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/raid1/www/Hosts/bankrupt/TCR_Public/050418.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, April 18, 2005, Vol. 9, No. 90 Headlines ACCLAIM ENTERTAINMENT: Ch. 7 Trustee Selling Assets for $200,000 AHF/AMBLER: Case Summary & 20 Largest Unsecured Creditors AMERICAN WHOLESALE: S&P Junks $40 Million Second Lien Term Loan AMERICREDIT AUTOMOBILE: S&P Rates $51.7M Class E Notes at BB AMERIGAS PARTNERS: 96% of Noteholders Agree to Amend Indenture AMERISOURCEBERGEN: Moody's Upgrades Sr. Unsec. Notes Rating to Ba2 ATA AIRLINES: Aircraft Sale Prompts S&P to Withdraw Junk Ratings ATC HEALTHCARE: Selling Subsidiary to Restructure Balance Sheet AUTONATION INC: Moody's Holds Low-B Ratings on $950 Million Debts AVADO BRANDS: To Receive $251,000 from Florida Lease Assignment AVAYA INC: Will Report 2005 Second Quarter Results Tomorrow AVOTUS CORP: Bares Going Private Deal with Jefferson Partners BROWN SHOE: S&P Rates Proposed $150M Senior Unsecured Notes BB- BROWN SHOE: Moody's Puts B1 Rating on $150M Senior Unsec. Notes CAPITALSOURCE: Fitch Rates $71.875 Floating-Rate Notes at BB CHESAPEAKE ENERGY: Launching $600 Million Private Debt Offering COMMUNITY HOME: Voluntary Chapter 11 Case Summary CONGOLEUM CORP: Moody's Withdraws Ratings Due to Ch. 11 Filing COX TECHNOLOGIES: Will Make Final Distribution to Shareholders DALLAS AEROSPACE: Ch. 7 Trustee Taps Passman & Jones as Counsel DECISIONONE CORP: Wants to Continue with Ordinary Course Experts DOCTORS HOSPITAL: Section 341(a) Meeting Slated for June 7 DOCTORS HOSPITAL: U.S. Trustee Forms 4-Member Creditors' Committee DOLE FOOD: Extends $325 Million Cash Tender Offer Until Today E*TRADE ABS: Fitch Junks Mezzanine Floating- & Fixed-Rate Notes EVERFRESH PRODUCE: Case Summary & 20 Largest Unsecured Creditors FAIRCHILD SEMI: Posts $10.4 Million Net Loss in First Quarter FALCONBRIDGE LTD: Holds 9.2% Equity Stake in Blackstone Ventures FISHER SCIENTIFIC: Launching Cash Tender Offer for 8-1/8% Notes FOSTER WHEELER: S&P Junks $261 Million Senior Secured Notes GOOD SAMARITAN: Large Losses Cue Moody's to Slice Rating to B1 HARRIS COUNTY: S&P Hacks Ratings on $31.4 Million Bonds HARVEST ENERGY: Discloses Second Quarter Distribution HAWAIIAN TELCOM: Moody's Junks $250M Senior Subordinated Notes HOMEBANC MORTGAGE: Moody's Rates $1.232 Mil. Class B-4 Notes Ba2 IMAGIS TECHNOLOGIES: Bolder Investment to Buy Shares for C$1.5M ISTAR FINANCIAL: Selling $500 Million of Senior Unsecured Notes JACQUELINE HATCHER: Case Summary & 16 Largest Unsecured Creditors JAYAMMA KOPPERA: Case Summary & 12 Largest Unsecured Creditors JM HILLS: U.S. Trustee Will Meet Creditors on June 7 KAISER ALUMINUM: Plan Confirmation Hearing Continued to April 27 KANSAS CITY SOUTHERN: 87% of Noteholders Agree to Amend Indenture KERR-MCGEE: Auction Announcement Prompts S&P to Cut Rating to BB+ KERR-MCGEE: Fitch Downgrades & Removes Two Debts from Watch Neg. KERR-MCGEE CORP: Risk Profile Shift Cues Moody's to Pare Ratings KRAMONT REALTY: Shareholders Approve Centro Properties Merger KRISPY KREME: KremeKo Franchisee Files for CCAA Protection LAC D'AMIANTE: Files for Chapter 11 Protection in S.D. Texas LAC D'AMIANTE: Case Summary & 30 Largest Unsecured Creditors LODGE ASSOCIATES: Case Summary & 14 Largest Unsecured Creditors MARKLAND TECH: Subsidiary Wins Omnibus Contract Extension MATLACK SYSTEMS: Court Okays Settlements of Avoidance Actions MATRIA HEALTHCARE: Wins Four New Disease Management Accounts METROMEDIA INT'L: Must File Reports by June 3 to Avoid Default MIRANT CORP: Shareholders Demand Fairness in Bankruptcy Hearing MIRANT CORP: Objects to Former Parent's Multi-Million Claims MIRANT CORP: Some Shareholders Slam Amended Disclosure Statement NABI BIOPHARMACEUTICALS: S&P Rates $100 Million Senior Notes at B NAVISTAR INT'L: Earns $20 Million of Net Income in First Quarter NEWPAGE CORP.: S&P Assigns Low Ratings on Various Transactions NEW WORLD: Moody's Puts B3 Rating on New $140M Secured Loan NEW WORLD: S&P Junks $185 Million First & Second Lien Loans NICHOLS & NICHOLS: Case Summary & 20 Largest Unsecured Creditors NORANDA INC: Declares Common Stock Dividend at $0.12 Per Share NORTEL NETWORKS: Filing Financial Statements by End of Month NORTEL NETWORKS: Look for 2004 Annual Reports by Month End NUMATICS INC.: S&P Withdraws Ratings At Company's Request OFFICEMAX INC: Appoints Sam K. Duncan as President & CEO PASADENA GATEWAY: U.S. Trustee Will Meet Creditors on May 12 PEGASUS SATELLITE: Judge Haines Confirms Amended Chapter 11 Plan PENN NATIONAL: Buying Site for Temporary Gaming Facility in Maine PINNACLE ENTERTAINMENT: Moody's Revises Rating Outlook to Stable PLASTECH ENGINEERED: Poor Performance Prompts S&P to Cut Rating PNC MORTGAGE: Fitch Holds Junk Ratings on Two Class D-B-5 Debts REDDY ICE: Noteholders Agree to Amend 8-7/8% Senior Indenture RIGGS NATIONAL: Moody's Reviews Low-B Ratings & May Upgrade SALOMON HOME: S&P Hacks Rating on Class MF-3 Certificates to D SAMSONITE CORP: Earns $6.9 Million of Net Income in Fourth Quarter SHAW COMMS: Earns $32.1 Million of Net Income in Second Quarter SHAW COMMUNICATIONS: Increases Quarterly Dividend Rate by 40% SHAW GROUP: Raising $250.6 Million to Retire 10-3/4% Senior Notes SHOPKO STORES: Moody's Reviews Low-B Debt Ratings & May Downgrade SINCLAIR BROADCAST: S&P Rates Proposed $555M Credit Facility BB SONIC AUTOMOTIVE: Moody's Lifts Senior Sec. Credit Rating to Ba2 SPANSION INC: Fitch Says IPO Won't Impact Ratings Anytime Soon THYSSENKRUPP BUDD: Tells Shareholders to Sell Shares to Budcan TROPICAL SPORTSWEAR: Bankr. Court Approves Disclosure Statement TRUSTREET PROPERTIES: Fitch Puts Low-B Ratings on Senior Debts UNISYS CORP: Posts $45.5 Million Net Loss in First Quarter VARTEC TELECOM: Wants to Hire Luffey Huffman as Accountants VAST EXPLORATION: Completes 2nd Tranche of $3M Equity Placement VERITEC INC: Licenses Multi-Dimensional Bar Code Tech. to Nokia WASHINGTON MUTUAL: Fitch Upgrades Low-B Ratings on 26 Mort. Certs. WINDHAM COMMUNITY: Moody's Affirms Ba1 Long-Term Bond Rating YUKOS OIL: Igor Chernov Appointed as CEO of Siberian Joint Venture YUKOS OIL: Stipulation with Deutsche Bank Makes Appeal Null & Void YUKOS OIL: Sued by Yuganskneftegas for $2.2 Bil. Unpaid Deliveries ZIFF DAVIS: Moody's Assigns B3 Rating to Planned $205M Rate Notes * FTI Consulting Adds Two New Experts to FTI Palladium Partners * Paul Hastings Expands Global Reach with New Milan Office * BOND PRICING: For the week of April 4 - April 8, 2005 ********* ACCLAIM ENTERTAINMENT: Ch. 7 Trustee Selling Assets for $200,000 ---------------------------------------------------------------- Allan B. Mendelsohn, Esq., the Chapter 7 Trustee of the estate of Acclaim Entertainment, Inc., asks the U.S. Bankruptcy Court for the Eastern District of New York for authority: a) to sell, assume, and assign all of the estate's right, title and interest in the Debtor's Assets, free and clear of all liens, claims and encumbrances of whatever kind or nature; and b) to approve the payment of a $10,000 Expense Reimbursement to John Taddeo in the event his bid price of $200,000 for the Assets is topped by another competitive bidder at a public auction. The Assets for sale are the Debtor's trademarks, tradenames and servicemarks, registrations and pending applications relating to certain comic book characters and titles and any and all files, correspondence, invoices, other business records, freelancer contracts, price lists, customer lists, sales records, sales correspondence, purchase orders, and sales orders, digital files, digital media including CDs and tapes, printing files, films specifically for printing, and any other items relating to the Comic Book Intellectual Property. Mr. Mendelsohn and Mr. Taddeo entered into an Asset Purchase Agreement on March 2, 2005, for the sale of the Assets. Pursuant to that contract, Mr. Mendelsohn agrees to assume and assign all the rights, titles and interests in the Assets to Mr. Taddeo. Headquartered in Glen Cove, New York, Acclaim Entertainment was a worldwide developer, publisher and mass marketer of software for use with interactive entertainment game consoles including those manufactured by Nintendo, Sony Computer Entertainment and Microsoft Corporation as well as personal computer hardware systems. The Company filed a chapter 7 petition on Sept. 1, 2004 (Bankr. E.D.N.Y. Case No. 04-85595). Jeff J. Friedman, Esq., at Katten Muchin Zavis Rosenman represents the Debtor. Allan B. Mendelsohn, Esq., serves as the chapter 7 Trustee. When the Company filed for bankruptcy, it listed $47,338,000 in total assets and $145,321,000 in total debts. AHF/AMBLER: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: AHF/Ambler, Inc. 4248 B. Tuller Road Dublin, Ohio 43017 Bankruptcy Case No.: 05-55942 Chapter 11 Petition Date: April 12, 2005 Court: Southern District of Ohio (Columbus) Judge: Barbara J. Sellers Debtor's Counsel: Michael D. Bornstein, Esq. Bornstein Law Offices 580 South High Street 3rd Floor Columbus, Ohio 43215 Tel: (614) 358-8052 - and - Richard T Ricketts, Esq. Ricketts Co., L.P.A. 580 South High Street Third Floor Columbus, Ohio 43215 Tel: (614) 229-4110 Fax: (614) 229-4111 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Bank of New York Unsecured value: $7,155,000 Corporate Trust Division $7,155,000 101 Barclay Street - 8W New York, NY 10286 Health Care Stat Trade payable $117,790 9537 Bustleton Ave. Philadelphia, PA 19115 Sundance Rehabilitation $65,357 P.O. Box 382014 Pittsburgh, PA 15250 Neighborcare Pharmacy Trade payable $61,193 Redline Medical Supply Trade payable $44,069 Healthcare Services Group Trade payable $17,800 Life Support Ambulance Trade payable $14,128 Borough of Ambler Water Trade payable $8,938 Dept. PHCA Trade payable $8,830 Reinhart Food Services Trade payable $6,350 Corrbert Properties, LLC Trade payable $6,000 Paul Edling Trade payable $5,460 Cent. Ohio Oxygen Trade payable $2,863 HHCE Co., Inc. Genesis Hospitality Trade payable $2,560 Top Tech Services Trade payable $1,342 United Pharmacy Association Trade payable $1,258 Firststaff Nursing Services Trade payable $1,120 Symphony Mobilex Trade payable $1,112 Stanley Marvel Trade payable $1,049 AMERICAN WHOLESALE: S&P Junks $40 Million Second Lien Term Loan --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' counterparty credit rating to American Wholesale Insurance Group Inc. (AmWINS). The outlook is stable. At the same time, Standard & Poor's assigned its 'B' senior secured debt rating to the company's $110 million first lien term loan and assigned its 'CCC+' senior secured subordinated debt rating to AmWINS $40 million second lien term loan. "The ratings reflect the company's good prospective competitive position and diversified revenue base," noted Standard & Poor's credit analyst Donovan Fraser. "Offsetting these strengths is the limited track record since beginning operations in 2002 coupled with significant prospective execution and integration risks." "The company will utilize the proceeds to acquire Stewart Smith Group, refinance its existing credit facility, and provide additional working capital for the business," Mr. Fraser added. Prospective operating performance, leverage, and coverage metrics are at the bottom end of the scale when compared with Standard & Poor's interactively rated group of insurance brokers; however, Standard & Poor's believes that the company will continue to remain cash flow positive and be able to meet its restrictive covenants in the near to intermediate term. Standard & Poor's expects EBITDA interest coverage in excess of 2x (incorporating the imputed interest on noncancelable operating leases) and total debt to EBITDA of less than 4x in 2005. Standard & Poor's estimates that the company will need to achieve EBITDA margins significantly in excess of its three-year average of 16.3% and the 2004 level of 18.5% to meet its restrictive debt covenants given the increased leverage and decreased coverage metrics. Partially offsetting Standard & Poor's concerns is the current EBITDA margin run-rate of about 22% (excluding start-up costs). In addition, Stewart Smith Group is expected to add to EBITDA margins and not detract from them in 2005. Standard & Poor's believes that the company will continue to remain cash flow positive and meet its restrictive covenants in the near to intermediate term. AMERICREDIT AUTOMOBILE: S&P Rates $51.7M Class E Notes at BB ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its ratings to AmeriCredit Automobile Receivables Trust 2005-1's $750 million automobile receivables-backed notes series 2005-1. The ratings on AmeriCredit Automobile Receivables Trust 2005-1's $750 million automobile receivables-backed notes series 2005-1 reflect: (1) subordination of * 31.25% for the class A notes, * 23.25% for the class B notes, * 13.25% for the class C notes, and * 6.50% for the class D notes; (2) a non-amortizing, fully funded reserve account equal to 2.00% of initial receivables; (3) initial overcollateralization of 5.75% of initial receivables; and (4) a turbo allocation feature by which excess spread will be used to pay down the securities to increase the level of overcollateralization to a target sufficient to help absorb any losses experienced by the collateral pool. Although the class E notes are subordinated to all other classes of notes in this transaction, once the reserve account is fully funded and the overcollateralization target has been reached, the remaining excess cash flow will be used to turbo the class E notes until they are paid off. Ratings Assigned AmeriCredit Automobile Receivables Trust 2005-1 Class Rating Amount ----- ------ ------ A-1 A-1+ $138,000,000 A-2 AAA $256,000,000 A-3 AAA $107,330,000 B AA $63,660,000 C A $79,570,000 D BBB $53,710,000 E BB $51,730,000 AMERIGAS PARTNERS: 96% of Noteholders Agree to Amend Indenture -------------------------------------------------------------- AmeriGas Partners, L.P. (NYSE:APU) said that, as of April 13, 2005, holders of 96% of its outstanding 8.875% Series B Senior Notes due 2011 tendered Notes and delivered consents in connection with the Partnership's tender offer and consent solicitation commenced on April 4, 2005. Accordingly, AmeriGas Partners, AP Eagle Finance Corp. -- the co- issuer of the Notes -- and the trustee under the Indenture relating to the Notes have executed and delivered a supplemental indenture containing the amendments described in AmeriGas Partners' Offer to Purchase and Consent Solicitation dated April 4, 2005. The amendments will not become operative unless the Notes are accepted for purchase in accordance with the terms of the tender offer. If the amendments become operative, holders of all untendered Notes will be bound thereby. AmeriGas Partners will not be required to purchase any of the Notes tendered or pay any consent payments unless certain conditions have been satisfied, including the receipt of the net proceeds of a private placement of debt securities in an amount sufficient to pay the aggregate consideration payable pursuant to the offer. As previously announced, the tender offer is scheduled to expire at 5:00 P.M. New York City time, on May 2, 2005, unless extended by the Partnership. As of the expiration of the consent period at 5:00 P.M., April 13, 2005, tendered Notes may no longer be withdrawn. The Company further announced that the price to be paid for each $1,000 principal amount of Notes tendered and accepted for payment would be $1,061.22, plus accrued and unpaid interest to the payment date. In addition, holders who delivered consents on or before April 13, 2005 will receive a consent fee of $30 per $1,000 principal amount of Notes, for a total consideration (exclusive of accrued and unpaid interest) of $1,091.22 per $1,000 principal amount. May 3 Private Placement AmeriGas Partners and AmeriGas Finance Corp. -- as co-issuer -- agreed to issue $415 million of 7.25% Senior Notes due 2015 in a private placement on May 3, 2005. The net proceeds of the new issue will be used to fund the purchase of 8.875% Series B Senior Notes pursuant to the tender offer. This announcement is not an offer to purchase, a solicitation of an offer to sell or a solicitation of consent with respect to any Notes. The full terms of the tender offer and the consent solicitation are set forth in the Partnership's Offer to Purchase and Consent Solicitation Statement, dated April 4, 2005, and in the related Consent and Letter of Transmittal. Credit Suisse First Boston LLC is the Dealer Manager and Solicitation Agent for the tender offer and consent solicitation. Questions regarding the tender offer and consent solicitation should be directed to CSFB at 800-820-1653 (Toll Free) or 212-538- 0652. Requests for documents should be directed to D.F. King & Co., Inc., the Information Agent for the tender offer and consent solicitation, at 48 Wall Street, New York, NY 10006, 800-848-2998 (Toll Free) or 212-269-5550. About AmeriGas Partners, L.P. Through its subsidiaries, AmeriGas Partners, L.P. (NYSE:APU) is the largest retail propane distributor in the United States. The Partnership serves residential, commercial, industrial, agricultural and motor fuel customers from over 650 retail locations in 46 states. * * * As reported in the Troubled Company Reporter on Apr. 14, 2005, Moody's Investors Service assigned a B2 rating to AmeriGas Partners, L.P.'s proposed $400 million senior unsecured notes due 2015. Moody's also affirmed AmeriGas's Ba3 senior implied rating and the B2 ratings on its existing senior unsecured notes. Moody's said the outlook remains stable. AMERISOURCEBERGEN: Moody's Upgrades Sr. Unsec. Notes Rating to Ba2 ------------------------------------------------------------------ Moody's Investors Service confirmed AmerisourceBergen Corporation's Ba2 senior implied rating and upgraded the company's senior unsecured notes to Ba2 from Ba3. Moody's withdrew the B1 rating on January 3, 2005, Amerisource Health Corporation's 5% convertible subordinated notes, following the conversion of substantially all of these notes to equity. Moody's also upgraded ABC's speculative grade liquidity rating to SGL-1 from SGL-2. The rating outlook is stable. This concludes Moody's rating review for possible upgrade that was initiated on December 10, 2004. The confirmation of ABC's Ba2 senior implied rating is supported by: (1) ABC's unanticipated and reduced earnings and cash flow guidance (excluding one time liquidation benefits) for fiscal year 2005; (2) the likelihood that excess cash generated from recent inventory liquidation will be used for shareholder initiatives; and (3) uncertainty associated with changes in PharMerica reimbursement. The senior unsecured notes are being upgraded to Ba2 from Ba3 because of the elimination of secured bank debt. As a result, all senior creditors are pari-passu with no preferential standing in the capital structure. Since mid-December 2004, ABC has lowered guidance two times, due to lack of drug price increases and ongoing reductions in buy opportunities. Despite the fact that ABC had liquidated about $485 million of excess inventory during fiscal 2004, it appears that stricter enforcement of lower inventory levels as outlined under inventory management agreements has resulted in even fewer buy opportunities and lower profitability. Further liquidation of inventory in 2005 should result in another $600-$700 million in one-time cash flow benefits. However, after excluding this one-time benefit, based on new guidance provided in late March 2005, expected operating and free cash flow will decline by about 30% and 50%, respectively, relative to the December 2004 guidance that was used by Moody's when it placed ABC's ratings under review for possible upgrade. Although debt levels have been reduced, this decline in cash flow raises the likelihood that normalized operating and free cash flow to debt metrics will fall within ranges that Moody's believes continue to support a Ba2 rating. The Ba2 ratings also reflect ABC's high reliance (85% of net earnings) on drug distribution -- a sector that continues to undergo transition due largely to a changing business model. Fee for service contract negotiations appear to be occurring, but the lack of clear incentives on the part of manufacturers to move to fee for service arrangements appear to be prolonging the transition period. In addition, lack of transparency in negotiated contracts make an assessment of the impact difficult. In the meantime, Moody's believe that players in this sector have limited control over key factors affecting their margins in drug distribution. Further, Moody's believe that the ratings reflect a relatively aggressive posture toward shareholder initiatives. The company recently indicated its intention to accelerate share buybacks under its existing program, which will bring share total buybacks, thus far in fiscal 2005, to the $700 million range. We expect ABC to continue using excess cash generated during the second quarter of fiscal 2005 for either share buybacks (subject to certain indenture restrictions) or acquisitions. Recent regulations governing the Medicare Modernization Act of 2003 result in uncertainty for PharMerica, ABC's institutional pharmacy division, comprising about 15% of the company's net earnings. The new regulations appear to recognize the value added by institutional pharmacies, and we believe that eliminating the need to negotiate with individual state Medicaid programs could be beneficial to this sector. However, the new regulations introduce the addition of risk-taking Prescription Drug Plans, which are likely to be health benefits companies. Under current legislation, we expect that rebates, which are currently negotiated between manufacturers and institutional pharmacies, will be moved to the PDP level. One uncertainty relates to how much leverage and therefore, how much rebate will be retained by the institutional pharmacies. The stable outlook assumes that despite declining margins and net income, ABC should have enough flexibility in its cash position to continue buying back shares as well as to make a moderate-sized acquisition without significantly leveraging its balance sheet. Fewer buy opportunities should result not only in one-time liquidation benefits, but also less volatile working capital swings. In addition, because of indenture restrictions, ABC will not be able to use all of its excess cash for buybacks immediately. A key factor limiting upside potential is the likelihood that ABC, along with the rest of the drug distribution sector, will be in a transition period for a minimum of another 12-18 months. Prior to a ratings upgrade, ABC must demonstrate its ability to reverse profitability trends as the company weathers transitions in both its drug distribution and institutional pharmacy businesses. If profits and cash flow return to stronger levels and shareholder initiatives are not likely to result in significant increases in debt, such that operating cash flow and free cash flow to adjusted debt metrics are sustainable in the 20% and 15% range, respectively, the ratings or outlook may be raised. Given uncertainties facing this sector, should ABC experience further declines in cash flow or raise debt levels, such that operating and free cash flow to adjusted debt metrics were to fall below the 15% and 10% range, respectively, the ratings or outlook could be lowered. The upgrade of ABC's speculative grade liquidity rating to SGL-1 from SGL-2 recognizes that during the next year, the company will not likely need external sources of liquidity due to the significant one-time boost in operating cash flow. Since the SGL- 1 rating takes only a 12-month view of liquidity, we believe the additional flexibility provided by liquidation of inventory outweighs recent declines in net income and normalized free cash flow, providing excellent liquidity over the near term. Ratings upgraded: AmerisourceBergen Corporation: * Ba2 from Ba3 senior unsecured notes; * Ba2 from Ba3 issuer rating; and * speculative grade liquidity rating to SGL-1 from SGL-2. Rating confirmed: AmerisourceBergen Corporation: * Ba2 senior implied rating Rating withdrawn (January 3, 2005): Amerisource Health Corporation: * B1 5% convertible subordinated notes, due 2007 AmerisourceBergen Corporation, headquartered in Valley Forge, Pennsylvania, is one of the nation's leading wholesale distributors of pharmaceutical products and related services. ATA AIRLINES: Aircraft Sale Prompts S&P to Withdraw Junk Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'D' corporate credit ratings on ATA Holdings Corp. and subsidiary ATA Airlines Inc., and its 'AAA' rating on ATA Airlines' series 2000-1G pass- through trust certificates and its 'CC' rating on ATA Airlines' series 2000-1C pass-through trust certificates. "The withdrawal of ratings on the pass-through trust certificates is based on the sale of the aircraft that back the certificates and the subsequent full repayment of the 2000-1G certificates, which were insured," said Standard & Poor's credit analyst Betsy Snyder. "Based upon current market values of the seven Boeing 757's that back the certificates, as well as costs associated with their repossession and sale, it would appear that there was no recovery on the outstanding principal of the 2000-1C certificates." ATA Holdings and ATA Airlines have been operating under Chapter 11 bankruptcy protection since Oct. 26, 2004. 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. ATC HEALTHCARE: Selling Subsidiary to Restructure Balance Sheet --------------------------------------------------------------- ATC Healthcare, Inc., (AMEX:AHN) a leader in medical staffing, entered into an Asset Purchase Agreement under which it will sell substantially all of the assets of its All Care Nursing Services subsidiary to Onward Healthcare, Inc. The closing of the sale, which is expected to occur on or about April 22, 2005, is subject to certain conditions, including the obtaining of required consents. ATC acquired the assets of All Care Nursing Services in January 2002. ATC will use the net proceeds from the sale to pay down approximately $12 million of its senior debt and to repay and restructure the $29 million of debt issued by ATC in connection with its acquisition of the assets of All Care, reducing that debt by approximately $20 million. "I'm pleased that ATC will be able to use the proceeds of this sale to restructure its balance sheet and reduce interest costs," said David Savitsky, CEO. "This is an important element in the company's overall strategy to move closer to profitability." All Care Nursing Services is a leading provider of per diem staffing to hospitals and healthcare facilities primarily located in Connecticut, the greater New York City area and northern New Jersey. About Onward Healthcare, Inc. Onward Healthcare -- http://www.onwardhealthcare.com/-- is a nationwide provider of per diem, travel, international, and permanent placement services for nursing and allied healthcare professionals to over 1,500 hospitals and healthcare facilities. Onward is "Reinventing Healthcare Staffing" by providing healthcare providers with customized, technology-driven human capital solutions to efficiently manage the costs of contingent labor. Onward is headquartered in Norwalk, CT, with offices in Burlington, MA, Cherry Hill, NJ, Crofton, MD, Livingston, NJ, New Castle, DE, New York, NY, Providence, RI, and Wexford, PA. About ATC Healthcare, Inc. ATC Healthcare, Inc. -- http://www.atchealthcare.com/-- is a national leader in medical staffing personnel to hospitals, nursing homes, clinics, and other health care facilities with 54 locations and conducts business in 33 states. ATC provides supplemental staffing, outsourcing and human resources solutions to hospitals, nursing homes, medical and research facilities and industry. Drawing from a pool of over 15,000 healthcare professionals spanning more than 50 specialties, the Company supplies both clinical and non-clinical personnel for short-term, long-term, and "traveling" contract assignments. * * * Liquidity and Capital Resources In its Form 10-Q for the quarterly period ended Nov. 30, 2004, filed with the Securities and Exchange Commission, the Company said it received a waiver in perpetuity from HFG Healthco-4LLC for non-compliance of certain Facility covenants as of August 31, 2004. "Working capital was $(5.9) million as of November 30, 2004 as compared to and $19.7 million on February 29, 2004," the Company said in its regulatory filing. "The decline in working capital is primarily due to Classification of the Company's credit facility as a current liability. Excluding the credit facility, working capital would have been $15.8 million as of November 30, 2004. Excluding the credit facility the decline in working capital is primarily related to a decrease in sales and the corresponding decline in accounts receivable." Management believes that the Company's capital resources are sufficient to meet its working capital requirements for the next twelve months. The Company's existing cash and cash equivalents are not sufficient to sustain its operations for any length of time. "The Company's revolving loan facility comes due in November 2005 and as such has been classified as a current liability as of November 30, 2005," the Company said. "The Company plans on refinancing this loan facility prior to its expiration." For the three months ended Nov. 30, 2004, ATC Healthcare posted a $1,297,000 net loss, compared to a $5,047,000 net loss for the same period in 2003. AUTONATION INC: Moody's Holds Low-B Ratings on $950 Million Debts ----------------------------------------------------------------- Moody's Investors Service affirmed the debt ratings of AutoNation, Inc. and maintained the positive ratings outlook. The affirmation reflects AutoNation's: * consistent strong operating performance amidst continuing challenges arising from the difficulties of the domestic car manufacturers which have been losing market share and posting deteriorating financial results; * AutoNation's diverse business model; * flexible cost structure; * consistent cash flow generation; and * the resolution of pending contingencies. The key rating drivers for AutoNation include: 1) Managing growth and size. Moderating its acquisition strategy to selectively target luxury/import franchises in an effort to diversify its brands together with a strong franchise network of over 350 franchises is a positive ratings driver. 2) Brand and Geographic diversity. Despite a demonstrated ability to withstand the eroding domestic OEM market share over the last few years, AutoNation's significant, albeit decreasing, concentration with the domestic OEMs, which collectively accounted for over 50% of 2004 new vehicle sales and slightly less than 50% of 2004 operating profit is a credit concern. On the other hand, AutoNation's geographic diversity in 17 states with a significant concentration in the key sunbelt states of Florida, California and Texas is a credit positive. 3) Cost structure and operating profitability. AutoNation's variable cost structure with industry leading cost efficiency ratio's (SG&A/gross profit) in the low 70% range and strong operating margins (EBIT/gross profit) in the mid 20% range are strong credit positives. 4) Cash flows, financial policy, and flexibility. The consistent generation of strong operating cash flow with over $550 million of retained cash flow and 30% retained cash flow/adjusted debt, coupled with modest adjusted leverage at 2.3x (adjusted debt/adjusted EBITDAR), is a credit strength. Debt is adjusted to treat 25% of the floor plan payable as debt and to capitalize operating leases. The resolution of its contingent tax liabilities and other contingencies stemming from its disposed car rental business and former auto loan business is also positive as is AutoNation's liquidity with significant availability under its revolving credit facilities and mortgage facilities. 5) Internal controls and corporate governance. Improved corporate governance and a focus on a more centralized operating structure combined with strengthened financial controls are credit positives. In addition, AutoNation's ratings reflect the competitive, highly fragmented and commodity nature of the auto retailing business as well as the fact that AutoNation has achieved its market dominance through a roll-up strategy of acquiring various franchises. The Ba2 ratings of the secured bank facilities and senior unsecured notes reflect their effective subordination to floor plan obligations, which are secured by new vehicle inventory and related accounts receivable, and existing and committed mortgage facilities, but also recognize the benefit of guarantees from operating companies and good asset coverage. The continuing positive outlook reflects Moody's view that AutoNation's diverse business model and targeted acquisition strategy should enable it to withstand the domestic OEM difficulties and further reduce its domestic OEM concentration and maintain strong earnings and cash flows. Nonetheless, Moody's believes that the continuing operating difficulties of the domestic OEMs will test AutoNation's business model and financial flexibility over the next 12 to 18 months. During this time, Moody's will assess AutoNation's ability to withstand the uncertainties over the performance of the domestic OEMs and will monitor the potential pressure this may have on its highly profitable finance & insurance business and parts & service business, which are partially driven by new vehicle sales. During this period, if AutoNation is able to sustain the level of operational improvements seen over the last few years and continue to maintain its industry leading margins in the mid 20% range, keep adjusted leverage around 2.0x to 2.5x and maintain a retained cash flow/adjusted debt ratio in excess of 30%, its ratings could be upgraded. Moody's would also expect AutoNation to continue with a measured and moderate program of acquisitions and share repurchases that will be financed by internal cash flow. Conversely, if AutoNation's is not able to demonstrate resilience through the domestic OEM uncertainties, if its highly profitable F&I and P&S business exhibit unexpected signs of weakness or if AutoNation significantly alters its financial policies, with significant degradation in operating margins and operating cash flow, AutoNation's rating outlook could stabilize or its ratings could be downgraded. The ratings outlook could stabilize if operating margins fall to the low 20% range, retained cash flow falls below $500 million or if retained cash flow/adjusted debt falls to the mid 20% range. These ratings are affected by this action: * $200 million senior secured credit facility due 2005, affirmed at Ba2; * $300 million senior secured credit facility due 2006, affirmed at Ba2; * $450 million senior unsecured notes due 2008, affirmed at Ba2; * Senior implied rating, affirmed at Ba1; and * Senior unsecured issuer rating, affirmed at Ba3. Moody's does not rate the company's $3.9 billion floor plan facilities or the company's $400 million mortgage facilities. AutoNation, headquartered in Fort Lauderdale, Florida, is the largest automotive retailer in the U.S. It has over 350 new vehicle dealerships, located predominantly in the Florida, Texas and California, covering major metropolitan markets in 17 states. In 2004, AutoNation had revenues of $19.4 billion. AVADO BRANDS: To Receive $251,000 from Florida Lease Assignment --------------------------------------------------------------- Avado Brands, Inc., sought and obtained permission from the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, to assume and assign the Hops Northeast Florida Joint Venture No. 1 lease to Creek Systems Franchising, LLC, for $251,000. Cono D'Alto, owner of the non-residential real property located in Jacksonville, Florida, will be paid $9,375 to cure Avado's default on the lease. The assignment agreement allows for the transfer of The Hops' rights and interests in the lease including certain personal property within the premises. Headquartered in Madison, Georgia, Avado Brands, Inc., owns and operates two proprietary brands comprised of 102 Don Pablo's Mexican Kitchens and 37 Hops Grillhouse & Breweries. The Company and its debtor-affiliates filed a voluntary chapter 11 petition on February 4, 2004 (Bankr. N.D. Tex. Case No. 04-1555). Deborah D. Williamson, Esq., and Thomas Rice, Esq., at Cox & Smith Incorporated, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $228,032,000 in total assets and $263,497,000 in total debts. AVAYA INC: Will Report 2005 Second Quarter Results Tomorrow ----------------------------------------------------------- Avaya Inc. (NYSE: AV) plans to report fiscal second quarter 2005 results after the market close tomorrow, April 19, 2005. Avaya also will host a conference call to discuss its financial results at 5:00 p.m. EDT on April 19, 2005. A listen-only broadcast of the conference call and presentation notes can be accessed on the company's Web site at: http://www.avaya.com/investors You also may listen to a replay of the conference call beginning at 8:00 p.m. EDT on April 19 through April 26, by dialing 800-642- 1687 within the United States and 706-645-9291 outside the United States. The replay access code is 4869246. Avaya, Inc. -- http://www.avaya.com/-- designs, builds and manages communications networks for more than one million businesses worldwide, including more than 90 percent of the FORTUNE 500(R). Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol telephony systems and communications software applications and services. Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services -- Avaya helps customers leverage existing and new networks to achieve superior business results. * * * As reported in the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services raised its corporate credit rating on Basking Ridge, New Jersey-based Avaya, Inc., to 'BB' from 'B+'. "The rating upgrade reflects an improved business profile, characterized by a better market environment for enterprise telephony products, greater geographic and product coverage, and a leaner cost structure, along with a stronger financial profile, including improved profitability, sharp reductions in funded debt and an improved liquidity position," said Standard & Poor's credit analyst Joshua Davis. The outlook is revised to stable. As reported in the Troubled Company Reporter on Jan. 21, 2005, Moody's Investors Service upgraded the senior implied rating of Avaya, Inc., to Ba3 from B1. Moody's simultaneously withdrew the ratings of the 11-1/8% senior secured notes that have been substantially redeemed. The ratings outlook is positive. Ratings upgraded include: * Senior implied rating to Ba3 from B1 * Issuer rating to B1 from B2 * Shelf registration for senior unsecured debt and preferred stock to (P)B1 and (P)B3 from (P)B2 and (P)Caa1, respectively. Ratings withdrawn include: * Senior secured notes at B1. AVOTUS CORP: Bares Going Private Deal with Jefferson Partners ------------------------------------------------------------- Avotus(R) Corporation (TSX Venture: AVS) intends to seek shareholder approval for a plan to take the Corporation private in response to a proposal from Jefferson Partners, Avotus' largest shareholder controlling approximately 15% of the outstanding common shares and 72% of the outstanding preferred shares. The Company's board of directors, acting on the recommendation of a committee of independent directors of Avotus formed to consider the proposal, has recommended to common shareholders that the proposal be accepted. The Company's management will distribute a proxy circular in connection with the proposed transaction today, April 18, 2005, to all holders of common shares of record on April 14, 2005. Avotus plans to effect the going-private transaction by way of a share consolidation on the basis of one post-consolidation common share for every 1,900,000 pre-consolidation common shares. Following the consolidation, Avotus common shareholders who hold less than one whole post-consolidation common share will receive a cash payment of $0.25 per pre-consolidation common share. This cash payment represents a premium of approximately 79% over the closing price of Avotus common shares on the TSX Venture Exchange on April 11, 2005. Holders of Avotus preferred shares as well as holders of one or more post-consolidation common shares will remain shareholders of Avotus following the consolidation. Following the consolidation, Avotus will apply to have its common shares de-listed from the TSX Venture Exchange and will apply to the securities regulatory authorities in each jurisdiction where it is currently a reporting issuer to cease to be a reporting issuer. The committee of independent directors, comprised of David Morris and Douglas Moore, was established to evaluate whether the proposed going-private transaction is in the best interest of Avotus and fair to those common shareholders of Avotus that will not continue as shareholders following the consolidation. As part of its review and analysis of the proposed transaction, the Independent Committee engaged Ernst & Young Orenda Corporate Finance, Inc., to provide an opinion as to the fairness, from a financial point of view, of the cash consideration offered to the Minority Shareholders and to provide a valuation of the company's common shares. After receiving and reviewing the fairness opinion and the valuation report from E&Y, and after undertaking a review of: -- Avotus' strategic direction, -- anticipated significant financing requirements and availability, -- current capital structure, and -- public company reporting obligations, the Board determined that the Corporation should restructure so as to cease to be a public corporation. The reasons for the Board's recommendation of the proposed transaction include: * the liquidity opportunity presented as a consequence of the proposed transaction, * the value of the cash consideration and the premium to the recent trading range of Avotus' common shares, * the fairness opinion and valuation report from E&Y, * the fact that the consolidation will be subject to approval of the majority of the Minority Shareholders, and * the unlikelihood of a superior proposal emerging in light of Jefferson Partners' controlling position in Avotus. The Company's Board of Directors, with interested directors abstaining, unanimously approved the going-private transaction and determined it to in the best interests of Avotus be fair to the Minority Shareholders. Debt Financing In connection with the going private transaction, Jefferson Partners has committed to provide Avotus with debt financing to provide sufficient funds to redeem all fractional common shares following the consolidation, up to a maximum of $2.8 million. Jefferson Partners has also committed to provide Avotus with additional debt financing to support the funding of its 2005 business plan, up to a maximum of $4 million. Affiliates of Jefferson Partners, holding 3,805,399 common shares and 59,835,266 series A preferred shares and the board of directors of Avotus have indicated that they will vote in favour of the consolidation. Shareholders holding an aggregate of 4,718,104 common shares and 20,601,964 series A preferred shares, including Roynat Capital Inc. (which holds 1,981,684 common shares and 10,394,754 preferred shares) and certain former shareholders of Formity Systems, Inc. (which hold 1,082,755 common shares and 10,207,210 preferred shares), have entered into support agreements with Avotus and an affiliate of Jefferson Partners whereby they have agreed, among other things, to vote in favour of the consolidation. Of the shareholders who have indicated their support for the consolidation, 4,242,284 common shares are held by shareholders who will be included among the Minority Shareholders. It is anticipated that additional shareholders will enter into support agreements with Avotus and a subsidiary of Jefferson Partners following the date hereof setting out their agreement to vote in favour of the consolidation as well as the terms of their ongoing involvement as shareholders of Avotus following the consolidation. As continuing shareholders, the shareholders, including Jefferson Partners and Roynat Capital Inc., will not be included among the Minority Shareholders. May 16 Annual Meeting Avotus plans to solicit common shareholder approval for the going- private transaction coincident with its annual meeting of shareholders on May 16, 2005. The annual and special meeting will be held at Avotus' head office at 110 Matheson Boulevard West, Suite 300, Mississauga, Ontario. Avotus Corporation -- http://www.avotus.com/-- provides solutions that dramatically reduce the cost and complexity of enterprise communications. Intelligent Communications Management is Avotus' unique model for a single, actionable environment that enables any company to bring together decision-critical information about communications expense management, procurement and systems usage for wired, wireless and VoIP systems. Deployed as an onsite or hosted application, or as a completely outsourced value-added managed solution, Avotus enables dramatic savings while improving productivity and efficiency. Avotus is empowering Fortune 500 companies as well as thousands of other organizations worldwide to gain insight into and control over their communications environment. Its solutions are strongly supported and endorsed by industry-leading partners such as Avaya, Cisco, and Nortel. At September 30, 2004, Avotus Corporation's balance sheet deficit narrowed to $536,144 compared to a $16,881,103 deficit at December 31, 2003. BROWN SHOE: S&P Rates Proposed $150M Senior Unsecured Notes BB- --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating on specialty footwear retailer and wholesaler Brown Shoe Co. Inc. The rating was removed from CreditWatch, where it was placed with negative implications on March 16, 2005. The outlook is negative. At the same time, Standard & Poor's assigned its 'BB-' rating to Brown Shoe's proposed $150 million senior unsecured notes due 2012. These notes, to be offered pursuant to Rule 144A with registration rights, are rated one notch below the corporate credit rating due to the substantial amount of priority debt in the capital structure (including borrowings from the company's $350 million secured revolving credit facility) relative to total assets. Pro forma for the transaction, total funded debt reaches about $307 million. The rating affirmation is based on Standard & Poor's expectations that improvement in earnings over the next few years could contribute to a gradual restoring of credit measures to levels more appropriate for the rating, despite a moderate increase in debt leverage due to the debt-financed acquisition. Brown Shoe entered into a definitive agreement to acquire privately held Bennett Footwear Group LLC for $205 million in cash, representing a 2004 EBITDA multiple of 6x-7x. In addition, terms provide for performance-based payments of up to $42.5 million over a three-year period if certain financial targets are met. This transaction is expected to close in May 2005. "The speculative-grade rating on Brown Shoe Co. Inc. is based on the company's participation in the mature, competitive, and fragmented wholesale and retail footwear businesses, as well as low operating margins relative to those of its peers and substantial debt leverage," said Standard & Poor's credit analyst Ana Lai. "These factors are tempered by the company's good position as the largest specialty family footwear retailer and a diversified sourcing and wholesale customer base." BROWN SHOE: Moody's Puts B1 Rating on $150M Senior Unsec. Notes --------------------------------------------------------------- Moody's Investors Service assigned these ratings to Brown Shoe Company, Inc.: * Senior Implied of Ba3; * $150 Million guaranteed senior unsecured notes due 2012 of B1; * Issuer Rating of B2; * Speculative Grade Liquidity Rating of SGL-2. The outlook is stable. The proceeds of the senior unsecured notes along with on balance sheet cash, and borrowings under the existing revolving credit facility will be used to finance the acquisition of Bennett Footwear. The transaction value is approximately $205 million. In addition, the purchase agreement contains a clause that the sellers may receive up to an additional $42.5 million in contingent payments that will be earned upon the achievement of certain performance targets. The senior implied rating of Ba3 reflects: * the company's solid portfolio of established brands; * multiple format platform which includes retail, wholesale, and internet; and * after the Bennett acquisition a broad price point coverage which includes the low end discount chain through the bridge lines offered at the high end department stores. The rating also considers the recent improvement in the Famous Footwear division and Moody's opinion that the Bennett acquisition makes strategic sense by adding three solid higher end brands (Etienne Aigner, Via Spiga, and Franco Sarto) which fill in a part of the shoe market where Brown Shoe did not have a presence. The rating is constrained by the additional leverage to finance the acquisition, which results in leverage and free cash flow metrics appropriate for the rating category. The rating is also constrained by the potential earn out payment to the former owners of Bennett which will limit Brown Shoe's ability to reduce leverage over the next three years. In addition, the rating is also constrained by the overall weakness in the department store sector, Moody's expectation that the Federated/May acquisition will likely result in door closings, and the losses being incurred at the retail Naturalizer division. The ratings also incorporate the seasonality and fashion risk associated with specialty retail as well as the replenishment nature of shoes. Pro forma for the transaction, sales for the fiscal year ended January 31, 2005, were $2.1 billion generating adjusted EBITDA of $134.7 million and EBITDA margin of 6%. Adjusted debt/EBITDAR was 5.0x, free cash flow to debt was 5.9%, and total coverage was 1.9x. The senior unsecured notes are notched down by one from the senior implied due to their effective subordination to the $350 million senior secured credit facility, as well as the expected usage under the revolving credit facility. The $350 million credit facility is secured by all assets of the company. The senior unsecured notes and the credit facility have the same subsidiary guarantees. The issuer rating is notched down from the senior notes because the issuer rating assumes no guarantees. The speculative grade liquidity rating of SGL-2 liquidity rating reflects good liquidity, and that the company's internally generated cash flow and cash on hand will be sufficient to fund its working capital, capital expenditures, dividends, and the accrued payout for the next 12-18 months. The company's operations are seasonal with approximately 40% of operating income (approximately 40%) incurred during the third quarter back to school selling season. The SGL-2 also reflects the ample availability under the $350 million revolving credit facility. The stable outlook reflects Moody's expectation that there will be a minimal reduction in debt over the next 18 months and that therefore credit metrics will remain at levels appropriate for the Ba3 rating category. In addition, the stable outlook reflects Moody's expectation that the company will maintain adequate liquidity. Ratings could move upward should performance improve and debt reduce such that adjusted debt/EBITDAR be maintained below 4.75x and FCF/Debt be maintained above 10%. Notching between the senior implied and the senior unsecured notes could be narrowed should borrowings under the revolver be dramatically reduced such that the senior notes represent the dominant piece of the capital structure. Ratings could move downward should liquidity deteriorate or operating performance decline such that adjusted debt to EBITDAR is sustained above 5.5x or total coverage is sustained below 1.5x, or the free cash flow to debt declines below current levels. Brown Shoe Company, Inc., headquartered in St. Louis, Missouri, is a retailer and wholesaler of footwear that owns approximately 1,300 Famous Footwear, Naturalizer, and F.X. LaSalle stores in the U.S. and Canada. FY 2004 revenues were approximately $1.9 Billion. CAPITALSOURCE: Fitch Rates $71.875 Floating-Rate Notes at BB ------------------------------------------------------------ Fitch Ratings assigns the following ratings to CapitalSource Commercial Loan Trust 2005-1: -- $425,000,000 class A-1 floating rate asset backed notes, due March 22, 2010 'AAA'; -- $468,750,000 class A-2 floating-rate asset backed notes, due Feb. 20, 2014 'AAA'; -- $62,500,000 class B floating-rate deferrable asset-backed notes, due Feb. 20, 2014 'AA'; -- $103,125,000 class C floating-rate deferrable asset-backed notes, due Feb. 20, 2014 'A'; -- $62,500,000 class D floating-rate deferrable asset-backed notes, due Feb. 20, 2014 'BBB'; -- $71,875,000 class E floating-rate deferrable asset-backed notes, due Feb. 20, 2014 'BB'. The ratings are based upon the credit quality of the underlying assets, the credit enhancement provided to the capital structure through subordination and excess spread, and the strength of CapitalSource Finance LLC as Servicer to the portfolio assets. The ratings of the classes A-1 and A-2 notes address the likelihood that investors will receive full and timely payments of interest, as well as the stated balance of principal by the legal final maturity date, as per the governing documents. The ratings of the classes B, C, D, and E notes address the likelihood that investors will receive ultimate and compensating interest payments, as well as the stated balance of principal by the legal final maturity date, as per the governing documents. The notes are supported by the cash flows of an asset portfolio consisting of high-yield loans to middle-market U.S. businesses, the majority of which are privately owned. The loans were made for the purpose of working capital, growth, acquisitions, and recapitalizations. The loan obligors primarily operate in the health care, real estate, business services, and broadcast and media sectors. Approximately 87.1% of the loans are senior secured loans, 8.5% are senior B loans, with the remaining balance consisting of subordinate and unsecured obligations. The portfolio has a weighted average rating of approximately 'B+/B'. The pool has 145 loan obligors. The largest single obligor exposure is 4%, which is similar to the CapitalSource Commercial Loan Trust 2004-2 transaction. There is some concentration with respect to industry exposure, specifically in health care and real estate, which was addressed in the Fitch Vector Model. It is important to note that the portfolio will generally be a static pool. There will be no discretionary trading; however, substitutions for specified reasons will be allowable up to 20% of the aggregate net outstanding portfolio balance. Prior to the occurrence of a sequential pay event, the structure pays principal pro rata amongst all the classes of notes, and sequentially within classes A-1 and A-2. If a sequential pay event occurs the notes are paid down sequentially. However, within the class A notes, the class A-1 and A-2 notes will receive principal pro rata, unless a class A trigger event occurs. As part of the rating process for this transaction, Fitch stressed the underlying asset portfolio with a variety of default and interest rate scenarios, designed to simulate varying economic conditions. For further details on the stress tests Fitch employed while rating CapitalSource Commercial Loan Trust 2005-1, please refer to the pre-sale report dated April 6, 2005, on the Fitch Ratings web site at http://www.fitchratings.com/ CHESAPEAKE ENERGY: Launching $600 Million Private Debt Offering --------------------------------------------------------------- Chesapeake Energy Corporation (NYSE: CHK) is commencing a private placement offering to eligible purchasers of $600 million of a new issue of senior notes due 2016. The notes are expected to be eligible for resale under Rule 144A. The private offering, which is subject to market and other conditions, will be made within the United States only to qualified institutional buyers, and outside the United States only to non-U.S. investors under regulation S of the Securities Act of 1933. Chesapeake intends to use the net proceeds from the offering to partially fund approximately $686 million of recently announced acquisitions of oil and gas properties, or in the event the acquisitions are not consummated, to repay debt under its bank credit facility. The new notes have not been registered under the Securities Act of 1933 or applicable state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. This announcement shall not constitute an offer to sell or a solicitation of an offer to buy the new notes. About the Company Chesapeake Energy Corporation is the fourth largest independent producer of natural gas in the U.S. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and producing property acquisitions in the Mid-Continent, Permian Basin, South Texas, Texas Gulf Coast and Ark-La-Tex regions of the United States. * * * As reported in the Troubled Company Reporter on Apr. 15, 2005, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Chesapeake Energy Corp. At the same time, Standard & Poor's assigned its 'BB-' rating to Chesapeake's proposed $600 million senior unsecured notes due 2015 and its 'B-' rating to Chesapeake's proposed $400 million preferred stock offering. S&P said the outlook is positive. Oklahoma City, Okla.-based Chesapeake will have about $3.7 billion worth of debt on a pro forma basis after this transaction. The actions follow Chesapeake's announcement that it has entered into four separate agreements to purchase 289 billion cubic feet equivalent (bcfe) of proved reserves, or 566 bcfe including probable and possible reserves, for $686.4 million. Standard & Poor's expects that excess proceeds will be used to repay existing borrowings under Chesapeake's credit facility. "Chesapeake's current slate of acquisitions continue the company's policy of aggressively expanding in its core areas in South Texas, East Texas, and the Permian Basin," said Standard & Poor's credit analyst Paul Harvey. COMMUNITY HOME: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Community Home Health Svcs Inc Plus 4373 E Livingston Ave Columbus, Ohio 43227 Bankruptcy Case No.: 05-55750 Type of Business: The Debtor is home health care service provider. Chapter 11 Petition Date: April 8, 2005 Court: Southern District of Ohio (Columbus) Judge: Charles M. Caldwell Debtor's Counsel: Grady L. Pettigrew, Esq. Cox Stein & Pettigrew Co. LPA 115 W. Main, 4th Floor Columbus, Ohio 43215 Tel: (614) 224-1113 Fax: (614) 228-0701 Estimated Assets: $50,000 to $1 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. CONGOLEUM CORP: Moody's Withdraws Ratings Due to Ch. 11 Filing -------------------------------------------------------------- Moody's Investors Service has withdrawn the ratings of Congoleum Corp. due to the company's voluntary filing of Chapter 11 and the Bankruptcy Court's authorized entry of a final order approving Congoleum's debtor-in-possession financing. Ratings for these issues will be withdrawn: * $100 million Senior notes, due 8/01/08, rated Ca; * Senior Implied, rated Caa2; * Issuer Rating, rated Ca. Moody's has withdrawn this rating because of the issuer's bankruptcy proceedings. Please refer to Moody's Withdrawal Policy on http://moodys.com/ Congoleum's Chapter 11 filling occurred December 31, 2003 as a result of asbestos litigation. The company's proposed plan of reorganization is expected to allow the company to resolve claims related to use of asbestos in its products decades ago. The proposed plan, subject to court approval, is expected to leave non-asbestos creditors unimpaired. Headquartered in Mercerville, New Jersey, Congoleum Corporation -- http://www.congoluem.com/-- manufactures sheet-vinyl, vinyl-floor tile, and plank flooring products. Congoleum is a 55% owned subsidiary of American Biltrite Inc. (AMEX:ABL). The Company filed for chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No. 03-51524). Domenic Pacitti, Esq., at Saul Ewing, LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. At Sept. 30, 2004, Congoleum Corp.'s reported assets of approximately $213 million and liabilities of approximately $236 million. COX TECHNOLOGIES: Will Make Final Distribution to Shareholders -------------------------------------------------------------- Cox Technologies, Inc.'s (OTCBB: COXT) board of directors has approved a final cash distribution to its shareholders out of the proceeds of the sale of substantially all of its assets to Sensitech Inc. The company will make the final distribution to each shareholder of record as of the cessation of trading in its common stock on January 17, 2005, of $0.0271 for each share of Cox Technologies common stock held as of that date. Cox Technologies will initiate the distribution immediately. About the Company On April 16, 2004, Cox Technologies sold substantially all of its assets to Sensitech, Inc., for cash and is currently engaged in the process of orderly liquidation of its remaining assets, the winding up of its business and operations, and the dissolution of the Company. DALLAS AEROSPACE: Ch. 7 Trustee Taps Passman & Jones as Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas gave Scott M. Seidel, the Chapter 7 Trustee for the estate of Dallas Aerospace, Inc., permission to employ Passman & Jones, P.C., as his counsel. The Court converted the Debtor's chapter 11 case to a chapter 7 liquidation proceeding on Jan. 24, 2005. Passman & Jones will: a) provide legal advice to Mr. Seidel with regard to his powers, duties and responsibilities as a Chapter 7 Trustee in the Debtor's liquidation proceeding; b) prepare on behalf of Mr. Seidel, all necessary applications, motions, answers, orders, reports and other legal papers; c) investigate and prosecute preference and fraudulent transfer actions arising under the avoidance powers of the Bankruptcy Code; d) appear for, prosecute, defend and represent Mr. Seidel and the estate's interest in suits arising in or related to the Debtor's previous chapter 11 case and the present chapter 7 liquidation proceeding; and e) perform all other legal services for Mr. Seidel that are necessary in the Debtor's chapter 7 proceeding. The hourly rates of Passman & Jones' professionals performing services to the Trustee are: Designation Hourly Rate ----------- ----------- Shareholders $200 - $400 Associates $165 - $225 Paralegals $75 - $120 Passman & Jones assures the Court that it does not represent any interest materially adverse to Mr. Seidel, the Debtor or its estate. 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. DECISIONONE CORP: Wants to Continue with Ordinary Course Experts ---------------------------------------------------------------- DecisionOne Corporation asks the U.S. Bankruptcy Court for the District of Delaware for permission to continue to retain, employ and pay professionals it turns to in the ordinary course of its business without bringing formal employment applications to the Court. In the day-to-day operation of its business, the Debtor regularly avails of the services of various attorneys, accountants, actuaries, consultants and other professionals to represent the company in matters arising in the ordinary course of its business that are unrelated to its chapter 11 case. Because of the complexity of its business, the Debtor submits it would be costly and time-consuming to require each Ordinary Course Professional to apply for separate employment and compensation applications to the Court because the costs of those applications would be significant and be borne by the Debtor's estate. The Debtor assures the Court that: a) Ordinary Course Professionals will be paid 100% of the fees and disbursements incurred; b) every three months, beginning on the quarter after the Court approves its request and ending on Plan confirmation, the Debtor will file with the Court a quarterly statement containing: (i) the name of each Ordinary Course Professional; (ii) the monthly fees and reimbursement of expenses for each of the Ordinary Course Professional for the quarter, and (iii) a list of any additional Ordinary Course Professionals that are retained or utilized after Jan. 4, 2005; c) each quarterly statement be served on the Office of the U.S. Trustee and counsel for any statutory creditors committee that may be appointed in the Debtor's chapter 11 case; and d) in the event that an Ordinary Course Professional's fees and expenses exceeds $25,000 per month, that Professional will be required to seek a formal approval from the Court. Although some of the Ordinary Course Professionals may hold minor amounts of unsecured claims, the Debtor does not believe that any of them have an interest materially adverse to the Debtor, its creditors and other parties-in-interest. Headquartered in Frazer, Pennsylvania, DecisionOne Corporation -- http://www.decisionone.com/-- serves leading companies and government agencies with tailored information technology support services that maximize the return on technology investments, minimize capital and infrastructure costs and optimize operational effectiveness. The Company filed for chapter 11 protection on March 15, 2005 (Bankr. D. Del. Case No. 05-10723). When the Debtor filed for protection from its creditors, it listed total assets of $107 million and total debts of $273 million. DOCTORS HOSPITAL: Section 341(a) Meeting Slated for June 7 ---------------------------------------------------------- The United States Trustee for Region 7 will convene a meeting of Doctors Hospital 1997 LP's creditors at 10:00 a.m., on June 7, 2005, at 515 Rusk Avenue, Suite 3516 in Houston, Texas. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Houston, Texas, Doctors Hospital 1997 LP, dba Doctors Hospital Parkway-Tidwell, operates a 101-bed hospital located in Tidwell, Houston, and a 152-bed hospital located in West Parker Road, Houston. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. S.D. Tex. Case No. 05-35291). James M. Vaughn, Esq., at Porter & Hedges, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $41,643,252 and total debts of $66,306,939. DOCTORS HOSPITAL: U.S. Trustee Forms 4-Member Creditors' Committee ------------------------------------------------------------------ The United States Trustee for Region 7 appointed four creditors to serve on an Official Committee of Unsecured Creditors in Doctors Hospital 1997 LP's chapter 11 case: 1. American Health First Attn: Alphine H. Freeman 5300 Hollister, Suite 510 Houston, Texas 77040 Tel: 713-895-7131, Fax: 713-895-7231 2. Rad Mart X-Ray Attn: John Burnett 2323 Clear Lake City Boulevard #180-168 Houston, Texas 77062 Tel: 713-446-4016, Fax: 281-335-3360 3. Gulf Coast Regional Blood Center Attn: Connie Foland 1400 La Concha Lane Houston, Texas 77054 Tel: 713-791-6348, Fax: 713-791-6644 4. Specialty Laboratories Inc. Attn: Erin Jones 27027 Tourney Road Valencia, California 91355 Tel: 800-421-7110, Fax: 661-799-5256 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Houston, Texas, Doctors Hospital 1997 LP, dba Doctors Hospital Parkway-Tidwell, operates a 101-bed hospital located in Tidwell, Houston, and a 152-bed hospital located in West Parker Road, Houston. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. S.D. Tex. Case No. 05-35291). James M. Vaughn, Esq., at Porter & Hedges, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $41,643,252 and total debts of $66,306,939. DOLE FOOD: Extends $325 Million Cash Tender Offer Until Today ------------------------------------------------------------- Dole Food Company, Inc., extended the expiration date for its cash tender offer for up to $325 million aggregate principal amount of its outstanding debt securities to 10:00 a.m., New York City time, on April 18, 2005. The settlement date of the Offer is expected to be on or about April 18, 2005. As of 5:00 p.m., New York City time, on April 14, 2005, holders had tendered approximately $427.1 million in aggregate principal amount of the 8-7/8% Senior Notes due 2011, $210.4 million in aggregate principal amount of the 8-5/8% Senior Notes due 2010, and $116.5 million in aggregate principal amount of the 7-1/4% Senior Notes due 2010. Based on the results to date, $275 million principal amount of the 8-7/8% Notes and $50 million principal amount of the 8-5/8% Notes will be accepted in the Offer, subject to the terms and conditions of the Offer. The complete terms and conditions of the Offer are set forth in the Offer to Purchase dated March 18, 2005, as supplemented April 1, 2005. Holders are urged to read the tender offer documents carefully. Banc of America Securities LLC is the exclusive dealer manager for the Offer. Questions regarding the Offer may be directed to Banc of America Securities LLC, High Yield Special Products, at 888- 292-0070 (U.S. toll-free) and 704-388-4813 (collect). Copies of the Offer to Purchase and Letter of Transmittal may be obtained from the Information Agent for the Offer, Global Bondholder Services Corporation, at 866-937-2200 (U.S. toll-free) and 212- 430-3774 (collect). This press release is neither an offer to purchase, nor a solicitation for acceptance of the Offer. Dole is making the Offer only by, and pursuant to the terms of, the Offer to Purchase. About the Company Dole Food Company, Inc., with 2004 revenues of $5.3 billion, is the world's largest producer and marketer of high-quality fresh fruit, fresh vegetables and fresh-cut flowers. Dole markets a growing line of packaged and frozen foods and is a produce industry leader in nutrition education and research. * * * As reported in the Troubled Company Reporter on March 31, 2005, Moody's Investors Service affirmed Dole's B1 senior implied rating and assigned a Ba3 to the company's planned new senior secured $300 million revolving credit facilities, $350 million term loan A, and $350 million term loan B. Moody's also affirmed its ratings on Dole's existing debt. Moody's said the ratings outlook remains stable. E*TRADE ABS: Fitch Junks Mezzanine Floating- & Fixed-Rate Notes --------------------------------------------------------------- Fitch Ratings has taken the following rating actions on classes of notes issued by E*TRADE ABS CDO I, Ltd., as issuer, and E*TRADE ABS CDO I, LLC, as co-issuer: These classes of notes have been affirmed: -- $78,156,505 class A-1 first priority senior secured floating-rate notes due 2017 'AAA'; -- $50,000,000 class A-2 second priority senior secured floating-rate notes due 2032 'AAA'. These classes of notes have been downgraded: -- $25,000,000 class B third priority senior secured floating- rate notes due 2037 to 'BBB' from 'A-'; -- $9,187,721 class C-1 mezzanine secured floating-rate notes due 2037 to 'CCC' from 'B+'; -- $3,326,401 class C-2 mezzanine secured fixed-rate notes due 2037 to 'CCC' from 'B+'; -- $12,500,000 preference shares due 2037 to 'CC' from 'CCC-'; -- $4,950,692 composite securities due 2037 to 'CC' from 'CCC-' E*TRADE I is a static cash flow collateralized debt obligation -- CDO -- managed by E*TRADE Global Asset Management, Inc. E*TRADE I, which closed Sept. 26, 2002, is a diversified portfolio of asset-backed securities -- ABS, residential mortgage-backed securities -- RMBS, commercial mortgage-backed securities -- CMBS, and CDOs. Included in this review, Fitch had discussions with E*TRADE Global Asset Management, Inc. (rated 'CAM2' by Fitch), regarding the current state of the portfolio. Fitch reviewed the credit quality of the individual assets comprising the portfolio and conducted cash flow modeling of various default timing and interest rate stress scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. The current rating actions are a result of continued deterioration in the credit quality of E*TRADE I's collateral pool, the negative impact of the interest rate hedge, and the class C notes capitalizing as a result of insufficient interest proceeds available to pay interest to this class on the October 2004 and January 2005 distribution dates. In addition, on Sept. 20, 2004, an event of default was triggered as a result of the net outstanding portfolio balance falling below the aggregate principal balance of Notes. Since the last rating action on June 30, 2004, the class A/B overcollateralization -- OC -- and class C OC ratios decreased to 105.38% and 97.98%, respectively, as of March 31, 2005, from 107.23% and 100.82%. The weighted average rating factor increased to 23 from 20 and three collateral positions have had their principal balances written down, indicating additional future default in the portfolio. In addition, E*TRADE I is considerably over-hedged and continues to suffer from the low interest rate environment. Interest proceeds available to pay E*TRADE I's notes have undergone stress largely attributable to an interest rate swap in place to hedge the mismatch between fixed-rate collateral (currently $55.7 million, excluding defaults) and floating-rate liabilities (currently $174 million inclusive of the preference shares). As a result, Fitch determined that the current ratings assigned to the class B notes, classes C-1 and C-2 notes, preference shares, and composite securities no longer reflect the current risk to their respective noteholders. The ratings on the classes A-1 and A-2 notes (together, the class A notes) and B notes address the timely payment of interest and ultimate payment of principal, whereas the ratings on the class C notes address the ultimate payment of interest and principal. The rating on the preference shares addresses the ultimate payment of the initial preference share rated balance and the ultimate receipt of payments that result in a yield on the preference share rated balance equivalent to 2% per annum. The rating on the composite securities addresses the ultimate payment of the initial composite securities rated balance and the ultimate receipt of payments that result in a yield on the composite securities rated balance equivalent to 4.66% per annum. 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/ EVERFRESH PRODUCE: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Everfresh Produce Market, Inc. Chartley Plaza, 2 Chartley Drive Reisterstown, Maryland 21136 Bankruptcy Case No.: 05-18844 Type of Business: The Debtor is a grocery store operator. Chapter 11 Petition Date: April 15, 2005 Court: District of Maryland (Baltimore) Judge: James F. Schneider Debtor's Counsel: James C. Olson, Esq. 10451 Mill Run Circle, Suite 400 Owings Mills, Maryland 21117 Tel: (410) 356-8852 Fax: (410) 356-8804 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Great Atlantic & Rent $387,478 Pacific Tea Company 2 Paragon Drive Montvale, NJ 07645 Shamis, Miki Personal loan $300,000 300 Bonnie Meadow Circle Reisterstown, MD 21136-6202 Sklar, Jason Personal loan $154,000 10811 Red Run Boulevard Suite 100 Owings Mills, MD 21117 Askenazi, Steve Personal loan $125,000 Kofman, Miki Personal loan $100,000 Cardoni Waddell Trade debt $57,375 Shpigel, Alex Personal loan $50,000 International Protit Professional fees $48,775 Associates, Inc. IWIF Insurance $41,884 Edward G. Rahll & Trade debt $38,937 Sons, Inc. L&M Produce Trade debt $32,260 BGE Trade debt $29,077 Sachs, Stewart Bank loan $27,000 Sudano Trade debt $21,558 GE Commercial Bank loan $19,882 Hankoff Insurance Insurance $18,942 Group, Inc. Amros Trade debt $15,234 The L Holloway Trade debt $14,408 Royal Swet Trade debt $12,210 Wachovia Bank, N.A. Bank loan $11,962 FAIRCHILD SEMI: Posts $10.4 Million Net Loss in First Quarter ------------------------------------------------------------- Fairchild Semiconductor (NYSE: FCS), the leading global supplier of products that optimize system power, reported results for the first quarter ended March 27, 2005. Fairchild reported first quarter sales of $362.8 million, a 9% decrease from the first quarter of 2004 and 4% lower than the prior quarter. Fairchild reported a first quarter net loss of $10.4 million, compared to net income of $13.0 million in the first quarter of 2004 and net income of $15.8 million in the prior quarter. As previously announced, included in this quarter's results are $23.9 million in expenses associated with calling our 10-1/2% senior subordinated notes in February. We also recorded $4.1 million of restructuring expenses related to employee severance. Gross margin was 23.1%, 320 basis points lower than the first quarter of 2004 and 250 basis points lower sequentially. Fairchild reported first quarter pro forma net income of $12.5 million, compared to pro forma net income of $21.4 million in the first quarter of 2004 and $24.8 million in the prior quarter. Pro forma net income excludes amortization of acquisition-related intangibles, restructuring and impairments, expenses associated with calling the notes, and other items. "We increased power products to a record 76% of total sales in the first quarter," said Kirk Pond, Fairchild's president, CEO and chairman of the Board. "Since we started the company in 1997, we've grown our power sales from less than $90 million to nearly $1.2 billion in 2004. In the first quarter, our power sales were down less than 3% sequentially, once again highlighting the greater stability of this business. We reached a significant milestone by shipping over one million smart power modules (SPM(TM)) in the first quarter. These highly integrated, complete power management solutions sell for $5 to $6 a piece, a significant increase from our overall average selling prices. Fairchild continues to make solid progress focusing our business on the fast-growing power market." End Markets "Order rates were strong in January, then as expected, slowed in February during the Chinese New Year holidays," explained Mr. Pond. "Bookings did improve in March over the February levels, but were lower than January and less than seasonal. Order rates were strongest for our products serving the computing, power supply and communications end markets, while orders for displays, monitors, and consumer products were weaker." First Quarter Financials "We paid off the last of our high yield notes this quarter, which will significantly reduce our interest expense and improve our cash flow going forward," said Matt Towse, Fairchild's senior vice president and chief financial officer. "Based on current interest rates, we expect to save nearly $25.0 million in pre-tax net interest expense this year compared to 2004. "Gross margins were 23.1% in the first quarter," stated Towse. "Margins were impacted primarily by lower prices due to aggressive competition for standard products as well as a mix shift in our analog business." Second Quarter Guidance "In the second quarter, we expect revenue to be flattish and gross margins to be flat to slightly higher sequentially," said Mr. Towse. "Our backlog entering the quarter was slightly lower than a quarter ago, so we'll need to book and ship a higher percentage of our sales in the second quarter compared to the first quarter. Lead times are shorter than a quarter ago, especially for our high power switches, which we expect will help us to achieve the bookings we need to meet our revenue guidance this quarter. Our current backlog also indicates firmer pricing and a better mix than the prior quarter. At current interest rates, we forecast net interest expense to be about $6.2 million per quarter for the rest of 2005. "I'm excited about our potential as we look to the future. In just eight years we've built the world's leading power semiconductor business, building a great foundation of operations and process capabilities. Our fab processes are at the leading edge of the industry and our packaging capabilities are exceptional. We have consistently generated cash during this time which has enabled us to de-lever and strengthen our balance sheet. Under the leadership of our new CEO, Mark Thompson, we are firmly committed to delivering more innovative power semiconductor solutions and driving higher, and more stable gross margins and earnings throughout the business cycle." About the Company Fairchild Semiconductor (NYSE: FCS) -- http://www.fairchildsemi.com/-- is the leading global supplier of high performance power products critical to today's leading electronic applications in the computing, communications, consumer, industrial and automotive segments. As The Power Franchise(R), Fairchild offers the industry's broadest portfolio of components that optimize system power through minimization, conversion, management and distribution functions. Fairchild's 9,000 employees design, manufacture and market power, analog & mixed signal, interface, logic, and optoelectronics products from its headquarters in South Portland, Maine, USA and numerous locations around the world. * * * As reported in the Troubled Company Reporter on Feb. 7, 2005, Moody's Investors Service assigned a Ba3 to the new $450 million term loan of Fairchild Semiconductor, withdrew the rating on the previous $300 million term loan, and affirmed the remaining ratings. Fairchild's rating outlook was changed to positive from stable. The new rating and affirmations assume the redemption of the company's $350 million outstanding 10.5% subordinated notes using loan proceeds and cash on hand. The new rating assigned is: * $450 million guaranteed senior secured term loan maturing 2010 of Ba3 The ratings affirmed are: * Senior implied rating of Ba3; * Speculative Grade Liquidity Rating of SGL-1; * Senior unsecured issuer rating of B1; * $180 million revolving credit facility maturing 2007 rated Ba3 The rating to be withdrawn following its redemption is: * $350 million 10.5% senior subordinated notes rated B2 The rating withdrawn is: * $300 million guaranteed senior secured term loan rated Ba3 FALCONBRIDGE LTD: Holds 9.2% Equity Stake in Blackstone Ventures ---------------------------------------------------------------- Falconbridge Limited (TSX:FL) acquired 1.5 million units in the capital stock of Blackstone Ventures Inc. by private transaction, representing approximately 9.2% of the issued and outstanding common shares of Blackstone. Each Unit consists of one common share and one common share purchase warrant. Falconbridge has both control and ownership over the Units. As a result of the acquisition, Falconbridge holds 3,312,055 common shares and 2,035,715 common share purchase warrants, representing approximately 15.3% of the issued and outstanding common shares of Blackstone (after giving effect to the exercise of the warrants). Falconbridge and Blackstone entered into a Purchase and Sale Agreement made as of June 6, 2004, pursuant to which Falconbridge sold all of the common shares of Kenbridge Nickel Mines Limited as well as Kenbridge mining claims owned by Falconbridge in exchange for the Units. The acquisition of the Units by Falconbridge was for investment purposes only and not with the purpose of influencing control or direction over Blackstone. Falconbridge may, in the ordinary course of its business, increase or decrease its holdings in Blackstone. Falconbridge Limited is a leading producer of nickel, copper, cobalt and platinum group metals. Its common shares are listed on the Toronto Stock Exchange under the symbol FL. Falconbridge is owned by Noranda Inc. of Toronto (58.8%) and by other investors (41.2%). * * * As reported in the Troubled Company Reporter on Mar. 3, 2004, Standard & Poor's Ratings Services assigned its 'BB' global scale and 'P-3' Canadian national scale ratings to diversified metal and mining company Falconbridge Ltd.'s C$78 million par value cumulative preferred shares series 3. At the same time, all other ratings on Falconbridge, including the 'BBB-' corporate credit rating, were affirmed. At the same time, Standard & Poor's assigned its 'BB' rating to Toronto, Ontario-based Noranda's proposed US$1.25 billion junior preferred shares. FISHER SCIENTIFIC: Launching Cash Tender Offer for 8-1/8% Notes --------------------------------------------------------------- Fisher Scientific International Inc. (NYSE: FSH) is commencing a cash tender offer for all $304 million principal amount of its outstanding 8-1/8 percent senior subordinated notes due 2012. The company is offering to purchase the 8-1/8 percent notes at a price per $1,000 principal amount based on the sum of: (1) the present value of $1,040.63, the redemption price on May 1, 2007, and (2) the present value of the scheduled interest payments through May 1, 2007. The present value will be calculated using a discount rate equal to a fixed spread of 75 basis points over the yield of the 3-3/4 percent U.S. Treasury Note due March 31, 2007. In connection with the tender offer, the company is soliciting consents to proposed amendments to the indenture governing the notes, which would eliminate substantially all of the restrictive covenants and amend certain events of default. Holders who tender on or prior to the consent payment deadline will receive the total consideration described above, which includes a $30.00 consent payment per $1,000 principal amount of notes. Holders who tender after the consent payment deadline will receive the total consideration minus the $30.00 consent payment. The consent payment deadline is 5 p.m., Eastern Daylight Time (EDT), on April 27, 2005. Holders who validly tender their notes by the consent payment deadline will receive payment on or about April 29, 2005. The tender offer is scheduled to expire at midnight, EDT, on May 11, 2005, unless extended or earlier terminated. However, no consent payments will be made in respect of notes tendered after the consent payment deadline. The tender offer and consent solicitation are subject to the satisfaction of certain conditions, including a requisite consent condition and other general conditions. Requests for documents may be directed to Global Bondholder Services Corporation, the depositary and information agent for the offer, at 212-430-3774 (collect) or 866-804-2200 (U.S. toll-free). Additional information concerning the tender offer and consent solicitation may be obtained by contacting Banc of America Securities LLC, High Yield Special Products, at 704-388-9217 (collect) or 888-292-0070 (U.S. toll-free). About the Company Fisher Scientific International Inc. (NYSE: FSH) provides products and services to the scientific community. Fisher facilitates discovery by supplying researchers and clinicians in labs around the world with the tools they need. The Company serves pharmaceutical and biotech companies; colleges and universities; medical-research institutions; hospitals; reference, quality- control, process-control and R&D labs in various industries; as well as government agencies. From biochemicals, cell-culture media and proprietary RNAi technology to rapid-diagnostic tests, safety products and other consumable supplies, Fisher provides more than 600,000 products and services. Founded in 1902, Fisher Scientific -- http://www.fisherscientific.com/-- is a FORTUNE 500 company and is a component of the S&P 500 Index. Fisher has approximately 17,500 employees worldwide, and annual revenues are expected to exceed $5.5 billion in 2005. * * * Moody's Investors Service and Standard & Poor's assigned single-B ratings to Fisher Scientific's: -- 6-3/4% senior subordinated notes due Aug. 15, 2014, -- 8% senior subordinated notes due Sept. 1, 2013, and -- 8-1/8% senior subordinated notes due May 1, 2012. FOSTER WHEELER: S&P Junks $261 Million Senior Secured Notes ----------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Hamilton, Bermuda-based Foster Wheeler to 'B-' from 'SD'. At the same time, Standard & Poor's assigned its 'CCC+' senior secured rating to the company's $261 million of 10.539% senior secured notes due 2011. The company's preferred stock is still in default. The outlook is negative. "We believe that Foster Wheeler has limited flexibility to carry out its near-term strategic business plan without potential adverse consequences for bondholders and other obligors," said Standard & Poor's credit analyst Joel Levington. "A failure to profitably increase the backlog in the near term, or to maintain sufficient domestic liquidity, would further strain the credit profile and lead to a ratings downgrade." At Dec. 31, 2004, Foster Wheeler had approximately $755 million in total debt (pro forma for the equity-for-debt exchange and including the present value of operating leases). Foster Wheeler is a global engineering and construction (E&C) firm mainly servicing the process (oil and gas, energy, chemical, and pharmaceutical) sectors. In addition, the company's global power unit designs, manufactures, and erects steam generators for industrial power plants, power stations, and cogeneration facilities. "We believe that management, which has been with the company since late 2001, has tried, and continues to attempt to strengthen the company's corporate culture," Mr. Levington said. "In our opinion, Foster Wheeler's operations have struggled for several years because of inconsistent bidding practices, change-order procedures, and risk-management techniques. However, we have yet to see a demonstrated track record of operating performance that would suggest that these issues have been fully corrected." GOOD SAMARITAN: Large Losses Cue Moody's to Slice Rating to B1 -------------------------------------------------------------- Moody's Investors Service has downgraded the bond rating for the Hospital of the Good Samaritan, located in Los Angeles, California, to B1 from Ba3. Moody's is also revising the outlook to negative from stable. This action affects $76 million of Series 1991 bonds. The downgrade is attributable to: -- a large operating loss in fiscal year 2004, that was much higher than the budget and prior year and which continues in 2005; -- recent decreases in inpatient volume; and -- declining unrestricted cash, which is expected to continue. The hospital faces considerable challenges including: -- expected negative or extremely weak cashflow for multiple years, jeopardizing the hospital's ability to make debt service payments and capital investment in the medium term; -- a competitive service area and a unionized workforce; and -- increasing capital needs after years of maintenance deferral. The hospital's strengths include: -- an adequate cash position, providing a source of liquidity for debt service payments over the medium term; and -- recent commercial and Medi-Cal rate increases, although the latter may be non-recurring. The negative outlook reflects Moody's belief that the hospital is not taking adequate measures to generate positive cashflow, which will result in further declines in cash and greater risk of payment default over the medium-term. Moody's believes more significant initiatives need to be pursued to ensure viability and Moody's does not foresee meaningful improvement until the board resolves to make major changes. Financial Performance Very Weak and Below Expectations Fiscal year 2004 performance was much weaker than anticipated and high operating losses continue through four months of fiscal year 2005. Even if Good Samaritan achieves its improved 2005 budget, which Moody's believes will be a challenge, the organization is operating at financial levels that are unsustainable in the long- term and, Moody's believes, will result in accelerated reductions in unrestricted cash. Although some improvement initiatives have been taken, Moody's believes that they are modest relative to the size of the deficit. In 2004, Good Samaritan had a $22.6 million operating loss (excluding $2.2 million of a non-recurring third-party settlement) compared with a $13 million operating loss in 2003 and a budgeted loss of $13 million. Operating cashflow in 2004 was a negative $6 million. Through four months of fiscal year 2005 the operating cashflow loss is over $3 million, suggesting the hospital will have difficulty meeting its full year operating cashflow budget of breakeven. Even if the hospital meets its full year 2005 operating budget, cashflow will be insufficient to cover debt service. Good Samaritan has implemented a number of expense and revenue initiatives. The hospital has been focused on productivity and standardization of supplies. Good Samaritan recently signed a new contract with Blue Cross (which had been its worst payer) that will result in good and recurring rate increases over the next 3 years of the contract. Additionally, the hospital expects to receive incremental Medi-Cal payments in 2005, although this increase may be one-time. The hospital has been focused on growing Medi-Cal obstetrical business, which is now more profitable including the incremental Medi-Cal payments. Despite these initiatives, as Moody's has discussed in prior reports, Moody's believes the organization has fundamental cultural and operating issues that suggest operations will continue to be very weak. The absence of more significant initiatives to ensure the hospital's long-term viability suggest a culture that may be resistant to major changes and has been overly reliant on its cash position to support operations and fund operating losses. Good Samaritan faces a number of operating challenges including a unionized nursing staff and high wage increases, an increasing dependency on Medi-Cal as obstetrics volume grows and potential cuts in Medi-Cal in light of the state's fiscal deficit. Competitive Service Area and Inpatient Volumes Beginning To Decline Good Samaritan operates in a competitive market and faces more competition for its more profitable services. Although volumes had been generally growing, inpatient admissions are down notably in 2004 and through four months of 2005 with a decline of 4% in each period. Open heart surgeries declined by 24% in 2004 and are down another 40% in 2005. The hospital has encountered physician departures in obstetrics and cardiovascular surgery and has been actively recruiting replacements. Liquidity Adequate But Declining While Good Samaritan's unrestricted cash position still provides some liquidity for debt service in the medium term, cash is down notably in 2004 and 2005 and Moody's believes cash could decline further as operating losses continue. As of August 31, 2004, Good Samaritan had approximately $59 million in unrestricted cash, representing 98 days of cash on hand. As of December 31, 2004, cash is down to $53 million. Cash would have been even lower without the receipt of a $6.5 million gift in 2004. [The hospital received the first $6.5 million piece of the total $12 million gift in 2003, which bolstered cash for that period as well.] Without gifts to finance capital needs, Moody's would expect cash to decline given continued operating losses and growing capital needs. Capital spending is budgeted at $12 million in 2005. The budget assumes cash will decline to $51 million by August 31, 2005, although the current cashflow run rate (for the four month period ending December 31, 2004) suggests cash could decline to closer to $40 million. The hospital expects to release $3 million in workers compensation reserves into unrestricted cash because of lower liability levels. Key Ratios and Statistics (Based on fiscal year ending 8/31/04; investment returns adjusted to 6% unless otherwise noted; excluding $2.2 million third-party settlement): -- Total Admissions: 16,373 -- Total Revenues: $209 million -- Net Revenues Available for Debt Service: ($0.8) million -- Days Cash on Hand: 98 days -- Debt-to-Cash Flow: (12.0) times -- Maximum Annual Debt Service: $7.4 million -- Maximum Annual Debt Service Coverage with actual investment income as reported: 0.04 times -- Maximum Annual Debt Service Coverage with investment income normalized at 6%: (0.11) times -- Total Debt Outstanding: $75.7 million -- Operating Cash Flow Margin: (3.1)% The negative outlook reflects Moody's belief that the hospital is not taking adequate measures to generate positive cashflow, which will result in further declines in cash and greater risk of payment default over the medium-term. Moody's believes more significant initiatives need to be pursued to ensure viability and Moody's does not foresee meaningful improvement until the board resolves to make major changes. HARRIS COUNTY: S&P Hacks Ratings on $31.4 Million Bonds ------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on: (1) Harris County Housing Finance Corp. (Waterford and Windfern Apartment Projects), Texas' $25.8 million multifamily senior housing revenue bonds series 1999A to 'CCC' from 'BB', (2) the corporation's $2.8 million subordinate bonds series 1999C to 'D' from 'B', and (3) the corporation's $2.8 million junior subordinate bonds series 1999D to 'D' from 'CCC'. The outlook is negative. The downgrade of the series 1999A bonds reflects low debt service coverage. Standard & Poor's downgraded series 1999C and 1999D bonds because we received the trustee's notification of events of default on the series 1999C and 1999D bonds. The trustee has not received sufficient funds from the borrower to pay the principal and interest due since July 1, 2002, when payments were due on both bond series. The bondholders have entered into a forbearance agreement with the borrower in 2001, as a way to resolve the events of default. However, the forbearance agreement does not waive the events of default, and therefore Standard & Poor's downgraded the bonds to 'D'. The principal and interest payments continue to be made to the bondholders of the series 1999A bonds, but the series 1999A debt service reserve fund was completely depleted on July 1, 2003. HARVEST ENERGY: Discloses Second Quarter Distribution ----------------------------------------------------- Harvest Energy Trust (TSX:HTE.UN) reported that the Board of Directors of Harvest Operations Corp. has authorized a cash distribution of $0.20 per trust unit to be paid in each of May, June and July 2005 as follows: Distribution Ex-Distribution Distribution Record Date Date Date Per Unit ------------------------------------------------------------------- April 29, 2005 May 16, 2005 April 27, 2005 $0.20 May 31, 2005 June 15, 2005 May 27, 2005 $0.20 June 30, 2005 July 15, 2005 June 28, 2005 $0.20 ------------------------------------------------------------------- As a result of the special distribution disclosed on Feb. 28, 2005, both the exchangeable share ratio and the conversion price of both series of convertible debentures will be adjusted. The adjusted exchange ratio and convertible debenture conversion prices will take effect on April 15, 2005 and will be as follows: Exchangeable Share Exchange Ratio 1.10188 Convertible Debentures Series 1 (9%) Conversion Price $13.85 Convertible Debentures Series 2 (8%) Conversion Price $16.07 Harvest Energy Trust -- http://www.harvestenergy.ca/-- is a Calgary-based energy trust actively managed to deliver stable monthly cash distributions to its Unitholders through its strategy of acquiring, enhancing and producing crude oil, natural gas and natural gas liquids. Harvest trust units are traded on the Toronto Stock Exchange under the symbol "HTE.UN". * * * As reported in the Troubled Company Reporter on Oct. 5, 2004, Standard & Poor's Ratings Services assigned its 'B+' long-term corporate credit rating to Calgary, Alberta-based Harvest Energy Trust and its 'B-' senior unsecured debt rating to the then proposed $200 million seven-year bond to be issued by Harvest Operations Corporation, a wholly owned subsidiary of Harvest Energy Trust. The debt is fully guaranteed by the trust and all its wholly owned subsidiaries. HAWAIIAN TELCOM: Moody's Junks $250M Senior Subordinated Notes -------------------------------------------------------------- Moody's Investors Services assigned: * a B1 senior implied rating to Hawaiian Telcom Communications, Inc., * a B1 to its proposed senior secured debt, * a B3 to its proposed senior unsecured notes, and * a Caa1 to its proposed senior subordinated notes. Moody's has downgraded the senior unsecured notes of Verizon Hawaii, to B1 from Baa1. Hawaiian Telcom, Inc., a wholly owned wireline operating subsidiary of HI-Telco, will assume these notes as part of the transaction. This action concludes Moody's rating review of Verizon Hawaii that was initiated on May 24, 2004, when The Carlyle Group announced it was undertaking a leveraged buyout of Verizon Hawaii. The rating outlook is stable. Moody's has assigned these ratings, as part of this rating action: -- Hawaiian Telcom Communications, Inc. * Senior Implied -- B1 * $175 million senior secured revolving credit facility -- B1 * $300 million senior secured delayed draw term loan A -- B1 * $400 million senior secured term loan B -- B1 * $300 million senior unsecured notes due in 2013 -- B3 * $250 million senior subordinated notes due in 2015 -- Caa1 Moody's also downgraded these senior notes previously issued by Verizon Hawaii: * $150 million 7 3/8% senior notes due in 2006 to B1 from Baa1 * $150 million 7% senior notes due in 2006 to B1 from Baa1 HI-Telco's B1 senior implied rating reflects high leverage and the significant business risk associated with the implementation of a new back office system, limited liquidity, and an increasingly competitive market place. Moody's also recognizes the inherit risk associated with the company's plans to improve margins while actively pursuing new product development. The senior implied rating is constrained by the company's operating margins, which are somewhat lower than comparable telecommunications companies. As a result of the leveraged buyout and investment necessary to establish new operating support systems, Moody's expects coverage metrics to be quite weak, especially in 2005 and 2006. Moody's is concerned that much higher fixed interest costs may limit HI- Telco's resources to respond to expanding challenges and to pursue growth opportunities, and could constrain the company's ability to withstand unexpected shortfalls as it builds out its new systems. HI-Telco will lose access to Verizon's back office functions as a result of the LBO. While HI-Telco and Verizon have negotiated a nine-month Transition Service Agreement -- TSA, with an optional 6-month extension, the scope of this substantial undertaking is fraught with operational risk. Moody's is concerned that the company's limited liquidity could quickly evaporate in the event that HI-Telco needs to extend the TSA beyond the 15-month optional contract life, or should competition expand faster than expected. Limited liquidity also weakens the company's financial profile. At peak borrowing, Moody's rating anticipates that the company will have $40 million available under its revolving credit facility to fund any unexpected cost overruns. HI-Telco has experienced 3.3% access line erosion in 2003 and 2004, mostly because of technology and wireless substitution. Cable competition is imminent and the primary cable provider in Hawaii has already made very significant inroads in residential high speed data with its cable modem product. HI-Telco's largest enterprise customers are particularly attractive to competition from other facility-based service providers because of the high geographical density, although the remoteness of its service territory somewhat limits the number of potential competitors. The company's strong management team and ability to generate strong operating cash flow support the rating. Moody's estimates that HI-Telco will generate approximately $155 million a year in cash flow from operations beginning in 2006, after spending over $80 million to develop back office systems in 2005. The rating also assumes that the company will use free cash flow in 2006 to begin to meaningfully reduce leverage and improve liquidity. The extensive experience and good track record of the operating management team and the involvement of prominent local investors also support the ratings. The financial sponsors have presented a comprehensive operational plan to drive revenue and earnings growth. The plan includes adding local focus to the company's marketing strategy, expanding product offerings to include branded wireless services, growing DSL penetration, expanding market coverage of small businesses, and significantly improving the overall cost structure. Moody's believes that these factors, coupled with the eventual cost and strategic benefits from an entirely new back office system, offer significant potential to offset access line decline and improve margins. The company benefits from a unique ability to bundle branded services. As the incumbent with 92% market share, HI-Telco will be able to offer local, long distance, data, and wireless services under the same brand. In addition, the rating incorporates the financial protection afforded by the restriction on the company's ability to pay dividends until debt falls to 65% of capitalization, per the Hawaiian PUC order. The rating assumes that The Carlyle Group will contribute as least $425 million to the venture at closing in the form of common stock. Moody's senior implied rating also assumes that the company will be able to switch to its own back office systems within nine months of closing, and as a result, improve its EBITDA margins to at least 35% over the intermediate term. The B1 rating also incorporates Moody's assumption that the company will use free cash flow to substantially reduce leverage, over the next several years. The rating outlook for HI-Telco is stable. The stable rating outlook reflects Moody's belief that the company's strategic plans to pursue greater LD and DSL penetration and add branded wireless services to its product bundle should provide sufficient growth opportunities to offset the negative impact of traditional wireline access line loss. Extending the TSA beyond nine months will not only increase costs and impede the company's ability to reduce leverage, but will also delay the company's ability to market bundled services. The failure to implement a complete and fully functioning back-office system by the TSA termination date will likely lead to a rating downgrade. The ratings are likely to improve if: 1) the successful implementation of a back office system results in significant margin improvement, 2) the wireless strategy drives revenue and earnings growth, and 3) the company uses free cash flow to reduce leverage such that free cash flow exceeds 15% of adjusted debt. HI-Telco's liquidity is adequate at best. The wireline segment produces strong operating cash flow, which Moody's believes is sufficient to fund the increased interest burden associated with the LBO and maintenance capital expenditures. To supplement its liquidity, the company will enter into a $175 million revolving credit facility that will mature in 2012. Although the company is still finalizing the terms of the facility, Moody's assumes that the covenants will be set at a level such that the company will be fully able to access the facility despite potential operational shortfalls or unforeseen capital needs. Moody's expects the company to draw $135 million under the revolver to finance its back office buildout. Upon completion of this investment, Moody's expects the company to quickly reduce debt through operating cash flow and restore the availability under the facility. In the meantime, Moody's is concerned that the $40 million peak revolver availability only provides a modest cushion, should the back office buildout prove to be significantly more expensive than anticipated, particularly given cost escalation clauses in the transition services agreement with Verizon. The Carlyle Group will issue the new LBO-related debt at HI-Telco, an intermediate holding company. Both the parent company and the operating companies will guarantee each class of debt on a basis consistent with its effective seniority. Secured debt will benefit from secured guarantees in the same way subordinated debt will benefit from subordinated guarantees. Moody's expects that the guarantees will unconditionally cover both interest and principal on a joint-and-several basis. Also as part of the transaction, Hawaiian Telcom, Inc., the wireline operating subsidiary, will assume the existing Verizon Hawaii debt. Moody's notes that the indenture governing this debt includes a negative pledge that covers the issuance of secured debt. In the event that the obligor provides security, the holder of these notes will also benefit from the same security package. Moody's expects that post-LBO these notes will rank pari passu with all other secured debt in the capital structure. Moody's does not notch the senior secured debt at the Parent company, nor the Verizon Hawaii-assumed debt, above the senior implied rating. Secured debt, measured in its totality ($400 million term loan, $300 million existing Verizon Hawaii bonds, and $135 million anticipated revolver borrowings), will comprise about 60% of total debt. This constitutes risk that is substantially the same as that of the company as a whole, and therefore is rated at the senior implied level. Moody's rates the senior unsecured and senior subordinated debt two and three notches below the senior implied rating, respectively, to reflect their effective subordination. Verizon Hawaii, a wholly owned subsidiary of Verizon Communications, Inc., is an incumbent telecommunication service provider servicing approximately 690K access lines. Moody's expects Hawaiian Telcom Communication, Inc., to acquire Verizon Hawaii through an LBO sponsored by The Carlyle Group. The new company will be headquartered in Honolulu, Hawaii. HOMEBANC MORTGAGE: Moody's Rates $1.232 Mil. Class B-4 Notes Ba2 ---------------------------------------------------------------- Moody's Investors Service has assigned ratings of Aaa to the senior notes issued by HomeBanc Mortgage Trust 2005-2. The ratings are based on the expected performance of the loans, the credit enhancement provided by the 16.35% subordination of the subordinate notes, initial overcollateralization of 2.90%, excess spread, and the structural and legal protections in the transaction. The ratings of the subordinate notes are based on the respective subordination of the junior most notes, excess spread, and overcollateralization. The notes are secured by adjustable-rate closed-end second-lien mortgages that were primarily originated in conjunction with the origination of the related first mortgage loan. The weighted average credit score of 729 is strong for a second-lien pool. The weighted average combined LTV of 96.78% is consistent with other second lien pools and a factor for a higher frequency and severity of loss. Investor property accounts for 5.12% of the loan pool and the performance could be more volatile. The pool is geographically concentrated in Georgia 54.99% and Florida 39.66%, HomeBanc's footprint. The ratings are: * Class A-1, $142,133,000, rated Aaa * Class M-1, $10,737,000, rated Aa2 * Class M-2, $3,080,000, rated Aa3 * Class M-3, $5,633,000, rated A2 * Class M-4, $2,464,000, rated A3 * Class B-1, $2,112,000, rated Baa1 * Class B-2, $1,760,000, rated Baa2 * Class B-3, $1,761,000, rated Baa3 * Class B-4, $1,232,000, rated Ba2 The mortgages will be serviced by HomeBanc Corp. Some reliance is placed on Wells Fargo Bank, N.A. as master servicer. HomeBanc Mortgage Trust 2005-2 is a Delaware statutory trust established for acquiring the mortgages and issuing the notes. IMAGIS TECHNOLOGIES: Bolder Investment to Buy Shares for C$1.5M --------------------------------------------------------------- Imagis Technologies Inc. (TSX VENTURE:WSI) (OTCBB:IMTIF)(DE:IGYA) has priced the brokered private placement with Bolder Investment Partners, Ltd., of up to CDN $1,500,000 at $0.40 per Unit. Each Unit will consist of one common share and one half common share purchase warrant. Each whole warrant will entitle the holder for one year, from the date of issue of the Units, to acquire one additional Imagis common share at $0.55. The private placement is subject to regulatory approval. The securities will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, "U.S. persons", as that term in defined in Regulation S promulgated under the Securities Act, except in certain transactions exempt from the registration requirements of the U.S. Securities Act. Based in Vancouver, British Columbia, Imagis Technologies Inc. -- http://www.imagistechnologies.com/-- specializes in developing and marketing software products that enable integrated access to applications and databases. The company also develops solutions that automate law enforcement procedures and evidence handling. These solutions often incorporate Imagis' proprietary facial recognition algorithms and tools. Using industry standard "Web Services", Imagis delivers a secure and economical approach to true, real-time application interoperability. The corresponding product suite is referred to as the Briyante Integration Environment -- BIE. Going Concern Doubt In its Form 10-Q for the quarterly period ended Sept. 30, 2004, filed with the Securities and Exchange Commission, Imagis Technologies' disclosed that: The Auditors' Report on the Company's Dec. 31, 2003 Financial Statements includes additional comments by the auditor on Canada- United States reporting differences that indicate the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern. The Company incurred a net loss for the year ended December 31, 2004, of $5,457,937, which is 34 percent higher than the net loss incurred during the year ended December 31, 2003, of $4,058,857. The loss per share figure for 2003 has been adjusted to take into account the Company's share consolidation that occurred in November of 2003. Adjusting the loss to take into account the non-cash and one-time expenses described, the losses become $2,729,105 for 2004 and $3,432,666 for 2003, representing a 20% reduction. The Company does not currently have sufficient cash flow from operations to fund its operations. The company has cash sufficient to fund its operations through April 30, 2005. The Company has also received orders that if completed will generate cash sufficient to fund its operations through September 30, 2005. If no further sales are received the Company may need to raise additional funds through private placements of its securities or seek other forms of financing. There can be no assurance that the financing will be available to the Company on terms acceptable to it, if at all. If the Company's operations are substantially curtailed, it may have difficulty fulfilling its current and future contract obligations. ISTAR FINANCIAL: Selling $500 Million of Senior Unsecured Notes --------------------------------------------------------------- iStar Financial Inc. (NYSE: SFI), the leading publicly traded finance company focused on the commercial real estate industry, agreed to sell $500 million of senior unsecured notes in an underwritten public offering. The Company said it will issue $250 million 5.375 % senior notes due 2010, and $250 million of 6.05% senior notes due 2015. iStar Financial expects to use the proceeds from the sale of the Notes to repay outstanding balances on its secured and unsecured credit facilities. Citigroup Global Markets Inc. and Wachovia Capital Markets, LLC are acting as joint book running managers of the offering. Barclays Capital Inc., KeyBanc Capital Markets, a Division of McDonald Investments Inc., and Greenwich Capital Markets, Inc., are acting as co-managers. About the Company iStar Financial -- http://www.istarfinancial.com/-- is the leading publicly traded finance company focused on the commercial real estate industry. The Company provides custom-tailored financing to high-end private and corporate owners of real estate nationwide, including senior and junior mortgage debt, senior and mezzanine corporate capital, and corporate net lease financing. The Company, which is taxed as a real estate investment trust, seeks to deliver a strong dividend and superior risk-adjusted returns on equity to shareholders by providing the highest quality financing solutions to its customers. * * * As reported in the Troubled Company Reporter on Apr. 8, 2005, Moody's Investors Service upgraded its rating on the 7.95% senior unsecured notes of TriNet Corporate Realty Trust, Inc., to Baa3, from Ba1, due to TriNet's merger with and into its parent, iStar Financial Inc. and the resulting direct obligation of these senior notes by iStar. TriNet was formerly a wholly owned subsidiary of iStar. Moody's also has withdrawn the ratings of the 7.7% senior unsecured notes due 2017 of TriNet as a result of the completed exchanged offer for these notes by iStar. iStar exchanged its 5.7% Series B Senior Notes due 2014 for virtually all of TriNet's outstanding 7.7% Senior Notes, and redeemed the remaining principal balance for cash. As reported in the Troubled Company Reporter on Jan. 24, 2005, iStar Financial, Inc., plans to acquire Falcon Financial Investment Trust. Fitch expects no change to iStar's rating and Outlook as a result of this transaction. The iStar's ratings are: -- Senior unsecured debt: 'BBB-'; -- Preferred stock 'BB'; -- Rating Outlook Stable. JACQUELINE HATCHER: Case Summary & 16 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Jacqueline Lee Hatcher 2705 North Wild Rose Street Wichita, Kansas 67205 Bankruptcy Case No.: 05-12036 Chapter 11 Petition Date: April 14, 2005 Court: District of Kansas (Wichita) Judge: Chief Judge Robert E. Nugent Debtor's Counsel: W. Thomas Gilman, Esq. Redmond & Nazar, L.L.P. 245 North Waco, Suite 402 Wichita, Kansas 67202-3089 Tel: (316) 262-8361 Fax: (316) 263-0610 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 16 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Metropolitan Life Ins Co Loan guarantee $10,000,000 c/o Martin Bauer 100 North Broadway Ste 500 Wichita KS 67202-2205 Amarillo National Bank Loan guarantee $9,000,000 c/o Don Sunderland PO Box 31656 Amarillo TX 79120-1656 Three W Land & Cattle Loan guarantee $2,000,000 Co Inc. c/o Walter Beesley PO Box 818 Hugoton KS 67951 Western State Bank Commercial promissory $740,498 PO Box 1198 note Garden City KS 67846 Kit Carson State Bank Loan guarantee $410,485 140 South First Street PO Box 220 Cheyenne Wells CO 80810 Hubbard Feeds Loan guarantee $400,000 Ridley Inc. PO Box 8500 Mankato MN 56002-8500 Kit Carson State Bank Loan $398,486 140 South First Street PO Box 220 Cheyenne Wells CO 80810 Eastern Colorado Bank Loan guarantee $392,582 10 South First PO Box 888 Cheyenne Wells CO 80810-0888 Kit Carson State Bank Loan guarantee $392,062 140 South First Street Po Box 220 Cheyenne Wells CO 80810 MH Holdings Guarantee $359,685 1211 Liberty Way Vista CA 92081-8307 Pioneer Electric Loan guarantee $200,000 Cooperative American Express Guarantor on $140,000 Business Fin business debt Wells Fargo Loan $138,879 Farm Credit Services Loan guarantee $130,000 of Amer Kit Carson State Bank Loan guarantee $104,437 John Deere Credit Equipment guarantee $34,012 JAYAMMA KOPPERA: Case Summary & 12 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Jayamma Koppera, Inc. dba Pinnacle Banquet and Conference Center 7594 Ogden Woods Boulevard New Albany, Ohio 43054 Bankruptcy Case No.: 05-55914 Type of Business: The Debtor operates banquet halls & reception facilities. Chapter 11 Petition Date: April 12, 2005 Court: Southern District of Ohio (Columbus) Judge: Donald E. Calhoun Debtor's Counsel: Matthew Fisher, Esq. Richard K Stovall, Esq. Allen, Kuehnle & Stovall LLP 21 West Broad Street Suite 400 Columbus, Ohio 43215 Tel: (614) 221-8500 Fax: (614) 221-5988 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Subbarayudu Koppera Note payable $1,846,526 7594 Ogden Woods Boulevard New Albany, OH 43054 Subbarayudu Koppera, M.D., $284,750 Inc. 7594 Ogden Woods Boulevard New Albany, OH 43054 Kamlesh Patel Breach of Contract $122,500 5672 Crown Crest Lane Columbus, OH 43235 The Wasserstrom Company Equipment $32,000 477 South Front Street purchase KY 42315 SBC Yellowpages Contract $20,749 SBC Bill Payment Sagina, OH 48662 Muzak Equipment $14,664 3318 Lakemont Boulevard installation Fort Mill, SC 29708 Hammond, Seward & Legal Fees $10,000 Williams 556 East Town Street Columbus, OH 43215 American Electric Power Utility bill $6,449 P.O. Box 24418 Canton, OH 447014418 J.H. Architects, Inc. Services rendered $5,000 3968A Brown Park Drive Hilliard, OH 43026 Columbia Gas of Ohio Utility bill $3,221 P.O. Box 9001847 Louisville, KY 40290 PODS Trade debt $169 3750 Brookham Drive, Suite H Grove City, OH 43123 Delaware County Treasurer Unknown 140 North Sandusky Street First Floor Delaware, OH 43015 JM HILLS: U.S. Trustee Will Meet Creditors on June 7 ---------------------------------------------------- The United States Trustee for Region 14 will convene a meeting of JM Hills Project LLC and its debtor-affiliates' creditors at 2:00 p.m., on June 7, 2005, at the U.S. Trustee Meeting Room located in 230 N. First Avenue, Suite 102 in Phoenix, Arizona. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Phoenix, Arizona, JM Hills Project, LLC, along with its affiliates filed for chapter 11 protection on April 7, 2005 (Bankr. D. Ariz. Case No. 05-05686). Dale C. Schian, Esq., at Schian Walker P.L.C., represents the Debtors in their restructuring efforts. When JM Hills filed for protection from its creditors, it estimated assets and debts from $10 million to $50 million. KAISER ALUMINUM: Plan Confirmation Hearing Continued to April 27 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has continued the hearing to consider confirmation of the Liquidating Plans filed by: -- Alpart Jamaica Inc. and Kaiser Jamaica Corp.; and -- Kaiser Alumina Australia Corp. and Kaiser Finance Corp., to April 27, 2005, at 10:00 a.m. No assurances can be provided as to whether or when the Liquidating Plans will be confirmed by the Court or ultimately consummated or, if confirmed and consummated, as to the amount of distributions to be made to individual creditors of the liquidating subsidiaries or the company. Further, the company cannot predict what the ultimate allocation of distributions among holders of the company's 9-7/8% Senior Notes, 10-7/8% Senior Notes, and the 12-3/4% Senior Subordinated Notes will be, when any resolution will occur, or what impact any resolution may have on the company and its ongoing reorganization efforts. Kaiser Aluminum (OTCBB:KLUCQ) is a leading producer of fabricated aluminum products for aerospace and high-strength, general engineering, automotive, and custom industrial applications. Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service, Inc., 215/945-7000) KANSAS CITY SOUTHERN: 87% of Noteholders Agree to Amend Indenture ----------------------------------------------------------------- Kansas City Southern (NYSE:KSU) disclosed that $386 million principal amount of the outstanding $443.5 principal amount of 11.75% Senior Discount Debentures due 2009 of its majority owned subsidiary, TFM, S.A. de C.V. have been tendered on or prior to the Consent Deadline of 5:00 p.m. NYC time, on April 14, 2005, pursuant to the previously announced consent solicitation and tender offer for the Notes, representing approximately 87.04% of the outstanding Notes. As a result of the consents and early tenders, TFM has received the requisite consents to execute a supplemental indenture relating to the Notes. As part of its pending tender offer for the Notes, TFM was soliciting consents to eliminate substantially all of the restrictive covenants included in the indenture under which the Notes were issued and to reduce the minimum prior notice period with respect to a redemption date for outstanding Notes from 30 to 3 days. The supplemental indenture relating to the Notes containing the proposed changes will be executed by TFM and the Trustee under the indenture, but it will not become operative until after the Notes tendered by the Consent Deadline are accepted for purchase and TFM makes payment for these Notes pursuant to the early tender provisions of the tender offer. TFM currently expects to make payment for these Notes on April 20, 2005. Headquartered in Kansas City, Mo., Kansas City Southern -- http://www.kcsi.com/-- is a transportation holding company that has railroad investments in the U.S., Mexico and Panama. Its primary U.S. holdings include The Kansas City Southern Railway Company, founded in 1887, and The Texas Mexican Railway Company, founded in 1885, serving the central and south central U.S. Its international holdings include a controlling interest in TFM, S.A. de C.V., serving northeastern and central Mexico and the port cities of Lazaro Cardenas, Tampico and Veracruz, and a 50% interest in The Panama Canal Railway Company, providing ocean-to- ocean freight and passenger service along the Panama Canal. KCS' North American rail holdings and strategic alliances are primary components of a NAFTA Railway system, linking the commercial and industrial centers of the U.S., Canada and Mexico. * * * As reported in the Troubled Company Reporter on Apr. 12, 2005, 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 Standard & Poor's 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." KERR-MCGEE: Auction Announcement Prompts S&P to Cut Rating to BB+ ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Kerr-McGee Corp. to 'BB+/B' from 'BBB-/A-3'. The rating remains on CreditWatch with negative implications where it was placed on March 4, 2005. Oklahoma City, Oklahoma-based Kerr-McGee has about $3.1 billion in debt outstanding, pro forma for the recent $600 million debt-to- stock conversion. "The downgrade follows today's announcement that Kerr-McGee's board of directors has authorized a modified 'Dutch Auction' tender offer for up to $4 billion of its common stock," said Standard & Poor's credit analyst Andrew Watt. "The share repurchase will be funded entirely through the issuance of debt and borrowings under new credit facilities, which materially harms the company's credit profile," said Mr. Watt. In conjunction with the tender offer announcement, Kerr-McGee also announced that based on the $4 billion share repurchase program, it has received written notice from the Icahn Group and associated investors confirming that they will immediately cease proxy solicitation activities. The Icahn Group and associated investors will withdraw their alternate board nominees from consideration for election to Kerr-McGee's board of directors on successful completion of the repurchase program. The $4 billion of common stock that will be repurchased represents approximately 27% to 29% of outstanding shares as of March 31, 2005. The rating on the company will remain on CreditWatch with negative implications until the Icahn group withdraws their alternate board nominees or progress toward successful completion of the repurchase program satisfies the Icahn group. At that time, the ratings are likely to be affirmed at the current 'BB+' rating and the outlook will be negative. KERR-MCGEE: Fitch Downgrades & Removes Two Debts from Watch Neg. ---------------------------------------------------------------- Fitch Ratings has downgraded and removed from Rating Watch Negative the ratings of Kerr-McGee: -- Senior unsecured debt to 'B' from 'BBB'; -- Commercial paper to 'B' from 'F2'. Fitch has also assigned a 'BB' senior secured rating to Kerr McGee. The Rating Outlook is Stable. At the same time, Fitch has withdrawn its ratings on Kerr-McGee's debt exchangeable securities -- DECS -- and convertible subordinated notes following conversion of those securities. Kerr-McGee announced it intends to repurchase $4 billion of common stock, initially financed with a combination of bank debt. The plan substantially increases Kerr-McGee's leverage to $7.2 billion from $3.2 billion currently. Pro forma for the transaction, debt to proved developed producing reserves will approximate $8.46 per barrels of oil equivalent -- boe, significantly worse than Kerr- McGee's 2004 year-end level of $4.04 per boe (excluding $500 million of debt associated with the chemical assets). Furthermore, this level of debt relative to reserves is significantly higher than most other high yield exploration and production -- E&P -- companies. Fitch anticipates that the debt financing will be provided by term loans. In conjunction with this transaction, the outstanding senior unsecured debt (approximately $3.2 billion) will become secured. Management stated that it intends to reduce debt in the intermediate term with the proceeds from asset sales and with free cash flow. In addition to the previously announced sale of the titanium dioxide operations, management stated it intends to sell more than 125 Mmboe of non-core E&P properties. According to the company, it expects proceeds of about $3 billion from the above transactions. Additionally, Kerr-McGee has hedged more than 75% of 2005 and 2006 production at relatively strong prices, which should allow the company to generate positive free cash flow. Kerr-McGee's action today is an abrupt change in the company's financial and operational strategy. As a result, Fitch questions Kerr-McGee's long-term strategy and future expectations regarding reserve bookings, production, capital expenditures and debt reduction. Today's announcement comes on the heels of poor operational results in 2004. Kerr-McGee's organic replacement was approximately 39 million boe in 2004. While total reserve replacement was over 250% for the year, replacement from successful exploration and development efforts was under 35%. Kerr-McGee's three-year average for organic replacement was under 25% as a result of the negative revisions associated with Leadon in 2002 and the lack of success in 2004. Furthermore, the costs associated with Kerr-McGee's finding and development -- F&D -- program were significantly higher than expected due to the poor replacement. During 2004, the company's total finding, development and acquisition -- FD&A -- costs were in excess of $14 per boe. The three-year average FD&A costs exceeded $17 per boe. More troubling were the F&D costs. In 2004, Kerr-McGee's one-year and three year F&D costs exceeded $30 per boe (figure excludes costs allocated to Westport's probable and possible properties). KERR-MCGEE CORP: Risk Profile Shift Cues Moody's to Pare Ratings ---------------------------------------------------------------- Moody's Investors Service lowered the long-term and short-term debt ratings of Kerr-McGee Corporation to below investment grade. Moody's assigned a Ba3 Senior Implied and lowered KMG's Senior Unsecured notes to Ba3 from Baa3. Moody's expects that KMG's existing notes will be secured equally and ratably with new secured term loans that the company has arranged. The company's short-term ratings were lowered to Not Prime from Prime-3. This action concludes the review begun March 4 that had reflected "material event risk" resulting from a more activist shareholder base. The outlook is stable. The downgrade of Kerr-McGee's ratings to below investment grade reflects the material shift in the company's risk profile as reflected by its share repurchase announcement and the corresponding increase in leverage. KMG announced a "Dutch Auction" tender for up to $4 billion of its common stock in a price range of $85-92 per share. KMG's proposed stock buyback represents 27-29% of its outstanding shares and will increase its balance sheet debt outstanding about two and one-quarter times to over $7.2 billion. KMG's higher leverage exacerbates its weak fundamental operating performance and portfolio durability as shown by inconsistent organic reserves replacement and correspondingly high finding and development costs over the past three years. The downgrade further reflects the time necessary over the medium term for KMG to transform its portfolio from a higher risk predominantly exploration focus to a lower risk balance of exploitation and exploration. In its analysis of KMG, Moody's considered the company's reserves and production characteristics, including size, scale and diversification, as well as: * proved developed reserve life; * its reinvestment risk reflected in reserves replacement and finding and development costs; * KMG's operating and capital efficiency as shown by full-cycle costs and leveraged full-cycle ratio; * its leverage as measured by debt per PD boe and debt plus future development costs to total boe; and * execution risk of its proposed asset sales and deleveraging strategy, and * uncertainty regarding the disposition of the chemicals business and resolution of environmental liabilities. Reserves Characterization Kerr-McGee's ratings are supported by the scale and diversification of its predominantly US oil and gas asset base, with 1.2 billion boe of proved reserves at the end of 2004, and the strength of its near term production. However, KMG's PD reserve life, based on year end PD reserves divided by annualized fourth quarter production, was only 5.8 years at the end of 2004. This metric was two years shorter than the median of the Ba3 exploration and production companies. KMG's shorter reserve life exacerbates its higher leverage. Leverage Kerr-McGee's leverage, as measured by adjusted debt per proved developed barrel of oil equivalent (debt per PD boe), will be about $9.80 per PD boe immediately after the stock buyback. This leverage level is higher than any E&P company that Moody's rates. However, KMG expects to reduce leverage over the near term through proceeds from the sale of its chemicals business and the sale of E&P properties representing 10-15% of proved reserves. Free cash flow (after capex and dividends), supported by a significant level of commodity price hedging, lower capital spending and a reduction of its dividend, will also contribute to debt repayment. In March, KMG announced its intention to sell its chemicals business and the additional E&P asset sales could result in total proceeds of $2.5 - 3 billion in the near term. KMG has hedged its commodity price exposure on 75% of its expected 2005 and 2006 production reflecting today's high commodity price environment. The company expects a reduction in its capital expenditure program over time and is reducing its dividend from $1.80 per share to $0.20, saving about $270 million per year (pro forma for the buyback). The combination of commodity hedging, lower capex and dividends should result in free cash flow on the order of $1 billion per year in each of 2005 and 2006. KMG's deleveraging plan is supported by the proposed terms of its new senior secured debt, which contemplates that asset sale proceeds and a portion of excess cash flow will be used for debt repayment. Through asset sales proceeds and free cash flow, Moody's expects KMG to reduce its leverage to under $8 per PD boe in 2005, with further reductions in 2006 to below $7. While this is an improvement over the leverage immediately after the buyback, these leverage levels are still high. Portfolio Durability KMG's rating also reflects the company's weak portfolio durability in terms of reserves replacement, percent PD reserves and F&D costs. KMG's all-sources reserves replacement for the three years ending 2004 was 124%; however, this was dominated by the Westport Resources acquisition in 2004. Looking at drilling only (ignoring revisions), KMG replaced only 51% of its production during these three years. Looking forward, KMG expects to add 205 million boe to proved reserves in 2005 in its base plan, which would replace 155% of expected production. There is reasonable visibility around 40 million boe from exploitation in the Rockies and another 40 million boe from projects under way, including offshore Gulf of Mexico projects Blind Faith and Tahiti that should be sanctioned this year. Further down the risk spectrum are appraisal of 2004 discoveries, including Alaska, Brazil and China, which could add from nothing to 80 million boe with a likely outcome around 40 million. These three categories could combine to add 120 million boe, or about 90% of 2005 production. Anything beyond this would come from exploration success, which is both difficult to predict and challenging for debt holders to ascribe value given KMG's inconsistent results in recent years. In addition to uncertainty around the absolute volume of reserves added, another concern is the mix of proved developed and proved undeveloped reserves. KMG's asset sales program will be dominated by PD reserves, while the company's reserves additions will be primarily PUD reserves. Moody's estimates the percentage of PD reserves will drop from 65% at the end of 2004 to the mid to high 50% range in 2005, which will negatively impact metrics that use PD reserves like reserve life and leverage. Moody's recognizes the portfolio management benefits of the proposed asset sales program, including reduced capital intensity of its remaining assets, lengthening reserve life and lower operating cost structure. Moody's also appreciates the value of improved portfolio focus as a result of selling the chemicals business and reduction of the environmental liability overhang. Ratings Outlook The stable outlook reflects the expectation that Kerr-McGee will successfully execute its asset sales and deleveraging strategy, including reducing leverage to below $8 per PD boe in 2005. The stable outlook also considers that KMG's credit metrics, including percent PD reserves, PD reserve life, reserves replacement, F&D costs, leveraged full-cycle ratio and leverage, will improve over the near term. The company needs to demonstrate significant improvement along these key credit metrics to move its outlook to positive, including replacing substantially more than 100% of its production at competitive F&D costs (~$10/boe). Stronger cash margins and improving F&D costs, leading to a leveraged full-cycle ratio consistently above 2x, are also needed. Moody's will continue to monitor KMG's performance to ensure it is on track to meet its plan. A combination of reserves replacement less than two-thirds of production, higher F&D costs (~$15), weaker leveraged full-cycle ratio (< 1.5x) or leverage that remains above $8 could result in a negative outlook. Ratings affected include those of Kerr-McGee Corporation and all of its rated subsidiaries. Kerr-McGee Corporation, headquartered in Oklahoma City, Oklahoma, is an independent exploration and production company with primary operations in the US and the UK North Sea. Kerr-McGee also manufactures and markets inorganic chemicals. KRAMONT REALTY: Shareholders Approve Centro Properties Merger ------------------------------------------------------------- Kramont Realty Trust's (NYSE:KRT) shareholders approved its previously announced proposed merger into an affiliate of Melbourne, Australia-based Centro Properties Limited (ASX:CNP), CWAR OP Merger Sub III Trust. Shareholders overwhelming voted in favor of the proposed merger. With 70% of eligible shares voted, over 98% of the votes received were in favor of the transaction. Kramont and CWAR OP Merger Sub III Trust anticipate completing the merger this week. About Kramont Kramont Realty Trust -- http://www.kramont.com/-- is a self- administered, self-managed equity real estate investment trust specializing in neighborhood and community shopping center acquisitions, leasing, development and management. The company owns, operates, manages and has under development 93 properties encompassing nearly 12.5 million square feet of leasable space in 16 states. Nearly 80 percent of Kramont's centers are grocery, drug or value retail anchored. * * * As reported in the Troubled Company Reporter on Dec. 23, 2004, Moody's Investors Service placed its B3 preferred stock rating of Kramont Realty Trust under review for upgrade due to the announcement that Kramont agreed to merge into Centro Watt America REIT III LLC, an affiliate of Melbourne, Australia-based Centro Properties Limited (ASX: CNP), a property trust. Simultaneously, other affiliates of Centro will be merged into Kramont. The transaction is expected to close during the first quarter of 2005. During its review, Moody's will review the pro forma financial and strategic structure of Centro and its US affiliates, and the disposition of the Kramont preferred stock. The review for upgrade reflects Centro's status as a larger, more diverse and seemingly more financially robust company than Kramont. Moody's does not rate Centro. KRISPY KREME: KremeKo Franchisee Files for CCAA Protection ---------------------------------------------------------- KremeKo, Inc., a Krispy Kreme Doughnuts, Inc. (NYSE: KKD) franchisee, filed an application with the Ontario Superior Court of Justice to restructure under the Companies' Creditors Arrangement Act. Krispy Kreme, which holds a 40.6% interest in KremeKo, has agreed to provide debtor-in-possession financing to provide funds for KremeKo's operations during the restructuring process. The Court also approved the appointment of a Chief Restructuring Officer to work closely with the Company and to manage KremeKo's operations during the course of the restructuring. The Court made an order on Friday, April 15, 2005, protecting KremeKo from its creditors while it restructures its affairs under the CCAA. The Initial Order appointed Ernst & Young Inc. as Monitor of the property and business of KKI. "This is a difficult but necessary process for KremeKo, and we believe it is in the best interest of the Krispy Kreme brand in Canada in the long term," said Steve Cooper, Chief Executive Officer of Krispy Kreme Doughnuts, Inc. "We believe that this process allows us to continue to serve customers in KremeKo's markets while simultaneously restructuring our Canadian operations on a sound basis so that we can continue to grow." Krispy Kreme's New Financing Agreements As previously reported in the Troubled Company Reporter, Krispy Kreme Doughnut Corporation, a wholly owned subsidiary of Krispy Kreme Doughnuts, Inc., entered into two senior secured credit facilities that will provide the doughnut-maker with up to $225,000,000 of fresh financing. Under a FIRST LIEN CREDIT AGREEMENT dated as of April 1, 2005, Krispy Kreme gets access to $75,000,000 of revolving credit, secured by a first lien on the company's assets. Under a SECOND LIEN CREDIT AGREEMENT dated as of April 1, 2005, the Company can borrow up to $120,000,000 in the form of a secured term loan and the lenders will back letters of credit for up to $30,000,000. The proceeds of the term loan repay approximately $90 million outstanding under KKDC's previous credit facility, pay fees and expenses related to the financing and provide cash on the balance sheet. KRISPY KREME DOUGHNUT CORPORATION is the Borrower under each facility, and KKDC's obligations are guaranteed by KRISPY KREME DOUGHNUTS, INC., KRISPY KREME DISTRIBUTING COMPANY, INCORPORATED, KRISPY KREME MOBILE STORE COMPANY, KRISPY KREME CANADA, INC., HD CAPITAL CORPORATION, HDN DEVELOPMENT CORPORATION, KRISPY KREME COFFEE COMPANY, LLC, GOLDEN GATE DOUGHNUTS, LLC, PANHANDLE DOUGHNUTS, LLC, FREEDOM RINGS, LLC, and NORTH TEXAS DOUGHNUTS, L.P. The FIRST LIEN Lenders are: * CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH, as Administrative Agent, Lender and Issuing Lender * WELLS FARGO FOOTHILL, INC., as Collateral Agent, Lender, Issuing Lender and Swingline Lender * Field Point I, LTD. * SPCP Group III LLC and * SPCP Group LLC The SECOND LIEN Lenders are: * CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH, as Lender, Administrative Agent, Paying Agent, Fronting Bank and Collateral Agent * Banc of America Securities LLC as agent for Bank of America, N.A. * Field Point I, LTD. * Sea Pines Funding LLC and * SPF CDO I, LLC As of April 1, 2005, Krispy Kreme warrants and represents to the Lenders that, after giving effect on a pro forma basis to the new extensions of credit, the Company is and will be solvent. Krispy Kreme is confident that the aggregate value of its property, at present fair saleable value (i.e., the amount that may be realized within a reasonable time, considered to be six to eighteen months, either through collection or sale at the regular market value, conceiving the latter as the amount that could be obtained for the properties in question within such period by a capable and diligent businessperson from an interested buyer who is willing to purchase under ordinary selling conditions), exceeds the amount of all the debts and liabilities (including contingent, subordinated, unmatured and unliquidated liabilities). Krispy Kreme assures the Lenders that it will not have unreasonably small capital with which to conduct their business operations and the Company will have sufficient cash flow to enable them to pay their debts as they mature. Milbank, Tweed, Hadley & McCloy LLP represented the Lenders in these financing transactions. Krispy Kreme is represented by Gerald S. Tanenbaum, Esq., at Cahill Gordon & Reindel LLP, as special New York counsel; Kilpatrick Stockton, LLP, as special North Carolina and intellectual property counsel; Taylor Law Offices, P.C., as special Illinois counsel; Allman Spry Leggett & Crumpler, P.A., as special North Carolina real estate counsel; Stites & Harbison PLLC, as special Kentucky counsel; and Andrews Kurth LLP, as special Texas counsel. Krispy Kreme promises to comply with three key financial covenants: (a) Krispy Kreme promises that its Consolidated Leverage Ratio will not exceed: Maximum Consolidated Testing Period Leverage Ratio -------------- -------------- Second, Third and Fourth Fiscal 4.50 to 1.00 Quarters of 2006 Fiscal Year First Fiscal Quarter of 2007 Fiscal Year 4.25 to 1.00 Second Fiscal Quarter of 2007 Fiscal Year 4.20 to 1.00 Third and Fourth Fiscal Quarters of 3.95 to 1.00 2007 Fiscal Year 2008 Fiscal Year 3.70 to 1.00 First Fiscal Quarter of 2009 Fiscal 3.50 to 1.00 Year and Thereafter (b) Krispy Kreme covenants that its Consolidated Interest Coverage Ratio will not fall below: Minimum Consolidated Testing Period Interest Coverage Ratio -------------- ----------------------- Second Fiscal Quarter of 2006 Fiscal 3.15 to 1.00 Year through Third Fiscal Quarter of 2007 Fiscal Year Fourth Fiscal Quarter of 2007 Fiscal 3.40 to 1.00 Year through Fourth Fiscal Quarter of 2008 Fiscal Year First Fiscal Quarter of 2009 and 3.50 to 1.00 Thereafter (c) Krispy Kreme agrees to limit Capital Expenditures (subject to a 50% carryover from one year to the next for unused amounts) to: Period Maximum CapEx ------ ------------- 2006 Fiscal Year $15,000,000 2007 Fiscal Year $15,000,000 2008 Fiscal Year $33,000,000 2009 Fiscal Year $40,000,000 2010 Fiscal Year $50,000,000 Krispy Kreme agrees it will deliver copies of all Restated Financial Statements for the 2004 and 2005 Fiscal Years to the Lenders no later than December 15, 2005, and promises that the audit opinion submitted by PriceWaterhouseCoopers LLP (or any other independent public accountants of recognized national standing) will not contain a "going concern" or similar qualification or exception or any other qualification or exception as to the scope of the audit. Additionally, until the Restated Financial Statements are delivered to the Lenders, Krispy Kreme promises that Kroll Zolfo Cooper LLC (or another firm with at least the same capabilities and reputation acceptable to the Lenders) will continue to be engaged to perform substantially the same services it's performing now. Krispy Kreme also agrees that any success or similar fee payable to Kroll, to the extent that amount of any portion is paid in cash, must be acceptable to the Lenders. Krispy Kreme further agrees with the Lenders that not later than 90 days after the Restated Financial Statements are prepared and delivered, the Company will arrange and pay for Standard & Poor's Ratings Services and Moody's Investors Services, Inc., to rate the loan facilities. Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme is a leading branded specialty retailer of premium quality doughnuts, including the Company's signature Hot Original Glazed. Krispy Kreme currently operates approximately 400 stores in 45 U.S. states, Australia, Canada, Mexico, the Republic of South Korea and the United Kingdom. Krispy Kreme can be found on the World Wide Web at http://www.krispykreme.com/ LAC D'AMIANTE: Files for Chapter 11 Protection in S.D. Texas ------------------------------------------------------------ Five of Tucson, Arizona-based ASARCO Inc.'s non-operational and dormant subsidiaries filed Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas to deal with asbestos-related claims. ASARCO, the U.S. unit of Mexican diversified mining firm Grupo M,xico S.A. de C.V. (Mexican: GMEXICOB), said in a press release that the filing in Corpus Christi, Texas, would not affect customers, suppliers, employees or any of its operational units. Although both businesses were discontinued, ASARCO says they face personal injury claims stemming from the widespread "asbestos crisis" of the late 1990s. "In order to dispose of thousands of claims in an expeditious and fair manner, Asarco has turned to the congressionally authored solution, and will seek a permanent injunction under section 524(g) of the Bankruptcy Code in which all asbestos-related claims will be channeled to a trust for an equitable resolution and payment," the company told Dow Jones. Section 524(g) of the Bankruptcy Code gives temporary protection to parent companies from asbestos-related personal injury claims against their subsidiaries. All claims have to be heard at the same court. Headquartered in Tucson, Arizona, Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd., are all non- operational and dormant subsidiaries of ASARCO Inc. n/k/a ASARCO LLC -- http://www.asarco.com/ ASARCO mines, smelts and refines copper and molybdenum in the United States and Peru. The Debtors filed for chapter 11 protection on Apr. 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). Nathaniel Peter Holzer, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they each estimated more than $100 million in assets and debts. LAC D'AMIANTE: Case Summary & 30 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Lac d'Amiante Du Quebec Ltee fka Lake Asbestos of Quebec, Ltd. 1150 North Seventh Avenue Tucson, Arizona 85705 Bankruptcy Case No.: 05-20521 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- CAPCO Pipe Company, Inc. 05-20522 Cement Asbestos Products Company 05-20523 Lake Asbestos Of Quebec, Ltd. 05-20524 LAQ Canada, Ltd. 05-20525 Type of Business: The Debtors are all non-operational and dormant subsidiaries of ASARCO Inc. nka ASARCO LLC. To deal with asbestos-related claims, the Debtors filed for chapter 11 protection. ASARCO mines, smelts and refines copper and molybdenum in the United States and Peru. See http://www.asarco.com/ Chapter 11 Petition Date: April 11, 2005 Court: Southern District of Texas (Corpus Christi) Judge: Richard S. Schmidt Debtors' Counsel: Nathaniel Peter Holzer, Esq. Jordan, Hyden, Womble & Culbreth, P.C. 500 North Shoreline Drive, Suite 900 Corpus Christi, Texas 78471 Tel: (361) 884-5678 Fax: (361) 888-5555 Financial Condition as of April 11, 2005: Estimated Assets Estimated Debts ---------------- --------------- Lac d'Amiante Du More than More than Quebec Ltee $100 Million $100 Million CAPCO Pipe Company, More than More than Inc. $100 Million $100 Million Cement Asbestos More than More than Products Company $100 Million $100 Million Lake Asbestos Of More than More than Quebec, Ltd. $100 Million $100 Million LAQ Canada, Ltd. More than More than $100 Million $100 Million Debtors' Consolidated List of 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Brayton Purcell Settled unfunded $15,300,000 Al Brayton claims 222 Rush Landing P.O. Box 6169 Novato, CA 94948 Karl Asch, Esq. Settled unfunded $4,300,000 150 Tices Lane claims East Brunswick, NJ 08816 Garruto, Galex & Cantor Settled unfunded $4,000,000 c/o Tortoreti Tomes & claims Callahan PC 150 Tices Lane East Brunswick, NJ 08816-2089 Paul Hanley & Harley LLP Settled unfunded $3,700,000 Dean Hanley claims 1608 Fourth Street, Suite 300 Berkeley, CA 94710 Baron & Budd, P.C. Settled unfunded $3,100,000 Russell Budd claims 3102 Oak Lawn Avenue Suite 1100 Dallas, TX 75219-4281 Kazan, McClain, Abrams, Settled unfunded $2,200,000 Fernandez, Lyones & claims Farrise, PLC Steven Kazan 171 Twelfth, Suite 300 Oakland, CA 94607 Environmental Attorneys Settled unfunded $2,100,000 Group LLC claims Marty Berks 1900 28th Avenue South, Suite 107 Birmingham, AL 35209 Waters & Kraus, LLP Settled unfunded $2,000,000 Peter Kraus claims 3219 McKinney Ave., Suite 3000 Dallas, TX 75204 $2,000,000 Early Ludwick & Settled unfunded $1,600,000 Sweeney, LLC claims One Century Tower 265 Church St., 11th Floor P.O. Box 1866 New Haven, CT 06508-1866 Pitkow & Witt Settled unfunded $1,400,001 Hal Pitkow claims 138 N. State Street Newtown, PA 18940 Greitzer & Locks Settled unfunded $1,200,000 1500 Walnut Street claims Philadelphia, PA 19102 Reaud, Morgan & Quinn, Inc. Settled unfunded $1,100,000 Glen Morgan claims 801 Laurel Beaumont, TX 77704 Wilentz Goldman & Settled unfunded $1,000,000 Spitzer, P.C. claims 90 Woodbridge Center Drive Suite 300, Box 10 Woodbridge, NJ 07095 Simmons Law Firm, L.L.C. Settled unfunded $750,000 Andy Bono claims 707 Berkshire Boulevard P.O. Box 521 East Alton, IL 62024 Brookman Rosenberg Brown & Settled unfunded $660,000 Sandler claims 17th Floor, One Penn Square West 30 South Fifteenth Street Philadelphia, PA 19102 Lynch Martin Settled unfunded $625,000 1368 How Lane claims North Brunswick, NJ 08902 James F. Humphreys & Settled unfunded $580,000 Associates LC claims David Cecil United Center, Suite 800, 500 Virginia Street, East Charleston, WV 25301 Robert E. Sweeney Co., Settled unfunded $478,000 L.P.A. claims 55 Public Square, Suite 1500 Cleveland, OH 44113 Jacobs & Crumplar, P.A. Settled unfunded $392,000 2 East 7th St claims P.O. Box 1271 Wilmington, DE 19899 McCurdy & McCurdy, LLP Settled unfunded $390,000 524 E. Lamar Blvd., claims Suite 250 Arlington, TX 76011 Brent Coon & Associates Settled unfunded $383,000 Brent Coon claims 917 Franklin Suite 210 Houston, TX 77002 Cooney & Conway Settled unfunded $375,000 John Cooney claims 120 N. LaSalle, 30th Floor Chicago, IL 60602 Gavin & Gavin PC Settled unfunded $370,000 22 Beech Lane claims Edison, NJ 08820 John Arthur Eaves Law Firm Settled unfunded $347,000 101 North State St. claims Jackson, MS 39201-2811 Hamburg, Rubin, Mullin, Settled unfunded $324,000 Maxwell & Lupin claims 375 Morris Road P.O. Box 1479 Lansdale, PA 19446-0773 Shein Paul Reich & Settled unfunded $269,000 Meyers PC claims Shein Law Center 121 South Broad Street, 21st Floor Philadelphia, PA 19107 Bevan & Associates, Settled unfunded $255,000 L.P.A., Inc. claims Tom Bevan 10360 Northfield Road Northfield, OH 44067 Morris Eisen & Perry Settled unfunded $250,000 Weitz PC claims c/o Weitz & Luxenberg,P.C. Perry Weitz 180 Maiden Lane New York, NY 10038 Foster & Sear, LLP Settled unfunded $232,000 Scott Wert claims 524 E. Lamar Blvd., Suite 200 Arlington, TX 76011 Law Offices of Peter G. Settled unfunded $225,000 Angelos (Baltimore) claims One Charles Center, 22nd Floor, 100 North Charles Street Baltimore, MD 21201 LODGE ASSOCIATES: Case Summary & 14 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Lodge Associates, Ltd. P.O. Box 160306 Mobile, Alabama 36616-1306 Bankruptcy Case No.: 05-12145 Chapter 11 Petition Date: April 14, 2005 Court: Southern District of Alabama (Mobile) Debtor's Counsel: Lawrence B. Voit, Esq. Silver, Voit & Thompson, P.C. 4317-A Midmost Drive Mobile, Alabama 36609-5507 Tel: (251) 343-0800 Fax: (251) 343-0862 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 14 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ The Mitchell Company, Inc. $751,531 P.O. Box 160306 Mobile AL 36616-1306 Airborne Security & Escort $13,440 537 Hwy 82 E., Suite 212 Greenville MS 38701 McNorton, Yeend & Biel, P.C. $7,854 41 West 1-65 Service Rd N, Ste. 190 Mobile AL 36608-1201 Andy Delancy $7,615 d/b/a Delancy Painting Service Southern Floor Covering, Inc. $6,817 Southeatern Partners, Inc. $6,202 Camsco Wholesalers, Inc. $4,407 Els, Inc. $3,020 State of Mississippi $2,938 State Tax Commission Mississippi Home Corp. $2,400 The Clarion Ledger $1,922 Billy R. Yates $1,785 d/b/a Carpet Source Jeffcoat Fence Co., Inc. $1,060 Steve's Auto Glass, Inc. $545 MARKLAND TECH: Subsidiary Wins Omnibus Contract Extension --------------------------------------------------------- Markland Technologies, Inc. (OTCBB: MRKL), a defense and homeland security company transforming advanced laboratory technology into real-world products, said the Contracting Officer for its U.S. Army Night Vision and Electronic Sensors Directorate Omnibus contract has stated that EOIR Technologies Inc. will be awarded an additional performance year on this contract thus extending the period for contract awards out to July 2007. Normal practice would allow for tasks awarded by that date to be executed over the following year, allowing backlog to be accumulated on this contract until midyear 2008. EOIR Technologies Inc has won this contract on three consecutive solicitations over the last twelve years and expects that it will compete for, and as a result of continued excellent performance, believes it will have a very good opportunity to win the 5-year follow-on contract to be awarded sometime in 2008. The contract has a potential value of approximately $406 million over the life of the contract. With approximately $150M funded to date there is a total remaining potential contract value which exceeds $250M over the three year period extending to mid year 2008. Although there is no guarantee of capturing that complete level of funding the company has traditionally captured a very high percentage of available contract funding over the previous twelve year history of this contract. The Army's NVESD research and development group is one of the U.S. military's most advanced technological leaders. Markland is working on a range of next-generation technology solutions for the NVESD, including night vision and advanced sensor applications, disposable sensors and other threat-detection systems. Many of the products and services being delivered on this contract utilize next-generation electro-optic and infrared sensor technologies that are being used in direct support of U.S. military combat operations in Iraq, Afghanistan and elsewhere. The Army's NVESD has been responsible for numerous key innovations in the fields of optical electronics and thermal imaging for weapons targeting, electronic surveillance and other mission- critical military applications. About Markland Technologies Markland Technologies, Inc., is committed to setting next- generation standards in defense and security through the provision of innovative emerging technologies and expert services. The Company is engaged in the identification of advanced technologies currently under development in laboratories, universities and in private industry, and in the transformation of those technologies into next-generation products. Markland's solutions support military, law enforcement and homeland security personnel to protect the nation's citizens, borders and critical infrastructure assets from the threat of terrorism and other dangers. Through strategic development, Markland focuses on the creation of dual- use technology and products with applications in both the defense market and civilian homeland security and law enforcement fields. The Company is a Board Member of the Homeland Security Industries Association, and is a featured Company on HomelandDefenseStocks.com * * * Going Concern Doubt In its Form 10-Q for the quarterly period ended Dec. 31, 2004, filed with the Securities and Exchange Commission, Markland reported net losses of $9,253,213 and $1,739,145 for the six months ended December 31, 2004 and 2003, respectively. During the six months ended December 31, 2004, Markland issued secured convertible promissory notes with a face value of $6,955,000 which, if not converted, are repayable between September and November 2005. There is no assurance that Markland can reverse its operating losses, or that it can raise additional capital to allow it to continue its planned operations. These factors raise substantial doubt about Markland's ability to continue as a going concern. MATLACK SYSTEMS: Court Okays Settlements of Avoidance Actions ------------------------------------------------------------- At the request of Gary F. Seitz, the chapter 7 Trustee of the estate of Matlack Systems, Inc., and debtor-affiliates, the U.S. Bankruptcy Court for the District of Delaware approved the Settlements of Avoidance Actions with six Defendants who filed preference actions against the Debtors. On July 19, 2003, the Court entered an order Establishing Compromise Procedures for Settlement of Avoidance Claims. The Court's order stipulates that Mr. Seitz must seek Court approval for any settlement of preference actions amounting to more than $100,000 asserted against the Debtors. The six Defendants covered by the Settlements and the settlement amounts are: Defendant Amount Demanded Settlement Amount --------- --------------- ----------------- Comdata Corp. $2,595,902.66 $170,000 J.J. Keller & Associates $972,572.68 $70,000 Ports Petroleum Inc., Co. $397,475.30 $30,000 Tennessee Transporter, Inc. $254,352.54 $2,000 Zurich Insurance Company $192,597.00 $2,500 Sorenson Transport $159,509.05 $5,000 ----------------- $279,500 Mr. Seitz assures the Court that none of the Debtors' creditors or other parties-in-interest will be prejudiced by the Settlements. Headquartered in Wilmington, Delaware, Matlack Systems, Inc., provides liquid and dry bulk transportation, primarily for the chemicals industry. The Company and its debtor-affiliates filed for chapter 11 protection on March 29, 2001 (Bankr. D. Del. Case No. 01-1114). The Court converted the case to a chapter 7 liquidation proceeding on Oct. 18, 2002. William H. Schorling Klett Rooney Lieber & Schorling, P.C., represents the Debtors as they wind up their assets. Charlene D. Davis, Esq., and Daniel K. Astin, Esq., at The Bayard Firm serves as the Chapter 7 Trustee's attorneys. When the Debtors filed for chapter 11 protection, they listed total assets of $105,337,000 and total debts of $59,275,000. MATRIA HEALTHCARE: Wins Four New Disease Management Accounts ------------------------------------------------------------ Matria Healthcare, Inc. (Nasdaq: MATR) has been awarded four new disease management accounts and expanded programs and services for two of the Company's current disease management clients. The Company's four new awards of business are with two self-insured employers and two third party administrators. The two awards of business for the expansion of the Company's health enhancement programs and services are with a self-insured employer and a regional health plan. The Company reported that these new awards are in addition to the six awards of new business that were announced February 2, 2005. The newly awarded services for one of the new accounts and one of the expanded accounts have already been implemented, and Matria expects to implement services for the remaining accounts during the second and third quarters of 2005. The two new employers selecting Matria's disease management services include a Fortune 700 company and a non-public company with annual revenues of approximately six billion dollars. The new third party administrator accounts will provide Matria's disease management programs to their members. Collectively, the new employer and third party administrator accounts will represent approximately 100,000 additional covered lives. The two existing Matria accounts adding health enhancement programs and services for their employees and health plan members are a Fortune 300 company and a regional health plan with approximately 1.5 million covered lives. Parker H. "Pete" Petit, Chairman and Chief Executive Officer, said, "We continue to see a steady flow of new accounts selecting our health enhancement services for their employees and their health plan members. We are especially pleased to see existing accounts recognizing the compelling outcomes and excellent patient satisfaction scores from their disease management programs; and therefore, expanding the breadth of Matria's programs and services that are available to their employees and members. We have continually pursued the broadening of our programs and services to encompass the full-continuum of care and a total health enhancement solution that brings together a comprehensive array of programs to support the health, well-being and productivity of employees and health plan members." "We believe the best testimony of a client's satisfaction with the return on investment from disease management programs is the client's desire to offer expanded health enhancement programs. We are just beginning to experience what we believe will become a trend ... accounts adding more and more components to their health enhancement offerings and doing so with a one-stop- shop provider," added Mr. Petit. In three of Matria's new accounts, the Company has been awarded the management of four or more diseases and conditions. The other new account has selected Matria's cancer management program for its members. In the existing health plan account, Matria has a long relationship as the provider of this health plan's diabetes, asthma, chronic obstructive pulmonary disease and maternity management programs, and now Matria will be adding its 24/7 nurse triage program. The existing employer account expanding Matria's services will be adding the Company's disease management programs for cancer and end- stage renal disease to its current Matria programs for diabetes, coronary artery disease and low back pain. About Matria Healthcare Matria Healthcare -- http://www.matria.com/-- is the leading provider of comprehensive disease management programs to health plans and employers. Matria manages the chronic disease and episodic conditions representing the greatest cost to the healthcare system ... diabetes, cardiovascular diseases, respiratory disorders, high-risk pregnancy, cancer, chronic pain and depression. Headquartered in Marietta, Georgia, Matria has more than 40 offices in the United States and internationally. * * * As reported in the Troubled Company Reporter on Aug. 23, 2004, Standard & Poor's Ratings Services reinstated its 'BB-' senior secured debt rating on disease-state management and fulfillment services provider Matria Healthcare Inc.'s $35 million revolving credit facility due October 2005. At the same time, Standard & Poor's affirmed its 'B+' corporate credit rating and its 'B-' subordinated debt rating on Matria's $84 million of 4.875% convertible senior subordinated notes due in 2024. Standard & Poor's initially withdrew the senior secured rating because they believed that the $35 million revolving credit facility would be refinanced as part of Matria's transaction to retire $122 million of outstanding 11% senior notes. However, because the revolving credit facility will remain outstanding, Standard & Poor's is reinstating the rating. S&P says the outlook is stable. "The low-speculative-grade ratings on Matria Healthcare, a disease-state management and fulfillment services provider to patients, physicians, and health plans, reflect the company's limited scale of operations, its position as a small vendor supplying products for larger medical products manufacturers, and the decline in its women's health segment," said Standard & Poor's credit analyst Jesse Juliano. "These concerns are offset by the fact that Matria has acquired businesses during the past few years that have broadened its clinical infrastructure and disease-state management platforms. The company is also operating with relatively moderate debt leverage." METROMEDIA INT'L: Must File Reports by June 3 to Avoid Default -------------------------------------------------------------- Metromedia International Group, Inc. (OTCBB: MTRM) (PINK SHEETS: MTRMP), the owner of interests in various communications and media businesses in the countries of Russia and Georgia, received notification from the trustee of its 10-1/2 % Senior Notes Due 2007 concerning non-compliance with certain covenants in the indenture governing the Senior Notes. The trustee reported that it had not received three documents from the Company: -- The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004; -- An Officers' Certificate executed by the Company's Chief Executive Officer and Chief Financial Officer containing management's representations that the Company has complied with the covenants of the Indenture; and -- A certificate executed by the Company's independent public accountants representing that nothing has come to their attention that leads them to believe that the Company failed to comply with the covenants of the Indenture. Under the terms of the Indenture, the Company must resolve these compliance matters no later than June 3, 2005, in order to avoid an event of default. If such an event of default were to occur, the trustee or holders of at least 25% of the aggregate principal amount of the Senior Notes outstanding could declare all Senior Notes to be due and payable immediately, and should that happen, the Company would not have sufficient corporate cash to meet this obligation. In making this announcement, Ernie Pyle, Chief Financial Officer of MIG, commented, "The Company is currently completing preparation of its Current Annual Report and anticipates filing such report with the United States Securities and Exchange Commission within the next three weeks. As such, we anticipate curing the outstanding compliance items with respect to the Indenture before June 3rd." With respect to the Company's ability to timely file future reports with the SEC, Mr. Pyle added: "The Company does not presently have sufficient financial personnel and resources within Russia and Georgia to prepare and finalize, on a timely basis, the US GAAP financial results for the Company's business ventures located within these countries. The recruitment and retention of qualified US GAAP accountants in these countries is difficult today due to the high demand for individuals with these skills in this part of the world. Accordingly, the Company may continue to experience difficulties in timely filing reports with the SEC." About the Company Through its wholly owned subsidiaries, Metromedia International Group owns interests in communications businesses in the countries of Russia and Georgia. Since the first quarter of 2003, the Company has focused its principal attentions on the continued development of its core telephony businesses, and has substantially completed a program of gradual divestiture of its non-core cable television and radio broadcast businesses. The Company's core telephony businesses include PeterStar, the leading competitive local exchange carrier in St. Petersburg, Russia, and Magticom, Ltd., the leading mobile telephony operator in Tbilisi, Georgia. At Sept. 30, 2004, Metromedia International's balance sheet showed a $6,497,000 stockholders' deficit, compared to a $13,155,000 deficit at Dec. 31, 2003. MIRANT CORP: Shareholders Demand Fairness in Bankruptcy Hearing --------------------------------------------------------------- Bankruptcy proceedings for Mirant, an Atlanta-based power company, continue with arguments to determine the company's enterprise value today, April 18, in the U.S. Bankruptcy Court for the Northern District of Texas. Mirant filed the 11th-largest bankruptcy of all time on July 14, 2003, with listed assets of $20.57 billion and consolidated debts of $11.4 billion. The company proposed a reorganization plan that has drawn objections from shareholders, bondholders, creditors and regulators. In fact, the Securities and Exchange Commission said in its objection to the plan that Mirant improperly provided releases to present and former executives and directors "to the detriment of public investors." With assets almost doubling liabilities at the time of Mirant's surprising and controversial bankruptcy filing, stakeholders were almost assured recovery. Inexplicably, the proposed plan makes only long-term bondholders whole, offers varying amounts of stock to other bondholders and creditors, but gives nothing to Mirant's stockholders. Today, the Mirant Shareholders' Rights Group LLC, representing more than 200,000 investors who have lost life savings and retirement funds, will argue that attempts to undervalue the company are a flagrant abuse of the bankruptcy process and steal value from those who hold stock and deliver that value instead to management and the banks that support them. Mirant Corporation (OTC Pink Sheets: MIRKQ) has clearly demonstrated it is uninterested in fulfilling any level of accountability to its shareholders. While the Company has lost billions of dollars and is currently under Chapter 11 protection, top executives continue to be rewarded with large bonuses. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. MIRANT CORP: Objects to Former Parent's Multi-Million Claims ------------------------------------------------------------ Mirant Corporation was a wholly owned subsidiary of The Southern Company until it was spun off as an independent, publicly traded company in 2001. Prior to the Spin-Off, Southern provided guarantees to certain of Mirant Americas Energy Marketing, LP's trading counterparties. On December 15, 2003, Southern filed Claim No. 6307 in MAEM's case as "contingent and unliquidated," based on six guarantees: Original Amended Claim -- Claim -- Date of Amount of Amount of Counterparty Guarantee Guarantee Guarantee ------------ --------- --------- --------- Avista Energy, Inc. 04/27/99 $3,000,000 Withdrawn Abitibi-Consolidated, Inc. 06/10/98 $5,000,000 $1,143,829 Entergy Power Marketing 02/10/98 $3,000,000 $3,000,000 Koch Energy Trading, Inc. 04/18/97 $5,000,000 $5,000,000 Enron Power Marketing, Inc. 04/01/97 $9,000,000 $9,000,000 Engage Energy US, L.P. 05/11/98 $4,000,000 $4,000,000 Southern amended Claim No. 6307 on November 30, 2004, for $22,143,829 based on the Guarantees. Southern alleged that its claims are secured by collateral, including a right of set-off. Avista Guarantee Pursuant to a Settlement Agreement and Release between Avista and MAEM approved by the Court by order dated December 18, 2003, Southern was released from any obligations under the Avista Guarantee. As a consequence of the release, Southern states that it "withdraws the portion of the Claim based on the Avista Guarantee." Abitibi Guarantee Southern states that it "has received a demand under the Abitibi Guarantee. On October 12, 2004, Southern Company paid $316,650 pursuant to the demand. To mitigate its damages and terminate its liability under the Abitibi Guarantee, Southern has also paid $829,179 on October 22, 2004." Entergy Guarantee Southern admits that it "has not received a demand under the Entergy Guaranty." Southern states that MAEM has "indicated that Southern Company has been released from the Entergy Guaranty." MAEM says it has made no express representation. Koch Guarantee Southern admits that it "has not received a demand under the Koch Guaranty." Southern states that MAEM has "indicated that Southern Company has been released from the Koch Guarantee." MAEM denies making express representation. Enron Guarantee Southern states that "[b]ecause of the dispute between the Debtor and its affiliates and Enron and its affiliated companies regarding the underlying contract, Southern Company reserves its rights under the Enron Guaranty until the Debtors and Enron resolve their disputes, including any disputes as to the amounts which may arise under the Enron Guaranty." MAEM believes that Enron has made no demand to Southern under the Enron Guarantee. Engage Guarantee Southern admits that it "has not received a demand under the Engage Guaranty. Accordingly, Southern Company reserves its rights regarding any amounts which may become due under the Engage Guaranty." MAEM disputes the Southern Guarantee Claim. Pursuant to Sections 502(e) and 509 of the Bankruptcy Code, MAEM asks the Court to disallow the Claim in its entirety. MAEM explains that Southern has represented it has received no demands for payment under any of the Guarantees other than in connection with the Abitibi Guarantee. The remainder of the Southern Guarantees Claim was filed as contingent and unliquidated, and these claims remain contingent and unliquidated. Section 502(e)(1)(B) provides that a claim for reimbursement will be disallowed if the claim is contingent at the time of allowance or disallowance. MAEM also points out that In re Drexel Burham Lambert Group, Inc., 148 B.R. 982, 990 (Bankr. S.D.N.Y. 1992), teaches a claim will be expunged where: (i) The claim is for reimbursement or contribution; (ii) The claimant is liable with the debtor on the claim; and (iii) The claim is contingent at the time of its allowance or disallowance. MAEM informs the Court that Engage Energy and Enron filed proofs of claim on their own behalf in its Chapter 11 case. Engage Energy also filed a proof of claim in Mirant's Chapter 11 case. The Engage Energy Claims assert unliquidated, unsecured claims based on (i) an energy tolling agreement between Engage Energy and MAEM, and (ii) a corporate guarantee issued by Mirant in favor of Engage Energy in support of the Tolling Agreement. The Engage Energy Claims do not relate to the Engage Guarantee or its underlying agreement. Enron filed Claim No. 6292, asserting its unliquidated, unsecured claim based on a Master Purchase and Sale Agreement between MAEM and Enron. To the extent that the Southern Guarantees Claim seeks recovery of amounts included in the Engage Energy Claims and the Enron Claim, MAEM asserts that the Claim should be disallowed. The Debtors will only pay once on the amounts purportedly owed to any of the counterparties under the Guarantees. MAEM also tells Judge Lynn that Southern, as a Guarantor, has no better claim than the underlying creditor. MAEM contends that, to the extent that a creditor's claim against a debtor's estate is limited or disallowed, so too is any claim against the estate for indemnity, reimbursement or contribution of an entity that is liable with the debtor on the transaction underlying the claim. Section 502(e)(1)(A) states that a claim for reimbursement will be disallowed to the extent that the underlying creditor's claim is disallowed. MAEM relates that Abitibi, Entergy, Koch, and Engage Energy have failed to file proofs of claim in the Debtors' Chapter 11 cases. Entergy, Koch and Engage Energy were each listed in the Debtors' Schedules of Liabilities as holding contingent and unliquidated claims against the Debtors' estates. Pursuant to Rule 3003(c)(2) of the Federal Rules of Bankruptcy Procedure, creditors whose claims are listed in a debtor's schedules as disputed, contingent or unliquidated must file a proof of claim. In addition, Southern elected not to file a proof of claim on the behalf of any of the Counterparties pursuant to Section 501(b). Each of Entergy, Koch, Engage Energy and Abitibi had actual notice of the deadline for filing claims in the Debtors' cases. As a result of the failure of these parties to file proofs of claim, any claims that Abitibi, Entergy, Koch and Engage Energy may have against MAEM and its estate should be considered disallowed. MAEM believes that the only party that (a) is purportedly covered by a guarantee and (b) filed a proof of claim in these cases relating to the Enron Guarantee is Enron. The Debtors have not yet filed an objection to the Enron Guarantee. Accordingly, the Court has not yet allowed or disallowed Enron's claim. To the extent the proof of claim filed by Enron is disallowed, Southern should not be entitled to any recovery under the Southern Guarantees Claim pursuant to Section 502(e)(1)(A). MAEM also argues that no basis exists for Southern to assert that the Southern Guarantees Claim is secured. To date, Southern has not provided any evidence of either collateral or rights of set- off. To the extent Southern seeks to subrogate the Southern Guarantees Claim, MAEM maintains that the Southern Guarantees Claim should be subordinated under Section 509(c) to the extent any of the Counterparties have an allowed claim against MAEM that has not been paid in full. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Some Shareholders Slam Amended Disclosure Statement ---------------------------------------------------------------- L. Matt Wilson, Esq., at The Wilson Law Firm, PC, in Atlanta, Georgia, represents a number of Mirant shareholders, including: Shareholder No. of Shares ----------- ------------- Frank Smith 145,000 R. Weldon Tigner 37,730 David Matter 10,600 Dave Lucas 8,000 Nancy Sterk 4,000 Mr. Wilson asserts that the Debtors' Amended Disclosure Statement continue to fail to provide adequate information regarding: A. Mirant Philippines Values and IPO According to Mr. Wilson, certain undisclosed facts or projections conceal the true value of the Mirant Philippines. There is no disclosure of: * the book value of the Mirant Philippines operations carried on the Debtor's consolidated balance sheet, nor of the amount of cash, which would be generated by an Initial Public Offering of some or all of Mirant Philippines, either at the planned or evaluated price, or the amount the Debtor would accept; * the amount of debt of that operation carried on the Debtors' consolidated balance sheet that might be removed, pursuant to Generally Accepted Accounting Principals, on completion of an IPO selling a majority interest; and * the amount of the tax consequences of any of the IPO. B. Power Plant Values and Sales Possibilities There is no disclosure of: * the appraised value, fair market value, or of the amounts of any offers which the Debtor might receive, has received, or the amounts which the Debtors would accept, for the purchase and sale of any individual power plants; * the amounts of historical energy production, revenue generated, cost of fuel expense, operating expenses, and operating profits attributable to each power plant; and * the power plant level information sufficient to determine the value of the power plants, to avoid a so-called "K-Mart style" plan of reorganization, which grossly undervalues some or all of the Debtors' power plants, which might otherwise be sold in the public market, pursuant to all available Bankruptcy procedural protections, for amounts in excess of the values implied by the Debtors' continued inefficient and underutilized operation of these power plants. Certain current pleadings suggest that Citibank, N.A., possibly acting on inside information obtained as a member of the Mirant Creditors Committee, has presented secret offers to purchase the Debtors' Philippines and Jamaican subsidiaries. The Debtors, Mr. Wilson asserts, should disclose: (1) all of the facts surrounding these offers should be investigated and fully disclosed as any unsolicited offer may provide a baseline minimum valuation for these assets; and (2) to the extent that these offers were evaluated by the Debtor and rejected as inadequate, or that counter-offers were made, there would be evidence the Debtors' own evaluation indicated a higher value for these assets; C. Liquidation Value Despite of their inclusion of a "Liquidation Analysis," the Debtors have performed no "analysis" whatsoever. The Debtors did not consider the interests of the shareholders, provided source for the numbers used and does not "show its math". They did not provide power plant specific numbers, made entirely incorrect, unreasonable, and unsubstantiated assumptions, and based the entire proposed liquidation over an unnecessary, unreasonable, and impossible three-month period. D. Trading Operations Value and Sale There is no disclosure of: * the appraised value, fair market value, or the amount of any offers which the Debtors have received, nor the amount which the Debtors would accept, for the purchase and sale of any of their trading operations. Similarly, there is no disclosure of the historical profits and losses of these operations, the amount of capital, which is committed to these trading operations, or the projected profit and loss of these operations; and * the amount of capital, which is projected to be committed to these operations. The Debtors' lack of disclosure conceals the true value of the trading operations. The Debtors must consider and evaluate sale or IPO so that the shareholders can determine whether the disposition of the trading operations, or even its discontinuation, might generate sufficient additional cash or revenues, or free up sufficient additional capital, to create positive value for equity. E. Warrant Values: The Debtors continue to fail to disclose the exercise price of the proposed New Mirant Warrants. F. Value of Released Claims The Debtors continue to fail to disclose: * the substance or values of any of the claims that they propose to release, which would include virtually all shareholder derivative claims other than the Southern Company Causes of Action; and * their own internal evaluation of the merits of any of the claims, as well as any adverse impact of not making the proposed release. 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) NABI BIOPHARMACEUTICALS: S&P Rates $100 Million Senior Notes at B ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B' senior unsecured debt rating to Nabi Biopharmaceuticals' offering of $100 million in convertible senior notes due April 15, 2025. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on Nabi. The outlook remains stable. "The speculative-grade ratings on Nabi reflect the company's narrow business focus as a niche developer of biopharmaceutical products and vaccines," said Standard & Poor's credit analyst Arthur Wong. "The ratings also reflect the risks inherent in drug development and the firm's limited cash flow generating ability as its investment in R&D and manufacturing capacity increases." These negative factors are only partially offset by the modest sales growth of the company's products and the promise of its development-stage staph infection treatment, StaphVAX. Boca Raton, Florida-based Nabi focuses on the development of treatments mainly for infectious and autoimmune diseases. The company's main products are Nabi-HB, PhosLo, and WinRho SDF, which collectively account for about 70% of sales. However, all three products have been experiencing minimal sales growth. Nabi-HB, a hepatitis B immune globulin, generated $40 million in sales in 2004, or an increase of 7% from 2003. Sales of Nabi-HB are typically directly correlated with the number of U.S. hepatitis B liver transplants. However, sales growth for the drug has lagged in the past year because of the changes in treatment protocols, which call for less costly anti-viral drugs and lower doses of antibody-based products such as Nabi-HB. Meanwhile, sales of PhosLo, a phosphate binder used to treat elevated phosphate levels in patients with kidney disease, grew only 7%, to $38 million in 2004. PhosLo is priced at a steep discount to competing treatments, but nonetheless, sales are expected to grow only modestly in 2005. Nabi's business profile remains constrained by the lack of diversity and limited growth potential of its current drug portfolio. The company's U.S. distribution agreement with Cangene Corp. on WinRho SDF has expired, removing the product from Nabi's lineup. Nabi still has a high potential sales prospect in StaphVAX, a staph infection vaccine currently in late-stage Phase III clinical trials. However, the drug's approval remains highly uncertain, and it could take regulatory agencies up to 12 months to complete their review of the product once an application is filed. Nabi does not plan to file a biological license application (BLA) in the U.S. for StaphVAX until the end of 2005, and the company currently has no marketing partner for the product. Nabi has completed three product filings in Europe, including those for PhosLo and StaphVAX. The successful marketing of PhosLo will be an important step in defining the company's commercial presence in Europe before the launch of StaphVAX. NAVISTAR INT'L: Earns $20 Million of Net Income in First Quarter ---------------------------------------------------------------- Navistar International Corporation (NYSE:NAV), the nation's largest combined commercial truck, school bus and mid-range diesel engine producer, reported that it earned $20 million, equal to $0.27 per diluted common share, in its first fiscal quarter compared with a net loss of $14 million in the first quarter a year ago. Consolidated sales and revenues from the company's manufacturing and financial services operations for the first quarter ended January 31, 2005 totaled $2.6 billion, compared with a restated $1.9 billion in the first quarter of 2004. Daniel C. Ustian, Navistar chairman, president and chief executive officer, said first quarter results reflect volume improvements tied to strong industry demand and substantially higher heavy truck market share than in the first quarter of 2004. "We are nearing the end of our second fiscal quarter and industry demand continues strong and our heavy truck market share continues at a high level," Mr. Ustian said. Mr. Ustian reiterated that based on the company's current truck industry volume forecast of 389,500 units, earnings in 2005 should be in the range of at least $4.60 to $5.00 per diluted common share. He said that industry volume is ahead of the company's forecast and that the forecast and guidance will be reviewed and commented upon during the second quarter conference call. According to Mr. Ustian, forecasting production and earnings is difficult because suppliers may not have the necessary components to support higher industry volume. He noted that the company reported two weeks ago that it was experiencing parts shortages that were creating additional inventory, but believed, based upon recent discussions with suppliers, material constraints should not result in excessive in-process inventory by the end of the second fiscal quarter ending April 30, 2005 and should have no impact on full year earnings as currently projected. "We anticipate that our overall market share will grow in 2005 and that our earnings will be greater in 2005 than if we had cut production as some of our competitors have done to address the supply issues," Mr. Ustian said. "Our Class 8 market share in the first quarter rose to 19.1 percent from 15.5 percent in the first quarter a year ago." Worldwide shipments of International medium and heavy trucks and school buses during the first quarter totaled 28,200 units, compared with 22,500 units in the first quarter of 2004 Class 8 shipments totaled 13,000 units, compared with 7,800 in 2004. Class 6-7 shipments totaled 10,800 units, up from 9,900 in 2004. School bus shipments totaled 4,400 units, down from 4,800 a year earlier as the nation's school districts continued to struggle with funding issues. Shipments of diesel engines to other original equipment manufacturers during the quarter totaled 88,800 units, up from 74,500 units in the first quarter of 2004. The company, producer of International(R) brand trucks, diesel engines and IC(R) brand school buses, announced on March 14 that it would be late in reporting first quarter results. The delay in filing the financial results with the Securities and Exchange Commission was related to the restatement of financial information for 2002 and 2003 and the first three quarters of 2004. The company's finance subsidiary, Navistar Financial Corporation, is expected to file its first quarter Form 10-Q with the Securities and Exchange Commission early this week followed later in the week by the parent company's first quarter Form 10-Q filing. About the Company Navistar International Corporation (NYSE: NAV) -- http://www.nav-international.com/-- is the parent company of International Truck and Engine Corporation. The company produces International(R) brand commercial trucks, mid-range diesel engines and IC brand school buses and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. With the broadest distribution network in North America, the company also provides financing for customers and dealers. Additionally, through a joint venture with Ford Motor Company, the company builds medium commercial trucks and sells truck and diesel engine service parts. * * * Moody's Investor Service and Standard & Poor's assigned their low-B ratings to Navistar International's 7-1/2% senior notes due 2011 last year. NEWPAGE CORP.: S&P Assigns Low Ratings on Various Transactions -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Dayton, Ohio-based paper producer, NewPage Corp. and to Escanaba Timber LLC, NewPage's indirect parent company. The outlook is stable. At the same time, based on preliminary terms and conditions, Standard & Poor's assigned its 'B' senior secured bank loan rating and '2' recovery rating to NewPage's $750 million senior secured term loan due in 2011. "The bank loan and recovery ratings reflect an expectation of substantial recovery of principal in the event of default," said Standard & Poor's credit analyst Pamela Rice. Standard & Poor's also assigned its 'BB-' senior secured bank loan rating and its '1+' recovery rating to Escanaba's $225 million senior secured term loan due in 2008, based on preliminary terms and conditions. These ratings reflect an expectation of full recovery of principal in the event of default. In addition, Standard & Poor's assigned its 'CCC+' senior secured debt rating and '5' recovery rating to NewPage's proposed $500 million second-lien secured instruments due 2012, based on preliminary terms and conditions. These ratings indicate negligible (0% to 25%) recovery of principal in the event of default. The second-lien instruments may be issued in the form of bank term loans, floating-rate notes and fixed rate notes, the latter two to be issued under Rule 144a with registration rights. The proposed term loans, floating-rate notes, and fixed-rate notes are rated the same, based on preliminary indications that the three instruments will share the same contractual characteristics. The second-lien instruments are rated two notches below the corporate credit rating on NewPage, reflecting the significant amount of priority liabilities that would rank ahead of second- lien lenders in the event of bankruptcy. Standard & Poor's also assigned its 'CCC+' subordinated debt rating to NewPage's $400 million subordinated notes due 2013, to be issued under Rule 144a with registration rights. Proceeds from the term loans, the second-lien and subordinated notes, $117 million drawn on NewPage's $350 million unrated senior secured revolving credit facility, and $465 million of equity will be used to finance private equity firm Cerberus Capital Management LP's $2.3 billion acquisition of MeadWestvaco Corp.'s (BBB/Negative; Watch Pos/A-3) coated and carbonless paper businesses, including 900,000 acres of timberland, plus fees, expenses, and hedging costs. The timberlands will be owned by Escanaba, which will own NewPage through NewPage Holding Corp. NewPage, with pro forma sales of $2.2 billion in 2004, produces 2.6 million tons of paper at its five mills, including coated paper grades used for commercial printing, magazine covers, catalogs, direct mail, and books, plus carbonless and uncoated paper. The company has a leading market share in North America, an attractive customer base, and a cost position that is competitive with other North American producers. The ratings on NewPage reflect its very aggressive debt leverage, complex capital structure, participation in mature, cyclical, and highly competitive coated paper markets, limited product and geographic diversity, some customer concentration, and potential risks associated with operating as a stand-alone entity. The ratings also reflect expectations of favorable near-term market conditions that should allow meaningful debt reduction over the next 12 months. The ratings on Escanaba also reflect its very aggressive debt maturity schedule and valuable timberland holdings. Standard & Poor's ratings on Escanaba incorporate expectations that it will sell the timberlands over the next year or two and use the proceeds to pay off the Escanaba term loan, with any excess proceeds returned to shareholders. NEW WORLD: Moody's Puts B3 Rating on New $140M Secured Loan ----------------------------------------------------------- Moody's Investors Service rated the proposed $140 million first- lien secured Credit Facility of New World Restaurant Group, Inc. at B3 and the $45 million second-lien secured Loan at Caa1, subject to review of final documentation. Proceeds from the new debt will principally be used to refinance the existing $160 million issue of 13% senior secured notes (2008). Negatively impacting the ratings are Moody's expectation that free cash flow will remain tight for several years, given that the company is at the beginning of an operating turnaround and will invest in modernizing its store base, and the long-term challenges in updating the company's image as more than a seller of bagels. In spite of the substantial debt burden, the recent progress at stabilizing operations and the potential to improve operating efficiency through growing non-breakfast sales benefit the ratings. The rating outlook continues to be stable. Ratings assigned are: $140 million first-lien secured credit facility at B3, and the $ 45 million second-lien term loan at Caa1. Moody's affirmed the following ratings: $160 million of 13% senior secured notes (2008) at B3, and the Senior implied rating at B3. Moody's also lowered the senior unsecured issuer rating to Caa2 from Caa1. Ratings on the senior secured notes (2008) will be withdrawn following completion of the contemplated transaction. The ratings recognize the lengthy history of mediocre sales and operating margins, the high financial leverage and low fixed charge coverage, and the uncertain outcome of the strategic shift to emphasize non-breakfast dayparts. Also adversely impacting the company's credit quality are limited liquidity for financing the store modernization program beyond operating cash flow, current and potential competition with respected restaurant operators such as Starbucks and Panera, and the challenges at staying relevant with shifting consumer preferences. However, the ratings also consider the progress that management has made at stabilizing sales and operating margins since the start of 2004, the potential for strategies (menu, marketing, and real estate) designed to build a significant lunch daypart, and the consumer recognition of the company's concepts as leading bagel restaurants. The pro-forma interest savings, given the expected lower price of the new debt relative to the replaced 13% secured notes, also tangibly benefit the company's ability to invest in its future. The stable outlook reflects Moody's expectation that the company's financial profile will tangibly improve in 2005 as: (1) the strategy to broaden daypart utilization appeals to consumers; (2) average unit volume and profitability grows; and (3) a portion of discretionary cash flow is used to improve the balance sheet. Factors that could lead Moody's to consider a negative rating action include: * a slowdown in the recent improvement pace of restaurant operations; * permanent borrowings on the revolving credit facility; * or inability to improve debt protection measures. Over the longer term, ratings could move upward as financial flexibility strengthens (such as the cushion to cover fixed charges approaching 1.5 times and lease adjusted leverage falling towards 5 times), average unit volume and store operating margin continues to improve, and the company achieves satisfactory returns on investment with the planned remodel and development program. The B3 rating on the proposed secured credit facility (to be comprised of a $15 million Revolving Credit Facility and $125 Term Loan B) considers that these notes are guaranteed by all operating subsidiaries and are secured by a first-lien on substantially all of the company's assets. In a hypothetical default scenario with the revolving credit facility fully utilized, Moody's expects that recovery would rely on ongoing enterprise value given likely liquidation proceeds relative to book value for significant assets such as restaurant equipment, leasehold improvements, goodwill, and trade names. The Caa1 rating on the proposed $45 million secured Loan considers that these notes are collateralized by a second-lien on the same assets that secure the first-lien credit facility. In a default scenario, Moody's believes that recovery value would not equal the total debt balance. Pro-forma lease adjusted leverage (assuming that the new debt has a weighted average interest rate substantially lower than the 13% of the to-be-retired secured notes) for the twelve months ending December 2004 was high at about 6.4 times and fixed charge coverage (Moody's definition is EBIT plus 1/3 * rent expense in the numerator and interest expense + 1/3 * rent expense in the denominator) was low at about 0.6 times. Restaurant margin recovered to 18.0% in 2004 after declining to 16.0% in 2003 from 19.4% in 2002. Margins improved in 2004 after stopping a marketing program that ineffectively stimulated incremental sales. Comparable store sales fell -1.9% in 2004 due to declines in customer traffic, but sequentially improved from - 4.8% in the 1st Quarter to +2.6% in the 4th Quarter. Comparable store sales grew +4.6% in the 1st Quarter of 2005. New local leadership and the refocus on restaurant fundamentals such as good-quality food and efficient service have contributed to the higher sales. The ratings anticipate that steady growth in average unit volume and profitability margins will lead to positive free cash flow and improved debt protection measures as the company expands the offering of non-breakfast items and carries out a high ROI remodel program on most of the store base. New World Restaurant Group, Inc., headquartered in Golden, Colorado, operates or franchises 690 restaurants principally under the "Einstein Bros. Bagels" and "Noah's Bagels" trade names. Revenue for the year ending December 2004 equaled $374 million. NEW WORLD: S&P Junks $185 Million First & Second Lien Loans ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC+' bank loan rating to Golden, Colorado-based New World Restaurant Group Inc.'s planned $140 million first-lien term loan. In addition, a 'CCC-' bank loan rating was assigned to the company's $45 million second- lien term loan. A recovery rating of '5' was assigned to both loans, indicating the expectation for negligible recovery of principal (0%-25%) in the event of a payment default. Proceeds will be used to repay the company's $160 million senior secured notes. At the same time, Standard & Poor's revised the rating outlook on New World to stable from negative. The 'CCC+' corporate credit rating on the company was affirmed. The 'CCC+' rating on the $160 million senior secured notes will be withdrawn upon their repayment. "The outlook revision to stable is based on the benefits of the refinancing transaction, which will lower the company's annual interest cost by about $5 million and extend its maturities," explained Standard & Poor's credit analyst Robert Lichtenstein. "The ratings reflect the risks associated with the company's relatively small size in the highly competitive restaurant industry, its reliance on a single primary product (bagels) and products sold during breakfast, its weak cash flow protection measures, and a highly leveraged capital structure." The restaurant industry is highly competitive, including many larger and well-established restaurants with substantially greater financial and marketing resources than New World. In addition, the company is vulnerable to changing consumer preferences to low- carbohydrate diets because it is more dependent on bagels and breakfast than its competitors. Barriers to entry are low, with insignificant start-up costs associated with retail bagel and similar food service establishments. Local bagel shops also provide effective competition. NICHOLS & NICHOLS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Nichols and Nichols, Inc. aka Nick's Crane Service P.O. Box 6447 Bend, Oregon 97708 Bankruptcy Case No.: 05-33927 Type of Business: The Debtor provides crane hoisting and rigging services, and also leases contractors' equipment. Chapter 11 Petition Date: April 13, 2005 Court: District of Oregon (Portland) Judge: Trish M. Brown Debtor's Counsel: Louis B. Dvorak, Esq. 1123 Nortwest Bond Street Bend, Oregon 97701 Tel: (541) 382-2553 Estimated Assets: $500,000 to $1,000,000 Estimated Debts: $1,000,000 to $10,000,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Essex Crane Money judgment for $225,655 777 Terrace Ave. FL-3 equipment rental Hasborouck Heights, NJ 07604 Greentree Financial Repo deficiency $172,454 7360 South Kyrene Rd. Tempe, AZ 85283 US Bank Cardmember Svcs VISA card $113,193 POB 6343 Fargo, ND 58125 Arnold, Bruce and Doerfler Insurance premiums $88,670 Dept of Consumer/Business Workers compensation fine $74,003 Wells Fargo Bank NA Credit line $54,037 Locals 302 and 612 Dues $30,194 Kevin Vietzke Property damage $26,451 MBNA America Mastercard $20,184 Interstate Heavy Hauling Freight $13,443 Citi Card VISA card $9,975 Kingman Peabody et al Attorney fees $9,690 Boom Boys Cranes Equipment rental $8,985 Discover Card Services Credit card $8,789 Industrial Applied Electric Supplier $6,569 Pacific Life Insurance Key man insurance $6,315 Crane Rental Service Equipment rental $6,175 Nicholson Engineering Engineering service $5,200 Scottsdale Insurance Deduction on claim $5,000 Harney Rock and Paving Concrete supplies $4,932 NORANDA INC: Declares Common Stock Dividend at $0.12 Per Share -------------------------------------------------------------- Noranda Inc. (TSX:NRD)(NYSE:NRD) has declared a dividend on its common shares of $0.12 per share in Canadian funds. The dividend is payable May 16, 2005, to shareholders of record at the close of business on April 26, 2005. Noranda -- http://www.noranda.com/-- is a leading copper and nickel company with investments in fully integrated zinc and aluminum assets. The Company's primary focus is the identification and development of world-class copper and nickel mining deposits. It employs 16,000 people at its operations and offices in 18 countries and is listed on The New York Stock Exchange and the Toronto Stock Exchange (NRD). * * * As reported in the Troubled Company Reporter on Mar. 11, 2005, Standard & Poor's Ratings Services changed its CreditWatch implications on mining companies Noranda, Inc., and its subsidiary, Falconbridge Ltd. to negative from developing, after the companies announced their intention to combine the businesses. At the same time, Standard & Poor's assigned its 'BB' rating to Toronto, Ontario-based Noranda's proposed US$1.25 billion junior preferred shares. NORTEL NETWORKS: Filing Financial Statements by End of Month ------------------------------------------------------------ Nortel Networks Corporation (NYSE:NT) (TSX:NT) and its principal operating subsidiary, Nortel Networks Limited, provided a status update pursuant to the alternative information guidelines of the Ontario Securities Commission. These guidelines contemplate that the Company and NNL will normally provide bi-weekly updates on their affairs until such time as they are current with their filing obligations under Canadian securities laws. Filing of Financial Statements for Year 2004 and First Quarter 2005 Consistent with its prior announcement, the Company expects that it and NNL will file their audited financial statements for the year 2004, and related Annual Reports on Form 10-K and corresponding Canadian filings, by the end of April 2005. The Company and NNL continue to devote significant resources to the preparation of the 2004 financial statements and 2004 Annual Reports, including the completion (for the first time) of the requirements under Section 404 of the U.S. Sarbanes-Oxley Act of 2002. As a result, the Company now expects that it and NNL will file their unaudited financial statements for the first quarter of 2005, and related Quarterly Reports on Form 10-Q and corresponding Canadian filings, by the end of May 2005. The Company and NNL do not expect to file the 2005 First Quarter Reports and corresponding Canadian filings by the required deadlines in May 2005 in compliance with certain U.S. and Canadian securities regulations and thus will each be filing with the United States Securities and Exchange Commission a Form 12b-25 Notification of Late Filing relating to the delay in filing their 2005 First Quarter Reports. The Company's expectation as to the timing of filing its and NNL's financial statements is subject to change due to limitations including previously announced material weaknesses in the Company's internal control over financial reporting and the review or audit of the Nortel financial statements by the Company's external auditors. EDC Support Facility As previously announced, the current waiver from Export Development Canada of certain defaults related to the delayed filings and related breaches under the EDC performance-related support facility will expire on April 30, 2005. EDC will have the right, on April 30, 2005 (absent a further waiver in relation to the related and other technical breaches), to terminate the EDC Support Facility, exercise certain rights against collateral or require NNL to cash collateralize all existing support. In addition, EDC will also have this right after May 25, 2005 (absent a further waiver) if the Company and NNL have not filed the 2005 First Quarter Reports by such date. NNL intends to seek a new waiver from EDC in connection with the delay in filing the 2005 First Quarter Reports, if necessary, and intends to seek a permanent waiver in connection with the related and other technical breaches. There can be no assurance that NNL will receive any new waivers or as to the terms of any such waivers. For other information on the EDC Support Facility and related breaches, see the Company's press release "Nortel Announces New Waiver from Export Development Canada" dated March 15, 2005. Debt Securities As a result of the continued delay in filing the Company's and NNL's 2004 Annual Reports, the Company and NNL are not currently, and depending upon the actual filing date of the 2005 First Quarter Reports, the Company and NNL may not (after May 25, 2005) be, in compliance with their obligations to deliver their SEC filings to the trustees under their public debt indentures. While a notice of default could have been given at any time after March 30, 2004, by holders of at least 25 percent of the outstanding principal amount of any relevant series of debt securities, neither the Company nor NNL has received any such notice as of April 13, 2005. The Company and NNL reported that there have been no material developments in the matters reported in their status updates of June 2, 2004 through March 30, 2005, with the exception of the matters described above. The Company's and NNL's next bi-weekly status update is expected to be released during the week of April 25, 2005. About the Company Nortel Networks is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at http://www.nortel.com/ * * * As reported in the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services affirmed its 'B-' credit rating on Nortel Networks Lease Pass-Through Trust certificates series 2001-1 and removed it from CreditWatch with negative implications, where it was placed Dec. 8, 2004. The affirmation is based on a valuation analysis of properties that provide security for the two notes that serve as collateral for the pass through trust certificates. The initial rating on the securities relied upon the ratings assigned to both Nortel Networks Ltd. and ZC Specialty Insurance Co. The Dec. 8, 2004, CreditWatch placement followed the Dec. 3, 2004 withdrawal of the rating assigned to ZC. The properties are secured by five single-tenant, office/R&D buildings in Research Triangle Park, North Carolina that are leased to Nortel (B-/Watch Developing), which guarantees the payment and performance of all obligations of the leases. The lease payments do not fully amortize the notes. A surety bond from ZC insures the balloon amount. Due to the withdrawal of the rating on ZC, Standard & Poor's current analysis incorporates the rating on Nortel and internal valuations of the properties, including balloon risk. The valuations factored in current market data. The rating will not necessarily be in alignment with Nortel's due to the balloon risk, which is no longer mitigated by a rated entity. A balloon payment of $74.7 million is due at maturity in August 2016. If this amount is not repaid, the indenture trustee can obtain payment from the surety, provided certain conditions are met. NORTEL NETWORKS: Look for 2004 Annual Reports by Month End ---------------------------------------------------------- Nortel Networks Corporation (NYSE:NT) (TSX:NT) and its principal operating subsidiary, Nortel Networks Limited -- NNL, expects that to file their audited financial statements for the year 2004, and related Annual Reports on Form 10-K and corresponding Canadian filings, by the end of April 2005. The Company and NNL continue to devote significant resources to the preparation of the 2004 financial statements and 2004 Annual Reports, including the completion (for the first time) of the requirements under Section 404 of the U.S. Sarbanes-Oxley Act of 2002. As a result, the Company now expects that it and NNL will file their unaudited financial statements for the first quarter of 2005, and related Quarterly Reports on Form 10-Q and corresponding Canadian filings, by the end of May 2005. The Company and NNL do not expect to file the 2005 First Quarter Reports and corresponding Canadian filings by the required deadlines in May 2005 in compliance with certain U.S. and Canadian securities regulations and thus will each be filing with the United States Securities and Exchange Commission a Form 12b-25 Notification of Late Filing relating to the delay in filing their 2005 First Quarter Reports. The Company's expectation as to the timing of filing its and NNL's financial statements is subject to change due to limitations including previously announced material weaknesses in the Company's internal control over financial reporting and the review or audit of the Nortel financial statements by the Company's external auditors. EDC Support Facility As previously announced, the current waiver from Export Development Canada of certain defaults related to the delayed filings and related breaches under the EDC performance-related support facility will expire on April 30, 2005. EDC will have the right, on April 30, 2005, to terminate the EDC Support Facility, exercise certain rights against collateral or require NNL to cash collateralize all existing support. In addition, EDC will also have this right after May 25, 2005 if the Company and NNL have not filed the 2005 First Quarter Reports by that date. NNL intends to seek a new waiver from EDC in connection with the delay in filing the 2005 First Quarter Reports, if necessary, and intends to seek a permanent waiver in connection with the related and other technical breaches. There can be no assurance that NNL will receive any new waivers or as to the terms of any such waivers. Debt Securities As a result of the continued delay in filing the Company's and NNL's 2004 Annual Reports, the Company and NNL are not currently, and depending upon the actual filing date of the 2005 First Quarter Reports, the Company and NNL may not (after May 25, 2005) be, in compliance with their obligations to deliver their SEC filings to the trustees under their public debt indentures. While a notice of default could have been given at any time after March 30, 2004 by holders of at least 25 percent of the outstanding principal amount of any relevant series of debt securities, neither the Company nor NNL has received any notice as of April 13, 2005. Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at http://www.nortel.com/ For the latest Nortel news, visit http://www.nortel.com/news * * * As reported in the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services affirmed its 'B-' credit rating on Nortel Networks Lease Pass-Through Trust certificates series 2001-1 and removed it from CreditWatch with negative implications, where it was placed Dec. 8, 2004. The affirmation is based on a valuation analysis of properties that provide security for the two notes that serve as collateral for the pass through trust certificates. The initial rating on the securities relied upon the ratings assigned to both Nortel Networks Ltd. and ZC Specialty Insurance Co. The Dec. 8, 2004, CreditWatch placement followed the Dec. 3, 2004 withdrawal of the rating assigned to ZC. The properties are secured by five single-tenant, office/R&D buildings in Research Triangle Park, North Carolina that are leased to Nortel (B-/Watch Developing), which guarantees the payment and performance of all obligations of the leases. The lease payments do not fully amortize the notes. A surety bond from ZC insures the balloon amount. Due to the withdrawal of the rating on ZC, Standard & Poor's current analysis incorporates the rating on Nortel and internal valuations of the properties, including balloon risk. The valuations factored in current market data. The rating will not necessarily be in alignment with Nortel's due to the balloon risk, which is no longer mitigated by a rated entity. A balloon payment of $74.7 million is due at maturity in August 2016. If this amount is not repaid, the indenture trustee can obtain payment from the surety, provided certain conditions are met. NUMATICS INC.: S&P Withdraws Ratings At Company's Request --------------------------------------------------------- Standard & Poor's Ratings Services announced that it withdrew its 'B-' corporate credit and 'CCC' subordinated debt ratings on Numatics Inc. at the company's request. Highland, Michigan-based Numatics is a manufacturer of four-way pneumatic valves, actuators, and related products. OFFICEMAX INC: Appoints Sam K. Duncan as President & CEO -------------------------------------------------------- OfficeMax Incorporated (NYSE: OMX) reported that Sam K. Duncan will assume the role of president and chief executive officer, effective April 18, 2005. Mr. Duncan, 53, served most recently as president and chief executive officer of Shopko Stores, Inc., a general merchandise retailer with more than 360 stores generating annual sales exceeding $3 billion. Prior to leading Shopko, from 2001 to 2002 he served as president of Fred Meyer, Inc., a division of The Kroger Co., one of the nation's largest grocery retailers, with fiscal 2004 sales of more than $56 billion. Mr. Duncan joined Fred Meyer in 1992 as vice president, grocery department and was named executive vice president of the food division in 1997. In 1998, he was named president of Ralph's Supermarkets, which had been acquired by Fred Meyer. Duncan began his career in 1969 as a courtesy clerk at an Albertson's supermarket in Southern California, and was promoted to positions of increasing responsibility until being named director of operations of Albertson's in 1992. "Sam is a proven leader who has delivered strong operating performance in changing business climates. He is the ideal person to lead our company as we fully integrate the two businesses brought together with the 2003 acquisition of OfficeMax, Inc., and work to realize the potential of this integrated business model," said George J. Harad, chief executive officer. Mr. Harad, who had been serving as the company's CEO on an interim basis, will return to his former role as executive chairman of OfficeMax and is expected to retire from the company and the board at the end of June 2005. "I am very excited to join the OfficeMax team and to lead the company as we build on the solid foundation currently in place," said Duncan. "As we move forward, we will focus on achieving profitable sales and delivering value for our shareholders, customers and employees." OfficeMax is a leader in both business-to-business and retail office products distribution. The company provides office supplies, and paper, print and document services, technology products and solutions, and furniture to large, medium, and small businesses and consumers. OfficeMax customers are served by more than 41,000 associates through direct sales, catalogs, the Internet, and 935 superstores. * * * As reported in the Troubled Company Reporter on Feb. 16, 2005, Standard & Poor's Ratings Services placed its ratings for OfficeMax Inc., including the 'BB' corporate credit rating, on CreditWatch with negative implications. "This action reflects our concerns regarding the company's softer-than-expected results for the fourth quarter and the resignation of its CEO, Christopher C. Milliken," said Standard & Poor's credit analyst Stella Kapur. OfficeMax now needs to fill three key senior management positions, including that of CEO, CFO, and president of the retail business. As reported in the Troubled Company Reporter on Jan. 3, 2005, Moody's Investors Service upgraded the senior implied rating of OfficeMax Incorporated to Ba1, upgraded the rating on the 7% senior notes due November 2013 to Baa2, and assigned a speculative grade liquidity rating of SGL-2. The outlook is stable. This concludes the review for upgrade initiated on July 14, 2004. The ratings upgraded: -- Senior implied rating to Ba1 from Ba2; -- Senior unsecured $560 million bank facility to Ba1from Ba2; -- Senior notes due 2013 to Baa2 from Ba2; -- Adjustable Conversion-Rate Equity Units to Ba1 from Ba2; -- Issuer rating to Ba1 from Ba2; -- Senior unsecured shelf to (P) Ba1 from (P) Ba2, and -- Preferred shelf to (P) Ba3 from (P) B1. PASADENA GATEWAY: U.S. Trustee Will Meet Creditors on May 12 ------------------------------------------------------------ The United States Trustee for Region 7 will convene a meeting of Pasadena Gateway Venture, Ltd.'s creditors at 10:00 a.m., on May 12, 2005, at 515 Rusk Avenue, Suite 3401 in Houston, Texas. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Houston, Texas, Pasadena Gateway Venture, Ltd., filed for chapter 11 protection on April 3, 2005 (Bankr. S.D. Tex. Case No. 05-34900). Marilee A. Madan, Esq., at Russell & Madan, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets from $10 million to $50 million and estimated debts from $1 million to $10 million. PEGASUS SATELLITE: Judge Haines Confirms Amended Chapter 11 Plan ---------------------------------------------------------------- Pegasus Satellite Communications, Inc. and its debtor-affiliates stepped Judge Haines through the 13 statutory requirements under Section 1129(a) of the Bankruptcy Code necessary to confirm their First Amended Plan of Reorganization: A. The Plan complies with all applicable provisions of the Bankruptcy Code as required by Section 1129(a)(1) of the Bankruptcy Code, including Sections 1122 and 1123. The Plan provides for the separate classification of Claims and Interests into 18 Classes, based on differences in the legal nature and priority of those Claims and Interests. Furthermore, each Class of Claims and Interests contains only Claims or Interests that are substantially similar to the other Claims or Equity Interests within the Class. B. The Debtors have complied with Section 1129(a)(2) of the Bankruptcy Code. Votes for acceptances and rejection or any other election on the Plan as provided for in the Ballots were solicited in good faith and complied with Sections 1125 and 1126 of the Bankruptcy Code, Rules 3017 and 3018 of the Federal Rules of Bankruptcy Procedure and the Solicitation Procedures Order, the Disclosure Statement Order, the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules, and all other applicable rules, laws and regulations. C. The Plan complies with Section 1129(a)(3) of the Bankruptcy Code in that it was proposed by the Debtors in good faith and not by any means forbidden by law. The Plan was proposed with the legitimate and honest purpose of maximizing the value of the Debtors' Estates by providing the means through which the Broadcast Assets may be sold and for liquidating the Debtors' remaining assets to maximize the value of the Debtors' Estates and making Distributions to Holders of Allowed Claims. D. Any payment made or to be made by the Debtors for services or for costs and expenses in connection with their Chapter 11 Cases or in connection with the Plan has been approved by, or is subject to the approval of, the Bankruptcy Court as reasonable, thereby satisfying Section 1129(a)(4) of the Bankruptcy Code. E. Pursuant to Section 1129(a)(5) of the Bankruptcy Code, the Debtors have disclosed the identity of the proposed directors and officers of the Reorganized Debtors and the Liquidating Trustee following confirmation of the Plan in an Amended Plan Supplement. No insiders will be employed or retained by the Reorganized Debtors. The appointment to those offices is consistent with the interests of the Debtors' creditors and Interest Holders and with public policy. A full-text copy of the Amended Plan Supplement is available for free at: http://www.pegasussatelliterestructuring.com/pdfs/1201-1220/1209_4%2012%2005.pdf F. The Plan does not contain any rate changes subject to the jurisdiction of any governmental regulatory commission and will not require governmental regulatory approval. Accordingly, Section 1129(a)(6) of the Bankruptcy Code is not applicable in the Debtors' Chapter 11 Cases or with respect to the Plan. G. The Plan satisfies the so-called "best interests of creditors test" set forth in Section 1129(a)(7) of the Bankruptcy Code. The liquidation analysis annexed to the Disclosure Statement and the other related evidence: a. is persuasive and credible as of the dates the evidence was prepared, presented or proffered; b. has not been controverted by other persuasive evidence or has not been challenged; c. is based on reasonable and sound assumptions; and d. establishes that each holder of an Impaired Claim or Interest either has accepted the Plan or will receive or retain under the Plan, on account of that Claim or Interest, property of a value, as of the Effective Date, that is not less than the amount that the Holder would receive or retain if the Debtors were liquidated under Chapter 7 of the Bankruptcy Code. H. Pursuant to Section 1129(a)(8), each class of claims or interests either has accepted the Plan or is not impaired under the Plan. On April 12, 2005, the Debtors filed certain technical modifications to the Plan to provide that Classes 3B, 3C and 3D are not Impaired. Thus, pursuant to the Plan, as modified, these Classes are not Impaired and are conclusively presumed to have accepted the Plan: Description of Class Designation -------------------- ----------- Secured Claims against PSC Class 1A Secured Claims against PMC Class 1B Secured Claims against PST Debtors Class 1C Secured Claims against PBT Debtors Class 1D Priority Non-Tax Claims against PSC Class 2A Priority Non-Tax Claims against PMC Class 2B Priority Non-Tax Claims against PST Debtors Class 2C Priority Non-Tax Claims against PBT Debtors Class 2D Unsecured Claims against PMC Class 3B Unsecured Claims against PST Debtors Class 3C Unsecured Claims against PBT Debtors Class 3D Common stock Interests in PMC Class 5B-2 Common stock Interests in PST Debtors Class 5C-2 Common stock Interests in PBT Debtors Class 5D-2 Class 3A - Unsecured Claims against PSC, an Impaired Class, voted in favor of the Plan. These Classes will not receive any Distributions or retain any property under the Plan and are conclusively presumed to have rejected the Plan: Description of Class Designation -------------------- ----------- Subordinated Claims against PSC Class 4A Old Preferred Stock Interests in PSC Class 5A-1 Old Common Stock Interests in PSC Class 5A-2 I. The treatment of Administrative Claims, Fee Claims, Indenture Trustee Claims and Priority Tax Claims in the Plan satisfies the requirements of Section 1129(a)(9) of the Bankruptcy Code. J. At least one Class of Claims is Impaired under the Plan and has accepted the Plan, determined without including any acceptance of the Plan by any insider, thus satisfying the requirements of Section 1129(a)(10) of the Bankruptcy Code. With the approval of certain Technical Modifications to provide that Classes 3B, 3C and 3D are not Impaired and with the granting of a Vote Modification Motion by certain noteholders, each Impaired Class, other than the Deemed Rejected Classes, has voted to accept the Plan. K. The evidence proffered or adduced at the Confirmation Hearing, among other things: a. is persuasive and credible; b. has not been controverted by other persuasive evidence; c. establishes that the Plan is workable and has a reasonable likelihood of success; and d. establishes that Plan confirmation is not likely to be followed by the need for further financial reorganization or a liquidation of the Debtors that is not proposed in the Plan. Thus, the requirements of Section 1129(a)(11) of the Bankruptcy Code is satisfied. L. The Plan provides for the payment of all fees payable under Section 1930(a)(6) of the Judiciary Code. The Debtors and the Liquidating Trust have adequate means to pay all those fees. Accordingly, the Plan satisfies the requirements of Section 1129(a)(12) of the Bankruptcy Code. M. Section 1129(a)(13) of the Bankruptcy Code requires a plan to provide for retiree benefits at levels established pursuant to Section 1114 of the Bankruptcy Code. The Debtors do not have any plans, funds, or programs providing or reimbursing retired employees and their spouses and dependents for medical, surgical, or hospital care benefits, or benefits in the event of sickness, accident, disability or death. Accordingly, the requirements of Section 1129(a)(13) of the Bankruptcy Code are not relevant to the Debtors' Chapter 11 Cases. Vote Modification Motion As previously reported, the Ad Hoc Noteholders Committee objected to the confirmation of the Plan. The claims of the Ad Hoc Noteholders Committee are classified as Class 3A under the Plan and, according to the Disclosure Statement, are the only claims that will not be paid in full. Members of the Ad Hoc Noteholders Committee and certain other creditors voted to reject the Plan. The parties engaged in negotiations to resolve the dispute. As a result, the Debtors agree to make technical modifications to the Plan and the Noteholders Committee sought the Court's permission to modify the votes of eight creditors to reflect that they accept the Plan: * Castlerigg Master Investments Ltd., * Davidson Kempner International Limited, * Davidson Kempner Institutional Partners, * Davidson Kempner Partners, * Merced Partners, * MH Davidson & Co., * Serena Limited, and * Tamarack International, Ltd. At the Confirmation Hearing on April 14, 2005, the Court granted the Vote Modification Motion. * * * Accordingly, on April 15, 2005, Judge Haines issued an order confirming the Debtors' Plan. To the extent that any Confirmation Objection have not been withdrawn, waived, settled or resolved, the Court overrules those objections with prejudice. A full-text copy of the Confirmation Order and the Technical Modifications to the Plan is available at no charge at: http://bankrupt.com/misc/Pegasus-confirmation_order.pdf Ocean Ridge Capital Advisors, LLC, will serve as the Liquidating Trustee as of the Effective Date. The Liquidating Trustee will serve as the agent of the Bankruptcy Court in making Distributions from the Liquidating Trust and from the Reserves. Judge Haines authorizes and directs the Liquidating Trustee to make Distributions from the Liquidating Trust and from the Reserves in accordance with the provisions of the Plan and the Liquidating Trust Agreement. Alan Ginsberg will be the sole director of the Liquidating Trust as of the Effective Date. 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. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) PENN NATIONAL: Buying Site for Temporary Gaming Facility in Maine ----------------------------------------------------------------- Penn National Gaming, Inc.'s (Nasdaq: PENN) subsidiary, Bangor Historic Track, Inc., has agreed to acquire an off-track betting facility in Bangor, Maine which Penn National intends to use, pending regulatory approval, as a temporary gaming facility for approximately 475 slot machines. The timetable Penn National envisioned for the permanent gaming facility at Bass Park has been delayed due to the need for the recently enacted statute protecting confidential information in the licensing process and because of Penn National's cooperation with the city of Bangor in continuing to explore additional available options for the location of the permanent facility. Commenting on the announcement, Peter M. Carlino, Chief Executive Officer of Penn National Gaming stated, "We are delighted to reach an agreement with the Miller family for the purchase of this site and believe the commencement of operations, pending all necessary licensing approvals, provides benefits to all involved parties. In addition to generating revenues ahead of schedule, this project will create new jobs and economic development in Bangor earlier than anticipated while allowing us to begin to revitalize the Maine harness racing industry." Under the terms of the agreement, BHT will acquire Miller's Inc., an approximate 27,000 square foot facility situated on 2.5 acres, which includes 250 parking spaces, from the Miller Family Limited Partnership and John Miller for $3.8 million. The transaction, expected to close in the summer of 2005, is subject to customary closing conditions and regulatory approvals including the Maine Harness Racing Commission and the Maine Gaming Control Board. About Penn National Gaming Penn National Gaming owns and operates casino and horse racing facilities with a focus on slot machine entertainment. The Company presently operates eleven facilities in nine jurisdictions including West Virginia, Illinois, Louisiana, Mississippi, Pennsylvania, New Jersey, Colorado, Maine and Ontario. In aggregate, Penn National's facilities feature over 13,000 slot machines, 260 table games, 1,286 hotel rooms and 417,000 square feet of gaming floor space. The company is currently in the process of completing the disposition of the Shreveport, Louisiana Hollywood Casino. In November 2004, Penn National Gaming agreed to acquire all of the outstanding shares of Argosy Gaming Company, which it expects to complete in the second half of 2005. * * * As reported in the Troubled Company Reporter on Feb. 28, 2005, Moody's Investors Service confirmed the ratings of Penn National Gaming, Inc., and assigned a stable ratings outlook. The confirmation completes the review process that was initiated on Nov. 4, 2004 following the announcement that Penn National and Argosy Gaming Company (Argosy; Ba2/under review for possible downgrade) entered into a definitive merger agreement under which Penn National will acquire all of Argosy's outstanding shares for $47.00 per share. The transaction is valued at approximately $2.2 billion. At the same time, Moody's assigned a B3 to Penn National's new $200 million senior subordinated notes due 2015, and a Ba3 to Penn National's new $2.725 billion senior secured bank facility that consists of a $750 million 5-year revolver, a $325 million 6-year term loan A, and a $1.65 billion 7-year term loan B. PINNACLE ENTERTAINMENT: Moody's Revises Rating Outlook to Stable ---------------------------------------------------------------- Moody's Investors Service revised Pinnacle Entertainment, Inc.'s ratings outlook to positive from stable and confirmed the company's existing B2 senior implied rating, B3 long-term issuer rating, B1 senior secured bank loan ratings, and Caa1 senior subordinated debt ratings. The positive ratings outlook reflects the expectation that Pinnacle's $365 million Lake Charles development project will open in May 2005 as currently planned and has a positive impact on the company's overall financial profile. To the extent the Lake Charles casino successfully ramps up over the near-term and the company's overall operating results continue to improve, ratings could be raised. The positive ratings outlook also takes into account operating improvements that have taken place, particularly with respect to Belterra, as well as the company's good liquidity profile. At Dec. 31, 2004, Pinnacle had about $280 million of balance sheet cash and access to an un-drawn $125 million revolver and a $130 million delayed draw term loan. Additionally, there are no near- term debt maturities until the revolving portion of the bank loan expires in 2008. The confirmation considers that a slower than expected ramp-up in Lake Charles will not necessarily result in a ratings downgrade. A significant amount of downside protection is afforded by Pinnacle's regional market focus, good liquidity position, and improved overall operating results. Slower than expected ramp-up, however, could delay any ratings improvement. Although Pinnacle's Lake Charles development, given its new and superior product, is expected to take market share away from existing casinos as well as expand the Lake Charles market overall; concern remains that the Lake Charles market may not have the depth and/or growth prospects to support this new casino at a level that meets the company's return objectives. For calendar year 2004, the Lake Charles market, in terms of reported gaming revenues, only grew 3.2%. For the month of January 2005, the market only grew 1.2% from the comparable prior year period, and February 2005 experienced a 1% decline. Pinnacle's B2 senior implied rating continues to reflect the risks associated with its high leverage and significant planned development activity through fiscal 2007. Pinnacle was selected to develop two casinos in the St. Louis, Mo. area - a $208 million casino/hotel in downtown St. Louis and a $300 million casino in St. Louis County. The county project is tentatively scheduled to open in late 2006/early 2007. The city project is tentatively scheduled to open in early 2008. Both projects are subject to Missouri Gaming Commission approval. Although the company has the liquidity to fund a portion of these St. Louis projects, it will likely require additional external funding. The ratings also acknowledge that longer-term, negative legislative or tax initiatives in Louisiana and/or any legalization of expanded gaming in Texas could pose threats to Pinnacle's Louisiana-based casinos, which currently account for about 45% of the company's total property-level EBITDA. This concentration is expected to increase substantially once the Lake Charles casino begins operating. The one-notch rating differential between the company's B1 senior secured bank loan rating and the B2 senior implied rating reflects the superior recovery profile of the credit facility relative to other debt obligations in Pinnacle's capital structure. Moody's decision to assign a higher rating to the senior secured credit facilities was based on an analysis of distressed asset and enterprise values and the determination that senior secured lenders would be adequately protected under distressed circumstances. Headquartered in Las Vegas, Nevada, Pinnacle Entertainment, Inc. (NYSE: PNK) owns and operates casinos in Nevada, Mississippi, Louisiana, Indiana and Argentina, and receives lease income from two card club casinos in California. The company is also building a casino resort in Lake Charles, Louisiana, and has been selected for two casino projects in Missouri, pending regulatory approval. Net revenue for the fiscal year ended Dec. 31, 2004 was about $554 million. PLASTECH ENGINEERED: Poor Performance Prompts S&P to Cut Rating --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Dearborn, Michigan-based Plastech Engineered Products Inc. to 'B+' from 'BB-' because of the company's weak operating results relative to expectations, high debt leverage, and constrained liquidity. These factors result, in part, from deteriorated automotive industry fundamentals in the past year. At the same time, Standard & Poor's removed the ratings from CreditWatch, where they had been placed on Feb. 15, 2005, with negative implications. "We expect that Plastech's balance sheet will remain highly leveraged and credit protection measures will remain weak through 2005, given reduced prospects for cash flow generation," said Standard & Poor's credit analyst Nancy Messer. "The ratings could be lowered if market conditions worsen, the company's liquidity position deteriorates, or if the company is unable to negotiate satisfactory amendments to its senior credit facilities." Plastech, a privately held major producer of plastic interior and exterior trim components for the automotive industry had total balance sheet debt of $504 million at Dec. 31, 2004. The outlook is negative. Plastech's near-term liquidity position depends on the company's ability to receive amendments from its lenders to permanently relax intermediate-term covenants under the company's senior secured credit agreements. Plastech's exposure to the Detroit-based three original equipment manufacturers (OEM) and sport vehicle platforms represent both near-term and long-term risks. Plastech's revenue base could erode over time unless new business is won from alternative sources, if these two declining trends, for Detroit-based OEM products and sport vehicles, continue. PNC MORTGAGE: Fitch Holds Junk Ratings on Two Class D-B-5 Debts --------------------------------------------------------------- Fitch Ratings has taken rating actions on PNC Mortgage Securities Corp issues: Series 1998-12 Group 1 -- Classes IA, IP, IX, R affirmed at 'AAA'; -- Class I-B-1 affirmed at 'AAA'; -- Class I-B-2 affirmed at 'AAA'; -- Class I-B-3 affirmed at 'AAA'; -- Class I-B-4 upgraded to 'AA+' from 'AA'; -- Class I-B-5 upgraded to 'A+' from 'BBB+'. Series 1998-12 Group 2, 3, & 4 -- Classes II-A, III-A, IV-A, P, X affirmed at 'AAA'; -- Class C-B-1 affirmed at 'AAA'; -- Class C-B-2 affirmed at 'AAA'; -- Class C-B-3 upgraded to 'AA-' from 'A-'; -- Class C-B-4 affirmed at 'BB'; -- Class C-B-5 affirmed at 'B'. Series 1999-3 Group 1 -- Classes IA, IIIA, X, P, affirmed at 'AAA'; -- Class C-B-1 affirmed at 'AAA'; -- Class C-B-2 affirmed at 'AAA'; -- Class C-B-3 affirmed at 'AAA'; -- Class C-B-4 upgraded to 'AA+' from 'AA'; -- Class C-B-5 upgraded to 'A' from 'BBB'. Series 1999-3 Group 2 -- Classes IIA, IVA, AP, X, R affirmed at 'AAA'; -- Class D-B-1 affirmed at 'AAA'; -- Class D-B-2 affirmed at 'AAA'; -- Class D-B-3 upgraded to 'AA' from 'A+'; -- Class D-B-4 affirmed at 'BB'; -- Class D-B-5 remains at 'C'. Series 1999-4 Group 1 -- Classes IA, IVA, X, R affirmed at 'AAA'; -- Class C-B-1 affirmed at 'AAA'; -- Class C-B-2 affirmed at 'AAA'; -- Class C-B-3 affirmed at 'AAA'; -- Class C-B-4 upgraded to 'AA+' from 'AA'; -- Class C-B-5 upgraded to 'A' from 'BBB'. Series 1999-4 Group 2 -- Classes IIA, IIIA, P, X affirmed at 'AAA'; -- Class D-B-1 affirmed at 'AAA'; -- Class D-B-2 affirmed at 'AAA'; -- Class D-B-3 upgraded to 'AA+' from 'AA'; -- Class D-B-4 affirmed at 'BB'; -- Class D-B-5 remains at 'CC'. The affirmations on the above classes reflect credit enhancement consistent with future loss expectations and affect approximately $190 million of certificates. The upgrades reflect an increase in credit enhancement relative to future loss expectations and affect approximately $21 million of certificates. The current enhancement -- CE -- levels for series 1998-12 group 1 class I-B-4 and I-B-5 have increased by more than 18 times original enhancement levels at closing date, Dec. 2, 1998. Class I-B-4 currently benefits from 9.50% subordination (originally 0.50%), and class I-B-5 benefits from 5.69% subordination (originally 0.30%). There is currently 4% of the original collateral remaining in the pool. The CE level for series 1998-12 group 2, 3, & 4, class C-B-3 has increased by more than 7x original enhancement levels at closing date, Dec. 2, 1998. Class C-B-3 currently benefits from 10.16% subordination (originally 1.35%). There is currently 6% of the original collateral remaining in the pool. The CE levels for series 1999-3 group 1 classes C-B-4 and C-B-5 have increased by more than 14x original enhancement levels at closing date, March 29, 1999. Class C-B-4 currently benefits from 8.48% subordination (originally 0.50%); class C-B-5 benefits from 3.50% subordination (originally 0.25%). There is currently 4% of the original collateral remaining in the pool. The CE level for series 1999-3 group 2 class D-B-3 has increased by more than 6x original enhancement levels at closing date, March 29, 1999. Class D-B-3 currently benefits from 12.06% subordination (originally 1.75%). There is currently 8% of the original collateral remaining in the pool. The CE levels for series 1999-4 group 1 class C-B-4 and C-B-5 have increased by more than 19x original enhancement level at closing date, April 29, 1999. Class C-B-4 currently benefits from 9.71% subordination (originally 0.50%); class C-B-5 currently benefits from 4.83% subordination (originally 0.25%) There is currently 4% of the original collateral remaining in the pool. The CE level for series 1999-4 group 2 class D-B-3 has increased by more than 7x original enhancement levels at closing date April 29, 1999. Class D-B-3 currently benefits from 15.59% subordination (originally 2.3%), and class D-B-3 benefits from 13.07% subordination (originally 1.80%). There is currently 9% of the original collateral remaining in the pool. The mortgage pool consists of prime quality, traditional, and hybrid fixed-rate mortgage loans, and balloons secured by residential properties which have original terms to maturity of 15 or 30 years. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ REDDY ICE: Noteholders Agree to Amend 8-7/8% Senior Indenture ------------------------------------------------------------- Reddy Ice Group, Inc., received the requisite consents from registered holders of the outstanding 8-7/8% senior subordinated notes due 2011 to amend the indenture governing the Notes. Reddy Ice also determined the price for its tender offer and consent solicitation for the Notes and that it will also pay the consent payment to all holders of the Notes who validly tender their Notes prior to 5:00 p.m., New York City time, on April 28, 2005, which is the currently scheduled Expiration Date. As of 5:00 p.m., New York City time, on April 12, 2005, tenders and consents had been received with respect to approximately 89.1% of the outstanding principal amount of the Notes. The consent condition has been satisfied with respect to the Notes. The Consent Date was 5:00 p.m., New York City time, on April 12, 2005, and any Notes that have been tendered prior to, or that are tendered after, the Consent Date may not be withdrawn and the related consents may not be revoked. Reddy Ice, Reddy Ice Holdings, Inc., the parent of Reddy Ice, and U.S. Bank National Association, the trustee under the Indenture, plan to execute a supplemental indenture to the Indenture in order to effect the proposed amendments to the Notes and the Indenture, as provided in Reddy Ice's Offer to Purchase and Consent Solicitation Statement, dated March 22, 2005, as amended by the Supplement and Amendment to the Offer to Purchase and Consent Solicitation Statement, dated April 5, 2005. However, the amendments will not become operative with respect to the Notes until Reddy Ice purchases validly tendered Notes pursuant to the Offer to Purchase. Reddy Ice also announced that the Total Consideration for each $1,000 principal amount of Notes validly tendered and not validly withdrawn prior to the Expiration Date, assuming a Payment Date of April 29, 2005, is $1,121.27. Of this Total Consideration, $20 per $1,000 principal amount of Notes represents a consent payment. All holders who validly tender their notes pursuant to the Offer to Purchase and prior to 5:00 p.m., New York City time, on the Expiration Date will receive the Total Consideration, including the consent payment. In addition, each such holder of Notes will be paid accrued and unpaid interest from the last interest payment date up to, but not including, the Payment Date. Reddy Ice expects that payment for the Notes, including Notes tendered on or prior to the Consent Date, will be made promptly after the Expiration Date. The Notes are being tendered pursuant to the Offer to Purchase, which more fully sets forth the terms and conditions of the cash tender offer to purchase any and all of the outstanding principal amount of the Notes as well as the consent solicitation to eliminate substantially all of the restrictive covenants and certain events of default contained in the Indenture. The tender offer and consent solicitation are subject to the satisfaction of certain additional conditions, including Reddy Ice having available funds sufficient to pay the aggregate Total Consideration from the anticipated proceeds of a new senior credit facility and from an offering of equity by Reddy Ice Holdings, Inc. in connection with the initial public offering of its common stock. In the event that the tender offer and consent solicitation are withdrawn or otherwise not completed, the Total Consideration, including the consent payment, will not be paid or become payable to holders of the Notes who have tendered their Notes and delivered consents. Credit Suisse First Boston LLC is the sole Dealer Manager and Solicitation Agent for the tender offer and consent solicitation. Questions regarding the tender offer and consent solicitation may be directed to Credit Suisse First Boston LLC, Liability Management Group, at (800) 820-1653 (US toll-free) and (212) 538- 0652 (collect). Copies of the Offer to Purchase and Consent Solicitation Statement and related documents may be obtained from the Information Agent for the tender offer and consent solicitation, Morrow & Co., Inc., at (800) 654-2468 (US toll-free) and (212) 754-8000 (collect). Headquartered in Dallas, Texas, Reddy Ice Holdings, Inc., and its subsidiaries manufacture and distribute packaged ice in the United States serving approximately 82,000 customer locations in 32 states and the District of Columbia under the Reddy Ice brand name. The company is the largest of its kind in the United States. Typical end markets include supermarkets, mass merchants, and convenience stores. For the last twelve months ended June 30, 2004, consolidated revenue was approximately $260 million. * * * Reddy Ice Group's 8-7/8% senior subordinated notes due Aug. 11, 2011, carry Moody's B3 rating and Standard & Poor's B- rating. RIGGS NATIONAL: Moody's Reviews Low-B Ratings & May Upgrade ----------------------------------------------------------- Moody's Investors Service changed the direction of it review on the ratings of Riggs National Corporation (subordinated at B2) and its lead bank subsidiary, Riggs Bank N.A. (deposits at Ba1) to 'review for upgrade' from 'review, direction uncertain'. Moody's said the change reflected the increased likelihood that The PNC Financial Services Group, Inc. will acquire Riggs National Corporation in accordance with the amended July 2004 agreement. PNC and Riggs had announced on February 10, 2005 their agreement to amend and restate the terms and conditions of their July, 2004 agreement, subject to legal, regulatory and shareholder approvals. The acquisition transaction is expected to close no later than May 31, 2005. Under the revised agreement Riggs National Corporation will be merged into The PNC Financial Services Group, Inc., while PNC Bank N.A. would acquire the assets of Riggs Bank N.A. This change in structure is to mitigate the potential business impact of Riggs Bank's plea agreement with the Department of Justice. Moody's believes that despite Riggs continuing to be the subject of lawsuits and on-going investigations by US and foreign governmental agencies and authorities, the likelihood of the revised acquisition agreement unraveling has diminished. In addition to the January, 2005 plea agreement with US Department of Justice, proceedings against Riggs in the Spanish courts were dismissed after a settlement agreement was reached. Moody's continues to believe that should the transaction not close as expected, Riggs will very likely suffer further deterioration in its franchise value, which in turn would create negative pressure on the ratings. Moody's observed that Riggs' asset quality remains strong, its liquidity profile is sound and its capital adequacy remains healthy despite the impact of the legal and compliance expenses, fines and litigation reserves that have weighed on its profitability. Riggs National Corporation is a bank holding company headquartered in Washington, D.C., with assets of $6.0 billion as of December 2004. SALOMON HOME: S&P Hacks Rating on Class MF-3 Certificates to D -------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on class M-1 from Salomon Home Equity Loan Trust's series 2002-WMC1. Concurrently, the ratings on classes MF-2 and MF-3 of series 2001- 1 are lowered. The ratings on 19 classes from four series are affirmed. The rating on class M-1 from series 2002-WMC1 is raised to 'AAA' from 'AA' due to the shifting interest structure of the transaction and the sequential payment of the certificates. As a result of these factors, the actual and projected credit support percentages to the M-1 class have grown to more than 2x the 'AAA' credit support percentage. The transaction has paid down to approximately 15.50% of the original principal balance, with total delinquencies and cumulative realized losses of approximately 39.83% and 2.11%, respectively. Furthermore, the senior certificates have paid in full and the M-1 class has paid down to approximately 66.50% of its original principal balance. The rating on class MF-3 from series 2001-1 is lowered to 'D' from 'BBB' due to the complete erosion of the overcollateralization of the transaction and the subsequent principal write-down to the class' principal balance. The rating on class MF-2 is lowered to 'BBB' from 'A' to reflect the credit support available to the class and the potential for further deterioration of that credit support, as monthly net losses continue to exceed monthly excess interest cash flow. The performance of this transaction will be monitored closely, with the ratings adjusted to reflect such performance. This transaction has paid down to approximately 21.63% of its original principal balance, with total delinquencies and cumulative realized losses of approximately 21.47% and 4.69%, respectively. The affirmed ratings reflect adequate actual and projected credit support percentages to support the ratings. Credit support is provided by subordination, overcollateralization, and excess interest cash flow. The collateral consists of 30-year, fixed- or adjustable-rate subprime mortgage loans secured by first liens on residential properties. Rating Raised Salomon Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2002-WMC1 M-1 AAA AA Ratings Lowered Salomon Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2001-1 MF-2 BBB A 2001-1 MF-3 D BBB Ratings Affirmed Salomon Home Equity Loan Trust Series Class Rating 2001-1 AF-3, AV-1 AAA 2001-1 MF-1, MV-1 AA 2001-1 MV-2 A 2001-1 MV-3 A- 2001-1 MV-4 BBB 2002-CIT1 A AAA 2002-CIT1 M-1 AA 2002-CIT1 M-2 A 2002-CIT1 M-3 A- 2002-CIT1 M-4 BBB 2002-CIT1 M-5 BBB- 2002-WMC1 M-2 A 2002-WMC1 M-3 BBB+ 2002-WMC1 M-4 BBB 2002-WMC2 A-1, M-1 AAA 2002-WMC2 M-2 AA+ 2002-WMC2 M-3 A 2002-WMC2 M-4 A- 2002-WMC2 M-5 BBB+ SAMSONITE CORP: Earns $6.9 Million of Net Income in Fourth Quarter ------------------------------------------------------------------ Samsonite Corporation (OTC Bulletin Board: SAMC) reported financial results for the fourth quarter and fiscal year ended January 31, 2005. Revenues and operating income for the fourth quarter were $243.5 million and $22.6 million, respectively, compared to revenues of $215.3 million and operating income of $23.7 million in the prior year quarter. Fiscal 2005 fourth quarter operating income includes a charge of $2.8 million related to a restructuring plan to streamline certain operating overhead functions in Canada and the United States and to recognize impairment of certain apparel trademark intangible assets. Income to common stockholders was $3.3 million or $0.01 per weighted average share outstanding for the fourth quarter compared to $4.0 million or $0.02 per weighted average share outstanding in the prior year quarter. For the three months ended Jan. 31, 2005, the Company reported a $6.9 million net income, compared to a $7.2 million net income for the same period last year. Revenues and operating income for the fiscal year ended Jan. 31, 2005 were $902.9 million and $65.0 million, respectively, which compares to $776.5 million and $69.7 million in the prior year. Operating income for the current fiscal year includes charges totaling $10.6 million for restructuring provisions and expenses and asset impairment charges related to the elimination of production operations in Spain and Mexico, the restructuring plan to streamline certain operating overhead functions in Canada and the United States, the impairment of certain apparel trademark intangible assets, and executive severance. Operating income for the prior fiscal year includes charges totaling $5.7 million for restructuring provisions and asset impairments related to the closure of the Company's Nogales, Mexico manufacturing facility and the impairment of certain apparel trademark intangible assets. In addition, operating income includes a charge of $4.0 million for stock compensation expense related to options granted to executive officers which was not incurred in the prior year. Loss to common stockholders for the fiscal year was $22.7 million or $0.10 per share, compared to $27.5 million or $0.22 per share in the prior fiscal year. Adjusted EBITDA (earnings before interest expense, taxes, depreciation, amortization and minority interest, adjusted for items which management believes should be excluded to reflect recurring operations, including stock compensation expense and executive severance, asset impairment charges, restructuring charges and expenses and to include realized currency hedge gains and losses) was $31.3 million for the fourth quarter which compares with $34.1 million for the same period in the prior year. Adjusted EBITDA for the year ended January 31, 2005 was $100.7 million compared to $93.1 million in the prior year. Cash provided by operating activities (as reflected in the Company's consolidated statements of cash flows) for the fourth quarter was $26.9 million, which compares to $21.8 million for the same period in the prior year. Cash provided by operating activities for the year ended January 31, 2005 was $34.7 million compared to $28.0 million in the prior year. A reconciliation of Adjusted EBITDA to cash provided by operating activities is included in the tables appearing at the end of this press release. Neither EBITDA nor Adjusted EBITDA is an accounting term used in generally accepted accounting principles. Chief Executive Officer, Marcello Bottoli, stated: "With the economic recovery in the first half of the year, increased marketing and advertising expenditures in the latter half, and the effects of the stronger euro, the Company's sales growth approximated 16% for the year. Expanded product diversity and increased market penetration drove sales growth in our non- luggage product categories, with casual and outdoor bag sales increasing 28%, and business case and computer bag sales increasing 17%. Fueled by new product introductions and marketing and advertising expenditures, sales of traditional luggage products also grew at 14%. Sales in each of our three major geographic regions grew at double-digit rates with Europe increasing 17.6%, the Americas at 12.8% and Asia at 33.6%. In addition, in January we completed negotiations and signed definitive agreements to commence our direct market entry into Japan by consummating a joint venture agreement with a local partner. We should begin to see the benefits of Japan's sales in our operations in the latter half of fiscal 2006. "We continue to improve our cost structure by pursuing lower cost methods to produce and engineer our products and by streamlining operating functions to reduce expenses. Our gross profit margin improved 100 basis points over the prior year to 46.1% and Adjusted EBITDA increased $7.6 million to $100.7 million, despite increasing our investment in marketing and advertising expenses by $14.9 million or 35%. We plan to increase investment in our brands by adding additional marketing and advertising expenditures to our operating budgets and by increasing expenditures in the product research and development area." Richard Wiley, Chief Financial Officer, commented: "During fiscal 2005 and the fourth quarter we continued to realize the benefits of our efforts to improve operating cash flows, income statement performance and balance sheet efficiency. Our programs to improve the Company's working capital efficiency coupled with our improved operating performance are the drivers to the improvement in the Company's cash flow and liquidity and to the repayment of debt. During the fourth quarter our debt, net of cash, declined $18.8 million to $298.0 million." About the Company Samsonite Corporation is one of the world's largest manufacturers and distributors of luggage and markets luggage, casual bags, business cases and travel-related products under brands such as SAMSONITE(R), AMERICAN TOURISTER(R), LARK(R), HEDGREN(R), LACOSTE(R) and SAMSONITE(R) black label. * * * Samsonite Corp.'s 8-78% senior subordinated notes due June 1, 2011, carry Moody's B3 rating and Standard & Poor's B- rating. SHAW COMMS: Earns $32.1 Million of Net Income in Second Quarter --------------------------------------------------------------- Shaw Communications Inc. (TSX:SJR.NV.B) (NYSE:SJR) reported net income of $32.1 million for the quarter ended February 28, 2005, compared to net income of $17.2 million for the comparable period in 2004. Net income for the first six months of the year was $50.9 million, up from $37.2 million last year. Total service revenue of $549.9 million and $1.1 billion for the three and six-month periods, respectively, both improved by 7% over the same periods last year. Consolidated service operating income before amortization of $244.3 million and $478.3 million improved by 9.0% and 6.5%, respectively. Funds flow from operations increased to $185.9 million and $366.7 million for the quarter and year-to-date compared to $163.1 million and $329.2 million in the same periods last year. Jim Shaw, Chief Executive Officer of Shaw, remarked: "We are pleased with the direction of the results. We have improved service revenue, service operating income before amortization and earnings for the first half of this year over last year. On a consecutive basis, we have increased quarterly service operating income before amortization by $10.3 million or 4% compared to the first quarter. In addition, we reported solid growth of digital and Internet customers and with these increases, approximately 45% of Shaw's customers now subscribe to bundled services compared to 41% last year." Digital and Internet subscribers grew approximately 3% during the quarter with increases of 15,517 and 32,539, respectively. Basic cable subscribers decreased marginally by 1,707 or 0.1% during the quarter. DTH customers increased 4,815. On a consolidated basis, the Company achieved positive free cash flow1 of $79.4 million in the second quarter, bringing the year- to-date amount to $106.3 million. This compares to $83.2 million and $149.1 million in the same periods last year. The decrease on a year-to-date basis is primarily due to higher capital expenditures in cable associated with investments to support customer growth and the rollout of Digital Phone. "We are on track towards achieving our free cash flow objectives of $270 - $285 million for the year. A substantial portion of the upfront fixed capital investments for Digital Phone and the launch of Anik F2 have been made, and this contributed to the growth in free cash flow from $26.9 million last quarter to $79.4 million this quarter," said Jim Shaw. Cable service revenue was up 7.6% for the quarter to $397.6 million (2004 - $369.6 million) and 6.9% for the first half of the year to $783.6 million (2004 - $732.8 million). This growth resulted from rate increases, higher customer levels and the impact of the Monarch cable systems acquisition which took place in the third quarter of fiscal 2004. Service operating income before amortization increased 1.8% to $199.3 million (2004 - $195.7 million) for the quarter and 1.1% to $393.0 million (2004 - $388.5 million) for the six months. The Satellite division's service revenue increased by 5.8% to $152.3 million and by 7.2% to $303.4 million for the three and six months, respectively, due to rate increases, change in mix of promotional activities and customer growth in DTH. Satellite service operating income before amortization increased by 29.1% to $45.0 million and 27.3% to $85.4 million. The improvement was largely due to the growth in DTH revenue and reduced costs. Jim Shaw commented, "Both divisions reported solid revenue growth compared to last year and on a consecutive basis improved quarterly service operating income before amortization by approximately $5 million each, representing consecutive growth of 3% in cable and 11% in satellite. As expected, the strategic upfront investment in enhanced customer care, development of Shaw Digital Phone and additional value-added services to support future customer growth has exerted pressure on the cable division's margins. We believe it is prudent to invest now in these new and enhanced product offerings, in customer support initiatives such as 24/7/365 service, and in bundling promotions. These will be important differentiators with customers in the competitive triple-play market." Mr. Shaw added, "Digital Phone is being well received by our customers and we are pleased with the performance to-date. We will begin to publish subscriber figures when we have a full quarter of Digital Phone activity to report on." During the quarter, Shaw repurchased 219,200 of its Class B Non- Voting Shares for cancellation pursuant to the normal course issuer bid for $4.6 million bringing the year-to-date total to $24.0 million. On February 1, 2005 Shaw redeemed its outstanding Series A US$142.5 million 8.45% Canadian Originated Preferred Securities. Mr. Shaw commented, "The outlook for the second half of the year remains positive. We have made significant upfront investments in our people and infrastructure to continue forward with the launch of Digital Phone in more of Shaw's service territories. We have achieved consecutive quarterly growth in service revenue, service operating income before amortization and free cash flow. In addition, on a year-to-date basis, we have increased our customer base across all product areas." "We believe that the Company is in a strong position to sustain positive free cash flow momentum. After many years of reinvestment in the business, we also feel that a focus on returning cash to shareholders is appropriate given our current prospects, cash generation potential, leverage and value of our stock. Accordingly, Shaw's board today approved a 40% increase to our dividend, from a $0.28 annual equivalent rate to a $0.40 annual equivalent rate on Class B shares payable monthly in the fourth quarter of this fiscal year. In addition, we plan to focus on repurchasing shares over the next 12 month period in order to take advantage of the current value of our stock relative to the strong prospects for future value growth. Following this period, it is our intention currently to resume using a substantial portion of our free cash flow to reduce debt." About the Company Shaw Communications Inc. is a diversified Canadian communications company whose core business is providing broadband cable television, Internet, Digital Phone and satellite direct-to-home services to approximately 3.0 million customers. Shaw is traded on the Toronto and New York stock exchanges and is a member of the S&P/TSX 60 index (Symbol: TSX - SJR.NV.B, NYSE - SJR). * * * As reported in the Troubled Company Reporter on March 7, 2005, Standard & Poor's Ratings Services revised its outlook to positive from stable on Calgary, Alberta-based Shaw Communications Inc., Western Canada's largest cable operator. At the same time, Standard & Poor's affirmed its 'BB+' long-term corporate credit and senior unsecured debt ratings, and its 'B+' preferred stock rating. "The revised outlook reflects expectations for continued improvement in Shaw's financial risk profile. Shaw has reduced debt by almost C$600 million in the past two years, and has demonstrated modest EBITDA growth," said Standard & Poor's credit analyst Joe Morin. The company's operating performance should continue to show modest improvements for the foreseeable future, which will support further debt reduction from free operating cash flow. SHAW COMMUNICATIONS: Increases Quarterly Dividend Rate by 40% ------------------------------------------------------------- Shaw Communications Inc.'s (TSX:SJR.NV.B) (NYSE:SJR) Board of Directors has increased the quarterly dividend rate on Shaw's Class A Participating Shares and Class B Non-Voting Participating Shares by $0.03 per share. The quarterly dividend rate will be $0.09875 per Class A Participating Share and $0.10 per Class B Non-Voting Participating Share, payable in monthly installments commencing June 30, 2005. This represents an increase of over 40% compared to the previous quarterly rate. Based upon this increase in the quarterly dividend rate, Shaw declared monthly dividends of $0.0329166667 per Class A Participating Share and $0.0333333333 per Class B Non-Voting Participating Share, payable on each of June 30, 2005, July 29, 2005 and August 31, 2005 to all holders of record at the close of business June 15, 2005, July 15, 2005 and August 15, 2005, respectively. Shaw Communications Inc. is a diversified Canadian communications company whose core business is providing broadband cable television, Internet, Digital Phone and satellite direct-to-home services to approximately 3.0 million customers. Shaw is traded on the Toronto and New York stock exchanges and is a member of the S&P/TSX 60 index (Symbol: TSX - SJR.NV.B, NYSE - SJR). * * * As reported in the Troubled Company Reporter on Mar. 7, 2005, Standard & Poor's Ratings Services revised its outlook to positive from stable on Calgary, Alberta-based Shaw Communications Inc., Western Canada's largest cable operator. At the same time, Standard & Poor's affirmed its 'BB+' long-term corporate credit and senior unsecured debt ratings, and its 'B+' preferred stock rating. S&P says the outlook is positive. SHAW GROUP: Raising $250.6 Million to Retire 10-3/4% Senior Notes ----------------------------------------------------------------- The Shaw Group Inc. (NYSE:SGR) reported that the offering price for the public offering of 12,850,000 shares of its common stock has been set at $19.50 per share, or $250.6 million aggregate price to the public. An additional 1,927,500 shares may be sold if the underwriters exercise their over-allotment option in full within the next thirty days. The Company intends to use the net proceeds of the offering, together with available cash and working capital borrowings, if necessary, to fund a tender offer, which Shaw commenced on April 5, 2005, for its outstanding 10-3/4% Senior Notes due 2010. The transaction is scheduled to close today, April 18, 2005. Credit Suisse First Boston, UBS Investment Bank and Merrill Lynch & Co. served as joint book-running managers for the offering. A prospectus supplement relating to the offering may be obtained from the offices of: Credit Suisse First Boston 11 Madison Avenue New York, NY 10010 UBS Investment Bank Prospectus Department 299 Park Avenue New York, NY 10171 -- and -- Merrill Lynch & Co. Prospectus Department Four World Financial Center New York, NY 10080 The common stock will be sold pursuant to the Company's universal shelf registration statement. The Shaw Group Inc. -- http://www.shawgrp.com/-- is a global provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation, and facilities management services for government and private sector clients in the power, process, environmental, infrastructure and emergency response markets. A Fortune 500 Company, The Shaw Group is headquartered in Baton Rouge, Louisiana, and employs approximately 18,000 people at its offices and operations in North America, South America, Europe, the Middle East and the Asia-Pacific region. As reported in the Troubled Company Reporter on Apr. 11, 2005, Moody's Investors Service has placed the long-term ratings of The Shaw Group Inc. on review for possible upgrade following the company's announcement that it intends to utilize the proceeds from an approximately $270 million secondary equity offering to tender for all outstanding 10.75% senior unsecured notes due 2010, effectively retiring virtually all long-term debt. Ratings placed on review include: * Ba3 -- senior implied * Ba3 -- 10.75% senior unsecured notes due 2010 * B1 -- senior unsecured issuer rating As reported in the Troubled Company Reporter on Apr. 8, 2005, Standard & Poor's Ratings Services placed its 'BB-' corporate credit and senior secured ratings on The Shaw Group Inc. on CreditWatch with positive implications. At the same time, we also placed our 'B+' senior unsecured and 'B' preliminary subordinated shelf ratings on CreditWatch with positive implications. SHOPKO STORES: Moody's Reviews Low-B Debt Ratings & May Downgrade ----------------------------------------------------------------- Moody's Investors Service placed the long-term debt ratings of Shopko Stores, Inc. on review for possible downgrade following the company's announcement that it had signed a definitive merger agreement to be acquired by an affiliate of Goldner Hawn Johnson & Morrison. The downgrade reflects the anticipated significant increase in leverage as a result of the proposed transaction. The transaction is valued at slightly more than $1 billion and is expected to be funded predominantly from debt with only $30 million of the purchase price to be funded by equity. The company has received a commitment from Bank of America to provide $700 million in real estate financing and additional commitments from Bank of America and Back Bay Capital Funding LLC to provide $415 million in senior debt financing. The proceeds from these financings along with the $30 million of equity will be used to pay the merger consideration, refinance the borrowings under the existing revolving credit facility, fund the amounts due under the expected tender offer for the $100 million senior unsecured notes due 2022, plus all fees and expenses. In addition, the financing will be used to cover all future working capital needs. If substantially all of the senior notes are tendered the rating on those notes will be withdrawn. The review will focus on the debt protection measures of Shopko post acquisition as well as the company's business strategy going forward. These ratings are placed on review for possible downgrade: * Senior implied of B1; * Issuer rating of B2; and * Senior unsecured notes due 2022 of B2. Shopko Stores, Inc., headquartered in Green Bay, Wisconsin, operates general merchandise retail stores under the Shopko and Pamida banners. As of January 29, 2005 it operated 140 Shopko stores in 15 Midwest, Pacific Northwest and Western Mountain states and 220 Pamida stores in 16 Midwest, North Central and Rocky Mountain states. Total revenues for the fiscal year ended January 29, 2005 were approximately $3.2 billion. SINCLAIR BROADCAST: S&P Rates Proposed $555M Credit Facility BB --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' rating to Sinclair Television Group Inc.'s proposed $555 million secured credit facilities. A recovery rating of '1' was also assigned, indicating a high expectation of a full (100%) recovery of principal in the event of a payment default. Borrowings are being used to refinance the company's credit facility. At the same time, Standard & Poor's affirmed its 'BB-' long-term corporate credit rating on parent company Sinclair Broadcast Group Inc. The outlook is negative. Hunt Valley, Maryland-based Sinclair had total debt outstanding of approximately $1.6 billion at Dec. 31, 2004. The effect of the proposed transaction is to lower the company's interest expense. "The rating on Sinclair continues to reflect high financial risk from aggressive, debt-financed TV station acquisitions, a portfolio of generally lower ranked stations, and television advertising's mature revenue growth prospects," said Standard & Poor's credit analyst Alyse Michaelson Kelly. These factors are partially offset by the company's large television audience reach, television broadcasting's good margin and discretionary cash flow potential, and resilient station asset values. The negative outlook recognizes that leverage is high for the 'BB-' rating level. There is modest debt capacity at the current rating to withstand operating shortfalls, share repurchases, or acquisitions. Reducing leverage by using cash flow to lower debt, in both political and nonpolitical years, will be important in any consideration of an outlook revision to stable. SONIC AUTOMOTIVE: Moody's Lifts Senior Sec. Credit Rating to Ba2 ---------------------------------------------------------------- Moody's Investors Service upgraded the senior secured credit facility rating of Sonic Automotive, Inc., to Ba2, affirmed other ratings and changed the rating outlook to stable from negative. The rating upgrade of the senior secured credit facility to Ba2 reflects Moody's increased comfort in the expected loss prospects given its priority position in the capital structure and the strong asset collateralization, namely inventory, accounts receivable and certain properties. The change in outlook reflects Sonic's improved operating performance and moderating acquisition activity since the second half of 2004, despite the continuing challenges of having relatively high leverage. The key rating drivers for Sonic include: 1) Managing growth and size Moderating its acquisition strategy since the second half of 2004 to focus more on operations than acquisitions together with a good franchise network of close to 200 franchises is a positive rating driver. 2) Brand and Geographic diversity Sonic's diverse brand mix with domestic, import and luxury new vehicle sales in 2004 of 26%, 30% and 44%, respectively, is a credit enhancement. In addition, Sonic's geographic diversity in 15 states with a concentration in the California, Florida and Texas is also a credit positive. 3) Cost structure and operating profitability Sonic's variable cost structure with good cost efficiency ratio's (SG&A/gross profit) in the mid 70% range and good operating margins (EBIT/gross profit) in the low 20% area are credit positives. 4) Cash flows, financial policy, and flexibility The consistent generation of operating cash flow with over $125 million of retained cash flow the last three years is a credit strength. On the other hand, high leverage with retained cash flow/adjusted debt of less than 10% and adjusted debt/adjusted EBITDAR of over 7.0x are credit concerns. Debt is adjusted to treat 25% of the floor plan payable as debt and to capitalize operating leases. 5) Internal controls and corporate governance A centralized operating structure together with improved financial controls are credit positives. In addition to the factors mentioned, Sonic's ratings also reflect the competitive, highly fragmented nature of the auto retailing business as well as Sonic's high growth through a roll-up strategy of acquiring existing franchises. The B2 ratings of the senior subordinated notes reflect their effective subordination to floor plan obligations and the secured credit facility, which are secured by new vehicle inventory and related accounts receivable, and minimal, if any, asset coverage, but also recognize the benefit of guarantees from operating companies. The B3 rating of the convertible subordinated notes reflect the same structural issues of the senior subordinated notes but further incorporates the lack of operating company guarantees. The stable ratings outlook reflects Moody's expectation that Sonic will maintain its recent operating gains with a continued focus on internal controls. The stable outlook also reflects our expectation that Sonic may use some debt to finance acquisitions, but that these acquisitions will be measured and the company's leverage, measured by adjusted debt/adjusted EBITDA, will not increase significantly beyond its current level. A resumption of an aggressive acquisition strategy could put pressure on the ratings. Ratings could also be downgraded if operating margins measured as EBIT/gross profit, which is currently around 20%, fell below 15%, SG&A/gross margin rose above 80%, or adjusted leverage (adjusted debt/adjusted EBITDAR) rose above 8.0x. Ratings could improve if Sonic sustains its improved debt protection measures by continuing with its focus on operations rather than acquisitions or reduces financial leverage. Ratings could be upgraded if operating margins increased to the mid 20% range, SG&A/gross profit fell to the low 70%, adjusted leverage fell below 5.0x or if retained cash flow/adjusted debt rose to the mid to high teens. These ratings were affected by this action: * Senior secured revolving credit facilities rating upgraded to Ba2 from Ba3; * Senior implied rating affirmed at Ba3; * Senior unsecured issuer rating affirmed at B1; * Senior subordinated guaranteed debt rating affirmed at B2; * Convertible subordinated notes rating affirmed at B3; Sonic Automotive, Inc., headquartered in Charlotte, North Carolina, operates over 190 franchises representing 38 automotive brands through the United States, with concentrations in the South, Southwest, and California. Sales were $7.4 billion for the year ended December 2004. SPANSION INC: Fitch Says IPO Won't Impact Ratings Anytime Soon -------------------------------------------------------------- Fitch Ratings believes the announced proposed initial public offering -- IPO -- of Spansion Inc., the flash memory joint venture 60% owned by Advanced Micro Devices -- AMD, will have no immediate impact on AMD's ratings. Fitch rates AMD as: -- Senior unsecured debt 'B'; -- $100 million senior secured U.S. revolving credit facility 'BB-'; The Rating Outlook is Stable and as of March 31, 2005, total debt was approximately $1.9 billion. The proposed IPO could positively affect AMD's near-term liquidity and slightly lower AMD's capital spending requirements. Additionally, the spin-off would reduce AMD's exposure to the significantly less profitable and more volatile flash memory market. Nonetheless, Fitch believes that the proposed transaction will not change AMD's fundamental credit risk profile as even the stand-alone microprocessor business: * will continue to have significant ongoing capital spending and research and development -- R&D -- requirements; * improving but still limited market share; * vulnerability to aggressive pricing actions from competitors; * historic negative free cash flow and operating losses, which have improved but will remain pressured; * expectations for continued high debt levels; and * exposure to the volatile cash flows and cyclical demand of the semiconductor market. Rating strengths center on AMD's improved product portfolio, particularly in microprocessors for enterprise servers and workstations, which has enabled the company to increase share in the microprocessor market and maintain a leading position in flash memory, and increased gross margins in microprocessors driven primarily by premium pricing related to a richer sales mix. Additionally, intermediate term liquidity was modestly improved by refinancing activity in 2004, which extended 2005 and 2006 maturities to 2012 and increased the percentage of unsecured debt in the capital structure. On April 13, 2004, Spansion filed an S-1 with the Securities and Exchange Commission for a proposed initial public offering of class A common stock. AMD is likely to retain a sizable but minority interest in Spansion, resulting in AMD no longer consolidating Spansion's financial results. Concurrently, Spansion intends to issue debt securities, the terms of which have not been determined; however, the net proceeds are expected to be used to refinance existing debt and repay intercompany notes. The registration statement still requires SEC approval and the terms of the transaction, such as timing, pricing, and the ultimate ownership structure, have not been finalized. As of March 31, 2005, AMD's liquidity was sufficient to meet near- term obligations and is supported by cash and cash equivalents of approximately $1.1 billion, the undrawn $100 million secured revolving credit facility expiring July 2007, and an undrawn EUR700 million secured term loan facility expiring 2011 related to its next generation Dresden facility, which AMD expects to draw down in 2006. Free cash flow is expected to continue to be negative due primarily to higher capital expenditures and R&D expenses. Total debt was $1.9 billion at quarter-end and consisted primarily of $600 million 7 3/4% senior unsecured notes due 2012, $500 million 4 3/4% convertible senior debentures due 2022 but putable in 2009, and approximately $200 million 4 1/2% convertible senior notes due 2007. These notes may be converted by the holders at any time and are currently in-the-money, potentially resulting in further debt reduction for AMD. The remaining approximately $560 million of debt consists of various secured loans and capital leases. AMD's debt and capital lease obligations are less than $200 million per year through 2006, approximately $239 million in 2007 (assuming no conversion of the remaining 4 1/2% senior notes), and $1.1 billion thereafter (excluding the EUR700 million term loan facility). THYSSENKRUPP BUDD: Tells Shareholders to Sell Shares to Budcan -------------------------------------------------------------- ThyssenKrupp Budd Canada Inc. (TSX:BUD) reported that its Board of Directors, on the advice of its committee of independent directors, is reaffirming its recommendation of the offer made on March 4, 2005 by Budcan Holdings Inc., a subsidiary of ThyssenKrupp Budd Company, to acquire all of the outstanding shares of the Corporation owned by the public for $9.00 per share. Budcan currently owns 77.25% of the outstanding shares of the Corporation. The Board of Directors and the Independent Committee continue to believe that the consideration offered by Budcan pursuant to the Offer is fair, from a financial point of view, to the shareholders of the Corporation other than Budcan and its affiliates, and continue to recommend that holders of shares of the Corporation tender their shares to the Offer. The Board of Directors' and Independent Committee's reaffirmation and continuing recommendation is made following the committee's review of the multi-year new business contract awarded to ThyssenKrupp Budd Canada Inc. by General Motors Corporation. Budcan has extended the time for depositing shares under the Offer to 11:59p.m. tomorrow, April 19, 2005. ThyssenKrupp Budd Canada Inc. is an automotive manufacturer specializing in the production of light truck and support utility vehicle frames and chassis components. The Corporation reported a net loss in the first quarter of fiscal 2005 of $7,552 resulting in further deterioration to its financial position. While cash flow was slightly positive in the first quarter of fiscal 2005, shareholder's deficit continued to increase. The Corporation continues to be dependent on debt financing provided by ThyssenKrupp Finance Canada, Inc., an affiliated corporation. Sales continued to decline due to the mentioned market conditions. The Corporation continued its efforts to reduce manpower in line with production levels and to implement other cost reduction initiatives. As at December 30, 2004, borrowing against the TKFC line of credit totaled $203,228, down from $214,227 as at Sept. 30, 2004 due to a positive cash flow from operations in the first quarter. TKFC has agreed to increase the line of credit through March 31, 2006 to $310,000 from its previous limit of $250,000. This line of credit will continue to provide financing to the Corporation up to the specified borrowing limit of $310,000 until March 31, 2006, provided that the Corporation continues to be part of the ThyssenKrupp group. TKFC has waived its right to call all advances made under this line of credit through March 31, 2006. The Corporation's ability to continue as a going concern is uncertain. The Corporation has incurred significant losses in the past four years, and continuing into the first quarter of this fiscal year. While the Corporation did not have to rely on non- operational sources of financing from TKFC to fund operations in the first quarter of fiscal 2005, the Corporation does have significant financial obligations arising in fiscal years 2005 and 2006. These include the repayment of bank loans of $58,000 in 2005 and $38,000 in 2006 and estimated contributions to the employees' defined benefit pension plans of $24,917 per year in fiscal years 2005 through 2008. The deferred pension costs, which fluctuated in each reporting period, were attributable to the actuarial and accounting timing differences. TROPICAL SPORTSWEAR: Bankr. Court Approves Disclosure Statement --------------------------------------------------------------- The Honorable Michael G. Williamson of the U.S. Bankruptcy Court for the Middle District of Florida approved the Disclosure Statement explaining the Joint Liquidating Plan of Reorganization filed on March 17, 2005, by Tropical Sportswear Int'l Corporation and its debtor-affiliates. Judge Williamson found the Disclosure Statement to contain adequate information for creditors to make an informed decision whether to accept or reject the Debtors' Plan. Objections to the Plan, if any, must be filed by May 10, 2005. The Court will convene a hearing to discuss the merits of the Plan on May 18, 2005, at 10:00 a.m. Review of the Plan Under the Plan, the Debtors and the Holders of Allowed Claims will execute a Liquidating Trust Agreement on the Effective Date. The Trust Agreement provides for the establishment of the Liquidating Trust with the sole purpose of liquidating and distributing the Trust Assets, in accordance with Treasury Regulation section 301.7701-4(d), with no objective to continue or engage in the conduct of a trade or business. On or before the Effective Date, the Liquidating Trust Committee will be formed, and will appoint a Liquidating Trustee. On the Effective Date, the Debtors, after making the initial Distributions to Holders of Allowed Claims pursuant to the Plan, will transfer to the Liquidating Trust all of their right, title, and interest in all of the Trust Assets and any other remaining Property of the Debtors and their Estates, free and clear of any Lien, Claim or Interest in that Property of any other Person except as provided in the Plan. The Plan groups claims and interests into five buckets. Unimpaired claims consist of: a) Priority Non-Tax Claims to receive Cash payments on or after the Effective Date; b) Secured Superpriority Claims of CIT as Agent under the DIP Facility to receive before the Effective Date Cash equal to all DIP Financing Obligations and upon the termination or reimbursement in full of all letters of credit issued under the DIP Facility, CIT, to return any remaining Cash Collateral payable to the Debtors to the Liquidating Trustee for deposit in the Liquidating Trust; and c) Claims by the Customs Bond Agent, who holds Cash of the Debtors amounting to $5.3 million, will be authorized, on or before the Effective Date to apply the Cash and all other amounts owing to the Bond Agent, and upon satisfaction in full of all the obligations of the Debtors, the remainder of the Cash held by the Bond Agent will be delivered to the Liquidating Trustee for deposit in the Liquidating Trust. Impaired claims consist of: a) Allowed General Unsecured Claims, with an approximate amount of $110 million, will receive on or after the Effective Date, either their Pro Rata Share of the Cash in the Unsecured Claim Distribution Fund, or they can elect to have their Claims treated as Convenience Claims and receive a one time Distribution of 40% of the Allowed amount of its Convenience Claim; and b) Subordinated Claims and Intercompany Claims will neither receive nor retain any property under the Plan, while Holders of Interests will be cancelled on the Effective Date and will also neither receive nor retain any property. Full-text copies of the Disclosure Statement and Plan are available for a fee at: http://www.researcharchives.com/bin/download?id=050321024442 -- and -- http://www.researcharchives.com/bin/download?id=050321024853 Headquartered in Tampa, Florida, Tropical Sportswear Int'l Corp. -- http://www.savane.com/-- designs, produces and markets branded branded apparel products that are sold to major retailers in all levels and channels of distribution. The Company and its debtor-affiliates filed for chapter 11 protection on Dec. 16, 2004 (Bankr. M.D. Fla. Case No. 04-24134). David E. Bane, Esq., and Denise D. Dell-Powell, Esq., at Akerman Senterfitt, represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $247,129,867 and total debts of $142,082,756. TRUSTREET PROPERTIES: Fitch Puts Low-B Ratings on Senior Debts -------------------------------------------------------------- Fitch assigned these ratings to Trustreet Properties, Inc.: -- $350 million senior secured credit facility 'BB+'; -- $250 million 7.50% senior unsecured notes due 2015 'BB-'; -- Preferred stock Series A and C 'B+'; The Rating Outlook is Stable. Fitch also withdraws the 'BB' senior unsecured rating for U.S. Restaurant Properties, Inc. -- USRP. On Feb. 25, 2005, CNL Restaurant Properties, Inc. combined with USRP through a reverse merger. Concurrently, USRP acquired CNL Income Funds I through XVIII. On the same date, the surviving entity was renamed Trustreet Properties, Inc. and began trading on the New York Stock Exchange under the ticker TSY. On Jan. 21, 2005, Fitch announced that it expected to rate Trustreet's debt following the merger and receipt and review of final closing documentation for the merger and financings. Fitch has reviewed the final closing documentation and concluded that the company's covenants and financing sources are substantially consistent with the terms that Fitch had evaluated prior to the transaction closing. Trustreet closed its $250 million private placement of senior unsecured notes due 2015 on March 23, 2005. In addition, the company's $350 million credit facility closed on April 8, 2005. Concurrent with the merger, the $111 million of outstanding USRP unsecured notes were repaid. Trustreet's credit strengths are centered on the diversity of its portfolio by geography, tenant, and restaurant concept. As of Dec. 31, 2004, the company had relationships with over 220 restaurant concepts and 550 franchisors/franchisees in a total of over 2,900 managed properties. Fitch also expects the company's interest coverage metrics to be adequate for the rating, with EBITDA to interest expense expected to be approximately 2.3 times for 2005. Recurring EBITDA to interest expense is expected to be about 1.7x for 2005, which is also adequate. This metric subtracts from EBITDA most of the company's specialty finance income, which consists mostly of M&A fees, investment property sales, and servicing income. Rating concerns center largely on the company's aggressive capitalization, as well as a predominantly secured funding profile. CNL's ratio of debt to tangible assets is believed by Fitch to be at approximately 65.5% following the close of the merger. These concerns are softened by management's expressed intention of reducing leverage in the 2005-2008 time period. In addition, management has also indicated it will seek to further diversify its funding profile through layering additional unsecured debt into the capital structure. The notching between the bank facilities and the senior unsecured notes is based in large part on the pledge of borrowing base assets to the bank facilities, as well as other financial covenants that provide superior protection to the bank facility. Trustreet has pledged the equity of its operating partnership, CNL APF Partners, LP, to the bank facility. APF effectively holds 100% of all unencumbered assets, and it also guarantees the bank facility. The unsecured notes, by contrast, have neither a guarantee or equity pledge. The borrower for both the bank facility and the unsecured notes is Trustreet Properties, Inc., which itself holds no direct real estate assets. As a result, Fitch believes that the bank facilities have superior access to both unencumbered assets, as well as any excess collateral or cash flows from encumbered assets. Headquartered in Orlando, Florida, Trustreet is the largest triple-net lessor of real estate to the restaurant industry. The company provides a range of real estate, financial, and advisory services to operators of national and regional restaurant chains. As of Dec. 31, 2004, the company had over $2.5 billion in total assets with 1,900 owned and an additional 1,000 managed properties in 49 U.S. states. UNISYS CORP: Posts $45.5 Million Net Loss in First Quarter ---------------------------------------------------------- Unisys Corporation (NYSE: UIS) reported a first-quarter 2005 net loss of $45.5 million, compared with first-quarter 2004 net income of $28.9 million. The first-quarter 2005 results included pre-tax pension expense of $46.8 million, compared with pension expense of $22.2 million in the year-ago quarter. Excluding the impact of pension expense in both periods, the first-quarter 2005 loss was $13.7 million, or a loss of 4 cents per share, compared with net income of $44.0 million in the first quarter of 2004. Revenue for the first quarter of 2005 declined 7% to $1.37 billion from $1.46 billion in the year-ago quarter. Currency had a 2 percentage-point positive impact on the company's revenue in the first quarter, reflecting a weak U.S. dollar against most major currencies worldwide. "This was a tough quarter for Unisys," said Joseph W. McGrath, Unisys President and Chief Executive Officer. "Our results in the quarter, as expected, were impacted by the continuing challenges of several transformational outsourcing contracts and a substantial increase in pension expense, both of which affected our services margins. We also saw lower-than-expected revenue in the quarter." Mr. McGrath continued, "We did make progress on several important fronts, however. After a slow year for orders in 2004, we implemented aggressive sales and marketing programs to drive stronger order and revenue trends going forward. We were pleased by good services order growth in the quarter, driven by substantial double-digit order gains for outsourcing services. Overall we signed multi-year annuity contracts with an estimated total value of more than $400 million in the quarter." Mr. McGrath said that major services contracts signed in the quarter included: -- a contract valued at $143 million ($105 million for the initial five-year term and $38 million for an optional two- year extension) to provide desktop support services on an outsourced basis to New York City Transit; -- a 10-year contract valued at $90 million to provide insurance processing services for a new Resolution Life Group company in the United Kingdom; -- a contract valued at $77 million over five years to provide infrastructure outsourcing services to a leading U.S. financial institution; -- a contract valued at $22 million over five years to provide infrastructure outsourcing services to a major U.S. city public entity. In addition, in early April, Unisys signed a five-year, $68 million contract with a group of U.S. telecommunications companies for IT infrastructure outsourcing services. "We are encouraged by these wins, since they show that our sales and marketing efforts are starting to pay off," Mr. McGrath said. "More importantly, they show that Unisys is providing the kind of value-added services and solutions that clients need in the marketplace." First Quarter Company Results Overall orders were flat in the first quarter. Services orders showed single-digit gains, while technology orders showed double- digit declines. On a geographic basis, U.S. revenue declined 9% to $621 million. Revenue in international markets declined 4% in the quarter to $746 million. The company's gross profit margin and operating profit margin in the quarter were 19.0% and (4.8%), respectively, compared with 26.8% and 4.0% in the first quarter of 2004. The year-over-year margin declines for the company and the services segment were principally due to the impact of the transformational outsourcing contracts and higher pension expense. SG&A expense and R&D expense represented 19.1% and 4.7% of revenue, respectively, in the first quarter of 2005 compared with 17.9% and 4.9% of revenue in the year-ago quarter. The principal reasons for the increase in SG&A expenses as a percent of revenue were the decrease in revenue and the higher pension expense. The first-quarter 2005 results include a tax benefit of $7.8 million related to a favorable decision in foreign tax litigation. First Quarter Business Segment Results Customer revenue in the company's services segment declined 5% in the first quarter of 2005 compared with the year-ago period. All services categories showed revenue declines in the quarter. On a reported basis, gross profit margin in the services business declined to 11.0% from 19.1% a year ago, while the services operating margin was (6.8)% compared with 2.5% a year ago. Excluding the impact of pension expense in both periods, services gross profit margin declined to 13.8% from 20.4% a year ago, while services operating margin declined to (3.2%) compared with 4.1% a year ago. Customer revenue in the company's technology segment declined 13% in the first quarter. Sales of specialized equipment declined by double digits, while enterprise server sales showed slight declines. Within enterprise servers, sales of ClearPath systems showed mid single-digit declines, while ES7000 revenue showed a high single-digit increase. The technology margins declined in the quarter, primarily reflecting lower sales of ClearPath and specialized technology. On a reported basis, technology gross margin declined to 47.7% from 48.3% a year ago, and technology operating margin declined to 6.1% from 8.6% a year ago. Excluding the impact of pension expense in both periods, the technology gross margin decreased to 48.0% in the first quarter of 2005 from 48.4% in the year-ago quarter and the technology operating margin declined to 8.5% compared with 9.5% in the year-ago period. Cash Flow Results Unisys generated $27 million of cash from operations in the quarter compared with operational cash flow of $129 million in the year-ago quarter. The decline in operational cash flow year-over- year was primarily driven by lower net income. Capital expenditures in the first quarter of 2005 were $97 million, including $76 million invested in revenue-generating projects. On January 17, 2005, Unisys repaid at maturity all outstanding $150 million of its 7-1/4% senior notes. The repayment was made from cash on hand. Unisys ended the quarter with $442 million of cash on hand. Business Outlook "We expect the second quarter to continue to be challenging as we work through the issues in our transformational outsourcing business and soft demand in our high-end enterprise server business," Mr. McGrath said. "We look for second-quarter earnings per share, excluding the impact of pension expense, to be approximately breakeven, with revenue relatively flat compared with the prior-year quarter." About Unisys Unisys -- http://www.unisys.com/-- is a worldwide information technology services and solutions company. Our people combine expertise in consulting, systems integration, outsourcing, infrastructure and server technology with precision thinking and relentless execution to help clients, in more than 100 countries, quickly and efficiently achieve competitive advantage. * * * As reported in the Troubled Company Reporter on March 29, 2005, Moody's lowered the speculative grade liquidity rating of Unisys Corporation to SGL-3 from SGL-2 based on increased potential for future charges and impairments to decrease operating profitability. Following lower than expected financial performance for 2004, Unisys received a waiver of a financial covenant and amended certain financial covenants under its $500 million unsecured credit facility. The entire facility was available for borrowing as of December 31, 2004. The company expects that first half 2005 results will be negatively impacted by problems involving certain outsourcing contracts. The speculative grade liquidity rating of SGL-3 for Unisys Corporation (Ba1/negative outlook) reflects adequate liquidity characterized by: (1) balance sheet liquidity of $661 million in cash and investments as of December 31, 2004; (2) accessible external liquidity; and (3) expected free cash flow generation (cash flow from operations less capital expenditures) in excess of $50 million in 2005. VARTEC TELECOM: Wants to Hire Luffey Huffman as Accountants ----------------------------------------------------------- Vartec Telecom, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, for permission to employ Luffey Huffman & Monroe as their accountants in their chapter 11 cases. Richard S. London, Esq., at Vinson & Elkins, tells the Court that Luffey Huffman has served as the Debtors' accountants and auditors for a number of years and is very familiar with the Debtors' book and records. As the Debtors' accountants, Luffey Huffman will: a. audit the Debtors' consolidated balance sheet as of December 31, 2004; and b. audit the related consolidated statements of stockholders' equity, income, and cash flows for the year then ending. In addition, the Firm will complete a payphone audit as mandated by the Federal Communications Commission effective as of July 1, 2005. Luffey Huffman's professionals and their hourly rates are: Designation Rate ----------- ---- Principal $240 Manager $210 Senior $150 Junior $125 The Firm assures the Court that it does not represent any interest adverse to the Debtors or their estates. Headquartered in Dallas, Texas, Vartec Telecom Inc. -- http://www.vartec.com/-- provides local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04-81695). Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed more than $100 million in assets and debts. VAST EXPLORATION: Completes 2nd Tranche of $3M Equity Placement --------------------------------------------------------------- Vast Exploration Inc. (TSX VENTURE:VST) has completed the second tranche of its previously announced $3,000,000 private placement through the issuance of 500,000 flow through shares at $0.60 per flow through share for gross proceeds of $300,000. Each of the flow through shares will be subject to a hold period that will expire on August 9, 2005. The Company previously completed the first tranche of the private placement through the issuance of 4,400,000 Units at $0.50 per Unit and 833,334 flow through shares at $0.60 per flow through share. In connection with both tranches of the private placement, Forbes & Manhattan, Inc. was provided with a finder's fee of $232,000. Vast Exploration, Inc., is a junior oil and gas exploration and production company focused on growth through acquisition, development, and exploration. It recently announced the acquisition of a private energy company in Alberta and currently has the right to earn up to 1875 hectares of gas rights from Canyon Creek Resources Ltd. Vast also has a 50% working interest in an additional 908 hectares of land located in the Dollard area of SW Saskatchewan with oil and gas rights that are held for five years. As of October 31, 2004, Vast Exploration's balance sheet reflected a $50,162 stockholders' deficit compared to $13,248 of positive shareholder equity at January 31, 2004. VERITEC INC: Licenses Multi-Dimensional Bar Code Tech. to Nokia --------------------------------------------------------------- Veritec, Inc., (OTC Bulletin Board: VRTC), a pioneer in two- dimensional bar code technology, said that VCode Holdings, Inc., one of its wholly owned subsidiary along with VData LLC -- a wholly owned subsidiary that is part of the Acacia Technologies group -- entered into a license agreement with Nokia Corporation of Finland regarding VCode's: -- United States Patent No. 5,612,524, "Identification Symbol System and Method with Orientation Mechanism," -- United States Patent No. 4,924,078, "Identification Symbol, System and Method," and -- European Patent EP438841, "Identification Symbol". The terms of the agreement are confidential. VCode Holdings, Inc., is a wholly owned subsidiary of Veritec, Inc., of Golden Valley, Minnesota. Veritec manufactures and sells data matrix software and systems under the VeriCode(R) trademark. VData LLC is an Illinois company that has an exclusive license under the patents. Together, VCode and VData are offering licenses to the patents. The '524 patent relates to a data matrix, an array of data cells with a border. The patent also concerns tools for reading and making a data matrix. The patent describes several varieties of matrix; a square array of cells permits creation of up to 248 different matrices. A data matrix has much higher information density and therefore can contain far more data than a bar code. Unlike a bar code, a data matrix does not have a preferred scanning direction, and is readable at various orientations. Headquartered in Golden Valley, Minnesota, Veritec, Inc., is the pioneer and patent holder of two-dimensional (2D) matrix coding technology. The company is engaged in developing, marketing, and selling encoding (writing) and decoding (reading) software and system products that utilize its patented technology. The Company filed for chapter 11 protection on Feb. 28, 2005 (Bankr. D. Minn. Case No. 05-31119). Matthew R. Burton, Esq., at Leonard O'brien Spencer Gale & Sayre Ltd., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $1,662,752 in total assets and $10,227,311 in total debts. WASHINGTON MUTUAL: Fitch Upgrades Low-B Ratings on 26 Mort. Certs. ------------------------------------------------------------------ Fitch Ratings has taken rating actions on Washington Mutual residential mortgage-backed certificates: Washington Mutual Mortgage Pass-Through Certificates, Series 2000-1 -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AAA'; -- Class M2 affirmed at 'AAA'; -- Class M3 affirmed at 'AA'; -- Class B1 upgraded to 'A+' from 'A'; -- Class B2 upgraded to 'A-' from 'BBB'. WAMU, Series 2000-3 -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AAA'; -- Class M2 affirmed at 'AA+'; -- Class M3 upgraded to 'A+' from 'A'. WAMU, Series 2001-7 -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AAA'; -- Class M2 affirmed at 'AA+'; -- Class M3 upgraded to 'AA' from 'A+'. WAMU, Series 2002-S5 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 upgraded to 'AAA' from 'AA+'; -- Class B3 upgraded to 'AA' from 'A+'; -- Class B4 upgraded to 'A' from 'BBB+'; -- Class B5 upgraded to 'BBB' from 'BB+'. WAMU, Series 2002-S6 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 upgraded to 'AAA' from 'AA'; -- Class B3 upgraded to 'AA-' from 'A'; -- Class B4 upgraded to 'A' from 'BBB'; -- Class B5 upgraded to 'BBB+' from 'BB'. WAMU, Series 2002-S7 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 upgraded to 'AA+' from 'AA'; -- Class B3 upgraded to 'A+' from 'A'; -- Class B4 upgraded to 'BBB+' from 'BBB'; -- Class B5 upgraded to 'BB+' from 'BB'. Washington Mutual Mortgage Pass-Through Certificates, Series 2002-MS7 -- Class A affirmed at 'AAA'; -- Class CB1 affirmed at 'AAA'; -- Class CB2 upgraded to 'AA+' from 'AA-'; -- Class CB3 upgraded to 'A+' from 'A-'; -- Class CB4 upgraded to 'BBB+' from 'BBB'; -- Class CB5 upgraded to 'BBB-' from 'BB'. WAMMS, Series 2002-MS8 -- Class A affirmed at 'AAA'; -- Class CB4 upgraded to 'A-' from 'BB'; -- Class CB5 upgraded to 'BB+' from 'B'. WAMMS, Series 2002-MS9 -- Class A affirmed at 'AAA'; -- Class CB1 upgraded to 'AAA' from 'AA'; -- Class CB2 upgraded to 'AA' from 'A-'; -- Class CB3 upgraded to 'A' from 'BBB'; -- Class CB4 upgraded to 'BBB-' from 'BB'; -- Class CB5 upgraded to 'BB' from 'B'. WAMMS, Series 2002-MS10 -- Class A affirmed at 'AAA'; -- Class CB1 affirmed at 'AAA'; -- Class CB2 upgraded to 'A+' from 'A'; -- Class CB3 upgraded to 'BBB+' from 'BBB'; -- Class CB5 upgraded to 'B+' from 'B'. WAMMS, Series 2002-MS11 -- Class A affirmed at 'AAA'; -- Class CB1 upgraded to 'AAA' from 'AA+'; -- Class CB2 upgraded to 'AA' from 'A+'; -- Class CB3 upgraded to 'A+' from 'BBB+'; -- Class CB4 upgraded to 'A-' from 'BB'; -- Class CB5 upgraded to 'BB+' from 'B'. WAMMS, Series 2002-MS12 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 upgraded to 'AA+' from 'AA'; -- Class B3 upgraded to 'AA-' from 'A'; -- Class B4 upgraded to 'A-' from 'BB'; -- Class B5 upgraded to 'BBB' from 'B'. WAMMS, Series 2003-MS1 -- Class A affirmed at 'AAA'; -- Class CB1 affirmed at 'AAA'; -- Class CB2 affirmed at 'AA+'; -- Class CB3 affirmed at 'AA-'; -- Class CB4 upgraded to 'BBB+' from 'BBB'; -- Class CB5 upgraded to 'BB' from 'B'. WAMMS, Series 2003-MS2 -- Class A affirmed at 'AAA'; -- Class CB1 affirmed at 'AAA'; -- Class CB2 upgraded to 'AA+' from 'AA'; -- Class CB3 upgraded to 'AA-' from 'A+'; -- Class CB4 upgraded to 'BBB' from 'BBB-'; -- Class CB5 upgraded to 'B+' from 'B'. WAMMS, Series 2003-MS3 -- Class A affirmed at 'AAA'; -- Class CB1 affirmed at 'AAA'; -- Class CB2 upgraded to 'AAA' from 'AA+'; -- Class CB4 upgraded to 'A' from 'BBB-'; -- Class CB5 upgraded to 'BB+' from 'B'. WAMMS, Series 2003-MS5 -- Class A affirmed at 'AAA'; -- Class CB5 upgraded to 'B+' from 'B'. WAMMS, Series 2003-MS7 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AA'; -- Class B3 affirmed at 'A-'; -- Class B4 upgraded to 'BB+' from 'BB'; -- Class B5 upgraded to 'B+' from 'B'. WAMU, Series 2002-AR10 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 upgraded to 'AAA' from 'AA'; -- Class B3 upgraded to 'AA' from 'A'; -- Class B4 upgraded to 'A' from 'BBB'; -- Class B5 upgraded to 'BBB' from 'BB'. WAMU, Series 2002-AR11 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AAA'; -- Class B3 affirmed at 'AA'; -- Class B4 affirmed at 'A'; -- Class B5 affirmed at 'BBB'. WAMU, Series 2002-AR12 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AAA'; -- Class B3 affirmed at 'AA+'; -- Class B4 affirmed at 'A+'; -- Class B5 upgraded to 'BBB+' from 'BBB'. WAMU, Series 2002-AR13 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AA+'; -- Class B3 affirmed at 'AA-'; -- Class B4 affirmed at 'A'; -- Class B5 affirmed at 'BBB'. WAMU, Series 2002-AR14 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AA+'; -- Class B3 affirmed at 'AA-'; -- Class B4 affirmed at 'A'; -- Class B5 affirmed at 'BBB'. WAMU, Series 2002-AR15 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AA'; -- Class B3 upgraded to 'A+' from 'A'; -- Class B4 upgraded to 'A-' from 'BBB'; -- Class B5 upgraded to 'BBB-' from 'BB'. WAMU, Series 2002-AR16 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AA'; -- Class B3 affirmed at 'A'; -- Class B4 upgraded to 'BBB+' from 'BBB'; -- Class B5 upgraded to 'BB+' from 'BB'. WAMU, Series 2002-AR18 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 upgraded to 'AA' from 'AA-'; -- Class B3 upgraded to 'A' from 'A-'; -- Class B4 upgraded to 'BBB+' from 'BBB-'; -- Class B5 upgraded to 'BB+' from 'BB-'. WAMU, Series 2002-AR19 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 upgraded to 'AA' from 'AA-'; -- Class B3 upgraded to 'A' from 'A-'; -- Class B4 upgraded to 'BBB+' from 'BBB-'; -- Class B5 upgraded to 'BB+' from 'BB-'. WAMU, Series 2003-AR1 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AA'; -- Class B3 affirmed at 'A'; -- Class B4 affirmed at 'BBB'; -- Class B5 affirmed at 'BB'. WAMU, Series 2003-AR2 -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AA'; -- Class B3 affirmed at 'A'. WAMU, Series 2003-AR3 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 upgraded to 'AA' from 'AA-'; -- Class B3 affirmed at 'A'; -- Class B4 affirmed at 'BBB'; -- Class B5 affirmed at 'BB'. WAMU, Series 2003-AR4 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AA'; -- Class B3 affirmed at 'A'; -- Class B4 affirmed at 'BBB-'; -- Class B5 upgraded to 'BB-' from 'B+'. WAMU, Series 2003-AR5 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA+'; -- Class B2 affirmed at 'A+'; -- Class B3 upgraded to 'A-' from 'BBB+'; -- Class B4 upgraded to 'BB+' from 'BB'; -- Class B5 upgraded to 'B+' from 'B'. WAMU, Series 2003-AR6 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA+'; -- Class B2 affirmed at 'A+'; -- Class B3 upgraded to 'A-' from 'BBB+'; -- Class B4 affirmed at 'BB+'; -- Class B5 affirmed at 'B+'. The affirmations, affecting approximately $8.28 billion of the outstanding balances, are due to credit enhancement consistent with future loss expectations. The upgrades, affecting approximately $180 million of the outstanding balances, are being taken as a result of low delinquencies and losses, as well as increased credit support levels. The above deals suffered none to minimal losses since the last rating action date and the upgraded classes experienced an increase in credit enhancement percentage as much as 11 times the original. The collateral of the above WAMU and WAMMS deals primarily consists of 15- to 30-year fixed-rate mortgages secured by first liens on one- to four-family residential properties. The 'AR' deals have collateral that consists of 15- to 30-year adjustable- rate mortgages, also secured by first liens on one- to four-family residential properties. The pool factors, i.e., current mortgage loans outstanding as a percentage of the initial pool for these deals, range from 8% (WAMU 2002-S5) to 44% (WAMU 2003-AR6). Further information regarding current delinquency, loss and credit enhancement statistics is available on the Fitch Ratings Web site at http://www.fitchratings.com/ WINDHAM COMMUNITY: Moody's Affirms Ba1 Long-Term Bond Rating ------------------------------------------------------------ Moody's Investors Service has affirmed Windham Community Memorial Hospital's Ba1 long-term bond rating affecting approximately $16 million of Series C bonds issued through the Connecticut Health and Educational Facilities Authority. The outlook is negative. The Ba1 rating is based on the: -- Weak financial performance in fiscal year (FY) 2002 and FY 2003 followed by cash flow improvement in FY 2004 that is continuing through five months of FY 2005; -- Weak unrestricted liquidity, although absolute liquidity levels and associated ratios have improved since reaching a low point at fiscal year end 2002; and -- Dominant market position within its service area. The negative outlook reflects Moody's concerns that operating performance may take a downturn due to recent issues with key WCMH physicians given the departure of two of WCMH's four orthopedic surgeons and the potential opening of a freestanding imaging center by radiologists on staff at the hospital. The departure of the two surgeons is the primary reason for the material decline in outpatient surgeries through the first five months of FY 2005. The ability to replace these physicians and diffuse the ramifications of a competing imaging center are keys to maintaining the Ba1 rating. Moody's also note that while outpatient surgical volumes have declined through the first five months of FY 2005, inpatient admissions have increased more than 4.0% during the period. Legal: The CHEFA Series C bonds are secured by a mortgage of WCMH property. Swaps: WCMH has no swaps outstanding. Considerable Improvement In Cash Flow In Fy 2004 Following Weak Financial Performance In Fy 2002 And Fy 2003: Following weak financial performance in FY 2002 and FY 2003, WCMH reduced operating losses in FY 2004 to $861,000 (-1.2% operating margin) from a low point of $4.2 million (-6.5%) in FY 2003. FY 2004 operating cash flow increased to $3.4 million (4.9% operating cash flow margin) from $2,000 (0.0%) in FY 2003. As a result, debt service coverage improved to 2.22 times maximum annual debt service coverage and 7.02 times debt to cash flow, up from 0.40 times and -39.52 times in FY 2003, respectively. Improvements have continued through the first five months of FY 2005, as operating losses were only $174,000 (-0.6%) and operating cash flow improved to a better $1.9 million (6.5%). The turnaround reflects a number of expense control and revenue enhancing initiatives, including: * bringing on board a new Chief Financial Officer; * enacting price increases and contractual improvements; * reducing the use of agency nurses; and * eliminating a number of non-essential positions. While Moody's views this financial turnaround favorably, the rating agency have some concern that operating losses may expand due to the aforementioned issues with physicians, which threatens volumes. Weak Liquidity, Although Liquidity Levels And Ratios Have Improved Since Fy 2002: WCMH continues to report relatively thin liquidity levels, which is a key credit concern. As of February 28, 2005, unrestricted cash and investments was a better, although low $10.3 million or 56.5 days cash on hand and resulting in 53% cash-to-debt. Nonetheless, these levels are improvements from a low point of $7.0 million (40.3 days) and 34% cash-to-debt at FYE 2002. Financial improvement, improved accounts receivable management to 51 accounts receivable days at FYE 2004 from a high 81 days at FYE 2002, and minimal liquidity expenditures drove the increase. While Moody's recognize the improved balance sheet, the rating agency is concerned that volume pressures resulting from the physician concerns could pressure cash flows and strain already weak liquidity measures further. Moreover, the need for increased spending on emergency department renovations and purchase of basic information system technology will pressure WCMH's ability to add liquidity. Finally, Moody's has concerns regarding WCMH's defined benefit pension plan, which has a funded ratio of only 66% of projected benefit obligations of $61.6 million. In FY 2004, WCMH made an employer contribution of $3.0 million to the pension plan; a contribution of $3.6 million is expected in FY 2005. Somewhat balancing our concerns with the defined benefit pension plan, all new WCMH employees are enrolled in a defined contribution plan, which should help contain pension costs in the long-run. Dominant Market Position Within Service Area: Moody's views WCMH's dominant market presence in its service area as a credit strength. WCMH is located in Willimantic, CT in southwestern Windham County. WCMH has an approximately 59% market share of a service area that includes Willimantic and surrounding communities. While these market share data are from FY 2002, management does not believe a material shift in market share has occurred. Bolstering the dominant market share, WCMH benefits from being located among bedroom communities between Storrs, CT and Norwich, CT. Somewhat offsetting the market position, WCMH faces competition in a broader service area, primarily from Eastern Connecticut Health Network's two hospitals - 56-bed Rockville General Hospital and 162-bed Manchester Memorial Hospital - and 179-bed William W. Backus Hospital. These facilities are located between 17 and 21 miles from 94-bed WCMH. Additionally, WCMH views a threat from physicians in key areas such as orthopedic outpatient rehabilitation and radiology as potential competition in the service area. Key Ratios And Data (Audited Windham Community Memorial Hospital, Inc. FY 2004 financial results; investment returns normalized at 6%): -- Admissions: 4,686 -- Total Operating Revenues: $68.9 million -- Net Revenues Available for Debt Service, Adjusted: $4.1 million -- Days Cash on Hand: 54.7 days -- Debt-to-Cash flow: 7.02 times -- Maximum Annual Debt Service Coverage with Actual Investment Income as Reported: 2.16 times on MADS of $1.9 million -- Moody's Adjusted Maximum Annual Debt Service Coverage with Investment Income Normalized at 6%: 2.22 times on MADS of $1.9 million -- Total Debt Outstanding: $19.9 million -- Operating Cash-flow Margin: 4.9% Outlook The negative outlooks reflects Moody's concerns that operating performance may take a downturn due to the recent issues with key WCMH physicians, which have contributed to the downturn in outpatient surgeries through five months FY 2005. Moody's recognizes WCMH's financial turnaround since FY 2003, however, and if WCMH is successful in recruiting efforts and associated volumes recover, a change in outlook may be warranted. Moody's also note that while outpatient surgical volumes have declined through the first five months of FY 2005, inpatient admissions have increased during the period. YUKOS OIL: Igor Chernov Appointed as CEO of Siberian Joint Venture ------------------------------------------------------------------ Mol Rt. of Hungary and OAO Yukos Oil Co. named Igor Chernov as chief executive of their Siberian production venture after his predecessor's arrest, Balazs Penz at Bloomberg News reports, citing the daily Napi Gazdasag. The previous CEO, Igor Vitke, was detained in March 2005 on charges that the company pumped more oil than its license allowed, the Napi said. OAO Yukos and Mol Rt. each own a 50% interest in the venture. Headquartered in Houston, Texas, Yukos Oil Company -- http://www.yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. (Yukos Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) YUKOS OIL: Stipulation with Deutsche Bank Makes Appeal Null & Void ------------------------------------------------------------------ As previously reported, the Bankruptcy Court on Feb. 24, 2005, granted Deutsche Bank AG's request to dismiss Yukos Oil Company's Chapter 11 case. On February 25, Yukos filed a request for new trial and asked the Bankruptcy Court to stay the Dismissal Order. The Bankruptcy Court denied Yukos' request on March 3. Yukos appealed from the Bankruptcy Court's Dismissal Order to the U.S. District Court for the Southern District of Texas. Yukos asked the Bankruptcy Court to impose a stay on the Dismissal Order pending resolution of the appeal. That request was again denied. Yukos turned to the District Court to impose the stay. After hearing arguments on March 9, 2005, District Court Judge Nancy F. Atlas issued a memorandum opinion on March 18, denying Yukos' request for a stay. On March 22, 2005, Yukos announced that it's dropping its appeal. Yukos determined to continue to pursue all legal means in other forums to stop expropriation of assets by the Russian Authorities. Zack A. Clement, Esq., at Fulbright & Jaworski, LLP, in Houston Texas, notes that the record in the appeal has not been assembled by the clerk of court and the appeal has not been docketed pursuant to Rule 8007(b) of the Federal Rules of Bankruptcy. Thus, the appeal may be dismissed on the filing of a stipulation of dismissal signed by all the parties pursuant to Bankruptcy Rule 8001(c)(1). Yukos and Deutsche Bank are the sole parties to the appeal. The parties stipulate that the appeal filed by Yukos is voluntarily dismissed. In accordance with the parties' stipulation, Judge Atlas dismisses Yukos' appeal with each party to bear its own costs. Headquartered in Houston, Texas, Yukos Oil Company is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. (Yukos Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) YUKOS OIL: Sued by Yuganskneftegas for $2.2 Bil. Unpaid Deliveries ------------------------------------------------------------------ Torrey Clark at Bloomberg News reports that Yuganskneftegas is suing Yukos Oil Company for RUR62.4 billion -- $2.2 billion -- to recover payments for unpaid oil deliveries. Yugansk asserts that Yukos owes it payments for crude oil delivered from July to December 2004. The preliminary hearing has been set for April 25, 2005, at The Moscow Arbitration Court. Yukos is also facing a separate RUR141 billion suit -- $5 billion -- initiated by the former unit before the Moscow Arbitration Court for tax claims for the years 1999-2003, Interfax reports. Yugansk is also seeking another RUR167 billion from Yukos and two subsidiaries, Yukos EP and Yukos Moscow, for damages as a result of "transactions with [Yugansk's] property" that occurred in 1999-2003, according to documents filed by Yugansk with the Arbitration Court. Headquartered in Houston, Texas, Yukos Oil Company -- http://www.yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. (Yukos Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) ZIFF DAVIS: Moody's Assigns B3 Rating to Planned $205M Rate Notes ----------------------------------------------------------------- Moody's Investors Service has assigned a B3 rating to Ziff Davis Media Inc.'s proposed $205 million of first lien floating rate notes due 2012. Details of the rating action are: Ratings assigned: * $205 million of first lien floating rate notes due 2012 -- B3 * Senior implied rating -- Caa1 * Speculative grade liquidity rating -- SGL2 The rating outlook is stable. The ratings reflect: * the heavy burden of ZD's debt and preferred stock (which is exacerbated by double digit accretion rates); * its high leverage; * heightened debt service pressure which is expected after its subordinated debt turns cash pay in 2006; * the relatively poor performance of ZD's established operations during 2004; and * the decline in the circulation of some of its legacy consumer and computer game related titles. Although a 2002 restructuring removed approximately $150 million in debt from ZD's balance sheet, its current balance of debt and preferred stock significantly exceeds levels recorded immediately after the restructuring. At closing (if successfully concluded), the company expects to record leverage of over 8 times net debt to reported EBITDA, representing a fully leveraged profile. ZD's capital structure is predominated by preferred stock obligations (largely held by Willis Stein), which are mandatorily redeemable in 2010. Adjusting for $815 million of mandatorily redeemable preferred stock, leverage exceeds 30 times reported EBITDA. For assessment purposes, Moody's has ascribed basket B treatment to ZD's preferred stock, resulting in 75% debt attribution. The stable outlook reflects: * a more normalized operating environment for the magazine publishing sector; * a pick-up in IT budgets; and * increasing market acceptance and usage of Internet related applications, both of which fell short of expectations a few years ago. Proceeds from the proposed first lien notes will be largely used to retire ZD's current $169 million senior secured credit facility. Post closing, ZD will have no bank facility and will rely upon cash and cash flow generation to meet its future funding needs. During 2004, ZD experienced a 5% improvement in revenues and a 1% improvement in reported EBITDA over the prior year. This revenue growth resulted largely from the launch of new brands in ZD's consumer tech group, as well as continued growth in its enterprise group. Nevertheless, circulation revenues declined during 2004, impacted, in part, by a reduction in circulation of ZD's flagship magazine, PC Magazine. In addition, ZD experienced declines in EBITDA in both its consumer tech group and its game group during 2004. In light of the declining circulation of PC Magazine (ZD reduced its rate base to 700,000 from 1,050,000 in January 2005), ZD's growth prospects are largely tied to its non-traditional businesses including Internet and e-commerce related lines and newer product launches. The Caa1 senior implied rating reflects Moody's view that the majority preferred stockholder (Willis Stein) will take no action which will jeopardize its controlling equity position. Nevertheless, the rating recognizes that preferred stock interests would receive poor recovery prospects in a distress scenario. The rating on the proposed first lien notes are notched up from the senior implied rating, in recognition of the asset protection afforded to senior secured debt holders, and their ranking above a very substantial amount of unrated subordinated debt and preferred stock. The assignment of a SGL-2 rating to ZD reflects a good liquidity position characterized by positive free cash flows and cash balances that are expected to internally fund its business plan over the next twelve months. However, in 2006, ZD's compounding subordinated notes turn cash pay (the first payment occurs in 2007), largely consuming ZD's cash flow and potentially reducing its liquidity cushion thereafter. The SGL rating acknowledges that the company will lack a committed liquidity facility should unexpected events occur. Given the high level of ZD's debt and preferred stock obligations, ratings improvement is unlikely unless ZD is able to substantially reduce the level of these obligations to more manageable proportions. In addition, an improvement in the performance of PC Magazine and traction in ZD's newer business endeavors could also assist ratings lift. Ratings pressure could result if the sponsor undertakes initiatives to monetize its investment in the company or if revenue and earnings growth from new product launches does not materialize as expected. Headquartered in New York City, New York, Ziff Davis is a leading integrated media company focusing on the technology, video game and consumer lifestyle markets. Total revenues for fiscal year 2004 were approximately $205 million. * FTI Consulting Adds Two New Experts to FTI Palladium Partners --------------------------------------------------------------- FTI Consulting, Inc. (NYSE: FCN), the premier provider of corporate finance/restructuring, forensic and litigation consulting and technology, and economic consulting, disclosed two new additions to FTI Palladium Partners, the interim management practice within FTI Corporate Finance/Restructuring. Joseph R. Szmadzinski has joined the company as a senior managing director, and Michael C. Buenzow, also a senior managing director, has transferred to FTI Palladium Partners from the general Corporate Finance/Restructuring practice. Mr. Szmadzinski, who has over 25 years experience, will work with the FTI Palladium Partners team to assist companies facing financial or operational difficulties. Based out of Chicago and Detroit, Mr. Szmadzinski will work with companies to stabilize operations, restore credibility and implement strategies to drive long-term positive change. Relevant to his new role at FTI Palladium Partners, Mr. Szmadzinski held several notable C-suite interim management positions including CEO of NetRegulus; and CIO of Champion Enterprises, Hayes Lemmerz, GMAC, GeoLogistics and Ryder System, among others. He also served as a restructuring director for several major clients including Fleet Securities and WorldCom/MCI. Most recently, he was president of IT Management Resources, Inc. (ITMR), a Detroit, MI consulting company that provides technology business planning, assessment, executive consulting and project quality assurance. Prior to his experience at ITMR, Mr. Szmadzinski was a Principal at AlixPartners, LLC for 6 years and president of The System Advisory Group, both located in Detroit. Mr. Szmadzinski was also previously CEO of Edcor Data Services, a Detroit-based outsourcing firm, and consulting partner at both KPMG in Philadelphia and Coopers & Lybrand (PwC) in Chicago and Detroit. Mr. Szmadzinski is a Certified IT Practitioner (CDP) and fellow of the AIIE. He received his BS at Grand Valley State University and studied for his MBA at the University of Michigan. Mr. Buenzow, who has over 18 years of experience, will transfer into the FTI Palladium Partners' practice. In this role, he will work with the stakeholders of underperforming companies - in interim management positions - to quickly stabilize relations with customers, vendors, lenders, shareholders and employees. He is currently serving as the interim CEO of Bush Industries, a $350 million diversified furniture manufacturer that is a leading supplier to major "big Box" retailers. Bush has approximately 2,500 employees at 15 facilities in the U.S., Mexico, Germany and China. His operational turnaround efforts at Bush Industries have included a refinancing, a recapitalization transaction, major expense reductions, asset sales and the development of a China- based international sourcing organization that oversees the manufacture and delivery of both finished goods and component parts. Prior to joining FTI Consulting in 2002, Mr. Buenzow spent 13 years at PricewaterhouseCoopers where he was a partner in the Business Recovery Services practice. He has experience in a broad range of industries, including manufacturing, automotive, discount retail, specialty retail, grocery, transportation, construction and paper. Mr. Buenzow received his MBA from the University of Notre Dame and his BBA from Niagara University. He will continue to work out of FTI Consulting's Chicago office. Commenting on the new appointments, Jack Dunn, president and chief executive officer, said, "We are pleased to welcome Joe and Michael, two highly talented individuals. The knowledge and experience Joe has gained from serving as an interim management advisor on diverse engagements is a great complement to the FTI Palladium." "Similarly," Mr. Dunn continued, "Michael's proven experience and success in his current interim position at Bush Industries demonstrates the credentialed expertise provided to clients by FTI. In a rapidly changing business environment, we value the expertise that both professionals will provide in helping troubled businesses implement turnaround initiatives and in maximizing value for the shareholders of these companies." About FTI Consulting FTI is the premier provider of corporate finance/restructuring, forensic and litigation consulting and technology, and economic consulting. Located in 24 of the major U.S. cities, London and Melbourne, FTI's total workforce of approximately 1,000 employees includes numerous PhDs, MBAs, CPAs, CIRAs, CFEs, and technologists who are committed to delivering the highest level of service to clients. These clients include the world's largest corporations, financial institutions and law firms in matters involving financial and operational improvement and major litigation. * Paul Hastings Expands Global Reach with New Milan Office ---------------------------------------------------------- Paul, Hastings, Janofsky & Walker, LLP, a leading international law firm, disclosed the opening of an office in Milan, Italy. The new office, which will officially open in early May, will be the firm's 17th office around the world. The firm also announced that Roberto Cornetta, previously managing partner at Norton Rose and Bruno Cova, former Lead Counsel to the Extraordinary Commissioner working on the restructuring of Parmalat, will be joining the office as partners. "The opening of an office in Italy, the fourth largest economy in Europe, is the next important step in expanding our global footprint," Seth Zachary, Chairman of Paul Hastings. "Over the past several years, we have replicated our Asian growth strategy in Europe, opening offices in London, Paris and Brussels, and building strong European transaction and litigation capabilities in order to serve the growing needs of our clients." "An office in Milan, the financial center of Italy, will further enhance our ability to serve these clients whose business continues to become more global in scope," said Mr. Zachary. "Roberto Cornetta and Bruno Cova are excellent attorneys who understand the business landscape in Italy and have a strong grasp of what it takes to help us succeed in Europe." Roberto Cornetta served as managing partner of Norton Rose Italy specializing in banking, finance, and M&A. As managing partner, Mr. Cornetta started the Italian practice in 2000 and grew it to a full service practice of 55 English and Italian qualified lawyers practicing in Milan and Rome. Mr. Cornetta represented a number of banks funding major privatization as well as PPP projects. Over the years Roberto has served clients in the aviation, real estate and service industries. Bruno Cova is a senior corporate attorney experienced in private practice and in several in-house counsel positions. He has been General Counsel of Fiat, a EUR 60 billion Fortune 100 company, Chief Compliance Officer of EBRD, and General Counsel of Eni's Exploration & Production Division, the energy company's core business which has a EUR 12 billion turnover. Paul, Hastings, Janofsky & Walker LLP, founded in 1951, is an international law firm, representing Fortune 500 companies with more than 1,000 attorneys located in 17 offices: Atlanta, Beijing, Brussels, Hong Kong, London, Los Angeles, Milan, New York, Orange County, Palo Alto, Paris, San Diego, San Francisco, Shanghai, Stamford, Tokyo and Washington, DC. * BOND PRICING: For the week of April 4 - April 8, 2005 ------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- AAIPharma Inc 11.000% 04/01/10 49 ABC Rail Product 10.500% 12/31/04 0 Adelphia Comm. 3.250% 05/01/21 6 Adelphia Comm. 6.000% 02/15/06 6 Advanced Access 10.750% 06/15/11 74 Allegiance Tel. 11.750% 02/15/08 25 Allegiance Tel. 12.875% 05/15/08 31 Allied Holdings 8.625% 10/01/07 73 Amer. Color Graph. 10.000% 06/15/10 68 Amer. Comm. LLC 12.000% 07/01/08 5 Amer. Plumbing 11.625% 10/15/08 14 Amer. Restaurant 11.500% 11/01/06 63 Amer. Tissue Inc. 12.500% 07/15/06 62 American Airline 7.377% 05/23/19 67 American Airline 7.379% 05/23/16 66 American Airline 8.839% 01/02/17 73 American Airline 8.800% 09/16/15 74 American Airline 9.070% 03/11/16 72 American Airline 10.180% 01/02/13 74 American Airline 10.190% 05/26/16 73 American Airline 10.600% 03/04/09 70 American Airline 10.610% 03/04/11 67 American Airline 11.000% 05/06/15 75 AMR Corp. 4.500% 02/15/24 74 AMR Corp. 9.000% 08/01/12 75 AMR Corp. 9.000% 09/15/16 75 AMR Corp. 9.200% 01/30/12 74 AMR Corp. 9.750% 08/15/21 64 AMR Corp. 9.800% 10/01/21 65 AMR Corp. 9.880% 06/15/20 62 AMR Corp. 10.000% 04/15/21 63 AMR Corp. 10.150% 05/15/20 60 AMR Corp. 10.200% 03/15/20 65 AMR Corp. 10.290% 03/08/21 63 AMR Corp. 10.450% 11/15/11 56 AMR Corp. 10.550% 03/12/21 57 Anadigics 5.000% 10/15/09 69 Anvil Knitwear 10.875% 03/15/07 64 Apple South Inc. 9.750% 06/01/06 17 Armstrong World 9.000% 06/15/04 70 AT Home Corp. 0.525% 12/28/18 7 AT Home Corp. 4.750% 12/15/06 5 ATA Holdings 12.125% 06/15/10 44 ATA Holdings 13.000% 02/01/09 45 Atherogenics Inc. 1.500% 02/01/12 74 Atlantic Coast 6.000% 02/15/34 22 Atlas Air Inc. 9.702% 01/02/08 51 Avado Brands Inc. 11.750% 06/15/09 20 B&G Foods Holding 12.000% 10/30/16 8 Bank New England 8.750% 04/01/99 11 Bank New England 9.500% 02/15/96 6 Bethlehem Steel 10.375% 09/01/03 0 Big V Supermarkets 11.000% 02/15/04 1 Borden Chemical 9.500% 05/01/05 1 Budget Group Inc. 9.125% 04/01/06 0 Burlington Inds. 7.250% 08/01/27 6 Burlington Inds. 7.250% 09/15/05 6 Burlington Northern 3.200% 01/01/45 60 Calpine Corp. 4.750% 11/15/23 68 Calpine Corp. 7.750% 04/15/09 66 Calpine Corp. 7.875% 04/01/08 73 Calpine Corp. 8.500% 02/15/11 67 Calpine Corp. 8.625% 08/15/10 67 Calpine Corp. 8.750% 07/15/07 75 Calpine Corp. 8.750% 07/15/13 74 Chic East ILL RR 5.000% 01/01/54 55 Collins & Aikman 12.875% 08/15/12 46 Color Tile Inc. 10.750% 12/15/01 0 Comcast Corp. 2.000% 10/15/29 43 Cone Mills Corp. 8.125% 03/15/05 10 CoreComm. Limited 6.000% 10/01/06 5 Covad Communicat 3.000% 03/15/24 71 Curagen Corp. 4.000% 02/15/11 73 Delta Air Lines 2.875% 02/18/24 39 Delta Air Lines 7.299% 09/18/06 61 Delta Air Lines 7.711% 09/18/11 55 Delta Air Lines 7.779% 01/02/12 48 Delta Air Lines 7.900% 12/15/09 36 Delta Air Lines 7.920% 11/18/10 55 Delta Air Lines 8.000% 06/03/23 36 Delta Air Lines 8.270% 09/23/07 70 Delta Air Lines 8.300% 12/15/29 31 Delta Air Lines 8.540% 01/02/07 74 Delta Air Lines 8.540% 01/02/07 71 Delta Air Lines 8.540% 01/02/07 68 Delta Air Lines 8.540% 01/02/07 71 Delta Air Lines 8.950% 01/12/12 61 Delta Air Lines 9.000% 05/15/16 32 Delta Air Lines 9.200% 09/23/14 42 Delta Air Lines 9.250% 03/15/22 31 Delta Air Lines 9.300% 01/02/10 63 Delta Air Lines 9.300% 01/02/10 68 Delta Air Lines 9.375% 09/11/07 66 Delta Air Lines 9.750% 05/15/21 31 Delta Air Lines 9.875% 04/30/08 73 Delta Air Lines 10.000% 06/01/08 59 Delta Air Lines 10.000% 08/15/08 48 Delta Air Lines 10.000% 06/01/09 65 Delta Air Lines 10.000% 05/17/10 73 Delta Air Lines 10.000% 06/01/10 64 Delta Air Lines 10.000% 06/01/10 36 Delta Air Lines 10.060% 01/02/16 48 Delta Air Lines 10.125% 05/15/10 37 Delta Air Lines 10.140% 08/14/11 68 Delta Air Lines 10.140% 08/26/12 50 Delta Air Lines 10.375% 02/01/11 42 Delta Air Lines 10.375% 12/15/22 31 Delta Air Lines 10.430% 01/02/11 73 Delta Air Lines 10.430% 01/02/11 73 Delta Air Lines 10.500% 04/30/16 45 Delta Air Lines 10.790% 03/26/14 37 Delta Air Lines 10.790% 03/26/14 71 Delta Air Lines 10.790% 03/26/14 34 Delta Mills Inc. 9.625% 09/01/07 48 Delphi Auto Syst 7.125% 05/01/29 75 Delphi Trust II 6.197% 11/15/33 51 Diva Systems 12.625% 03/01/08 1 Dura Operating 9.000% 05/01/09 74 Duty Free Int'l 7.000% 01/15/04 25 DVI Inc. 9.875% 02/01/04 9 E. Spire Comm Inc. 10.625% 07/01/08 0 E. Spire Comm Inc. 12.750% 04/01/06 0 E. Spire Comm Inc. 13.000% 11/01/05 0 E&S Holdings 10.375% 10/01/06 51 Eagle-Picher Inc. 9.750% 09/01/13 70 Eagle Food Center 11.000% 04/15/05 4 Edison Brothers 11.000% 09/26/07 0 Encompass Service 10.500% 05/01/09 0 Enron Corp. 6.400% 07/15/06 32 Enron Corp. 6.500% 08/01/02 30 Enron Corp. 6.625% 10/15/03 32 Enron Corp. 6.625% 11/15/05 31 Enron Corp. 6.725% 11/17/08 32 Enron Corp. 6.750% 09/01/04 32 Enron Corp. 6.750% 09/15/04 33 Enron Corp. 6.750% 07/01/05 0 Enron Corp. 6.750% 08/01/09 30 Enron Corp. 6.875% 10/15/07 32 Enron Corp. 6.950% 07/15/28 33 Enron Corp. 6.950% 07/15/28 30 Enron Corp. 7.000% 08/15/23 33 Enron Corp. 7.125% 05/15/07 31 Enron Corp. 7.375% 05/15/19 31 Enron Corp. 7.625% 09/10/04 31 Enron Corp. 7.875% 06/15/03 34 Enron Corp. 8.375% 05/23/05 32 Enron Corp. 9.125% 04/01/03 33 Enron Corp. 9.875% 06/15/03 30 Epic Resorts LLC 13.000% 06/15/05 2 Exodus Comm. Inc. 10.750% 12/15/09 0 Exodus Comm. Inc. 11.625% 07/15/10 0 Falcon Products 11.375% 06/15/09 42 Federal-Mogul Co. 7.375% 01/15/06 28 Federal-Mogul Co. 7.500% 01/15/09 28 Federal-Mogul Co. 8.160% 03/06/03 28 Federal-Mogul Co. 8.370% 11/15/01 24 Federal-Mogul Co. 8.800% 04/15/07 28 Fibermark Inc. 10.750% 04/15/11 70 Finova Group 7.500% 11/15/09 43 Fleming Cos. Inc. 10.125% 04/01/08 35 Flooring America 9.250% 10/15/07 0 Foamex L.P. 9.875% 06/15/07 50 Ford Motor Cred 5.900% 02/20/14 72 Fruit of the Loom 8.875% 04/15/06 0 GMAC 5.250% 01/15/14 75 GMAC 5.350% 01/15/14 74 GMAC 5.900% 12/15/13 75 GMAC 5.900% 01/15/19 67 GMAC 5.900% 01/15/19 72 GMAC 5.900% 10/15/19 72 GMAC 6.000% 02/15/19 73 GMAC 6.000% 02/15/19 66 GMAC 6.000% 02/15/19 67 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 67 GMAC 6.000% 03/15/19 71 GMAC 6.000% 03/15/19 64 GMAC 6.000% 03/15/19 67 GMAC 6.000% 04/15/19 66 GMAC 6.000% 09/15/19 72 GMAC 6.000% 09/15/19 73 GMAC 6.050% 08/15/19 70 GMAC 6.050% 08/15/19 73 GMAC 6.050% 10/15/19 71 GMAC 6.100% 09/15/19 71 GMAC 6.125% 10/15/19 68 GMAC 6.150% 08/15/19 71 GMAC 6.150% 09/15/19 68 GMAC 6.150% 10/15/19 69 GMAC 6.200% 04/15/19 69 GMAC 6.250% 01/15/19 74 GMAC 6.250% 04/15/19 70 GMAC 6.250% 05/15/19 72 GMAC 6.250% 07/15/19 73 GMAC 6.300% 10/15/13 74 GMAC 6.300% 08/15/19 73 GMAC 6.300% 08/15/19 72 GMAC 6.350% 04/15/19 69 GMAC 6.350% 07/15/19 73 GMAC 6.350% 07/15/19 72 GMAC 6.400% 12/15/18 72 GMAC 6.400% 11/15/19 70 GMAC 6.400% 11/15/19 73 GMAC 6.500% 06/15/18 68 GMAC 6.500% 11/15/18 72 GMAC 6.500% 12/15/18 74 GMAC 6.500% 05/15/19 67 GMAC 6.500% 01/15/20 67 GMAC 6.500% 02/15/20 73 GMAC 6.550% 12/15/19 71 GMAC 6.600% 05/15/18 70 GMAC 6.600% 06/15/19 75 GMAC 6.650% 06/15/18 70 GMAC 6.650% 10/15/18 71 GMAC 6.700% 06/15/18 65 GMAC 6.700% 11/15/18 73 GMAC 6.750% 09/15/16 74 GMAC 6.750% 07/15/18 66 GMAC 6.750% 09/15/18 72 GMAC 6.750% 05/15/19 72 GMAC 6.750% 05/15/19 73 GMAC 6.750% 06/15/19 74 GMAC 6.750% 06/15/19 71 GMAC 6.800% 09/15/18 72 GMAC 6.850% 05/15/18 74 GMAC 6.875% 07/15/18 71 GMAC 6.900% 07/15/18 73 GMAC 6.900% 08/15/18 73 GMAC 7.000% 05/15/17 71 GMAC 7.000% 03/15/18 74 GMAC 7.000% 08/15/18 73 GMAC 7.000% 09/15/21 71 GMAC 7.000% 06/15/22 71 GMAC 7.000% 11/15/23 67 GMAC 7.000% 11/15/24 73 GMAC 7.000% 11/15/24 68 GMAC 7.000% 11/15/24 75 GMAC 7.150% 09/15/18 73 GMAC 7.400% 02/15/21 73 Golden Books Pub. 10.750% 12/31/04 1 Golden Northwest 12.000% 12/15/06 10 Graftech Int'l 1.625% 01/15/24 73 Graftech Int'l 1.625% 01/15/24 72 GST Network Funding 10.500% 05/01/08 0 Guilford Pharma 5.000% 07/01/08 74 HNG Internorth. 9.625% 03/15/06 32 Icon Health & Fit 11.250% 04/01/12 71 Imperial Credit 9.875% 01/15/07 0 Imperial Credit 12.000% 06/30/05 0 Impsat Fiber 6.000% 03/15/11 74 Inland Fiber 9.625% 11/15/07 48 Intermet Corp. 9.750% 06/15/09 55 Intermune Inc. 0.250% 03/01/11 72 Iridium LLC/CAP 10.875% 07/15/05 16 Iridium LLC/CAP 11.250% 07/15/05 13 Iridium LLC/CAP 13.000% 07/15/05 15 Iridium LLC/CAP 14.000% 07/15/05 12 IT Group Inc. 11.250% 04/01/09 1 Kaiser Aluminum & Chem. 12.750% 02/01/03 18 Kmart Corp. 6.000% 01/01/08 16 Kmart Corp. 8.990% 07/05/10 70 Kmart Corp. 9.350% 01/02/20 25 Kmart Funding 8.800% 07/01/10 75 Kmart Funding 9.440% 07/01/18 40 Kulicke & Soffa 0.500% 11/30/08 72 Lehman Bros. Holding 6.000% 05/25/05 60 Lehman Bros. Holding 7.500% 09/03/05 54 Level 3 Comm. Inc. 2.875% 07/15/10 51 Level 3 Comm. Inc. 6.000% 09/15/09 52 Level 3 Comm. Inc. 6.000% 03/15/10 51 Liberty Media 3.750% 02/15/30 61 Liberty Media 4.000% 11/15/29 66 Lukens Inc. 7.625% 08/01/04 0 LTV Corp. 8.200% 09/15/07 0 MacSaver Financial 7.400% 02/15/02 8 MacSaver Financial 7.600% 08/01/07 8 MacSaver Financial 7.875% 08/01/03 5 Metamor Worldwide 2.940% 08/15/04 1 Metro Mortgage 9.000% 12/15/04 0 Mississippi Chem. 7.250% 11/15/17 4 Muzak LLC 9.875% 03/15/09 49 Nat'l Steel Corp. 8.375% 08/01/06 3 Nat'l Steel Corp. 9.875% 03/01/09 3 Northern Pacific Railway 3.000% 01/01/47 60 Northpoint Comm. 12.875% 02/15/10 1 Northwest Airlines 7.248% 01/02/12 72 Northwest Airlines 7.360% 02/01/20 66 Northwest Airlines 7.875% 03/15/08 61 Northwest Airlines 8.070% 01/02/15 59 Northwest Airlines 8.130% 02/01/14 62 Northwest Airlines 8.700% 03/15/07 72 Northwest Airlines 9.875% 03/15/07 74 Northwest Airlines 10.000% 02/01/09 62 Northwest Steel & Wir. 9.500% 06/15/01 0 Nutritional Src. 10.125% 08/01/09 74 Oakwood Homes 7.875% 03/01/04 30 Oakwood Homes 8.125% 03/01/09 25 O'Sullivan Ind. 13.375% 10/15/09 34 Orion Network 11.250% 01/15/07 50 Orion Network 12.500% 01/15/07 54 Oscient Pharm 3.500% 04/15/11 74 Outboard Marine 9.125% 04/15/17 1 Owens Corning 7.500% 08/01/18 75 Owens Corning Fiber 8.875% 06/01/02 65 Owens Corning Fiber 9.375% 06/01/12 65 Pegasus Satellite 9.625% 10/15/05 57 Pegasus Satellite 9.750% 12/01/06 60 Pegasus Satellite 12.375% 08/01/06 57 Pegasus Satellite 12.500% 08/01/07 60 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings Inc. 9.875% 06/15/08 65 Penn Traffic Co. 11.000% 06/29/09 27 Piedmont Aviat 9.900% 11/08/06 8 Piedmont Aviat 10.000% 11/08/12 0 Piedmont Aviat 10.250% 01/15/07 23 Piedmont Aviat 10.300% 03/28/06 7 Piedmont Aviat 10.350% 03/28/12 0 Pixelworks Inc. 1.750% 05/15/24 73 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 7.250% 01/15/07 3 Polaroid Corp. 11.500% 02/15/06 1 Portola Packaging 8.250% 02/01/12 75 Primedex Health 11.500% 06/30/08 46 Primus Telecom 3.750% 09/15/10 48 Primus Telecom 8.000% 01/15/14 71 Psinet Inc 10.000% 02/15/05 0 Railworks Corp. 11.500% 04/15/09 1 Radnor Holdings 11.000% 03/15/10 72 Read-Rite Corp. 6.500% 09/01/04 51 Realco Inc. 9.500% 12/15/07 40 Reliance Group Holdings 9.000% 11/15/00 24 Reliance Group Holdings 9.750% 11/15/03 2 RDM Sports Group 8.000% 08/15/03 0 RJ Tower Corp. 12.000% 06/01/13 57 S3 Inc. 5.750% 10/01/03 0 Safeguard Scient 2.625% 03/15/24 68 Safety-Kleen Corp. 9.250% 05/15/09 0 Safety-Kleen Corp. 9.250% 06/01/08 0 Salton Inc. 12.250% 04/15/08 62 Silverleaf Res. 10.500% 04/01/08 0 Solectron Corp. 0.500% 02/15/34 59 Specialty Paperb. 9.375% 10/15/06 75 Startec Global 12.000% 05/15/08 0 Syratech Corp. 11.000% 04/15/07 36 Teligent Inc. 11.500% 12/01/07 0 Teligent Inc. 11.500% 03/01/08 1 Tower Automotive 5.750% 05/15/24 20 Triton PCS Inc. 8.750% 11/15/11 68 Triton PCS Inc. 9.375% 02/01/11 69 Tropical SportsW 11.000% 06/15/08 53 Twin Labs Inc. 10.250% 05/15/06 17 United Air Lines 6.831% 09/01/08 16 United Air Lines 6.932% 09/01/11 50 United Air Lines 7.270% 01/30/13 41 United Air Lines 7.762% 10/01/05 3 United Air Lines 7.811% 10/01/09 38 United Air Lines 8.030% 07/01/11 15 United Air Lines 8.250% 04/26/08 21 United Air Lines 8.310% 06/17/09 53 United Air Lines 8.700% 10/07/08 48 United Air Lines 9.000% 12/15/03 7 United Air Lines 9.060% 09/26/14 46 United Air Lines 9.125% 01/15/12 8 United Air Lines 9.200% 03/22/08 45 United Air Lines 9.300% 03/22/08 38 United Air Lines 9.350% 04/07/16 48 United Air Lines 9.560% 10/19/18 38 United Air Lines 9.750% 08/15/21 9 United Air Lines 9.760% 05/13/06 48 United Air Lines 10.020% 03/22/14 45 United Air Lines 10.110% 01/05/06 41 United Air Lines 10.110% 02/19/06 38 United Air Lines 10.125% 03/22/15 45 United Air Lines 10.250% 07/15/21 8 United Air Lines 10.360% 11/20/12 54 United Air Lines 10.670% 05/01/04 9 United Air Lines 11.210% 05/01/14 8 Univ. Health Services 0.426% 06/23/20 62 United Homes Inc. 11.000% 03/15/05 0 US Air Inc. 7.500% 04/15/08 0 US Air Inc. 8.930% 04/15/08 0 US Air Inc. 9.330% 01/01/06 42 US Air Inc. 10.250% 01/15/07 1 US Air Inc. 10.490% 06/27/05 3 US Air Inc. 10.610% 06/27/07 0 US Air Inc. 10.680% 06/27/08 6 US Air Inc. 10.700% 01/15/07 23 US Air Inc. 10.900% 01/01/08 3 US Air Inc. 10.900% 01/01/09 5 US Air Inc. 10.900% 01/01/10 5 US Airways Inc. 7.960% 01/20/18 48 US Airways Pass. 6.820% 01/30/14 40 Venture Hldgs 9.500% 07/01/05 1 Werner Holdings 10.000% 11/15/07 70 Westpoint Stevens 7.875% 06/15/05 0 Westpoint Stevens 7.875% 06/15/08 0 Winn-Dixie Store 8.875% 04/01/08 55 Winsloew Furniture 12.750% 08/15/07 20 Winstar Comm 14.000% 10/15/05 1 Winstar Comm Inc. 12.500% 04/15/08 0 Winstar Comm Inc. 10.000 03/15/08 1 World Access Inc. 13.250% 01/15/08 4 World Access Inc. 4.500% 10/01/02 7 Xerox Corp. 0.570% 04/21/18 50 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***