February 24, 2005, the Company announced plans to raise up to $1,000,000 by way of a brokered private placement with Research Capital Corporation acting as agent on a commercially reasonable best efforts basis. The offering will consist of a maximum of 2,000,000 units at price of $0.50 per unit. Each unit will consist of one common share, with a four-month hold period from the closing date, and one non-transferable common share purchase warrant. Each common share purchase warrant will entitle the holder to purchase one additional common share at an exercise price of $0.60 per common share for a period of eighteen months from the closing date. If the common shares close at or above $0.75 per common share for a period of 30 consecutive trading days, then the warrant holders must exercise their warrants during the following 90 day period, otherwise the warrants will expire at the end of the 90 day period. If successful, the net proceeds from the sale of the units will be used to reduce existing indebtedness. KnightHawk -- http://www.knighthawk.ca/-- provides contract rail and air cargo services, delivering freight both domestically and transborder between Canada and the United States, on behalf of its customers in the North American railway and air cargo express industries. KnightHawk's air division operates a fleet of cargo aircraft, and during the past ten years and over 45,000 flying hours has maintained an excellent on-time performance record, a crucial reliability factor for its customers. As of Jan. 31, 2005, KnightHawk reported a $1,052,000 stockholders' deficit, compared to a $1,169,000 deficit at Oct. 31, 2004. KNIGHTHAWK INC: Gets $1.24M from 1st Tranche Short Form Financing ----------------------------------------------------------------- KnightHawk Inc. has completed the first tranche of its short form offering financing raising gross proceeds of $1.24 million. The Company issued 2,482,700 units at a price of $0.50 per Unit. Each Unit consists of one common share in the capital of the Company and one non-transferable common share purchase warrant, each whole Warrant entitling the holder to acquire one additional common share on or before October 7, 2006 at a price of $0.60 per Warrant Share. The Company also issued to Research Capital Corp. an agent's option entitling it to acquire 211,029 Units at a price of $0.50 per Unit on or before October 7, 2006. KnightHawk -- http://www.knighthawk.ca/-- provides contract rail and air cargo services, delivering freight both domestically and transborder between Canada and the United States, on behalf of its customers in the North American railway and air cargo express industries. KnightHawk's air division operates a fleet of cargo aircraft, and during the past ten years and over 45,000 flying hours has maintained an excellent on-time performance record, a crucial reliability factor for its customers. As of Jan. 31, 2005, KnightHawk reported a $1,052,000 stockholders' deficit, compared to a $1,169,000 deficit at Oct. 31, 2004. LASER FAB: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: Laser Fab, Inc. 33901 Riviera Fraser, Michigan 48026 Bankruptcy Case No.: 05-50165 Type of Business: The Debtor does business as a repair and machine shop. Chapter 11 Petition Date: March 31, 2005 Court: Eastern District Of Michigan (Detroit) Judge: Thomas J. Tucker Debtor's Counsel: Robert N. Bassel, Esq. Kemp, Klein, Umphrey, Endelman & May, P.C. 201 W. Big Beaver, Suite 600 Troy, Michigan 48099 Tel: (248) 528-1111 The Debtor did not file a list of its 20 Largest Unsecured Creditors. LOOK COMMS: Creates Two New Equity Classes in Reorganization ------------------------------------------------------------ Look Communications Inc. (TSX Venture: LOK) completed its capital reorganization by filing articles of amendment to create the two new classes of shares to be issued in exchange for the outstanding common shares of Look. Shareholders approved the reorganization at the Company's annual and special meeting on February 16, 2005. On April 8, each existing Common Share of Look will be automatically exchanged for one-half of a Multiple Voting Share and one-half of Subordinate Voting Share. Both classes are fully participating shares, but the Multiple Voting class carry 150 votes per share and the Subordinate Voting class carry one vote per share. In the event of a successful take-over bid for the Multiple Voting Shares, the Subordinate Voting shares will become convertible into Multiple Voting Shares for the sole purpose of allowing holders of Subordinate Voting Shares to participate in the transaction. Look's new shares will be trading under the symbols LOK.SV (subordinate voting) and LOK.MV (multiple voting) on the TSX Venture Exchange. This new capital structure gives Look more flexibility to pursue various financing alternatives. Look Communications' mission is to be a mobile multimedia entertainment and information service provider in Ontario and Quebec. The Company is developing a mobile multimedia video network and currently delivers a full range of communications services, including high-speed and dial-up Internet access, Web applications, digital television distribution and superior customer service to both the business and residential markets across Canada. Look delivers high-speed connections and a full range of Web solutions that help SMEs achieve their business objectives. Through its advanced wireless infrastructure, Look also offers high quality digital entertainment services to consumers in Ontario and Quebec. In Look Communications' latest quarterly report ending August 31, 2004, management raises substantial doubt about the Company's ability to continue as a going concern as it has incurred significant operating losses over the past two years and has a working capital deficiency of $2,412 as at August 31, 2004. The Company's ability to continue as a going concern and to realize the carrying value of its assets and discharge its liabilities when due is dependent upon achieving and maintaining profitable operations and successful implementation of the Company's business strategy. MARYLEBONE ROAD: Fitch Affirms BB+ Rating on Class A-3 Notes ------------------------------------------------------------ Fitch Ratings has affirmed its ratings on Marylebone Road CBO II: -- Class A-1 notes at 'AAA'; -- Class A-2 notes at 'AA'; -- Class A-3 notes at 'BB+'. Marylebone Road CBO II, Ltd is a collateralized debt obligation -- CDO -- that was established on April 11, 2001. The CDO is backed predominantly by investment-grade bonds and loans and attains credit exposure to the investment-grade portfolio via a credit swap with Abbey National Financial Products. Fitch has reviewed the credit quality of the individual assets constituting the portfolio. Overall, Marylebone Road CBO II has improved since the last review in February 2004. Marylebone Road CBO II, Ltd. has experienced minimal credit migration, along with no additional credit events since last reviewed. Additionally, all excess spread is currently trapped within the CDO structure, providing continual improvement to the par coverage tests. Subsequently, the par coverage ratio has increased to 102.4% from 95.8%, per the March 2005 and December 2003 trustee reports, respectively. The ratings of the class A-1 and A-2 notes address the timely payment of interest and the ultimate payment of principal. The rating assigned to the class A-3 notes address the ultimate receipt of interest and the stated principal amount by the final maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments as needed. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/ MCCANN INC: Two Creditors Transfer $718,204 in Claims to Time Inc. ------------------------------------------------------------------ Papers filed with the U.S. Bankruptcy Court for the Southern District of New York show that Time Inc. has purchased trade debt obligations from two creditors of McCann, Inc., between Feb. 17 and April 1, 2005: Creditor Claim No. Amount -------- --------- ------ Fred Geller Electrical, Inc. 33 $667,918 54-15 38th Avenue Woodside, NY 11377 Wilkstone, LLC 59 $50,286 128 19th Avenue Paterson, NJ 07513 Time Inc. is represented by: Brian J. Markowitz, Esq. Ross & Cohen, LLP 711 Third Avenue New York, New York 10017 Headquartered in New York, New York, McCann, Inc., is a commercial interior general contracting company. On April 15, 2004, a group of creditors filed an involuntary Chapter 7 petition against McCann, Inc. On June 23, 2004, the Debtor exercised its right under Sec. 706(a) of the Bankruptcy Code to convert its bankruptcy case to a Chapter 11 case, and an order for relief was entered on June 25, 2004 (Bankr. S.D.N.Y. Case No. 04-12596 (SMB)). On July 22, 2004, the court appointed Lee E. Buchwald to serve as Chapter 11 Trustee. Mr. Buchwald hired Scott S. Markowitz, Esq., at Todtman, Nachamie, Spizz & Johns, P.C., as his counsel. Clifford A. Katz, Esq., at Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow, LLP, represents the Debtor in its restructuring efforts. MCI INC: Verizon to Purchase All Shares by Carlos Slim Affiliates ----------------------------------------------------------------- Verizon Communications Inc. (NYSE: VZ) disclosed an agreement to purchase approximately 43.4 million shares of MCI, Inc. (Nasdaq: MCIP) common stock from eight entities affiliated with Carlos Slim Helu for $25.72 per share in cash. The purchase, which is subject to regulatory approvals, is expected to close in several weeks. Under the agreement, Verizon will pay the Slim entities an adjustment at the end of one year in an amount per MCI share equal to 0.7241 times the amount by which the price of Verizon's common stock exceeds $35.52 per share (measured over a 20-day period). The prices for the MCI and Verizon shares were set by Verizon and the Slim entities based upon the market prices for the stocks at the time of the agreement. Verizon Chairman and CEO Ivan Seidenberg said, "While this was an opportunity for us to purchase a block of shares under unique circumstances and is an important step forward in our acquisition of MCI, we will continue to assess the situation as we move toward a vote by the MCI shareholders." MCI Board Reacts to Verizon-Slim Transaction "Verizon's agreement to purchase approximately 43.4 million shares from entities affiliated with Mr. Slim is a private transaction between those two parties," MCI's board of directors said in a pres statement. "Nevertheless, MCI's Board of Directors remains committed to obtaining the transaction that is in the best interests of all of its shareholders. "Accordingly, MCI's Board of Directors has no intention of amending its Rights Agreement to permit accumulations of the Company's stock in excess of the current 15 percent limit other than pursuant to its previously announced merger agreement with Verizon or an alternative merger transaction which the Board determines is in the best interest of its shareholders." Qwest Reiterates Superior Proposal "By entering into its deal with Mr. Slim," Qwest Communications International Inc. (NYSE:Q) issued in a press statement, "Verizon has both created two classes of shareholders and called into question the MCI board's previous determination that Verizon's lower offer to the other MCI shareholders was superior and fair. We believe Qwest has a superior proposal for all shareholders." As reported in the Troubled Company Reporter on April 7, 2005, MCI, Inc.'s Board of Directors voted to reject, for the third time, Qwest Communications' offer to acquire MCI in a stock and cash transaction. The Company's directors said that Qwest's proposal in its current form, taken as a whole, is not superior to its merger agreement with Verizon. As reported in the Troubled Company Reporter on March 31, 2005, MCI's board accepted Verizon's $7.5 billion takeover bid over Qwest's $8.9 billion offer. MCI/Verizon Agreement On March 29, 2005, MCI and Verizon amended their joint merger agreement. Under that agreement, each MCI share would receive cash and stock worth at least $23.50, comprising $8.75 (including MCI's March 15 dividend payment of $0.40 per share) as well as the greater of 0.4062 Verizon shares for every share of MCI Common Stock or Verizon shares valued at $14.75. About Verizon With more than $71 billion in annual revenues, Verizon Communications Inc. (NYSE: VZ) -- http://www.verizon.com/-- is one of the world's leading providers of communications services. Verizon has a diverse work force of more than 210,000 in four business units: Domestic Telecom serves customers based in 29 states with wireline telecommunications services, including broadband and other services. Verizon Wireless owns and operates the nation's most reliable wireless network, serving 43.8 million voice and data customers across the United States. Information Services operates directory publishing businesses and provides electronic commerce services. International includes wireline and wireless operations and investments, primarily in the Americas and Europe. About Qwest Qwest Communications International Inc. (NYSE:Q) -- http://www.qwest.com/-- is a leading provider of voice, video and data services. With more than 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. At Dec. 31, 2004, Qwest Communications' balance sheet showed a $2,612,000,000 stockholders' deficit, compared to a $1,016,000,000 deficit at Dec. 31, 2003. About MCI Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. * * * As reported in the Troubled Company Reporter on March 1, 2005, Standard & Poor's Ratings Services placed its ratings on Denver, Co.-based diversified telecommunications carrier Qwest Communications International, Inc., and subsidiaries, including the 'BB-' corporate credit rating, on CreditWatch with negative implications. This follows the company's counter bid to Verizon Communications, Inc., for long-distance carrier MCI, Inc., for $3 billion in cash and $5 billion in stock. MCI also has about $6 billion of debt outstanding. The ratings on MCI, including the 'B+' corporate credit rating, remain on CreditWatch with positive implications, where they were placed Feb. 14, 2005 following Verizon's announced agreement to acquire the company. The positive CreditWatch listing for the MCI ratings reflects the company's potential acquisition by either Verizon or Qwest, both of which are more creditworthy entities. However, the positive CreditWatch listing of the 'B+' rating on MCI's senior unsecured debt assumes no change to the current MCI corporate and capital structure under an assumed acquisition by Qwest, such that this debt would become structurally junior to other material obligations. "The negative CreditWatch listing of the Qwest ratings reflects the higher business risk at MCI if its bid is ultimately successful," explained Standard & Poor's credit analyst Catherine Cosentino. As a long-distance carrier, MCI is facing ongoing stiff competition from other carriers, especially AT&T Corp. Moreover, MCI is considered to be competitively disadvantaged relative to AT&T in terms of its materially smaller presence in the enterprise segment and fewer local points of presence -- POPs. The latter, in particular, results in higher access costs relative to AT&T. Qwest also faces the challenge of integrating and strengthening MCI's operations while improving its own underperforming, net free cash flow negative long-distance business. These issues overshadow the positive aspects of Qwest's incumbent local exchange carrier business that were encompassed in the former developing outlook. As reported in the Troubled Company Reporter on Feb. 22, 2005, Moody's Investors Service has placed the long-term ratings of MCI, Inc., on review for possible upgrade based on Verizon's plan to acquire MCI for about $8.9 billion in cash, stock and assumed debt. These MCI ratings were placed on review for possible upgrade: * B2 Senior Implied * B2 Senior Unsecured Rating * B3 Issuer rating Moody's also affirmed MCI's speculative grade liquidity rating at SGL-1, as near term, MCI's liquidity profile is unchanged. As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. As reported in the Troubled Company Reporter on Feb. 16, 2005, Fitch Ratings has placed the 'A+' rating on Verizon Global Funding's outstanding long-term debt securities on Rating Watch Negative, and the 'B' senior unsecured debt rating of MCI, Inc., on Rating Watch Positive following the announcement that Verizon Communications will acquire MCI for approximately $4.8 billion in common stock and $488 million in cash. MERISANT WORLDWIDE: Weak Performance Prompts S&P to Lower Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Chicago, Illinois-based low-calorie sweetener processor and marketer Merisant Worldwide Inc. and its wholly owned subsidiary Merisant Co., including its corporate credit rating to 'B' from 'B+'. The ratings remain on CreditWatch, where they were placed on May 10, 2004. "The downgrade and CreditWatch listing reflect the company's weaker-than-expected operating performance for fiscal 2004 due to declining sales primarily in its retail channel, a shift in product mix from retail towards lower-margin food service, and increased marketing spending," said Standard & Poor's credit analyst Mark Salierno. In addition, Standard & Poor's expects greater competition from larger, financially stronger competitors, such as Johnson & Johnson (AAA/Stable/A-1+) and its 'Splenda' brand, will continue to pressure Merisant's EBITDA margins and credit measures, which were weaker in fiscal 2004. The CreditWatch listing further reflects concern over Merisant's announcement that it will delay filing of its Form 10-K until about April 15, 2005. The company disclosed that it needs additional time to complete its audit and its assessment related to deficiencies in its internal controls over financial reporting. The ratings could be further negatively affected if there are additional concerns beyond those already disclosed. Standard & Poor's will meet with management to discuss the current operating environment and Merisant's business strategies, financial policies, and internal control deficiencies. Merisant Worldwide, through Merisant Co., is a processor, packager, and marketer of low-calorie tabletop sweeteners, primarily aspartame- based products. MIRANT CORPORATION: Valuation Hearing Starts on April 18 -------------------------------------------------------- Judge Lynn of the U.S. Bankruptcy Court for the Northern District of Texas issued an amended Scheduling Order with respect to the hearing to determine the estate value of Mirant Corporation and its debtor-affiliates. The Court will hold the trial on April 18 (commencing at 1:00 p.m.), 19, 20 and 22, 2005, and on additional dates, if needed, as the Court may direct. Judge Lynn directs the parties who will participate in the Valuation Hearing to exchange witness and exhibit lists by April 11, 2005. All deposition designations must be exchanged by April 13, 2005. All exhibits must be marked with exhibit labels and exchanged on or before 12:00 pm (prevailing Central Time) on April 12, 2005. By 12:00 pm (prevailing Central Time) on April 16, 2005, the Valuation Parties must exchange all demonstrative exhibits known and prepared; provided, however, that a Valuation Party may prepare and use additional demonstrative exhibits during the course of the Valuation Hearing so long as the demonstrative exhibits are provided to all other Valuation Parties as soon as reasonably possible following their creation. All deposition designations and exhibits not objected to in writing by April 15, 2005, will be admitted into evidence at trial without further proof, except for relevance. All deposition counter-designations will be exchanged by all Valuation Parties by April 15, 2005, and all the counter- designations not objected to in writing by 10:00 am (prevailing Central Time) on April 18, 2005, will be admitted into evidence at trial without further proof, except for relevance. Written objections to deposition designations and exhibits will be taken up either at the beginning of, or during the course of, the trial. 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. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Equity Committee Wants Expert Reports Made Public -------------------------------------------------------------- Mirant Corporation and its debtor-affiliates, the Official Committee of Unsecured Creditors of Mirant Corporation, the Official Committee of Unsecured Creditors of Mirant Americas Generation, LLC, and the Official Committee of Equity Security Holders have retained experts to prepare certain reports on the enterprise value of the Debtors' business. The U.S. Bankruptcy Court for the Northern District of Texas will receive those Expert Reports into evidence at the Valuation Hearing. The Equity Committee asks Judge Lynn to: (a) designate the Expert Reports as public documents; and (b) authorize the public dissemination of the Expert Reports. The Equity Committee believes that the Expert Reports are judicial documents that Mirant's 400,000 shareholders and the public at large have a fundamental right to access. Eric J. Taube, Esq., at Hohmann, Taube & Summers, L.L.P., in Austin, Texas, asserts that the right of access is compelling for the shareholders who face the possibility of their shares to be canceled by virtue of the analyses and conclusions set forth in the Expert Reports. The shareholders, therefore, have the right to review, critique, and assess the Expert Reports. In addition, the shareholders have the right to review and assess the Expert Reports prepared by the Equity Committee's Experts on their behalf. Mr. Taube reminds the Court that the Debtors have already filed a Disclosure Statement, which is required to contain financial information, and points out that the Valuation Hearing itself will be a public hearing. Thus, there is no justification for keeping the Expert Reports secret. 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. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: U.S. Bank Says Disclosure Statement is Inadequate -------------------------------------------------------------- Mirant Corporation and its debtor-affiliates are parties to several non-residential real property office and ground leases relating to 11 Facility Lease Agreements executed by Mirant Mid- Atlantic, LLC. The MirMA Leases are the subject of a complicated leveraged lease transaction in which each MirMA Lease has a distinct "Owner Lessor." The Owner Lessors are: -- Morgantown OLl LLC, -- Morgantown OL2 LLC, -- Morgantown OL3 LLC, -- Morgantown OL4 LLC, -- Morgantown OL5 LLC, -- Morgantown OL6 LLC, -- Morgantown OL7 LLC, -- Dickerson OL1 LLC, -- Dickerson OL2 LLC, -- Dickerson OL3 LLC, -- Dickerson OL4 LLC, -- SEMA OP1 LLC, -- SEMA OP2 LLC, -- SEMA OP3 LLC, -- SEMA OP4 LLC, -- SEMA OP5 LLC, -- SEMA OP6 LLC, -- SEMA OP7 LLC, -- SEMA OP8 LLC, -- SEMA OP9 LLC, -- Steamed Crab Partners, L.P., -- Steam Heat LLC, -- First Chicago Leasing Corporation, and -- Bankers Commercial Corporation Four of the MirMA Leases relate to the "Undivided Interests" in an electric generating facility referred to as the Dickerson Base-Load Units 1, 2 and 3 located in Montgomery County, Maryland, and were executed on December 19, 2000. Seven of the MirMA Leases relate to the "Undivided Interests" in an electric generating facility referred to as the Morgantown Base-Load Units 1 and 2 located in Charles County, Maryland, and were executed on December 18, 2000. The base lease term of the Dickerson Leases is for 28.5 years -- from December 19, 2000, through June 19, 2029. The base lease term of the Morgantown Leases is for 33.75 years -- from December 19, 2000 through September 19, 2034. Under the MirMA Leases, MirMA is required to make semi-annual lease payments in June and December of each year. In 2003, MirMA paid $129,193,434 for the Morgantown Leases and $21,526,362 for the Dickerson Leases. In 2004, MirMA will pay $99,973,638 for the Morgantown Leases and $21,526,362 for the Dickerson Leases. The leased properties are being maintained and insured. Trustee & Owner Lessors Object to Disclosure Statement U.S. Bank, N.A., as successor trustee to State Street Bank and Trust Company, and the Owner Lessors assert that the Disclosure Statement explaining the Debtors' Plan of Reorganization should not be approved with respect to MirMA because MirMA's creditors are given no concrete information regarding the treatment to be afforded the $1.5 billion Morgantown and Dickerson Leases, notwithstanding that the Morgantown and Dickerson power plants are, by all accounts, centerpieces of the Debtors' business. According to Ronald J. Silverman, Esq., at Bingham McCutchen, LLP, in New York, New York, the Disclosure Statement hinders MirMA Creditors' understanding of what will happen to them under the Plan. The Disclosure Statement does not describe, much less make clear, the effect that pending events will have on the Debtors' financial health and ability to perform whatever obligations MirMA eventually undertakes to its creditors. The Plan is so entirely lacking regarding the proposed treatment that U.S. Bank and the Owner Lessors will receive that it cannot be considered a "plan" for MirMA. The Plan's treatment for the balance of MirMA creditors is so gratuitously worse than what solvent MirMA can provide and what the law requires that one must conclude that the Debtors have no intention of seeking confirmation of the Plan as to MirMA. "MirMA has a mere handful of assets, albeit extremely valuable ones," Mr. Silverman reminds the Court. MirMA's December 31, 2004 Monthly Operating Report, which contains a consolidated balance sheet, shows that MirMA has a total equity value of over $2.7 billion. The U.S. Bank and the Owner Lessors provide a list of the crucial information that MirMA Creditors would need to have to properly evaluate a MirMA plan: (1) The amount or value of MirMA's cash, other assets, equity value and prepetition liabilities -- leases and otherwise -- stated in an easily understood format; (2) A MirMA liquidation analysis; (3) A clear statement that MirMA has sufficient cash to pay in full, with interest, all of its legitimate unsecured claims if it were to assume the Leases, but has decided not to do so; (4) A clear statement explaining that by voting for the plan, MirMA Creditors would be agreeing to accept, instead of cash payment in full at confirmation: (i) an unsecured promise to pay 90% of their claims -- without payment of accrued postpetition interest -- made by a new holding company that will own stock in a multitude of companies of varying financial strength as well as in MirMA; and (ii) stock in the reorganized Mirant Corporation parent entity equal to 10% of the amount of their claims -- again excluding interest -- which stock will have a priority junior to all other stakeholders of the approximately 80+ reorganized Mirant-group entities; (5) Disclosure must be made that MirMA does not intend to reject the Leases. In connection therewith, the MirMA disclosure statement should: (i) incorporate the summary provided to the Court on January 26, 2005, by Thomas E. Lauria, Esq., at White & Case LLP, in Miami, Florida, on behalf of the Debtors, where he stated that the Plan contemplates no material asset dispositions or business changes; and (ii) describe and discuss Mirant Corp.'s decision to implement the environmental cap and trade consent decree purporting to bind the Chalk Point, Morgantown, Dickerson and Potomac River Plants, including any benefits to MirMA and its creditors resulting from the consent decree and the effect on MirMA's cash flow in the event that either the Morgantown or Dickerson Plants are shut down as a result of the provisions contained in the proposed consent decree; (6) In the alternative, if MirMA contends that it does reserve the right to reject the Morgantown and Dickerson Leases, disclosure must be made of the effects that rejection would have on the terms of the Plan and feasibility. That disclosure should include MirMA pro forma financials -- including, without limitation, cash flows -- for both the lease assumption and lease rejection scenarios; (7) Disclosure of the effects the recharacterization, if granted by the Court, will have on MirMA and its creditors. Effects discussed should include, without limitation: (i) the amount of any indemnification obligations to be paid by MirMA assuming the Court or any appellate court finds that indemnification obligations exist; (ii) the amount of any tax liabilities that may result to MirMA as a result of recharacterization aside from indemnification obligations; and (iii) during the 12 month-period after confirmation, the amount of debt Mirant Corp. intends to place on MirMA's -- or its subsidiaries' -- assets and the amount of cash Mirant Corp. intends to transfer out of MirMA if recharacterization is effected; (8) An explanation of why recharacterization is in the best interests of MirMA's creditors and why the decision to prosecute recharacterization by MirMA's directors and officers is within the sound business judgment of those directors and officers; (9) A description of the litigation history and status of the recharacterization litigation current through the date of dissemination of the Disclosure Statement; and (10) A statement that absent an amendment to the Plan to clarify that MirMA will assume the Leases in toto and cure all defaults, U.S. Bank and the Owner Lessors have indicated their intention to object to confirmation of the Plan. Mr. Silverman states that MirMA's creditor structure is even simpler than its asset structure. On the one hand there are U.S. Bank and the Owner Lessors. On the other hand, there are some few millions of dollars of small trade and tax creditors that can, should -- and U.S. Bank and the Owner Lessors' believe ultimately will -- be paid in full in cash with interest. MirMA's equity holder, Mirant Americas Generation, LLC, had unequivocally stated to the Court that the recharacterization litigation against the Morgantown and Dickerson Leases is "folly," "unjustified" and should stop, and the Leases should be assumed. After the curing of defaults, this would eliminate U.S. Bank and the Owner Lessors as plan creditors. In addition, the Debtors represented to the Court that MirMA's trade and tax creditors will be paid in full in cash as part of whatever plan they ultimately present for approval. The Disclosure Statement should say just that -- in a few short, concise pages. With respect to MirMA, the Plan is unconfirmable for three reasons: (1) The Plan completely fails to satisfy the most basic Bankruptcy Code plan requirements regarding specifying treatment of creditors that it is in substance no "plan" at all; (2) The Plan fails to satisfy multiple statutory plan requirements in an attempt to gerrymander voting and plan acceptance; (3) As a result of MirMA's strong financial condition and simple creditor structure, any properly formulated MirMA plan yields an absolute blocking position for U.S. Bank and the Owner Lessors. Mr. Silverman maintains that because U.S. Bank and the Owner Lessors are the only potentially impaired creditors at MirMA, the Plan -- and any plan that does not fully assume the Morgantown and Dickerson lease transactions -- must be rejected. * * * J&L Engineering, United Conveyor Corp., and Nextel Communications, Inc., holders of MirMA unsecured claims, support the U.S. Bank and the Owner Lessors' objections. 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. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Equity Committee Asks for Examiner Report Supplement ----------------------------------------------------------------- The Official Committee of Equity Security Holders appointed in the chapter 11 cases of Mirant Corporation and its debtor-affiliates wants to conduct discovery pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure with respect to the Debtors' investigation of potential claims arising out of Mirant Corp.'s spin-off from The Southern Company. Specifically, the Equity Committee seeks access to a supplement to the First Interim Report prepared by the Mirant Examiner in June 2004. After the Debtors provided the Equity Committee with a copy of the Interim Report, the Committee explains that it became aware of the Supplement, which was prepared by Charles River Associates, a professional retained by the Debtors. In its ongoing efforts to obtain meaningful information relating to the Southern Company Spin-off, the Committee asked the Debtors to immediately turn over the Supplement. Based on information provided to the Equity Committee, it was expected that the Supplement would be circulated by January 31, 2005; however, that time frame has passed. The Debtors indicated that the Supplement has been presented to their Board of Directors and that it will be "at least" another month before the Supplement will be provided to the Committee. There is no justification for this delay, the Equity Committee argues. The Supplement has been completed and presented to the Debtors' Board of Directors. The Debtors gave no explanation as to why they are holding the document from the Committee. At the Equity Committee's request, Judge Lynn directs the Debtors to produce the Supplement along with any other supplements, modifications, or updates to the Interim Report. 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. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) MOVIE THEATER: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Movie Theater Entertainment Group, Inc. aka Ultrastar Cinemas 1060 Joshua Way Vista, California 92081 Bankruptcy Case No.: 05-02960 Type of Business: The Debtor is a cinema operator. Chapter 11 Petition Date: April 8, 2005 Court: Southern District of California (San Diego) Judge: John J. Hargrove Debtor's Counsel: Geraldine A. Valdez, Esq. Procopio, Cory, Hargreaves & Savitch LLP 530 B Street, Suite 2100 San Diego, California 92101 Tel: (619) 238-1900 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. MUZAK HOLDINGS: 10-K Filing Delay Cues S&P to Watch Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services placed all of its ratings on Muzak Holdings LLC and its subsidiary, Muzak LLC, including the 'CCC+' corporate credit ratings, on CreditWatch with negative implications. The negative CreditWatch listing follows the company's failure to file its 2004 Form 10-K by its March 31, 2005, deadline. This is a breach in the terms of the company's secured bank credit agreement, and failure to correct this breach within 30 days would constitute an event of default. The companies are analyzed on a consolidated basis. The Fort Mill, South Carolina-based provider of business music services had about $426 million in consolidated debt and $157 million in debt- like preferred stock at Sept. 30, 2004. "Although Muzak's filing delay and pending restatement of its financial statements for 2002-2004 are not expected to affect the company's EBITDA (adjusting for noncash impairment charges) or cash flow, it prevents an updated assessment of the company's ability to maintain compliance with its bank covenants," said Standard & Poor's credit analyst Steve Wilkinson. Muzak's liquidity, which has been a key rating concern, relies on borrowing access under the company's $55 million revolving credit facility. The filing delay also prevents an updated assessment of Muzak's success in addressing its weak earnings and correcting implementation problems with its operational restructuring, which are also important rating concerns. The CreditWatch listing will be resolved pending a review of Muzak's operations, cash flow, and liquidity following the filing of the company's 10-K statement. NATIONAL AUDIT: Trustee Sues to Recover Fraudulent Conveyances -------------------------------------------------------------- William Leonard, the Chapter 7 Trustee overseeing the liquidation of National Audit Defense Network sued the company's founder, Cort Christie, to recover millions of dollars he says were improperly transferred to Mr. Christie prior to the company's chapter 11 filing. Nevada Corporate Headquarters Inc. and American Binder Co., two companies under Mr. Christie's alleged control, are named in the lawsuit as well. In a separate lawsuit, Mr. Leonard wants more than $1 million he says was fraudulently conveyed to Keyword Gold Inc. and its principals, Dorian Reed and Joseph Prokop, while NADN was insolvent. The list of defendants in this lawsuit also includes Keyword Gold's alleged successor company, Pacifica Labs, Inc., its parent company, American Management Group, Inc., and Donald D. Merritt. The liquidation of National Audit Defense Network, which began in May 2004, Kevin Rademacher at In Business Las Vegas relates, followed a series of problems involving the company. In 2002 both the Federal Trade Commission and the Nevada attorney general's office sued NADN, alleging it failed to honor money-back guarantees. The SEC made allegations that the company was involved in a Ponzi scheme. The IRS sought a Temporary Restraining Order against the firm in April 2004. The Department of Justice said NADN was engaged in running a tax scam and filed false federal income tax returns for customers, costing the government an estimated $324 million. National Audit Defense Network, providing tax strategy and audit defense services to taxpayers, filed for chapter 11 protection on June 11, 2003 (Bankr. D. Nev. Case No. 03-17306), and converted to a chapter 7 liquidation proceeding. Jeffrey I. Shaner, Esq., at Jeffrey Ian Shaner, Ltd., in Las Vegas, represents the Debtor. When NADN filed for bankruptcy, it estimated $1 million to $10 million in assets and liabilities. NATIONAL RV: UPS Capital Likely to Waive Credit Facility Default ---------------------------------------------------------------- National R.V. Holdings, Inc. (NYSE: NVH) didn't deliver its Annual Report on Form 10-K for the fiscal year 2004 to the United States Securities and Exchange Commission before the March 31, 2005, deadline. Late in the course of finalizing the Company's financial results for 2004 and in connection with its response to a "comment letter" received from the SEC in connection with the SEC's statutory review of the Company's SEC filings, management determined that the Company had an error in the accounting for a correction of the Company's self-insured reserves for estimated worker compensation claims in the State of California. As a result, the Company will restate its previously issued financial statements for the 2002, 2001 and 2000 fiscal years in its Form 10-K for the year ended December 31, 2004 to allocate the adjustment to the appropriate years. In addition, while reviewing its revenue recognition of a limited number of motorhomes sold in the third and fourth quarters of 2004 with deferred payment arrangements, the Company determined that it did not correctly recognize such revenue. The Company will restate its financial statements for the third quarter of 2004 by amending its Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, and will adjust previously disclosed fourth quarter financial information. The Company is also seeking to resolve other issues relating to the pending SEC comment letter. Accordingly, the previously issued financial statements for the fiscal year ended December 31, 2002, and the quarter ended September 30, 2004, and financial information for the years ended 2001 and 2000 and for the fourth quarter of 2004 should not be relied upon. The decision to restate prior financial statements was with the concurrence of the Company's Audit Committee on March 31, 2005. This conclusion was also discussed with the Company's independent registered public accounting firm. Workers' Compensation Reserves During the fourth quarter in 2002, the Company changed its methodology for calculating workers' compensation self-insurance reserves. The Company changed to an actuarial based method involving incurred but not reported claims analysis from the specific reserve method, which was not in accordance with generally accepted accounting principles. The total adjustment to the reserve of $4.2 million was recorded in 2002 of which approximately $2.3 million should have been recorded in prior years. The Company treated the change as a revision of an estimate, but should have treated it as a correction of an error, and restated prior years. The Company is continuing to work to finalize the amount and appropriate time frame of the adjustments. Third and Fourth Quarter 2004 Revenue Recognition In addition, the Company also determined that its treatment of revenue recognition relating to the sale of a limited number of motorhomes in the third and fourth quarters of 2004 under a deferred payment arrangement in which the Company held the manufacturer's certificate of origin as security for payment was incorrect. On a preliminary basis, the Company believes that the review will result in a restatement of approximately $4.2 million in revenues previously recorded in the third quarter of 2004, which would be recognized in the fourth quarter of 2004 and a decrease of an estimated $0.02 earnings per share in the Company's third quarter 2004. Also, revenues of approximately $2.9 million previously recognized in the fourth quarter 2004 will be recognized in the first quarter of fiscal 2005 resulting in a net increase of approximately $1.3 million in the Company's fourth quarter 2004 revenues decreasing the net loss by an estimated $0.01 per share. The Company previously reported a net loss of $0.09 per share in the fourth quarter of 2004. The Company has recorded other adjustments since disclosing its financial results for the 2004 fourth quarter. These other adjustments, when combined with the positive impact of the adjustment described above, is not expected to result in a change to the Company's previously reported loss per share for the 2004 fourth quarter. The Company's reported cash flows will not be impacted by these items. Default Under Credit Facility The Company is a party to a $15 million asset-based revolving credit facility with UPS Capital Corporation that expires in August 2005. The Credit Facility contains certain covenants which, among other things, requires the Company to provide UPSC with audited financial statements for each year within 90 days following the end of the year and to comply with related financial statement covenants. The Company's inability to satisfy these covenants constitutes an event of default under the Credit Facility, which if unremedied or not waived, would enable UPSC to seek immediate repayment of all obligations. UPSC has indicated to the Company that it will furnish a written waiver of these defaults. As a result of the expiration of the Credit Facility in August, the Company is assessing its liquidity and ability to continue as a going concern. The Company believes that it will be able to enter into a new credit facility that would extend beyond December 31, 2005, although there can be no assurance that it will be able to do so. The Company's balance sheet dated Sept. 30, 2004, shows $152 million in assets, $60 million in liabilities, and a 2:1 liquidity ratio, with $110 million of current assets available to pay $53 million of liabilities maturing within the next year. The Company reported $3.5 million of net income in the nine-month period ending Sept. 30, 2004, following losses topping $40 million in 2003, 2002 and 2001. Sarbanes-Oxley Section 404 Assessment As a result of the Company's assessment of its compliance with Section 404 of Sarbanes-Oxley Act of 2004, the Company identified, as of December 31, 2004, the following material weaknesses in the Company's assessment of the effectiveness of internal control over financial reporting: 1. Insufficient Personnel Resources and Technical Expertise Within the Company's Accounting Function As of December 31, 2004, the Company did not maintain effective controls over the financial reporting process at one of its divisions because of insufficient personnel resources and technical expertise within the accounting function. This control deficiency resulted in: (a) errors in the preparation and review of schedules and reconciliations supporting the general ledger account balances. As a result, errors were not detected in certain accrued liability accounts, including sales and marketing, warranty, legal and workers' compensation, and the related income statement accounts, primarily cost of goods sold; (b) inadequate financial statement disclosures, primarily related to the sale of a division and capital leases; (c) accounting cutoff errors and an inability to properly and timely account for capital leases entered into during the year. Accrued liabilities, property, plant and equipment, and the related income statement accounts, primarily cost of goods sold, selling, general and administrative, amortization and interest, were affected as a result of this deficiency; and (d) inappropriate recognition of revenue in the third and fourth quarters of 2004. As a result of the control deficiency described, the Company is restating its third quarter 2004 financial statements. This control deficiency also resulted in audit adjustments to the fourth quarter 2004 financial statements. Additionally, this control deficiency could result in misstatements in the aforementioned accounts that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a material weakness. 2. Physical Inventory Process As of December 31, 2004, the Company did not maintain effective controls over the physical inventory process at one of its divisions. Specifically, the Company did not have controls to ensure all of the individuals involved in the physical inventory process were properly trained and supervised and that discrepancies between quantities counted and the accounting records were properly investigated. Further, the Company did not have controls to ensure the accounting records were adjusted to reflect the actual quantities counted during the physical inventory process. As a result, the Company did not detect an error affecting inventory and cost of goods sold. This control deficiency resulted in an audit adjustment to the fourth quarter 2004 financial statements. Additionally, this control deficiency could result in a misstatement of inventory and cost of goods sold that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a material weakness. 3. Unrestricted Access to Programs and Data As of December 31, 2004, the Company did not maintain effective controls over access to application programs and data at one of its divisions. Specifically, these deficiencies were noted: (a) there were instances in which financial accounting personnel had unrestricted access to financial application program and data and there were also instances in which the access granted to financial accounting personnel and information technology personnel did not comply with the Company's segregation of duties requirements; (b) the Company did not maintain effective controls over the access rights granted to information technology staff and the activities of these individuals were not subject to independent monitoring. These control deficiencies did not result in an adjustment to the 2004 interim or annual consolidated financial statements. However, these control deficiencies could result in a misstatement to financial statement accounts that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, management has determined that these control deficiencies constitute a material weakness. The existence of one or more material weaknesses as of December 31, 2004, would preclude a conclusion that the Company's internal control over financial reporting was effective as of that date. Upon completion of its assessment, management expects to conclude that the Company did not maintain effective internal control over financial reporting as of December 31, 2004, based on criteria in Internal Controls -- Integrated Framework. Management's evaluation of its internal control over financial reporting as of December 31, 2004, is not complete. Further, upon completion of its ongoing evaluation of internal control over financial reporting the Company may identify additional control deficiencies, and those deficiencies, alone or in combination with others, may be considered additional material weaknesses. The Company also expects that the report of its independent registered public accounting firm will contain an adverse opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2004. The Company has not finalized its review of the 2004 financial statements and its assessment of internal controls. There can be no assurance that other financial statement issues will not arise. At this time, although the Company is working as quickly as possible to finalize its 2004 financial statements, the Company is unable to predict when it will be in a position to file its Form 10-K for the fiscal year ended December 31, 2004. About National R.V. Holdings, Inc. National R.V. Holdings, Inc. -- http://www.nrvh.com/-- through its two wholly owned subsidiaries, National RV, Inc., and Country Coach, Inc., is one of the nation's leading producers of motorized recreation vehicles. NRV is located in Perris, California where it produces Class A gas and diesel motor homes under model names Dolphin, Islander, Sea Breeze, Tradewinds and Tropi-Cal. CCI is located in Junction City, Oregon where it produces high-end Class A diesel motor homes under the model names Affinity, Allure, Inspire, Intrigue, Lexa and Magna, and bus conversions under the Country Coach Prevost brand. NAVIGATOR GAS: Committee Has Until Sept. 15 to File Closing Report ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of Navigator Gas Transport plc and certain of its subsidiaries sought and obtained an extension of the deadline for it to file a final report with the U.S. Bankruptcy Court for the Southern District of New York. The Committee is responsible for filing the closing report after the Bankruptcy Court confirmed its First Amended Joint Plan of Reorganization on March 17, 2004. At that time, the parties thought a final report could be filed in a year's time. The Committee has some unresolved matters related to the winding up proceedings of the Debtors' businesses in the Isle of Man as well as the claims resolution process. The Honorable Allan L. Gropper gives the Committee until Sept. 15, 2005, to file a closing report. Headquartered in Castletown, Isle of Man, Navigator Gas Transport PLC, transports liquefied petroleum gases and petrochemical gases between ports throughout the world. The Company along with its debtor-affiliates filed for chapter 11 protection on Jan. 27, 2003 (Bankr. S.D.N.Y. Case No. 03-10471). Adam L. Shiff, Esq., at Kasowitz, Benson, Torres & Friedman LLP represents the Debtors in the United States. When the Company filed for protection, it listed $197,243,082 in total assets and $384,314,744 in total debts. NEXEN INC: Paying Subord. Noteholders $0.459375 per Note on May 1 ----------------------------------------------------------------- Nexen Inc. disclosed the regular quarterly interest payment on its 7.35% Subordinated Notes due 2043 of $0.459375 per note, payable May 1, 2005, to note holders of record on April 15, 2005. The notes are listed for trading on the TSX: NXY.PR.B and the NYSE: NXYPRB. Nexen Inc. is an independent, Canadian-based global energy and chemicals company. Our common shares are listed on the Toronto and New York stock exchanges under the symbol NXY. The company is uniquely positioned for growth in the UK North Sea, the deep-water Gulf of Mexico, the Athabasca oil sands of Alberta, the Middle East and offshore West Africa. * * * As reported in the Troubled Company Reporter on Mar. 10, 2005, Standard & Poor's Ratings Services assigned its 'BBB-' senior unsecured debt rating to Nexen Inc.'s two-tranche US$1.040 billion bond issue. Proceeds from the 10-year US$250 million issue, maturing in 2015, and 30-year US$790 million issue, maturing in 2035, will be used to repay a portion of the company's existing US$1.5 billion acquisition bridge facility. At the same time, Standard & Poor's affirmed its 'BBB-' corporate credit and senior unsecured debt ratings and its 'BB+' subordinated debt rating on the company. S&P says the outlook is stable. NORSTAN APPAREL: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Norstan Apparel Shops Inc. dba Fashion Cents aka Fashion cents aka Artley's 33-00 47th Avenue Long Island City, New York 11101-0000 Bankruptcy Case No.: 05-15265 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Norstan Delaware Corporation 05-15268 Type of Business: Norstan Apparel operates 229 retail stores selling women's budget-priced apparel. The stores are located in 24 states throughout the Midwestern, Midsouthern, Mid-Atlantic and southeastern regions of the United States. Chapter 11 Petition Date: April 8, 2005 Court: Eastern District of New York (Brooklyn) Judge: Carla E. Craig Debtors' Counsel: Jeff J. Friedman, Esq. Merritt A. Pardini, Esq. 575 Madison Avenue New York, New York 10022 Tel: (212) 940-7035 Fax: (212) 940-8776 Consolidated Financial Condition as of February 20, 2005: Total Assets: $19,637,000 Total Debts: $44,776,000 Consolidated List of Debtors' 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ The CIT Group $1,268,996 1211 Avenue of the Americas, 13th Floor New York, NY 10036 Attn: Corey Lehr Tel: (212) 382-7284 Fax: (212) 382-7120 Jes & Joy (LUXUSA) $485,027 1100 South San Pedro Street C-13 Los Angeles, CA 90015 Attn: Richard Kim Tel: (213) 749-8448 Fax: (213) 749-7338 Apollo Jeans $392,388 1407 Broadway, Suite 2004 New York, NY 10018 Attn: Morris Alfakx Tel: (212) 398-6585 Fax: (212) 398-7950 Milberg Factor $306,873 99 Park Avenue New York, NY 10016 Attn: Maurice Sabony Tel: (212) 697-4200 Fax: (212) 697-4866 Pure Design $273,250 400 West 30th Street Los Angeles, CA 90007 Attn: Charles Kim Tel: (213) 745-6428 Fax: (213) 745-6368 UF Factor $258,256 1400 Broadway, 14th Floor New York, NY 10018 Attn: Gregory Alexander Tel: (646) 383-8146 Fax: (212) 629-9223 Rosenthal & Rosenthal $237,364 1370 Broadway New York, NY 10018 Prime Business Credit $226,323 1055 West 7th Street # 2200 Los Angeles, CA 90017 Finance 1 $220,320 888 South Figueroa # 1100 Los Angeles, CA 90017 Jes & Joy (Lux) $166,779 1015 South Crocker Street Q-5 Los Angeles, CA 90021 Capital Factors $165,481 1700 Broadway, 19th Floor New York, NY 10019 Accutime Watch $147,501 1001 Avenue of the Americas, 6th Floor New York, NY 10018 General Business $133,712 110 East 98th Street # A1131 Los Angeles, CA 90079 Silnor #2 LP $129,109 c/o Silverman Realty 237 Mamaroneck Avenue White Plains, NY 10605 Benny's $118,857 1138 South Los Angeles Street Los Angeles, CA 90015 Park Avenue $112,281 820 Fourth Avenue Brooklyn, NY 11232 GMAC $111,464 1290 Avenue of the Americas New York, NY National Hanger Company $104,164 P.O. Box 818 North Bennington, VT 05257 Paxar Americas Inc. $97,855 P.O. Box 116779 Atlanta, GA 30368 Econoco Corporation $93,109 300 Karin Lane Hicksville, NY 11801 NORTH AMERICAN: Moody's Rates Planned $115M Credit Facility at B2 ----------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to North American Membership Group Inc.'s (NAMG) proposed $115 million senior secured credit facility. Moody's also assigned a senior implied rating of B2, a senior unsecured issuer rating of B3 and a stable outlook. The ratings reflect significant leverage, significant customer attrition rates consistent with the industry and modest operating margins. The ratings also reflect the company's large and diverse membership base, long-term track record and solid growth in long term memberships and product revenues. Moody's assigned these first time ratings: * $20 million senior secured revolving credit facility due 2010, rated B2; * $95 million senior secured term loan facility due 2011, rated B2; * Senior implied rating, rated B2; and * Senior unsecured issuer rating, rated B3; The ratings outlook is stable. The ratings are subject to the review of the final executed documents and audited financial statements for the year ended December 31, 2004. NAMG is a wholly owned subsidiary of North American Membership Group Holdings Inc., a company which is controlled by Doughty Hanson & Company, the financial sponsor. Proceeds from the $95 million term loan are expected to be used to pay a $48 million distribution to the company's parent to redeem preferred stock, repay existing senior secured indebtedness, pay transaction expenses and for working capital purposes. The revolver is expected to be unused and fully available at closing. Upon the closing of the proposed financing, North American Membership Group Holdings Inc. is expected to have about $54 million of preferred stock outstanding. The preferred stock will have no fixed mandatory redemption date, will allow for cash dividends only after the maturity of the senior secured credit facility and will be redeemable at the option of the holder in the event of a change in control. The ratings reflect the challenges facing the company's membership based business including significant customer attrition rates consistent with the industry, modest growth of the membership base and modest operating margins. The company has historically spent over 30% of sales on member marketing and retention expenses. Due to the high level of marketing expenses, operating margins are relatively low at about 6% in 2004. The company has managed to increase revenues and profitability despite these challenges. Revenues have increased from $180 million in 2002 to $211 million in 2004. Operating income during this time frame has grown from about $5 million to $12 million. The growth in revenues and operating profits is mainly attributable to the increased sale of long term memberships and products. Product revenues grew from about $80 million in 2002 to about $101 million in 2004, comprising 48% of 2004 revenues. The sale of books, videos and other targeted products represent a large portion of the company's operating profit. Product revenues have benefited from the increase in long term members, who generally respond more favorably to product offers. The company has a long track record in the industry and a large membership base. At the end of 2004, the company had 4.5 million active members and sponsored 10 clubs, the oldest of which was started in 1978. Club benefits include a magazine which is generally distributed six to eight times a year, club web-site, special events and product offers. Club magazines are targeted to the interests of club members and have circulations that are generally strong within the special interest category. The company has minimal capital expenditure requirements. The stable ratings outlook reflects Moody's expectation that increased products sales and long term memberships will lead to modest revenue growth and operating margin improvements. Moody's believes that it will be difficult for the company to substantially grow its membership base due to continued significant industry attrition rates and modest plans for new club launches. Free cash flow from operations is expected to be utilized to reduce borrowings under the credit facility. The ratings or outlook could be upgraded if significant membership growth or stronger than expected product sales leads to sustainable free cash flow to debt in the 8-10% range and a reduction in debt to EBITDA to about 4 times. The ratings or outlook could be pressured if a decline in the membership base or product revenues leads to reduced operating margins and free cash flow from operations. The B2 rating assigned to the proposed senior credit facility reflects the first priority security interest in substantially all the tangible and intangible assets of the company, including 100% of the capital stock of domestic subsidiaries. The term loan amortizes at a rate of .25% a quarter with the balance payable at maturity. The credit facility has a cash flow sweep, initially set at 50%, with a step down if the company achieves a specified decline in its leverage ratio. Free cash flow to debt pro forma for the new credit facility was less than 5% in 2004 and is expected to be about 4%-5% in 2005. Pro forma debt to EBITDA was about 5.9 times in 2004 and is expected to be about 5.5 times in 2005. North American Membership Group Inc, headquartered in Minnetonka, Minnesota, is the largest club-based affinity marketing company with about 4.5 million active members. The company's revenues are derived from membership fees, product sales, advertising in the company's targeted magazines and other ancillary activities. Revenue for the year ended December 31, 2004 was about $211 million. NORTH AMERICAN: S&P Rates Proposed $115M Credit Facility at B ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to membership services provider North American Membership Group Inc. At the same time, Standard & Poor's assigned its 'B' bank loan rating, and a recovery rating of '4', to North American Membership's proposed $115 million credit facility. The rating and the recovery rating of '4' indicate an expectation of marginal (25%-50%) recovery of principal in the event of a payment default. The proposed credit facility consists of a $20 million revolving credit facility due 2010 and a $95 million Term Loan B due 2011. Proceeds will be used to refinance existing debt, to purchase Cendant Corp.'s stake in the company, to purchase a portion of preferred shares, and for general corporate purposes. The outlook is stable. Pro forma for the transaction, total debt outstanding was $95.5 million on Dec. 31, 2004. "The ratings reflect North American Membership's niche membership market focus, its small EBITDA base, and some merchandising risks," said Standard & Poor's credit analyst Andy Liu. These factors are only partially offset by the company's fairly stable membership and product revenues, and good conversion of EBITDA to discretionary cash flow. North American Membership is a membership services provider, with 4.5 million active members in 10 clubs. Consumers join the company's specialty interest clubs (such as hunting, fishing, cooking, gardening, etc.) for modest fees. In turn, the company makes available to its members free and paid products and services. More than 45% of North American Membership's revenues are from product sales, including sales of continuity programs, specialty products, and ancillary programs. Products sold by the company include DVDs, books, and collectible coins. The outlook is stable. The outlook assumes that the company will have an adequate cushion of compliance under its bank covenants. If not, the outlook will be revised to negative. NORTHWEST AIRLINES: Deficits Prompt Moody's to Review Ratings ------------------------------------------------------------- Moody's Investors Service placed the long-term debt ratings of NWA Corp and Northwest Airlines Inc. on review for possible downgrade (Senior Implied Rating is B2). The company's SGL-2 Speculative Grade Liquidity rating has been affirmed. The review of the long term ratings for possible downgrade was prompted by the ongoing financial losses and deficit cash flow being experienced by the company, and the expectation that continuing difficult business conditions for the airline industry will preclude any meaningful near term improvement in the company's performance. In particular, Moody's believes that price competition in the US airline industry coupled with higher than expected fuel costs could preclude adequate earnings and cash flow generation at Northwest, particularly in relation to upcoming debt maturities and capital spending needs. While the company maintains considerable balance sheet liquidity, with unrestricted cash balances of over $2.4 billion at December 31, 2004, liquidity could begin to erode over the course of the coming year if the company is unable to achieve needed labor and fuel cost reductions and improve cash flow generation. Moody's review will focus on the near-to-intermediate term business outlook for Northwest. Although overall airline passenger volumes are at relatively high levels, aggressive pricing competition among airlines has contained revenue growth while sustained high fuel costs have continued to erode profits and cash flow. Moody's review will consider Northwest's strategies to adapt to the current business environment, including the company's ability to achieve needed reductions in its cost structure. The review will also consider the company's cash flow outlook in relation to upcoming debt maturities and capital investment requirements (all scheduled aircraft deliveries have committed financing arrangements in place), and the degree to which the company's liquidity profile could be eroded over time if operating performance fails to improve. Northwest's secured debt ratings, including Enhanced Equipment Trust Certificates (EETC's) will be reviewed in relation to the review of the underlying senior implied rating as well as to the asset values of aircraft equipment that provide collateral support for the transactions. The potential ratings actions for these transactions may be of greater or less magnitude than a change in the underlying airline rating, if any. Northwest's SGL-2 Speculative Grade Liquidity rating reflects the company's strong cash and short term investment balances (currently estimated by Moody's to be approximately $2.2 billion) which provides an intermediate term cushion against weak cash flow, the possibility of weaker than expected financial results in 2005 and debt maturities and pension obligations that must be met over the next twelve months. Last year the company refinanced and extended its fully drawn $975 million bank line of credit that was due to mature in October 2005. Moody's assigned a B1 rating at that time to the credit facility based upon the collateral supporting it (the rating is currently under review for possible downgrade). The term loan facility consists of a $575 million Term Loan A that matures in November 2009, and a $400 million Term Loan B that matures in November 2010. Although Moody's affirmed the company's SGL-2 rating, the rating agency noted that a downgrade in the SGL-2 rating could occur if Northwest is unable to maintain a liquidity position in the $2.0 billion range during the course of 2005. Ratings placed under review for possible downgrade are: * Northwest Airlines Corporation (1) B2 Senior Implied Rating (2) Caa2 Issuer rating * Northwest Airlines, Inc. (1) Caa1 rating on Senior Unsecured debt (2) (P)Caa1 and (P)Caa3 ratings for Senior Unsecured and Subordinated debt to be issued under the multiple seniority shelf, (3) B1 rating on the Secured Bank Credit Facility. In addition, all ratings on Enhanced Equipment Trust Certificates, except for Aaa ratings supported by monoline insurance policies, were placed on review for possible downgrade. NUTRAQUEST INC: Has Until Oct. 10 to File a Chapter 11 Plan ----------------------------------------------------------- Nutraquest, Inc., sought and obtained an extension of the time within which it alone can file a chapter 11 plan and solicit acceptances of that plan. The Debtor needs more time to resolve numerous civil actions pending in several states and in Canada associated with the company's Xenadrine RFA-1 dietary supplement. The Honorable Raymond T. Lyons of the U.S. Bankruptcy Court for the District of New Jersey gave Nutraquest until Oct. 10, 2005, to file its plan, and until Dec. 8, 2005, to solicit acceptances of that plan. Headquartered in Manasquan, New Jersey, Nutraquest, Inc., is the marketer of the ephedra-based weight loss supplement, Xenadrine RFA-1. The Company filed for chapter 11 protection on October 16, 2003 (Bankr. N.J. Case No. 03-44147). Andrea Dobin, Esq., and Simon Kimmelman, Esq., at Sterns & Weinroth, P.C. represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $50 million to $100 million. OGLEBAY NORTON: SEC Approves Resale of Preferred & Common Shares ---------------------------------------------------------------- Oglebay Norton Company's (OTC Bulletin Board: OGBY) previously filed Registration Statement on Form S-1 relating to the resale of: -- up to 3,360,800 shares of its Series A Convertible Preferred Stock and -- up to 3,360,800 shares of its Common Stock, which is issuable upon conversion of the Convertible Preferred Stock by the holders of those securities, was declared effective by the Securities and Exchange Commission on April 8, 2005. The Company will not receive any proceeds from the sale of these securities. Headquartered in Cleveland, Ohio, Oglebay Norton Company - http://www.oglebaynorton.com/-- mines, processes, transports and markets industrial minerals for a broad range of applications in the building materials, environmental, energy and industrial market. The Company and its debtor-affiliates filed for chapter 11 protection on February 23, 2004 (Bankr. D. Del. Case Nos. 04- 10559 through 04-10560). Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $650,307,959 in total assets and $561,274,523 in total debts. The Debtors' plan of reorganization became effective on Jan. 31, 2005. OWENS CORNING: 22 Creditors Transfer $3,899,952 in Claims --------------------------------------------------------- From January 1 through March 16, 2005, 22 creditors transferred their claims against Owens Corning, aggregating $3,899,952, to either Longacre Master Fund, Ltd., SPCP Group, LLC, Portia Partners, LLC, or Contrarian Funds, LLC. Transferor Transferee Claim No. Claim Amount ---------- --------- --------- ------------ AES Engineering Longacre $21,049 American Minerals Longacre 28,164 Ammeraal Beltech Contrarian 4026 193,315 Automated Handling Longacre 3639 14,682 Boehm, Inc. Longacre 12288 16,660 Chick Packaging Contrarian 2936 199,650 Cleveland Laminating Longacre 2467 126,016 Compucom Systems Longacre 3141 25,436 Condor Earth Longacre 5903 49,678 Foreland Refining Longacre 3064 300,000 Gaillard, Inc. Longacre 6703 13,987 Greystone Construction Portia 853 Hometime Video SPCP Group 6244 116,667 Lonza, Inc. SPCP Group 600,000 Mississippi Lime Longacre - 303,025 Morgan Adhesives Contrarian 3071 608,388 Nesco Services Co. Contrarian 22,668 New Pak Inc. Portia 296 Plains Marketing, Contrarian 7326 1,225,169 Research Foundation Contrarian 25,000 Trialvision Portia 526 Texas Electric Portia 2726 8,723 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 Nos. 102 & 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) OZARK AIR: Ch. 7 Trustee Wants to Hire Mr. Ed's as Appraiser ------------------------------------------------------------ Patrick J. Malloy, the Chapter 7 Trustee overseeing the liquidation of Ozark Air Lines, Inc. d/b/a Great Plains Airlines, asks the U.S. Bankruptcy Court for the Northern District of Oklahoma for permission to employ Mr. Ed's Auction Company as appraiser. Mr. Ed's will: (A) prepare an inventory of Ozark's office furniture, equipment, parts and inventory located at Tulsa International Airport; (B) appraise those assets; and (C) secure those assets. Mr. Ed's will charge $100 per hour and look to the estate for reimbursement of extraordinary expenses for securing the assets. Mr. Ed's assures the Court that it holds no adverse interest in this case and is well qualified to provide services to the Trustee. Headquartered in Tulsa, Oklahoma, Ozark Air Lines, Inc. -- http://www.gpair.com/-- owns an air carrier that served Colorado Springs, Albuquerque, Tulsa, Oklahoma City and Nashville. The Company filed for chapter 11 protection on January 23, 2004 (Bankr. N.D. Okla. Case No. 04-10361). The case converted to a chapter 7 liquidation proceeding on March 11, 2005. Sidney K. Swinson, Esq., Jeffrey D. Hassell, Esq., and John D. Dale, Esq., at Gable & Gotwals represent the Debtor. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $10 million. PEGASUS SATELLITE: Plan Confirmation Hearing Continued to Apr. 14 ----------------------------------------------------------------- The hearing to consider confirmation of Pegasus Satellite Communications, Inc. and its debtor-affiliates' Plan of Reorganization is continued to April 14, 2005, at 10:30 a.m. (prevailing Eastern time) or as soon thereafter as counsel may be heard. As reported in the Troubled Company Reporter on Feb. 3, 2005, the Debtors revised their Chapter 11 Plan and Disclosure Statement to include, among other things, the estimated recovery of general unsecured claims against Pegasus Satellite Communications, Inc., additional provisions regarding tax consequences of the Plan, and a Liquidation Analysis. The Debtors delivered their First Amended Plan and Disclosure Statement to the United States Bankruptcy Court for the District of Maine on January 31, 2005. A full-text copy of the Debtors' 1st Amended Joint Plan is available for free at: http://bankrupt.com/misc/Pegasus_1stAmendedPlan.pdf A full-text copy of the Debtors' 1st Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/Pegasus_1stAmendedDS.pdf Class 3A Estimated Recovery Class 3A General Unsecured Claims against PSC will be paid a pro rata share of the Liquidating Trust Interests or Liquidating Trust Available Cash. Estimated recovery is 56% to 60%. The estimate corresponds to a recovery of 58-62 cents on the dollar on the principal amount of the Senior Notes (excluding accrued and unpaid prepetition interest). The actual recovery of Holders of Claims in Class 3A may be higher or lower than the estimates provided depending on a number of factors, including, without limitation, the actual proceeds from the sale of the Broadcast Assets (if such a sale is consummated), the actual aggregate amount of Allowed Claims in Classes 3A, 3B, 3C and 3D and the actual aggregate amount of Allowed Administrative Claims. Tax Consequences The U.S. federal income tax consequences in connection with the Plan are complex and are subject to significant uncertainties. The Debtors have not requested, nor do they expect to request, a ruling from the Internal Revenue Service or an opinion of counsel with respect to any of the tax aspects of the Plan. Thus, no assurance can be given as to any particular interpretation that the IRS may adopt with respect to various tax aspects of the Plan. Liquidation Analysis The Liquidation Analysis indicates the values which may be obtained by Classes of Claims upon disposition of the Debtors' assets, pursuant to a Chapter 7 liquidation, as an alternative to the orderly sale of the business as a going concern and any remaining assets under the Plan, and is based on certain assumptions. A full-text copy of the Debtors' Liquidation Analysis is available for free at: http://bankrupt.com/misc/Pegasus_Liquidation_Analysis.pdf The Liquidation Analysis has been prepared assuming that the Chapter 11 Cases convert to Chapter 7 proceedings on March 31, 2005, and the Debtors' assets are liquidated. The Liquidation Analysis is based on the unaudited book values for those assets as of November 30, 2004, unless otherwise stated, for each of the Debtors, and these book values are assumed to be representative of the Debtors' assets and liabilities as of the Liquidation Date. In accordance with the Plan, the Liquidation Analysis presents separately the Liquidation Analysis of: (1) the PST Debtors: -- Argos Support Services Company, -- Carr Rural TV, Inc., -- DBS Tele-Venture, Inc., -- Digital Television Services of Indiana, LLC, -- DTS Management, LLC, -- Golden Sky DBS, Inc., -- Golden Sky Holdings, Inc., -- Golden Sky Systems, Inc., -- Henry County MRTV, Inc., -- Pegasus Satellite Television of Illinois, Inc., -- Pegasus Satellite Television, Inc., -- Primewatch, Inc., -- PST Holdings, Inc., and -- South Plains DBS, LP (2) the PBT Debtors: -- Bride Communications, Inc., -- B.T. Satellite, Inc., -- HMW, Inc., -- Pegasus Broadcast Associates, L.P., -- Pegasus Broadcast Television, Inc., -- Pegasus Broadcast Towers, Inc., -- Portland Broadcasting, Inc., -- Telecast of Florida, Inc., -- WDSI License Corp., -- WILF, Inc., -- WOLF License Corp., and -- WTLH License Corp. (3) Pegasus Media & Communications, Inc. (4) Pegasus Satellite Communications, Inc. The Liquidation Analysis excludes all non-Debtor affiliates of the Debtors. The Liquidation Analysis represents an estimate of recovery values and percentages based on hypothetical liquidations whereby a Chapter 7 trustee would be appointed by the Bankruptcy Court to convert the Debtors' assets into cash. The determination of the hypothetical proceeds to be obtained from the liquidation of assets is an uncertain process involving the extensive use of estimates and assumptions that, although considered reasonable by the Debtors, are inherently subject to significant business, economic and competitive uncertainties and contingencies beyond the Debtors' control. Accordingly, neither the Debtors nor any of their advisors make any representation or warranty that the actual proceeds realized in a Chapter 7 liquidation would or would not correspond to results represented in the liquidation analysis. Actual results could vary materially. In the Liquidation Analysis, all operations of the Debtors are assumed to cease immediately upon conversion to a Chapter 7 liquidation. All Debtors would liquidate simultaneously (except for the PST Debtors whose assets are assumed to be converted to Cash prior to the Liquidation Date) and their assets would be disposed of primarily through sale, liquidation or termination, as appropriate. The Liquidation Analysis does not contemplate the sale of the Broadcast Assets or any of the PBT Debtors' television broadcasting stations as going concern businesses. The Liquidation Analysis does not include recoveries resulting from any potential preference claims, fraudulent conveyance litigation, or other avoidance actions. Based on the Liquidation Analysis, it appears that, on liquidation, unsecured creditors in Class 3A would receive only between 47 and 49 cents on the dollar, significantly below the estimated recovery under the Plan -- which is 58 to 62 cents on the dollar. Alternative Chapter 11 Plan If the Plan is not confirmed, the Debtors or any other party-in- interest may attempt to formulate an alternative chapter 11 plan, which might provide for the liquidation of the Debtors' remaining assets other than as provided by the Plan. Any attempt to formulate an alternative chapter 11 plan would unnecessarily delay creditors' receipt of Distributions yet to be made and, due to the incurrence of additional administrative expenses during that period of delay, may provide for smaller Distributions to Holders of Allowed Claims than are currently provided for in the Plan. Accordingly, the Debtors believe that the current Plan will enable all creditors to realize the greatest possible recovery on their Claims with the least delay. Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Me. Case No. 04-20889) on June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) PILLOWTEX CORP: Court Lets Committee Prosecute Avoidance Actions ---------------------------------------------------------------- Gilbert R. Saydah, Jr., Esq., at Morris, Nichols, Arsht & Tunnel, in Wilmington, Delaware, tells the U.S. Bankruptcy Court for the District of Delaware that Pillowtex Corporation and its debtor- affiliates are currently reviewing their strategic alternatives, with a view to preserving value through a reorganization. Among other alternatives, the Debtors are pursuing potential business arrangements with respect to certain of the Debtors' real properties. This review, Mr. Saydah says, is being conducted by the Debtors in consultation with, and with the participation of, the Official Committee of Unsecured Creditors and its advisors. Avoidance Actions The Debtors diligently have sought to maximize the value of their bankruptcy estates for the benefit of their creditors. The Debtors' estates include potential causes of action to: (i) avoid prepetition transfers under Sections 544, 547 and 548 of the Bankruptcy Code, (ii) avoid unauthorized postpetition transfers under Section 549, and (iii) recover those transfers under Section 550. The Debtors and the Committee have analyzed the nature and extent of the Avoidance Actions and have identified more than 100 potential claims. After much deliberation, they agree that the Committee's counsel will prosecute the Avoidance Actions, as it is the creditors who hold the pecuniary interest in the Avoidance Actions. Although the Committee will act as the primary estate representative in prosecuting the Avoidance Actions, the Debtors' counsel will pursue any claims against members of the Committee and any other claims where the Committee's counsel would have a conflict. Prepetition Insurance Policies Prior to July 30, 2003, the Debtors maintained several insurance policies for the benefit of the Debtors and their officers and directors. Among other things, the D&O Policies provide insurance coverage to the Officers and Directors for monetary judgments and settlements arising out of their activities as the Debtors' officers or directors. The Committee believes that the Debtors' estates may possess valuable causes of action against the Officers and Directors for which the D&O Policies would provide insurance coverage in the event of a judgment or settlement. However, the Debtors' management may in certain cases have a potential conflict that would prevent the Debtors from pursuing the causes of action. Committee as Estate Representative Pursuant to Section 1109(b) of the Bankruptcy Code, the Debtors and the Committee ask Judge Walsh to appoint the Committee as representative of the Debtors' estates and confer standing on the Committee to: (a) investigate and, if determined that a valuable cause of action exists, prosecute certain causes of action pertaining to several insurance policies for the benefit of the Debtors and their officers -- with the Debtors' prior consent, or if that consent is not available, with the Court's permission; and (b) investigate, prosecute, defend or otherwise resolve any and all Avoidance Actions that may be pursued for the benefit of the Debtors' estates and creditors. According to Mr. Saydah, Section 1109(b) provides, in pertinent part, that the Committee "may raise and may appear and be heard on any issue in" the Debtors' Chapter 11 cases. "Courts have interpreted this section of the Bankruptcy Code as conferring authority upon the court to appoint a committee as the estate representative with respect to the prosecution of claims where the debtor-in-possession cannot or will not prosecute the claims," Mr. Saydah says. * * * Judge Walsh appoints the Committee as representative of the Debtors' estates for the purpose of investigating the potentially valuable D&O Causes of Action, and prosecuting, defending or otherwise resolving the Avoidance Actions. Headquartered in Dallas, Texas, Pillowtex Corporation -- http://www.pillowtex.com/-- sold top-of-the-bed products to virtually every major retailer in the U.S. and Canada. The Company filed for Chapter 11 protection on November 14, 2000 (Bankr. Del. Case No. 00-4211), emerged from bankruptcy under a chapter 11 plan, and filed a second time on July 30, 2003 (Bankr. Del. Case No. 03-12339). The second chapter 11 filing triggered sales of substantially all of the Company's assets. David G. Heiman, Esq., at Jones Day, and William H. Sudell, Jr., Esq., at Morris Nichols Arsht & Tunnel, represent the Debtors. On July 30, 2003, the Company listed $548,003,000 in assets and $475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) PUBLICARD INC: Deloitte Expresses Going Concern Doubts ------------------------------------------------------ PubliCARD, Inc. (OTCBB:CARD) reported its financial results for the three months and year ended December 31, 2004. Revenues for the fourth quarter of 2004 increased to $1,279,000, compared to $758,000 a year ago. Foreign currency changes had the effect of increasing revenues by 18%. Excluding the impact of foreign currency changes, revenues in 2004 increased by 50%. Revenues in 2004 benefited from an increase in direct sales to customers located in the United Kingdom and an improvement in shipments to distribution partners located in the United States. The Company reported a net loss for the quarter ended December 31, 2004 of $491,000, or $0.02 per share, compared with a net loss of $915,000, or $0.04 per share, a year ago. The 2003 results include a gain of $2,885,000 relating to an insurance settlement and a charge of $3,000,000 to write-down the investment in a minority-owned company. As of December 31, 2004, cash and short- term investments totaled $1,943,000. For the year ended December 31, 2004, revenues were $4,395,000 compared to $4,781,000 a year ago. Foreign currency changes had the effect of increasing revenues by 10%. Excluding the impact of foreign currency changes, revenues in 2004 decreased by 18% driven principally by a decline in shipments to distribution partners located in the United States and elsewhere outside of Europe. The Company reported a net loss of $4,859,000, or $0.20 per share, for the year ended December 31, 2004 compared with a net loss of $1,593,000, or $0.07 per share, in 2003. The 2004 results include a $2,739,000 non-cash loss on the termination of the Company's frozen defined benefit pension plan and a gain of $647,000 relating to the assignment to a third party of certain insurance claims against a group of historic insurers. The 2003 results include the $3,000,000 minority-owned investment charge and a total gain of $4,590,000 relating to three separate settlements with various historical insurers that resolve certain claims (including certain future claims) under policies of insurance issued to the Company by those insurers. Going Concern Doubt PubliCARD has incurred operating losses, a substantial decline in working capital and negative cash flow from operations for a number of years. The Company has also experienced a substantial reduction in its cash and short-term investments, which declined from $17.0 million at December 31, 2000, to $1.9 million at December 31, 2004. The Company also had a $5.2 million shareholders' deficiency December 31, 2004. These conditions prompted DELOITTE & TOUCHE LLP to raise substantial doubt about the Company's ability to continue as a going concern when the auditing firm completed its review of the Company's 2004 financial statements. Bankruptcy Warning "Additional capital will be necessary in order to operate beyond December 31, 2005," the Company says, "and to fund the current business plan and other obligations." PubliCARD says it is considering various funding alternatives. PubliCARD says that if it can't raise additional capital to continue its present level of operations it is not likely to be able to meet its obligations . . . and is likely to lead the Company to seek bankruptcy protection. About PubliCARD, Inc. Headquartered in Manhattan, PubliCARD -- http://www.publicard.com/ -- designs smart card solutions for educational and corporate sites through its Infineer Ltd. subsidiary. RAMP CORP: Auditors Express Going Concern Doubt in Annual Report ---------------------------------------------------------------- BDO Seidman, LLP expressed substantial doubt about Ramp Corporation's (Amex: RCO) ability to continue as a going concern after it completed an audit of the company's financial statements for the fiscal year ended Dec. 31, 2004. The company delivered a copy of its annual report to the Securities and Exchange Commission last week. The Company's independent auditors issued the going concern qualification due to the Company's recurring operating losses. The Company has had a going concern opinion each year for the past 3 years. "The Company has incurred operating losses for the past several years, the majority of which are related to the development of the Company's healthcare connectivity technology and related marketing efforts," Ramp disclosed in its Annual Report. "These losses have produced operating cash flow deficiencies, and negative working capital." At Dec. 31, 2004, Ramp Corporation's balance sheet showed a $3,229,000 stockholders' deficit, compared to $5,997,000 of positive equity at Dec. 31, 2003. About the Company Ramp Corporation -- http://www.Ramp.com/-- through its wholly owned HealthRamp subsidiary, markets the CareGiver and CarePoint suite of technologies. CareGiver allows long term care facility staff to easily place orders for drugs, treatments and supplies from a wireless handheld PDA or desktop Internet web browser. CarePoint enables electronic prescribing, Internet-based communication, data integration and transaction processing over a handheld device or browser, at the point-of-care. HealthRamp's products enable communication of high value-added healthcare information among physician offices, pharmacies, hospitals, pharmacy benefit managers, health management organizations, pharmaceutical companies and health insurance companies. RESIDENTIAL ASSET: Fitch Ups Ratings on 3 Mort. Certs. & Affirms 5 ------------------------------------------------------------------ Fitch Ratings has taken rating actions on Residential Asset Mortgage Products, Inc. mortgage pass-through certificates: Series 2002-RM1 group 1: -- Class A-I affirmed at 'AAA'; -- Class M-I-1 upgraded to 'AA+' from 'AA'; -- Class M-I-2 affirmed at 'A'; -- Class M-I-3 affirmed at 'BBB'; -- Class B-I-1 upgraded to 'BB+' from 'BB'; -- Class B-I-2 affirmed at 'B'. Series 2002-RM1 group 2: -- Class A-II affirmed at 'AAA'; -- Class M-II-1 upgraded to 'AA+' from 'AA'; -- Class M-II-2 upgraded to 'A+' from 'A'; -- Class M-II-3 affirmed at 'BBB'; -- Class B-II-1 affirmed at 'BB'; -- Class B-II-2 affirmed at 'B'. Series 2002-RM1 group 3: -- Class A-III affirmed at 'AAA'; -- Class M-III-1 upgraded to 'AAA' from 'AA'; -- Class M-III-2 upgraded to 'AAA' from 'A'; -- Class M-III-3 upgraded to 'AA+' from 'BBB'; -- Class B-III-1 upgraded to 'A' from 'BB'; -- Class B-III-2 upgraded to 'BBB' from 'B'. Series 2003-RM1: -- Class A affirmed at 'AAA'; -- Class M-1 upgraded to 'AA+' from 'AA'; -- Class M-2 upgraded to 'A+' from 'A'; -- Class M-3 upgraded to 'BBB+' from 'BBB'; -- Class B-1 affirmed at 'BB'; -- Class B-2 affirmed at 'B'. The upgrades, affecting approximately $16 million of outstanding certificates, are being taken as a result of low delinquencies and losses, as well as increased credit support levels. As of the March 2005 distribution date, the credit enhancement for the upgraded classes increased to between 2.4 times and 9x the original credit enhancement levels. The affirmations, affecting approximately $218 million of outstanding certificates, are due to pool performance credit enhancement levels consistent with expectations. The pool factors (current mortgage loans outstanding as a percentage of the initial pool) for 2002-RM1 and 2003-RM1 were 21% and 39%, respectively. The collateral on these deals primarily consists of 15- to 30-year fixed-rate and adjustable-rate mortgages secured by first liens on one- to four-family residential properties. Further information regarding delinquencies, losses, and credit enhancement is available on the Fitch ratings web site at http://www.fitchratings.com/ SELENA ENTERPRISES: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Selena Enterprises, Inc. 2132 Caniff Hamtramck, Michigan 48212 Bankruptcy Case No.: 05-50416 Chapter 11 Petition Date: April 4, 2005 Court: Eastern District Of Michigan (Detroit) Judge: Thomas J. Tucker Debtor's Counsel: Kurt Thornbladh, Esq. 301 International Manor 6200 Schaefer Dearborn, Michigan 48126 Tel: (313) 943-2678 The Debtor did not file a list of its 20 Largest Unsecured Creditors. SHENANDOAH ASSOCIATES: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Shenandoah Associates Ltd. Partnership dba The John S. Perry House 932 Hungerford Drive, Suite 17B Rockville, Maryland 20850 Bankruptcy Case No.: 05-18130 Chapter 11 Petition Date: April 7, 2005 Court: District of Maryland (Greenbelt) Judge: Paul Mannes Debtor's Counsel: Janet M. Nesse, Esq. Morrison & Hecker, LLP 1150 18th Street, Northwest, Suite 800 Washington, DC 20036 Tel: (202) 785-9100 Total Assets: $5,499,509 Total Debts: $2,272,376 The Debtor did not file a list of its 20 Largest Unsecured Creditors. SHOPKO STORES: Acquisition Cues Fitch to Put Ratings on Watch Neg. ------------------------------------------------------------------ Fitch has placed its ratings on ShopKo Stores Inc. on Rating Watch Negative following the announcement that the company has signed a definitive agreement to be acquired by private equity firm Goldner Hawn Johnson & Morrison Incorporated. Fitch rates ShopKo's senior unsecured notes 'B' and senior secured bank facility rating 'BB-'. As currently structured, Goldner Hawn and Johnson & Morrison Incorporated will acquire ShopKo for approximately $1 billion, comprising $715.2 million in cash and the assumption of $330 million debt. The cash portion of the transaction will fund the acquisition of ShopKo's 29.8 million common shares for $24.00 per share. The deal is expected to close during the second quarter of 2005. The Rating Watch Negative considers Fitch's assumption that the acquisition will be financed with a material debt component. ShopKo's adjusted debt to EBITDAR was 2.3 times and EBITDAR coverage of interest plus rents was 4.0x for the year ended Jan. 29, 2005. Fitch's resolution of the Rating Watch Negative will consider any equity component of the transaction, as well as proceeds from asset sales that could reduce the debt component. ShopKo owns approximately 52% of its 359 stores. Also of importance will be Fitch's evaluation of the company's competitive operating environment, as the company faces a dramatic increase of Wal-Mart discount stores and supercenters in the upper Midwest, and as a highly promotional retail strategy could place pressure on near-term operating margins. SHOPKO STORES: $1 Bil. Goldner Hawn Sale Cues S&P to Watch Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings for Shopko Stores Inc., including the 'BB-' corporate credit rating, on CreditWatch with negative implications. This follows the company's announcement that it has agreed to be acquired by a private equity investment firm. The company is being acquired by an affiliate of Goldner Hawn Johnson & Morrison Inc. for about $1 billion, including assumed debt of about $330 million. Commitment letters have been obtained for all necessary debt financing from Bank of America. The transaction is subject to approval by Shopko's shareholders and other customary conditions, including regulatory approvals. The acquisition is expected to be completed in Shopko's second fiscal quarter ending July 2005. "Although the specifics of the new capital structure are not clear at this time, the company is expected to add incremental debt to finance the buyout," said Standard & Poor's credit analyst Mary Lou Burde. "Accordingly, debt leverage is expected to rise from its level of 2.1x at January 2005. We will assess the impact on the rating as more information becomes available." SOLUTIA INC: Gets Court Nod to Shut Down Acrylic Fiber Business --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New York allows Solutia, Inc., and its debtor-affiliates to exit from their acrylic fibers business. As reported in the Troubled Company Reporter on Jan. 26, 2005, the company's plant in Decatur, Alabama, will continue to operate as a producer of chemical intermediates for use in nylon products, but will close its acrylic fiber operation in early-to-mid April. This action will impact approximately 250 Solutia employees and 200 contractors, most of whom work at the Decatur plant. "Despite the tremendous efforts of those within our acrylic business to reduce costs and improve productivity, the business has simply been unable to compete as fiber and textile manufacturing has moved outside the United States," said John Saucier, president of Solutia's Integrated Nylon platform. "In the coming weeks, we will work diligently to ensure our employees impacted by this event are treated fairly, and to support our customers as they transition to other suppliers." Jeffry N. Quinn, president and CEO of Solutia Inc., stated, "A key component of our reorganization strategy is to re-shape our asset portfolio so that it consists of high-potential businesses leveraged on Solutia's core competencies that can consistently deliver returns in excess of their cost of capital. Exiting the acrylic fiber business, which in recent years has been rendered unprofitable due to low-cost foreign competition, declining global demand trends and sustained high raw material prices, is our most recent step forward in implementing this strategy." 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 is represented by Conor D. Reilly, Esq., and Richard M. Cieri, Esq., at Gibson, Dunn & Crutcher, LLP. (Solutia Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOUTH BALDWIN: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: South Baldwin Plaza Associates, LTD 5001 Curry Road Pittsburgh, Pennsylvania 15236 Tel: (412) 653-1880 Bankruptcy Case No.: 05-23894 Chapter 11 Petition Date: March 31, 2005 Court: Western District of Pennsylvania (Pittsburgh) Judge: Judge Thomas P. Agresti Debtor's Counsel: Robert G. Boyle, Esq. GBU Building - Suite 348 4232 Brownsville Road Pittsburgh, Pennsylvania 15227 Tel: (412) 884-0770 Fax: (412) 884-3550 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 The Debtor did not file a list of its 20 Largest Unsecured Creditors. SPITZERS HEBREW: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Spitzer's Hebrew Book & Gift Center, Inc 21790 West 11 Mile Road Southfield, Michigan 48076 Bankruptcy Case No.: 05-48943 Type of Business: The Debtor operates bookstores and sells religious goods and Church supplies Chapter 11 Petition Date: March 22, 2005 Court: Eastern District Of Michigan (Detroit) Judge: Thomas J. Tucker Phillip J. Shefferly Debtor's Counsel: Robert A. Peurach, Esq. Fitzgerald & Dakmak, P.C. Sixth Floor, Ford Building Detroit, Michigan 48226 Tel: (313)-964-0800 Fax: 313-964-0581 The Debtor did not file a list of its 20 Largest Unsecured Creditors. STORAGE COMPUTER: Can't Afford to Complete 2004 Financial Audit --------------------------------------------------------------- Storage Computer Corporation (OTC: SOSO), delayed reporting its audited financial results and filing its Form 10-K for year ended December 31, 2004, because the company doesn't have the financial resources to complete the 2004 audit and can't find anyone who'll lend those funds. Sullivan Bille, P.C., in Tewksbury, Mass., the company's auditing firm, expressed doubt about the Storage Computer's ability to continue as a going concern when it reviewed the company's 2003 financial statements. The auditing firm pointed to the company's recurring losses and negative cash flows from operations. Computer Storage says it is currently pursuing an opportunity that would provide new financing. The company cautions that there's no assurance it'll be able to obtain new financing and, if new financing is obtained it could result in significant dilution to existing shareholders. Storage Computer says it is unable to determine at this time a date certain by which it expects to file its Form 10K and report audited financial results for the quarter and year ended December 31, 2004. The Company projects it will report a $3.5 million net loss for 2004, which follows a $4.7 million net loss in 2003. The Company's projected balance sheet at Dec. 31, 2004, shows $4.4 million in assets and liabilities totaling $5.1 million. About Storage Computer Corporation Storage Computer Corporation (AMEX:SOS) -- http://www.storage.com/ -- is a provider of high performance storage software solutions focused on developing advanced storage architectures to address the emerging needs of high-bandwidth and other "performance- impaired" applications. Storage Computer's technology supports a variety of applications including advanced database activities, wide area networked storage and sophisticated business continuity topologies. STRUCTURED FINANCE: Fund Reduction Cues Moody's to Cut Rating ------------------------------------------------------------- Moody's Investors Service downgraded the rating of one class of securities issued by Structured Finance Advisors ABS CDO III, Ltd. The U.S. $12,500,000 Preference Shares due 2037 have been downgraded from Ba3 to B3. The reduction in the rating of the Preference Shares is due to a combination of factors, including the deterioration over time of the credit quality of the portfolio of primarily asset-backed securities. It is also due to reductions in funds available for distribution to the Preference Shares due to reduction in the size and weighted average coupon of the portfolio, past reductions in distributions to the Preference Shares due to breaches of the overcollateralization tests and a slight reduction in the diversity of the portfolio. The rating assigned to the Preference Shares addresses only the ultimate receipt of the $12,500,000 liquidation preference plus a 2% annual yield and does not address any other distributions or payments. As of the January 2005 distribution date, the holders of the Preference Shares have received approximately one half of the liquidation preference. THISTLE MINING: Mails CCAA Plan Documents to Impaired Creditors --------------------------------------------------------------- Thistle Mining Inc. (TSX: THT and AIM: TMG) filed a material change report with the Canadian securities regulators, attached to which are copies of these materials that have been mailed to Thistle's known affected creditors: (1) notices to the two classes of Thistle's affected creditors, being the Meridian Creditors (the holders of claims in respect of Thistle's senior secured indebtedness) and the Noteholder Creditors (consisting of the holders of claims relating to notes issued by Thistle), regarding a meeting of those creditors scheduled to be held in Toronto on May 3, 2005; (2) the Thistle plan of compromise and reorganization dated March 24, 2005 pursuant to the CCAA and the Business Corporations Act (Yukon); (3) the Thistle information circular dated April 4, 2005, with respect to the Plan; (4) forms of proxy for Meridian Creditors and Noteholder Creditors; (5) meeting and proxy instructions to Meridian Creditors and Noteholder Creditors; and (6) a notice of sanction motion. Copies of the materials that were mailed to Thistle's known affected creditors are also available on the website of the Monitor, being PricewaterhouseCoopers Inc., at http://www.pwc.com/brs-thistlemining Terms of the Plan As reported in the Troubled Company Reporter on April 1, 2005, the plan provides for, inter alia: (1) Two classes of affected creditors: (a) Class One, being the Meridian Creditors, the holders of claims in respect of Thistle's senior secured indebtedness; and (b) Class Two, being the Noteholder Creditors, consisting of the holders of claims relating to notes issued by Thistle. (2) The sale by Meridian Creditors to Thistle, or its security agent, of: (a) debt owing to Meridian Creditors by Thistle's subsidiaries totalling approximately US$54.2 million and interest thereon guaranteed by Thistle, and security therefor; and (b) debt owing to Meridian Creditors by a subsidiary of Thistle totalling approximately CDN$3.93 million and interest thereon. (3) In consideration for such sale, the Meridian Creditors will receive from Thistle, in aggregate: (a) secured notes evidencing indebtedness of US$20 million; (b) secured notes evidencing indebtedness of CDN$3.93 million; and (c) 70% of Thistle's post-implementation equity. (4) The compromise of all claims of Noteholder Creditors, totalling principal of US$24,850,000 and interest thereon, in consideration for which Noteholder Creditors will receive 25% of Thistle's post-implementation equity. (5) The consolidation of existing shares of Thistle such that existing shareholders will retain 5% of Thistle's post- implementation equity. (6) The delivery by Thistle to Meridian Creditors of secured notes evidencing the debtor-in-possession financing which remains outstanding on implementation of the plan. (7) Releases in favour of the directors and other parties from all claims, except that the releases in favour of directors exclude claims that: (a) relate to contractual rights of creditors; or (b) are based on allegations of misrepresentation or of wrongful or oppressive conduct. All Thistle's creditors, other than Meridian Creditors and Noteholder Creditors, are unaffected creditors under the plan. The plan provides that unaffected creditors will be paid in full by Thistle. Thistle Mining (TSX: THT and AIM: TMG) -- http://www.thistlemining.com/-- says its goal is to become one of the fastest gold mining growth operations in the world. Thistle has focused on acquiring companies with established reserves and will not be developing green field sites. The company operations in South Africa and Kazakhstan are in production, while the Masbate project in the Philippines is forecast to commence production in the latter half of 2005. The Company obtained an order on January 7, 2005, to commence Thistle's restructuring under the Companies' Creditors Arrangement Act. TOM'S FOODS: Greenberg Traurig Approved as Bankruptcy Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Georgia gave Tom's Foods Inc. permission to employ Greenberg Traurig, LLP, as its general bankruptcy counsel. Greenberg Traurig will: a) provide legal advice with respect to the Debtor's powers and duties as a debtor-in-possession in the continued operation and management of its property; b) negotiate, draft and pursue the approval of a disclosure statement and the confirmation of a plan of reorganization; c) prepare on behalf of the Debtor all applications, motions, answers, orders, reports and other legal papers necessary to the administration of its estate; d) appear in Court hearings to protect the Debtor's interests and attend all meeting and negotiations with representatives of the creditors, the U.S. Trustee, and other parties in interest; e) assist the Debtor in any disposition or sale of assets and provide all other legal services appropriate and necessary in its chapter 11 case. David B. Kurzweil, Esq., a Shareholder at Greenberg Traurig, is the lead attorney for the Debtor. Mr. Kurzweil discloses that the Firm received a $350,000 retainer. Mr. Kurzweil charges $450 per hour for his services. Mr. Kurzweil reports Greenberg Traurig's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Scott D. Cousins Shareholder $550 James R. Sacca Shareholder $450 Monica L. Loftin Associates $440 Victoria W. Couniban Associates $410 William E. Chipman, Jr. Associates $370 Dennis a. Meloro Associates $260 John D. Elrod Legal Assistant $230 Sandy Bratton Paralegal $155 Carolyn Fox Paralegal $155 Mr. Kurzweil reports Greenberg Traurig's other professionals bill: Designation Hourly Rate ----------- ----------- Shareholders $235 - $750 Associates $130 - $480 Legal Assistants/Paralegals $65 - $230 Greenberg Traurig assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Columbus, Georgia, Tom's Foods Inc. manufactures and distributes snack foods. Its product categories include chips, sandwich crackers, baked goods, nuts, and candies. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. M.D. Ga. Case No. 05-40683). When the Debtor filed for protection from its creditors, it listed total assets of $93,100,000 and total debts of $79,091,000. TOM'S FOODS: Look for Bankruptcy Schedules on May 20 ---------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Georgia gave Tom's Foods Inc. more time to file its Schedules of Assets and Liabilities, Schedules of Current Income and Expenditures, Statements of Financial Affairs, and Schedules of Executory Contracts and Unexpired Leases. The Debtor has until May 20, 2005, to file those documents. The Debtor explained that it needed more time to file its Schedules and Statements due to: a) the substantial size and complexity of its organization and the tremendous volume of materials that must be assembled and compiled; b) the multiple locations of the information for the Schedules and Statements, and the limited staff available to review and prepare those information; and c) the Debtor and its employees must devote their time and attention to the business operations during the first critical months of the bankruptcy case in order to maximize the value of the estate. Headquartered in Columbus, Georgia, Tom's Foods Inc. manufactures and distributes snack foods. Its product categories include chips, sandwich crackers, baked goods, nuts, and candies. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. M.D. Ga. Case No. 05-40683). David B. Kurzweil, Esq., at Greenberg Traurig, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $93,100,000 and total debts of $79,091,000. TORCH OFFSHORE: Selling Certain Assets to Cal Dive for $92 Million ------------------------------------------------------------------ Cal Dive International, Inc. (Nasdaq: CDIS) entered into an asset purchase agreement with Torch Offshore, Inc. (OTC Pink Sheets: TORCQ). Under the purchase agreement, Cal Dive has agreed to serve as the "stalking horse" bidder for the purchase of Torch's fleet of vessels, including all equipment, inventory, intellectual property and other assets related to the operation of the vessels. In exchange for these assets, Torch will receive consideration of approximately $92.0 million, including a deposit of $4.6 million, which will be credited towards the purchase price. The purchase agreement does not include Torch's accounts receivable, overhead assets unrelated to the operation of the vessels, and claims owned by Torch's bankruptcy estate. On April 6, 2005, Torch filed the purchase agreement with the United States Bankruptcy Court for the Eastern District of Louisiana along with a motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers for all or part of Torch's assets, as required under Section 363 of the Bankruptcy Code. If Cal Dive is the highest bidder for all of Torch's assets, it is anticipated that the transaction will be completed in the second quarter of 2005, pending approval of the Bankruptcy Court and certain government regulatory agencies. Owen Kratz, Chairman and Chief Executive Officer stated, "This transaction represents our continued commitment to the Marine Contracting business as it remains an integral part of our Production Contracting business model." Cal Dive International, Inc., headquartered in Houston, Texas, is an energy service company which provides alternate solutions to the oil and gas industry worldwide for marginal field development, alternative development plans, field life extension and abandonment, with service lines including marine diving services, robotics, well operations, facilities ownership and oil and gas production. 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. TRAILER DEPOT: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Trailer Depot, Inc. dba Trailer Connection dba Boat and Trailer Depot dba Trailer Depot 3645 Highland Road Waterford, Michigan 48328 Bankruptcy Case No.: 05-50715 Type of Business: The Debtor does business dealing recreational vehicles. Chapter 11 Petition Date: April 6, 2005 Court: Eastern District Of Michigan (Detroit) Judge: Thomas J. Tucker Debtor's Counsel: Charles D. Bullock, Esq. 29200 Southfield Road, Suite 210 Southfield, Michigan 48076 Tel: (248) 423-8200 The Debtor did not file a list of its 20 Largest Unsecured Creditors. TRUMP HOTELS: Onyx Allowed to Pursue New Jersey Litigation ---------------------------------------------------------- In January 2005, Onyx Acceptance Corporation filed an unsecured claim against Trump Taj Mahal Associates for $1,690,853, asserting damages, fees and expenses arising out of the Debtor's breach of obligations in connection with a December 2001 hotel group reservation. Trump Taj Mahal indicated that the Onyx Claim will be subject of an objection. In March 2005, Onyx objected to the Debtors' Plan. Onyx complained that the Plan unfairly fails to provide it, and other members of Class 7, with any reasonable estimate or projection of the timetable to be used to determine the claims. To resolve the disputes between them, Onyx and Trump Taj Mahal agree that the automatic stay will be modified to the extent necessary to allow Onyx to proceed in that certain litigation pending in the Superior Court of New Jersey, Law Division, in Burlington County so as to liquidate the Onyx Claim and convert it to an allowed Class 7 Claim under the Plan. Onyx's Confirmation Objection is deemed withdrawn. The Court approves the parties' stipulation. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. U.S. FLOW: Ch. 7 Trustee Taps Stites & Harbison as Special Counsel ------------------------------------------------------------------ The Honorable Judge James D. Gregg of the U.S. Bankruptcy Court for the Western District of Michigan, Southern Division, gave Thomas A. Bruinsma, the Chapter 7 trustee overseeing the liquidation of U.S. Flow Corporation, permission to engage Stites & Harbison PLLC as his Special Counsel. In April 2003, Stites & Harbison PLLC was retained to represent U.S. Flow Corporation in an Indiana state court collection action against Ansert Mechanical Contractors, Inc., and Joan A. Ansert, as the guarantor of the debt owed by Ansert Mechanical Corporation. Mr. Bruinsma tells the Court that Stites & Harbison is being retained as special counsel, nunc pro tunc to April 2003, to compensate it for services provided in procuring funds for the Debtor's estate post-petition in the Indiana State Court litigation. To the best of the Trustees knowledge, information and belief, Stites & Harbison PLLC: (a) does not have any connection with the Debtor, its affiliates, this Court, the United States Trustee, any person employed in the Office of the United States Trustee, or their respective attorneys and accountants; (b) is a "disinterested person"; and (c) does not hold or represent any interest adverse to the Debtor or its estate with respect to the matters on which the firm is to be employed. Stites & Harbison PLLC will be paid for its services on an hourly basis in accordance with its ordinary and customary hourly rates. Those hourly rates are not discloses in the papers the Trustee filed with the Bankruptcy Court. Headquartered in Grand Rapids, Michigan, US Flow Corporation filed for chapter 11 protection on August 12, 2003. (Bankr. W.D. Mich. Case No. 03-09863). The case was converted to a chapter 7 liquidation proceeding on March 5, 2003. Robert F. Wardrop, II, Esq., at Wardrop & Wardrop, P.C., represents the Debtor. When the Company filed for protection from its creditors, it listed $69,056,000 in total assets and $123,461,000 in total debts. UAL CORP: Inks Mediation Agreement with Air Wisconsin & US Airways ------------------------------------------------------------------ As reported in the Troubled Company Reporter on March 16, 2005, pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure, UAL Corporation and its debtor-affiliates ask the Hon. Eugene Wedoff of the U.S. Bankruptcy Court for the Northern District of Illinois to compel Air Wisconsin Airlines Corporation to produce "an unredacted or less heavily-redacted version" of a Jet Services Agreement Air Wisconsin recently entered into with US Airways Group. On February 28, 2005, Judge Stephen Mitchell at the United States Bankruptcy Court for the Eastern District of Virginia authorized USAir to obtain $125,000,000 in DIP Financing from Eastshore Aviation LLC and enter into the Jet Service Agreement. The JSA was integral to the approval of USAir's DIP Loan. The Debtors and Air Wisconsin are parties to 20 Agreements, including the United Express Agreement, which governs regional jet services. The Debtors want to verify that the terms of the JSA do not violate the letter or spirit of any of its Agreements with Air Wisconsin. The Debtors informally asked Air Wisconsin for a clearer copy of the JSA via a telephone call during the week of February 21. Air Wisconsin refused. On February 28, 2005, the Debtors sent William P. Jordan, Air Wisconsin's Vice Chairman and General Counsel, a similar faxed request. Air Wisconsin has not responded. The 20 Agreements with Air Wisconsin are important assets of the Debtors' business that govern the operation of thousands of flights and millions of passengers each year, James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, says. Therefore, the Agreements control millions of dollars in revenues. The Debtors have no interest in the rates and other financial information. If their request is granted, the Debtors promise to keep all information confidential. From the publicly available version of the JSA, Mr. Sprayregen says, it is impossible to tell whether any terms may violate or conflict with the Agreements. Without viewing the actual substance of the JSA, the Debtors are left only with the assurance in US Airways' news release that the Agreements are unaffected by the JSA. This assurance "would be cold comfort in the event that it turns out not to be accurate for all purposes," Mr. Sprayregen says. Parties Reach Mediation Agreement US Airways Group, Inc., Air Wisconsin Airlines Corporation and the Debtors agree to enter into mediation to resolve the dispute. Pursuant to a Mediation Agreement approved by both the U.S. Bankruptcy Court for the Northern District of Illinois and the U.S. Bankruptcy Court for the Eastern District of Virginia, the parties agree that James J. White, Professor at the University of Michigan Law School, will serve as Mediator. The Mediator will review the Jet Service Agreement between US Airways and Air Wisconsin to determine if the terms constitute a breach or repudiation of the Air Wisconsin-United Regional Jet Agreement. If the Mediator sides with US Airways, the Debtors will dismiss their request for a Rule 2004 examination of the JSA. If the Mediator sides with the Debtors, then they will have the right to view all redacted text of the JSA that gives rise to this finding and US Airways will withdraw the request for a protective order pending in both the US Airways and UAL bankruptcy cases. All three parties will equally share the expenses of the Mediator. During the Mediation Period, the various motions related to this matter will be temporarily stayed and not prosecuted. The parties will dismiss claims, restrain from bringing actions, and respect the confidentiality terms of the Mediation Agreement. The Official Committee of Unsecured Creditors of the Debtors, the Official Committee of Unsecured Creditors of US Airways, and all other interested parties will help implement the Mediation Agreement and be bound by its terms. Any violation of the Mediation Agreement's confidentiality requirements will be a violation of the Approval Order. The parties to the Mediation Agreement will share any report by the Mediator with the Debtors' Creditors Committee, which agrees that all information disclosed in the report and all information disclosed in the JSA is subject to the confidentiality provisions of the Mediation Agreement. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through UnitedAir Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Air Wisconsin Objects to Agreement Modification --------------------------------------------------------- Peter C. Blain, Esq., at Reinhart, Boerner, Van Deuren, in Milwaukee, Wisconsin, explains that about two years ago, UAL Corporation and its debtor-affiliates wanted two things from Air Wisconsin Airlines Corporation: 1. The Debtors wanted Air Wisconsin to continue providing service without compelling the Debtors to make a decision on the existing 2001 Agreement, which the Debtors did not want to reject at that time; and 2. The Debtors wanted Air Wisconsin to lower its prices. Air Wisconsin was not willing to grant price reductions without the security of a fixed, long-term contract. As a result of lengthy and extensive negotiations, the parties consensually arrived at the Amended United Express Agreement, which was approved by the U.S. Bankruptcy Court for the Northern District of Illinois. Mr. Blain emphasizes that the 10% surcharge, which the Committee wants to eliminate, was an integral part of the Amended Agreement. The Committee had a copy of the Agreement and was fully aware of its terms. The Committee had the opportunity to object, but did not. Now, the Committee asserts that the estates are entitled to judicial reformation of the Agreement and a judgment of over $90,000,000. The Court cannot give the Debtors all the benefits they bargained for, but take away from Air Wisconsin one of the key benefits it negotiated. The Committee says the estates are entitled to this relief because they made a miscalculation as to how long the reorganization would take. Apparently, the Committee reasons that Air Wisconsin should pay for this miscalculation. Air Wisconsin has continued to provide the Debtors with services when needed, based on a set of payment assumptions. Now, the Committee wants to change those assumptions after the services have been provided. Mr. Blain says that the Court should not rewrite the Agreement after its terms have been implemented. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through UnitedAir Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNIFIED SYSTEMS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Unified Systems Corporation, Inc., 26532 Groesbeck Highway Warren, Michigan 48089 Bankruptcy Case No.: 05-21374 Type of Business: The Debtor provides products that includes individual components and complete systems for the automotive and transportation industry. See http://unifiedsystems.org/ Chapter 11 Petition Date: March 23, 2005 Court: Eastern District Of Michigan (Detroit) Judge: Thomas J. Tucker Debtor's Counsel: Michael I. Zousmer, Esq. Nathan Neuman & Nathan, P.C. 29100 Northwestern Highway, Suite 260 Southfield, Michigan 48034 Tel: (248) 351-0099 The Debtor did not file a list of its 20 Largest Unsecured Creditors. US AIRWAYS: Wants 2001 Credit Facility Draws Increased to $28.2M ---------------------------------------------------------------- US Airways, Inc., and its debtor-affiliates seek to amend the Order granting them permission to enter into a Global Settlement with General Electric Capital Corporation. Due to an additional payment made by the Debtors to GECC, the Debtors want to increase the amount of the additional draws permitted under the 2001 Credit Facility to $28,225,000. Under the Global Settlement, GECC will purchase nine CRJ-200s, one CRJ-700, three A319s, three A320s, five A321s, 14 CFM56-5B spare engines, 14 CFM56-3B spare engines and engine stands that secure the 2001 Credit Facility and the 2003 Liquidity Facility. Immediately thereafter, GECC will leaseback these assets to the Debtors under operating leases that expire on the earlier of the Debtors' emergence from bankruptcy or June 30, 2005. The Debtors and GECC agreed to extend the closing date for these Phase II Transactions beyond February 15, 2005. As a result, in February, the Debtors made an additional $11,500,000 principal payment under the 2001 Credit Facility. As in the previous amendment approved by the Court, so that the Debtors may realize the economic benefits intended by the Global Settlement, the Debtors, with the consent of GECC, seek to modify the Global Settlement Order to increase the drawdowns under the 2001 Credit Facility to reflect the February Payment. Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, relates that the Debtors and GECC are finalizing the documentation to implement the Sale/Leaseback. The parties have agreed to certain purchase price adjustments under the Sale/Leaseback due to actual versus assumed conditions of the spare engines. The adjustments will reduce the net sale proceeds realized by the Debtors by $4,250,000. As a result of the February Payment and the Sale/Leaseback Adjustments, the Debtors and GECC agree that the net additional drawdown, together with the $21,500,000 drawdown under the 2001 Credit Facility, will result in a maximum drawdown of 28,225,000. By increasing the permitted drawdown, the outstanding principal balance of the 2001 Credit Facility will be consistent with the Global Settlement approved by the Court. Mr. Leitch emphasizes that the underlying economics of the Global Settlement, and the effect on the Debtors' estates, are not altered by increasing the permitted drawdown to $28,225,000. The modifications will ensure that the Debtors realize the economic benefits intended by the Global Settlement. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Has Exclusive Right to File Ch. 11 Plan Until May 31 ---------------------------------------------------------------- U.S. Bankruptcy Court for the Eastern District of Virginia extended the period within which US Airways, Inc., and its debtor- affiliates have the exclusive right to file a plan of reorganization to May 31, 2005, and the exclusive right to solicit acceptances of that plan to August 31, 2005. As reported in the Troubled Company Reporter on Apr. 4, 2005, pursuant to an agreement with General Electric Capital Corporation, the Debtors are currently obligated to file their plan of reorganization and disclosure statement by April 15, 2005, and to emerge from bankruptcy by July 1, 2005. According to Brian P. Leitch, Esq., at Arnold & Porter, the Debtors intend to meet the deadline for filing a plan. Out of an abundance of caution, however, the Debtors seek a modest extension of the Exclusive Periods. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 87; Bankruptcy Creditors' Service, Inc., 215/945-7000) USG CORP: Wants to Employ Meckler as Special Environmental Counsel ------------------------------------------------------------------ USG Corporation and its debtor-affiliates seek the U.S. Bankruptcy Court for the District of Delaware's authority to employ Meckler Bulger & Tilson LLP as their special environmental counsel. Meckler's services are anticipated to include, but not limited to, advising the Debtors regarding various environmental compliance and regulatory matters in connection with their operations at certain facilities in Pennsylvania, North Carolina, Minnesota, Michigan, New Jersey, Indiana, Iowa, Texas, and Mississippi. The Debtors inform the Court that Meckler has represented them and provided legal services in connection with these and similar environmental matters as an Ordinary Course Professional since the Petition Date. Pursuant to the Court's OCP Order, the Debtors were authorized to pay Meckler's fees and expenses up to $25,000 per month, on average, over any consecutive three-month period. In September 2002, the Court entered an order modifying the OCP Order to increase Meckler's average monthly payment cap to $50,000. In August 2004, the Court approved another amendment to the OCP Order and established a procedure for increasing the amount the Debtors are authorized to pay an ordinary course professional. The Debtors relate that since the Petition Date, they have paid Meckler's fees and expenses pursuant to the provisions of the OCP Order. The Debtors have disclosed these payments periodically in their OCP Reports as required. However, as a result of an increase in activity in matters regarding which Meckler is representing the Debtors, the firm's incurred monthly fees and expenses have approached, and in some cases, exceeded the OCP Fee Limit in recent months. As a result, a portion of Meckler's incurred fees and expenses since September 2004 remain unreimbursed. The Debtors intend to seek Court authority to pay the Unreimbursed OCP Fees and Expenses in connection with Meckler's first Interim Fee Application. Nonetheless, the Debtors have paid Meckler only the amounts authorized by the OCP Order. The Debtors further anticipate that Meckler's monthly fees and expenses likely will continue to exceed the OCP Fee Limit in the coming months. Therefore, for them to be able to pay Meckler the full amount of its services on a timely basis, the Debtors want to move the firm's employment in their Chapter 11 cases from an ordinary course professional to a specifically retained special environmental counsel pursuant to Section 327(e) of the Bankruptcy Code. The Debtors believe that Meckler is well qualified to perform the required services and represent their interests in their Chapter 11 cases. Brett D. Heinrich, Esq., a partner at Meckler and the chair of the firm's environmental practice group, has handled a variety of environmental matters for clients throughout the country in his nearly 20 years of practice. He has extensive experience negotiating with governmental agencies on litigation and compliance issues regarding air, water, hazardous and solid waste. In addition, Mr. Heinrich and the Meckler environmental practice group have wide-ranging experience in federal regulatory and cost-recovery actions initiated by governmental agencies and individuals. The Debtors will pay Meckler according to its standard hourly rates: Brett D. Heinrich, Esq. (Partner) $275 Peter Petrakis, Esq. (Of-Counsel) $325 Matther E. Cohn, Esq. (Associate) $190 Paralegals $95 Meckler will also be reimbursed for out-of-pocket expenses incurred. Mr. Heinrich assures the Court that Meckler has no connection with the Debtors, their creditors, the United States Trustee or any other party with an actual or potential interest in the Debtors' Chapter 11 cases. Meckler does not represent, and has not represented, any entity other than the Debtors in matters related to the Debtors' Chapter 11 cases. Moreover, Mr. Heinrich attests that Meckler does not represent or hold any interest adverse to the Debtors with respect to the matters for which the firm is proposed to be employed. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- throughits 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. 84; Bankruptcy Creditors' Service, Inc., 215/945-7000) W.R. GRACE: Expands Scope of Baker Donelson's Lobbying Services --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorizes W.R. Grace & Co., and its debtor-affiliates to expand the scope of Baker to include services relating to non-debtor subsidiaries that conduct business in China, and increase the monthly fees paid to Baker Donelson from $17,000 to $20,000 in consideration of its existing services, in accordance with the terms of a Letter Agreement, nunc pro tunc to Jan. 1, 2005. As reported in the Troubled Company Reporter on Feb. 3, 2005, the Debtors related that over the past several months, the U.S. Congress has more rigorously pursued asbestos reform, thus Baker Donelson's legislative affairs services has expanded, as the project for which they were employed has become more expansive than originally envisioned. As a result, Baker Donelson needed to increase its staffing. Separate from the Legislative Affairs Services, the Debtors also require additional services from Baker Donelson in connection with their business operations in China. The Debtors intend to aggressively pursue business opportunities in China through non-debtor subsidiaries. In particular, the Debtors plan to seek approval from Chinese governmental authorities to expand the scope of their operations in China to include businesses that have not been licensed to do business there. Baker Donelson has a great deal of experience in assisting companies doing business in that country. Chinese approval regimes and standard-setting processes can be somewhat opaque and time-consuming. Accordingly, the Debtors sought Baker Donelson's assistance with respect to the Chinese governmental authorities at the national, provincial and local levels for a six-month period in 2005. Baker Donelson can effectively represent the Debtors' interests by meeting with Chinese ministries and other governmental authorities that regulate the Debtors' operations in China or that establish standards for the use of the Debtors' products. Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 82 ; Bankruptcy Creditors' Service, Inc., 215/945-7000) WADDINGTON NORTH: Poor Liquidity Prompts S&P to Chop Ratings to CC ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit and senior secured bank loan ratings on Waddington North America Inc. to 'CC' from 'B-'. All ratings remain on CreditWatch with negative implications, where they were placed on Feb. 18, 2005. The CreditWatch placement followed the company's disclosure that it was in violation of the financial covenants in its bank credit agreement. Covington, Kentucky-based WNA had approximately $172 million of total debt outstanding at Feb. 28, 2005. "The downgrade reflects WNA's significantly constrained liquidity because of ongoing operating challenges. The breach of financial covenants is important because it restricts WNA's access to its revolving credit facility and prohibited the company from making the recent interest payment due on its $45 million senior subordinated notes," said Standard & Poor's credit analyst Franco DiMartino. The company will have a grace period to cure the missed interest payment situation before it becomes an event of default under the indenture. However, WNA's ultimate ability to make the payment is subject to ongoing negotiations with its senior lenders regarding amendments to the covenants in its bank credit facility. The company, which continues to suffer from higher raw-material costs, particularly polypropylene and polystyrene, and lower-than- budgeted thermoformed product volumes, was in violation of these covenants as of Dec. 31, 2004. WNA has yet to secure a waiver or a permanent amendment to the financial covenants in its bank credit agreement and the company could be forced to restructure its scheduled near-term term loan amortization requirements due to the lack of meaningful free cash flow generation. If the bank facility is successfully amended and WNA is able to cure the pending interest payment default within the grace period, ratings could be affirmed pending further information on a plan to restore satisfactory operating results. A restructuring of the scheduled amortization payments, or failure to make the subordinated notes payment within the grace period, would constitute a default and the ratings would be lowered to 'D'. Standard & Poor's will monitor the progress of the company's negotiations with its senior bank lenders to resolve the CreditWatch listing. WESTPOINT STEVENS: Has Until Aug. 31 to Solicit Plan Acceptances ---------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York gave WestPoint Stevens, Inc. and its debtor-affiliates permission to extend their Exclusive Solicitation Period through August 31, 2005, which will give them sufficient time to market the company, complete the auction and sale process, amend their Plan and solicit plan acceptances. As reported in the Troubled Company Reporter on Jan. 24, 2005, the Debtors filed its proposed Plan of Reorganization and related Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York. Bloomberg News reports that WestPoint Stevens: -- expects to have an enterprise value between $615 million and $670 million; -- proposes to pay secured creditors, including its banks, between 90 cents and 100 cents on the dollar; and -- proposes to pay unsecured creditors 0.2 cent on the dollar. Shareholders get nothing. The Disclosure Statement and the Plan of Reorganization can be accessed on the Company's website at http://www.westpointstevens.com/ Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) WINN-DIXIE: Creditors Committee Wants Cases to Stay in New York --------------------------------------------------------------- As previously reported in the Troubled Company Reporter on April 1, 2005, Winn-Dixie Stores, Inc., and its debtor-affiliates asked the U.S. Bankruptcy Court for the Southern District of New York to transfer its Chapter 11 case to the Jacksonville Division of the Middle District of Florida. Committee Objects The Official Committee of Unsecured Creditors believes that the venue of the Debtors' Chapter 11 cases should remain in New York and should not be transferred. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, points out that: (a) most creditors prefer New York over Florida; (b) New York is more convenient for most parties; (c) the Court has had substantial involvement and made significant rulings in the Debtors' Chapter 11 cases to date; and (d) the cost of administering the cases may be significantly lower if the cases remain in New York. Mr. Dunne tells Judge Drain that since the Debtors' consent to the venue transfer, the Committee has been approached by many creditors urging it to oppose the Debtors' request to transfer venue. As of April 7, 2005, the parties who have opposed the venue transfer include: (1) Wilmington Trust Company, as indenture trustee, (2) 14 Trade Vendor entities, (3) Six Landlords, and (4) Jamarco Realty, LLC. Mr. Dunne notes that while the Debtors purport to consent to the venue transfer, they contend that the cases were properly filed in New York and that New York is more convenient for creditors. These beliefs existed when the Debtors' Chapter 11 cases were filed and still exist. The Debtors' sole basis for acquiescing to Buffalo Rock Company's request to transfer was the existence of the venue dispute itself. "This is a clear case of the tail wagging the dog: the venue dispute will be resolved by the Court shortly, probably after a single hearing," Mr. Dunne says. "It is simply incorrect to argue -- as the Debtors do -- that this one issue will so dominate the attention of the parties and the Court for such a length of time that it will interfere with the Debtors' attempt to reorganize." As the Debtors correctly note in their Response, only one -- now a few -- of the thousands of creditors in their Chapter 11 cases have supported Buffalo Rock, the DIP Lender has not joined in the Motion, and neither has anyone else. Creditors who support Buffalo Rock's motion, as of April 7, 2005, include: (1) Riverdale Farms, Inc., (2) Richard J. Ehster and Bradley T. Keller, (3) Ernst Properties, Inc., and (4) Progress Energy Florida, Inc., Progress Energy Carolinas, Inc., Orlando Utilities Commission and Tampa Electric Company. Mr. Dunne also notes that, Peter Lynch, President and CEO of Winn-Dixie Stores, is correct when he states that Winn-Dixie's decision to file in New York was with the understanding that creditors preferred that location because of its convenience. Winn-Dixie's research showed that most of its major creditors either have offices or legal representations in New York. It may appear that the Debtors' consent changes the way the Court should evaluate Buffalo Rock's Venue Transfer Motion, Mr. Dunne notes. "It does not." Mr. Dunne asserts that the burden is on Buffalo Rock and the parties who joined in its motion to establish that the Debtors' Chapter 11 cases should be transferred and there is a strong presumption that the Debtors' choice of venue should be upheld. New York is a convenient forum for the Debtors' bankruptcy cases, Mr. Dunne maintains. Despite Buffalo Rock's argument that nearly all witnesses are located in Florida, Mr. Dunne says, it has not identified any witnesses in Florida that will be necessary for the administration of the Debtors' cases. Furthermore, Mr. Dunne continues, Florida is not the geographic focus of the Debtors' creditors: * Only two out of the 20 largest creditors are located in Florida; * The Debtors' three largest secured creditors as of the Petition Date were located in Charlotte, North Carolina, Nashville, Tennessee, and Minneapolis, Minnesota; and * The Debtors' other creditors are located throughout the United States and, of their 50 largest unsecured creditors, only five are located in Florida. Buffalo Rock also fails to consider its relatively limited role in the Debtors' Chapter 11 cases as opposed to the role of the Committee, Mr. Dunne adds. The Committee is charged with statutory and fiduciary responsibility for the collective body of unsecured creditors. "It is clear that New York will be the center of the Committee's efforts to fulfill its mandate," Mr. Dunne says. The members of the Committee operate from: Committee Member Location ---------------- -------- Capital Research & Los Angeles, California Management Company Deutsche Bank Trust New York, New York Company Americas Kraft Foods Global, Inc. Northfield, Illinois New Plan Excel New York, New York Realty Trust, Inc. OCM Opportunities Los Angeles, California Fund V. L.P. (retained New York counsel) Pepsico Plano, Texas R2 Investments, LDC Forth Worth, Texas c/o Amalgamated Gadget, LP Furthermore, Buffalo Rock's argument that the majority of the Debtors' assets are located in Florida is of little weight, Mr. Dunne asserts. "The assets are not located around Jacksonville, but throughout the Southeast and elsewhere." In addition, Mr. Dunne tells the Court, the Debtors' objective is to achieve a reorganization and not a liquidation. Thus, Mr. Dunne contends, the location of the Debtors' assets is not of great significance in deciding where proper venue lies. Moreover, Mr. Dunne continues, given the reorganization effort that lies ahead, the case must remain in New York where the Debtors and the Committee will easily be able to meet and consult with their professionals. 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 $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Fitch Publishes Credit Analysis on MCI After Verizon's Purchase ----------------------------------------------------------------- Fitch Ratings has published a credit analysis on MCI Inc., available on the Fitch Ratings web site at http://www.fitchratings.com/ Fitch has a 'B' rating on MCI and placed the company on Rating Watch Positive on Feb. 14, 2005, after the announcement that Verizon Communications would acquire the company. At this time, it has not been disclosed whether Verizon will guarantee or legally assume MCI's outstanding debt, and, without a guarantee, it is likely that MCI would be upgraded two notches below Verizon's rating. Fitch currently rates Verizon at 'A+' with a Rating Watch Negative. The report provides an analysis of MCI's current financials and debt structures, as well as a review of key developments (i.e. Qwest's unsolicited bid) since the Feb. 14 announcement. The report is available at http://www.fitchratings.com/under 'Corporate Finance' then 'Corporates' then 'Special Reports.' * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Airgate PCS Inc. PCSA (94) 299 86 Akamai Tech. AKAM (126) 183 62 Alaska Comm. Syst. ALSK (12) 650 84 Alliance Imaging AIQ (41) 654 36 Amazon.com AMZN (227) 3,248 919 American Repro ARP (35) 377 22 AMR Corp. AMR (581) 28,773 (2,047) Amylin Pharm. Inc. AMLN (87) 358 282 Arbinet-Thexchan. ARBX (1) 70 11 Atherogenics Inc. AGIX (19) 93 77 Blount International BLT (282) 423 103 CableVision System CVC (1,944) 11,393 248 CCC Information CCCG (131) 80 (8) Cell Therapeutic CTIC (52) 174 87 Centennial Comm CYCL (516) 1,608 168 Choice Hotels CHH (203) 262 (32) Cincinnati Bell CBB (600) 1,987 (20) Clorox Co. CLX (457) 3,710 (422) Compass Minerals CMP (109) 642 99 Conjuchem Inc. CJC (35) 19 13 Cotherix Inc. CTRX (44) 25 20 Cubist Pharmacy CBST (75) 155 (6) Delta Air Lines DAL (5,519) 21,801 (2,335) Deluxe Corp DLX (178) 1,499 (331) Denny's Corporation DNYY (246) 730 (80) Dollar Financial DLLR (47) 335 82 Domino's Pizza DPZ (575) 421 (16) Eagle Hospitality EHP (26) 177 N.A. Echostar Comm-A DISH (2,078) 6,029 (41) Empire Resorts NYNY (15) 61 0 Fairpoint Comm. FRP (162) 831 (36) Foster Wheeler FWHLF (441) 2,268 (212) Foxhollow Tech. FOXH (60) 28 16 Graftech International GTI (44) 1,036 284 Hawaiian Holding HA (160) 236 (60) I2 Technologies ITWH (173) 391 101 IMAX Corp IMAX (42) 231 17 Idevus Pharmace IDEV (83) 149 108 Int'l Wire Group ITWG (80) 410 97 Investools Inc. IED (7) 50 (19) Isis Pharm. ISIS (72) 208 82 Life Sciences LSRI (2) 200 2 Lodgenet Entertainment LNET (68) 301 20 Majesco Holdings MJES (41) 26 8 Maxxam Inc. MXM (649) 1,017 72 Maytag Corp. MYG (75) 3,020 535 McDermott Int'l MDR (261) 1,387 (58) McMoran Exploration MMR (85) 156 29 Neff Corp. NFFCA (42) 270 6 New York & Co. NWY (14) 280 43 Northwest Airline NWAC (2,824) 14,042 (919) Northwestern Corp. NWEC (603) 2,445 (692) ON Semiconductor ONNN (381) 1,110 215 Per-se Tech. Inc. PSTI (25) 169 31 Phosphate Res. PLP (484) 280 6 Pinnacle Airline PNCL (8) 166 31 Primedia Inc. PRM (1,145) 1,171 (152) Protection One PONN (177) 461 (372) Quality Distribution QLTY (26) 377 9 Qwest Communication Q (2,612) 24,324 (68) Revlon Inc-A REV (1,020) 1,000 120 Riviera Holdings RIV (29) 218 1 SBA Comm. Corp. SBAC (27) 915 11 Sepracor Inc. SEPR (331) 1,039 636 St. John Knits Inc. SJKI (52) 213 80 Syntroleum Corp. SYNM (8) 48 11 US Unwired Inc. UNWR (263) 640 (335) U-Store-It Trust YSI (34) 536 N.A. Vector Group Ltd. VGR (48) 528 110 Vertrue Inc. VTRU (32) 486 31 Worldgate Comm WGAT (3) 14 (4) WR Grace & Co. GRA (118) 3,086 774 Young Broadcasting YBTVA (12) 798 85 ********* 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 ***