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/raid1/www/Hosts/bankrupt/TCR_Public/050516.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, May 16, 2005, Vol. 9, No. 114 Headlines 1301 CP AUSTIN: Case Summary & 20 Largest Unsecured Creditors AAIPHARMA INC: Wants to Hire Fried Frank as Bankruptcy Counsel AAIPHARMA INC: Ernst & Young Resigns as Accountants ADVOCAT INC.: Earns $8.8 Million of Net Income for First Quarter ALLIANCE ONE: Moody's Rates Planned $100M Senior Sub. Notes at B3 AMCAST INDUSTRIAL: Unsecured Creditors Get 2 Cents on the Dollar AMERICAN BUSINESS: Wants to Reject Certain Executory Contracts AMERICAN BUSINESS: Wants to Sell Personal Property In Philadelphia AMERICAN BUSINESS: Taps Great American To Liquidate Certain Assets AMERIQUEST MORTGAGE: Fitch Affirms Five Low-B Equity Ratings AMES TRUE: Weak Performance Cues S&P to Pare Ratings to B- BEAR STEARNS: S&P Junks Series 1999-CFL1 Class F Certificates BERWALD PARTNERSHIP: Court Approves Plan of Reorganization BLEU SKIES: Case Summary & 29 Largest Unsecured Creditors BLOCKBUSTER: Fitch Downgrades One Notch Two Senior Debts BRIDGEPOINT TECHNICAL: Court Approves Disclosure Statement C&H QUICK: Case Summary & 6 Largest Unsecured Creditors CALL-NET ENTERPRISES: Moody's May Upgrade Ratings After Review CALIFORNIA PACIFIC: Final Payout of Unsecureds Just Weeks Away CALPINE CORP: Weak Performance Spurs Moody's to Slice Ratings CATHOLIC CHURCH: Court Won't Extend Portland Claims Bar Date CENTRAL GARDEN: Moody's Ups Rating on $150M Sr. Sub. Notes to B1 COLLINS & AIKMAN: David Stockman Resigns & Becker Named Acting CEO COLLINS & AIKMAN: Gets Waiver Under Accounts Receivables Facility COLLINS & AIKMAN: Liquidity Pressures Prompt S&P to Junk Ratings CREDIT SUISSE: Poor Performance Prompts Moody's to Slice Ratings CYPRESS COMMUNICATIONS: Reports $547K Net Loss for First Quarter CYPRESS COMMS: Lenders OK Extension of $8M Debt Maturity to '06 DEUTSCHE MORTGAGE: Adequate Credit Support Cues S&P to Up Ratings DUFFUS & ASSOCIATES: Case Summary & 20 Largest Unsecured Creditors EAGLEPICHER PHARMACEUTICALS: Discloses Capital Improvement Plans EGAIN COMMS: March 31 Balance Sheet Upside-Down by $1 Million ELDON HOFFMAN: Case Summary & 18 Largest Unsecured Creditors FOOTSTAR INC: Gets Court's Support to Continue Selling at Kmart FORD MOTOR: Moody's Maintains Investment Grade Rating GEORGETOWN HEALTHCARE: Negative Income Cues S&P's Negative Outlook HAYES LEMMERZ: Joint Venture in Turkey Set to Begin Production HILL CITY: Judge Brahney Confirms Amended Chapter 11 Plan INDYMAC ARM: Moody's Reviewing Ba2 Rating on Class B-3 Certs. INTEGRATED HEALTH: Wants Objection Deadline Extended to Sept. 6 INTERPUBLIC GROUP: Reporting Delays Continue IVACO INC.: Court Sets June 3 as D&O Claims Bar Date JOHN KEMP: Case Summary & 9 Largest Unsecured Creditors KMART CORP: Dawson Wants to Modify Injunction to Pursue Claim KMART CORP: Rosalie Countryman Wants Stay Lifted to Pursue Claim KITCHEN ETC: July 7 is Administrative Claims Objection Deadline KITCHEN ETC: Joseph Myers Wants Until Aug. 29 to Object to Claims LEE'S TRUCKING: Case Summary & 32 Largest Unsecured Creditors LEHMAN BROTHERS: Fitch To Put Low-B Ratings on Two Note Classes LIBERTY GROUP: Fortress Investment Sale Cues S&P to Watch Ratings MARTHA FINELLI: Case Summary & 3 Largest Unsecured Creditors MAYTAG CORP: Declares $0.09 per Share Quarterly Dividend MERIDIAN AUTOMOTIVE: Wants to Hire Ordinary Course Professionals MERIDIAN AUTOMOTIVE: Wants to Give $10 Million to Foreign Units MERIDIAN AUTOMOTIVE: Seeks Priority Status for Intercompany Claims MIRANT CORP: Court Approves IRS & Southern Co. Closing Agreement MIRANT CORP: Court Approves Seattle Settlement Agreement MIRANT CORP: EPA Says Plan Proposes Provisions "Forbidden by Law" NDCHEALTH CORP: Moody's Holds Ratings as Lenders Waive Default NORTH AMERICAN MEMBERSHIP: Moody's Junks Planned $20M Term Loan PEGASUS SATELLITE: Felton Street Asserts Interest in Fixtures REHOBOTH MCKINLEY: Fitch Lowers Rating on $3.7 Mil. Loan to BB+ REGIONAL DIAGNOSTICS: U.S. Trustee Picks 5-Member Creditors Comm. REGISTER.COM INC: Delays Form 10-Q Due to Manual Processing S-TRAN HOLDINGS: Case Summary & 30 Largest Unsecured Creditors SAFETY-KLEEN: Injunction Modified for Moore to Pursue Lawsuit SR TELECOM: Incurs $13.8 Million Net Loss in First Quarter STELCO INC: Prepares Plan Outline for Presentation to Stakeholders THOMAS WILSON: Case Summary & 20 Largest Unsecured Creditors TOWER AUTOMOTIVE: Can't File Quarterly Report on Time TOWER AUTOMOTIVE: Wants Until Sept. 30 to File Chapter 11 Plan TOWER AUTOMOTIVE: Files Amendments to DIP Financing Agreement TRUMP HOTELS: Wants to Modify Plan to Fix May 20 Record Date TRUMP HOTELS: NJ Sports Authority Says Easement Was Terminated VISTEON CORP.: Hires J.P. Morgan Chase as Financial Advisor VISTEON CORP.: Michael Johnston Elected as New Board Chairman WELLMAN INC.: Declining Imports Cue S&P to Hold Rating to B+ WESTPOINT STEVENS: Wants to Settle Nan Ya Litigation Claims WODO LLC: Wants Exclusive Filing Period Extended Until Aug. 16 WMG HOLDINGS: IPO Prompts Moody's to Put Positive Outlook XYBERNAUT CORP: Nasdaq Delists Securities Due to Low Stock Price YUKOS OIL: Taps Alvarez & Marsal as Restructuring Advisor * Moody's Credit Trends: Talking Points on Various Issues * BOND PRICING: For the week of May 9 - May 13, 2005 ********* 1301 CP AUSTIN: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: 1301 CP Austin, Ltd. dba Crossing Place Apartments fka Meyer Properties (Austin), Ltd. 1601 Belvedere Road, Suite 407 South West Palm Beach, Florida 33406 Bankruptcy Case No.: 05-12719 Type of Business: The Debtor owns and operates several apartments in Texas and in Michigan. See http://www.thecrossingplace.com/ Chapter 11 Petition Date: May 12, 2005 Court: Western District of Texas (Austin) Judge: Frank R. Monroe Debtor's Counsel: Stephen A. Roberts, Esq. Strasburger & Price, LLP 600 Congress Avenue, Suite 1600 Austin, Texas 78701 Tel: (512) 499-3600 Fax: (512) 499-3660 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Time Warner Cable Trade Debt $20,102 P.O. Box 660097 Dallas, TX 75266-0097 City of Austin Utilities $16,453 P.O. Box 2267 Austin, TX 78783-2267 Emerald P I, Inc. Trade Debt $14,289 3810 Medical Parkway, Suite 235 Austin, TX 78756 Visual Marketing Trade Debt $8,423 1502 Deer Lodge Trail Cedar Park, IL 78613 Green Teams, Inc. Trade Debt $6,191 The Greenery 731 Industrial Blvd. Bryan, TX 77803 Emmis Austin Radio-KROX Trade Debt $4,614 2497 Reliable Parkway Chicago, IL 60686 Austin Apartment Guide Trade Debt $4,540 HPC Publications P.O. Box 402039 Atlanta, GA 30384 Home Depot Supply Trade Debt $3,378 P.O. Box 509058 San Diego, CA 92150-9058 Premium Cuts Lawn Service, Trade Debt $2,814 Inc. P.O. Box 82108 Austin, TX 78708-2108 Viking Office Trade Debt $2,484 PO Box 30488 Los Angeles, CA 90030-0488 BG Personnel, Inc. Trade Debt $2,227 P.O. Box 803312 Dallas, TX 75380-3312 Waste Management Trade Debt $2,090 Longhorn Disposal 9708 Giles Lane Austin, TX 78754 Comfort Express Trade Debt $1,770 P.O. Box 5311 Round Rock, TX 78664 Network Savvy Solutions Trade Debt $1,745 P.O. Box 7012 Austin, TX 78713-7012 Dahill Industries, Inc. Lease $1,714 P.O. Box 314 San Antonio, TX 78292-0314 Texas Student Publications Trade Debt $1,583 P.O. Box D Austin, TX 78713-8904 Worldwide Pest Control, Inc. Trade Debt $1,501 P.O. Box 5746 San Antonio, TX 78201 Wells Fargo Financial Trade Debt $1,326 Leasing P.O. Box 6434 Carol Stream, IL 60197-6434 SBC Trade Debt $1,289 P.O. Box 650661 Dallas, TX 75265 Universal Cleaning Trade Debt $1,170 Specialist 1834 Ferguson Lane, Suite 1000 Austin, TX 78754 AAIPHARMA INC: Wants to Hire Fried Frank as Bankruptcy Counsel -------------------------------------------------------------- aaiPharma Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to employ Fried, Frank, Harris, Shriver & Jacobson LLP as their bankruptcy counsel, nunc pro tunc to May 10, 2005. The Debtors seek to retain Fried Frank because: (a) Fried Frank has extensive experience and knowledge in the field of debtors' and creditors' rights; (b) the Debtors believe that Fried Frank is well qualified to represent the Debtors as debtors-in-possession in their chapter 11 cases; and (c) Fried Frank's bankruptcy and restructuring attorneys have developed familiarity with the Debtors' assets, affairs and businesses. Fried Frank will: (a) provide legal advice with respect to the Debtors' powers and duties as debtor-in-possession in the continued operation of their businesses and management of their properties, including with respect to general corporate, tax, litigation, real estate and ERISA matters; (b) take necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on behalf of the Debtors and the defense of actions commenced against the Debtors; (c) prepare, present, and respond to, on behalf of the Debtors, as debtors-in-possession, necessary applications, motions, answers, orders, reports and other legal papers in connection with the administration of their estates in these cases; (d) assist the Debtors in facilitating the sale of substantially all of their pharmaceutical assets pursuant to Section 363 of the U.S. Bankruptcy Code and in obtaining the approval of these matters by the Court; (e) assist and advise the Debtors in obtaining postpetition debtor-in-possession financing to operate their businesses during the pendency of the cases and assist and advise the Debtors and their advisors with any subsequent exit financing agreements sought or obtained by the Debtors; (f) attend meetings and negotiate with representatives of creditors and other parties-in-interest; (g) review and object to claims, analyze, recommend, prepare, and bring any causes of action created under the Bankruptcy Code; (h) negotiate, prepare, and review on the Debtors' behalf, the Debtors' plan of reorganization, disclosure statement, and all related agreements and documents, and take any necessary action on behalf of the Debtors to obtain confirmation of such plan of reorganization; (i) assist and advise the Debtors, with issues regarding the Debtors' obligations under existing and amended business agreements and contracts and with any negotiation or renegotiation of such contracts in light of these cases; (j) assist the Debtors in matters relating to pending litigation and the continuation or discontinuation of such litigation in light of their chapter 11 cases; (k) assist the Debtors and their advisors with SEC filings and disclosures related to their chapter 11 cases; (l) assist the Debtors and their advisors with employment agreements, employee incentive agreements, confidentiality agreements, retention agreements, and incentive agreements related to their chapter 11 cases; (m) assist the Debtors and their advisors with governmental investigations and inquiries, including any investigations by the U.S. Attorney's Office or the Securities and Exchange Commission; and (n) perform any other necessary legal services for the Debtors, in connection with their chapter 11 cases. In addition, Fried Frank will consult the Debtors' management and other advisors in connection with: (a) any potential transaction involving the Debtors, and (b) the operating, financial and other business matters relating to the ongoing activities of the Debtors. If an official creditors' committee is appointed, Fried Frank will attend and participate in creditors' committee meetings. Fried Frank's professionals' current hourly billing rates: Designation Hourly Rate ----------- ----------- Partners $620 - $995 Counsel $500 - $850 Special Counsel $565 - $590 Associates $295 - $515 Legal Assistants $150 - $225 Fried Frank customarily charges clients for all disbursements incurred. To the best of the Debtors' knowledge, Fried Frank and the partners, principals and professionals who will work in the engagement: (a) do not have connections with the Debtors, their creditors, or other party-in-interest, or their attorneys, (b) are "disinterested persons" as defined in Section 101(14) of the U.S. Bankruptcy Code, as modified by Section 1107(b) of the U.S. Bankruptcy Code, and (c) do not hold or represent any interest adverse to the Debtors' estates. Headquartered in Wilmington, North Carolina, aaiPharma Inc. -- http://aaipharma.com/-- provides product development services to the pharmaceutical industry and sells pharmaceutical products which primarily target pain management. AAI operates two divisions: AAI Development Services and Pharmaceuticals Division. The Company and eight of its debtor-affiliates filed for chapter 11 protection on May 10, 2005 (Bankr. D. Del. Case No. 05-11341). Karen McKinley, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they reported consolidated assets amounting to $323,323,000 and consolidated debts totaling $446,693,000. AAIPHARMA INC: Ernst & Young Resigns as Accountants --------------------------------------------------- On May 11, 2005, Ernst & Young LLP resigned as aaiPharma Inc. and its debtor-affiliates' independent registered public accountants. The firm delivered a letter to the Audit Committee of the Company's Board of Directors confirming that its auditor-client relationship had ceased. The Company had no disagreement with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure in connection with the audits of the financial statements of aaiPharma for the fiscal years ended December 31, 2004, and 2003. According to Ernst & Young's audit report on the financial statements of the Company for the fiscal years ended December 31, 2004, and 2003, the Company's ability to continue as a going concern is doubtful. Ernst & Young identified two conditions that raise substantial doubt about the Company's ability to continue as a going concern: -- The Company has incurred recurring operating losses and has a significant working capital deficiency; and -- The Company has not complied with certain covenants of loan agreements with banks and other lenders. In Ernst & Young's report, dated April 26, 2005, regarding management's assessment of the Company's internal control over financial reporting, Ernst & Young concluded that the Company has not maintained effective internal control over financial reporting as of December 31, 2004, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Ernst & Young's report was included in the 2004 Form 10-K. Six material weaknesses in internal control over financial reporting were listed in Ernst & Young's report: -- Insufficient controls with respect to recognition of revenue from developmental services contracts for the Company's development services business. The accounts affected by this material weakness are development services revenue and work-in-process receivables; -- Insufficient controls with respect to accounting for inventory of certain supplies used in its development services business. The accounts affected by this material weakness are inventory and direct costs; -- A combination of control deficiencies relating to the Company's period end financial statement close process. All accounts are affected by this material weakness; -- A combination of control deficiencies relating to the Company's accounting for income taxes. This material weakness affected the following tax accounts: income tax expense, the related income tax accruals and current and non-current deferred tax assets and liabilities; -- Insufficient controls related to the Company's pharmaceutical division's process of recording adjustments to revenue, including reserving for product returns. This material weakness affects accounts receivable reserve accounts and product sales revenue; and -- Insufficient controls related to the Company's analysis for impairment of intangible assets. This material weakness affects intangible assets and amortization expense. In addition, in April 2004, in connection with their audit of the Company's consolidated financial statements for the year ended December 31, 2003, Ernst & Young identified and communicated to the Company two material weaknesses relating to the Company's accounting and public financial reporting of significant matters and to its initial recording and management review and oversight of certain accounting matters. The material weaknesses were with respect to the calculation and procedures for the analysis of revenue reserves for product sales and lack of procedures for timely communications from the Legal Department and operating divisions to the Finance Department impairing the ability to properly evaluate the accounting treatment for certain transactions the Company had entered into and assess the impact of those transactions in a timely manner. The Company included this disclosure in its Annual Report on Form 10-K for the year ended December 31, 2003. Headquartered in Wilmington, North Carolina, aaiPharma Inc. -- http://aaipharma.com/-- provides product development services to the pharmaceutical industry and sells pharmaceutical products which primarily target pain management. AAI operates two divisions: AAI Development Services and Pharmaceuticals Division. The Company and eight of its debtor-affiliates filed for chapter 11 protection on May 10, 2005 (Bankr. D. Del. Case No. 05-11341). Karen McKinley, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they reported consolidated assets amounting to $323,323,000 and consolidated debts totaling $446,693,000. ADVOCAT INC.: Earns $8.8 Million of Net Income for First Quarter ---------------------------------------------------------------- Advocat Inc. (NASDAQ OTC: AVCA) reported its results for the first quarter ended March 31, 2005. Advocat reported net income from continuing operations of $8.8 million, for the first quarter of 2005 compared with a net income from continuing operations of $4.6 million, in 2004. The 2005 results included a net benefit of $7.3 million related to professional liability expense compared with a similar benefit of $3.0 million in 2004. Net income for common stock for the first quarter was $8.9 million, compared with $4.6 million, in the first quarter of 2004. First Quarter Results Advocat's net revenues from continuing operations increased 6.9% to $51.8 million compared with $48.5 million in the first quarter of 2004. The increase in first quarter net revenues was primarily due to patient revenues that increased 6.9% to $48.7 million compared with $45.6 million in the first quarter of 2004. Higher patient revenues benefited from Medicare rate increases that were effective October 1, 2004, and increased Medicaid rates in certain states, partially offset by a 1.3% decline in census in 2005 compared with 2004. Resident revenues increased to $3.1 million in 2005 from $2.9 million in the first quarter of 2004. Ancillary service revenues, prior to contractual allowances, increased 5.5% to $9.9 million in 2005 from $9.4 million in the first quarter of 2004. Operating expenses increased to $40.8 million and represented 78.8% of patient and resident revenues for the first quarter of 2005 compared with $38.1 million, or 78.5% of such revenues, in the first quarter of 2004. The increase in operating expenses was primarily due to higher wage and benefit costs. The Company's results of continuing operations for the first quarter of 2005 included a $7.3 million net benefit for professional liability costs, compared with a similar benefit of $3.0 million in 2004. The benefit resulted from downward adjustments in the Company's self-insured reserves associated with professional liability claims. During 2005, the Company reduced its total recorded liabilities for self-insured professional liability risks associated with professional liability claims to $34.4 million, down from $42.9 million at December 31, 2004. The decrease in the total accrual resulted primarily from downward adjustments in the estimated liabilities for periods prior to the current period, which were partially offset by the provision for liability related to claims incurred in the current period. These self-insurance reserves are assessed on a quarterly basis, with changes in estimated losses being recorded in the consolidated statements of operations in the period identified. Professional liability costs include cash and non-cash charges recorded based on current actuarial reviews. The actuarial reviews include estimates of known claims and an estimate of claims that may have occurred, but have not yet been reported to the Company. As of March 31, 2005, the Company reported a liability of $34.4 million, including reported professional liability claims and estimates for incurred but unreported claims, and has current debt obligations of $45.0 million. The Company does not have cash or available resources to pay in full this current debt, the accrued professional liability claims or any significant portion of either and has limited resources available to meet its anticipated operating, capital expenditure and debt service requirements during 2005. Reimbursement Updates President Bush's proposed federal budget for the fiscal year beginning October 1, 2005, includes several reductions that will adversely affect Advocat's revenues if implemented. The budget eliminates the reimbursement of add-ons for high acuity patients under the Resource Utilization Group that, if implemented, will reduce revenue and operating cash flow by approximately $3.6 million per year. In addition, the proposed reduction of reimbursement for cross-over bad debt expense may reduce the Company's revenue and operating cash flow by approximately $150,000 per year when fully phased in. About the Company Advocat Inc. provides long-term care services to nursing home patients and residents of assisted living facilities in nine states, primarily in the Southeast. * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, BDO Seidman LLP raised substantial doubt about Advocat Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The Company incurred operating losses in two of the three years in the period ended December 31, 2004, and although the Company reported a profit for the year ended December 31, 2004, that profit primarily resulted from non-cash expense reductions caused by downward adjustments in the Company's accrual for self-insured risks associated with professional liability claims. ALLIANCE ONE: Moody's Rates Planned $100M Senior Sub. Notes at B3 ----------------------------------------------------------------- Moody's Investors Service affirmed the B1 rating of the proposed senior secured credit facilities of Alliance One International, Inc., upgraded the rating of the proposed senior unsecured notes to B2 from B3, and assigned a B3 rating to the company's proposed $100 million senior subordinated notes. The rating actions follow the revision announced on May 10, 2005 of the company's contemplated capitalization structure. Ratings affirmed: -- Alliance One * B1 for senior implied * B1 for a three-year $300 million secured revolving credit facility -- Intabex Netherlands BV * B1 for a three-year $150 million secured Tranche A term loan * B1 for a five-year $200 mullion secured Tranche B term loan Rating upgraded: -- Alliance One * $315 million senior notes due in 2012 and 2013, to B2 from B3 Rating assigned: -- Alliance One * B3 for $100 million senior subordinated notes due in 2012 On May 10, 2005, Dimon and Standard Commercial announced a change in the capitalization structure to be put in place at closing of the merger between the two companies. In November 2004, Dimon and Standard Commercial announced their intent to combine under a 100% stock merger, with Dimon being the surviving corporation, which will be renamed Alliance One International Inc. The previously anticipated structure was comprised of: (i) a three-year $150 million secured Tranche A term loan, with Intabex Netherlands BV being the direct obligor. (ii) a five-year $200 million secured Tranche B term loan, with Intabex Netherlands BV being the direct obligor. (iii) a three-year $300 million secured revolving credit facility (iv) $450 million unsecured senior notes due in 2012 and 2013 In the new anticipated structure, the $450 million unsecured senior notes will be replaced by $315 million in senior notes and $100 million in senior subordinated notes. Initial revolving credit funding will be increased by $25 million. The affirmation of the B1 senior implied rating reflects the absence of change in total indebtedness brought by the new capitalization structure. The affirmation of the B1 rating of the credit facilities reflect the absence of change to the terms and conditions of the bank facilities brought by the new structure. Moody's notes that an inter-creditor agreement among bank lenders will preserve parity in recovery in case of a bankruptcy, even though the obligors differ among facilities. The upgrade of the unsecured senior notes to B2 from B3 reflects the improvement in percentage of recovery prospects in case of a bankruptcy due to the decrease in amount of these notes from $450 million to $315 million. The assignment of a B3 rating to the senior subordinated notes reflects their subordination to the senior unsecured notes in right of payment. Headquartered in Wilson, North Carolina, Standard Commercial Corp. is the world's third-largest dealer of leaf tobacco with operations in more than 30 countries. Headquartered in Danville, Virginia, Dimon Incorporated is the world's second-largest dealer of leaf tobacco with operations in more than 30 countries. AMCAST INDUSTRIAL: Unsecured Creditors Get 2 Cents on the Dollar ---------------------------------------------------------------- Amcast Industrial Corporation and its debtor-affiliates delivered their First Amended Joint Plan of Reorganization to the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division at Dayton. The Plan provides for the consolidation of the Debtors for voting and distribution purposes. Administrative claims, priority tax claims and other priority claims with an aggregate approximate claim of $18 million will be paid in full. Secured Lenders owed $108,351,000 will receive: * pro rata shares of Term Note A in an aggregate principal amount of $42 million; * pro rata shares of Term Note B in an aggregate principal amount of $27 million; and * pro rata shares of 100% of the New Amcast Common Stock. The Secured Lenders are expected to recover about 65% of their claims. Key Continuing Vendor claims amounting to $4.9 million will be paid in an amount agreed between Amcast and the vendor. Payments scheduled to be made by the Debtors pursuant to the Trade Agreement will continue after the Effective Date of the Plan. General unsecured creditors owed $43.7 million will receive about 2% of their claims in lump sum cash payment from the Unsecured Claims Reserve. Equity interests will be cancelled. The Reorganized Debtors will obtain secured financing of $89 million to refinance the DIP Facility, pay creditors and continue their operations. Reorganized Amcast is valued at approximately $67 million to $73 million. Amcast will distribute 1,000 shares of New Common Stock upon the Effective Date. Headquartered in Dayton, Ohio, Amcast Industrial Corporation -- http://www.amcast.com/-- is a manufacturer and distributor of technology-intensive metal products to end-users and supplier in the automotive and plumbing industry. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 30, 2004 (Bankr. S.D. Ohio Case No. 04-40504). Jennifer L. Maffett, Esq., at Thompson Hine LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $104,968,000 and total debts of $165,221,000. AMERICAN BUSINESS: Wants to Reject Certain Executory Contracts -------------------------------------------------------------- In connection with their plan for an orderly wind-down and business liquidation, American Business Financial Services, Inc., determined that they no longer require certain of their executory contracts, including stock options and change of control agreements for certain employees. Thus, the Debtors seek Judge Walrath's authority to reject the Agreements effective as of each corresponding rejection date. A complete list of the Agreements to be rejected is available for free at: http://bankrupt.com/misc/Contract_Agreements_List.pdf Jason W. Staib, Esq., at Blank Rome, LLP, in Wilmington, Delaware, clarifies that certain of the Agreements contained in the list may not, in fact, be executory contracts pursuant to Section 365 of the Bankruptcy Code, or may have previously expired or terminated by their terms. Nevertheless, the Debtors included those Agreements in the list out of an abundance of caution. Mr. Staib adds that the inclusion of an agreement in the list will not be deemed an admission that it is a contract or lease, that it is still executory, or that any non-debtor party has any related claim against any of the Debtors. Moreover, Mr. Staib notes that the Agreements may have also been modified or supplemented from time to time by various amendments, restatements, waivers, estoppel certificates, letters or other document instruments or agreements that may not be indicated. Irrespective of whether an ancillary agreement is listed separately on the list, all the ancillary agreements will also be deemed rejected as of the rejection date of the related Agreement, unless noted otherwise. Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203). Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. (American Business Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMERICAN BUSINESS: Wants to Sell Personal Property In Philadelphia ------------------------------------------------------------------ American Business Financial Services Inc. and its debtor- affiliates tell the U.S. Bankruptcy Court for the District of Delaware that the wind-down process of their businesses will include the sale of certain of their personal property and other assets. Mark J. Packel, Esq., at Blank Rome LLP, in Wilmington, Delaware, relates that the Debtors want to liquidate certain personal property consisting primarily of furniture, fixtures, equipment and other assets located at their principal office in Philadelphia. Mr. Packel tells Judge Walrath that the Debtors no longer plan to use the Philadelphia FF&E. The Debtors believe that if they do not sell the FF&E in a timely manner, they may be forced to pay for the storage and upkeep of the property. Moreover, the Debtors are concerned that the FF&E may depreciate in value. Accordingly, the Debtors seek the Court's authority to sell the FF&E, with the aid of a professional liquidator, free and clear of any liens, with those liens to attach to the proceeds of the sale in the same amount and priority as existed on the FF&E. The Debtors assert that the sale will maximize the value of the FF&E. The Debtors also assume that any creditor asserting a lien, like their DIP Lender Greenwich Capital Financial Products, Inc., will consent or be deemed to have consented to the FF&E Sale. Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203). Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. (American Business Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMERICAN BUSINESS: Taps Great American To Liquidate Certain Assets ------------------------------------------------------------------ In accordance with their plan to liquidate their furniture, fixtures, equipment and other assets in their Philadelphia facility, American Business Financial Services, Inc., and its debtor-affiliates selected a professional with experience in liquidating personal property. By this application, the Debtors seek the U.S. Bankruptcy Court for the District of Delaware's authority to employ Pride Capital Group, LLC, doing business as Great American Group, effective May 6, 2005, as their liquidator. With regard to Great American's employment and the sale of the FF&E, the parties have entered into a consulting agreement that provides: (1) Initiation of Pre-Sale Process Great American will initiate the Pre-Sale Process no later than 48 hours after the Court approves its employment. (2) Primary Sales Agent; Agent in Fact With respect to the sale, Great American will serve as the Debtors' primary sales agent. Great American will determine, after consultation with the Debtors, the manner in which to conduct the sale so as to maximize the value of the assets. All sales of assets will be made by Great American as agent in fact for the Debtors. (3) Sale Services Specifically, Great American will: (a) implement a wind-down and controlled sell-off strategy of the FF&E, followed, if necessary, by an orderly sale or auction approach for the liquidation of the remaining FF&E; (b) oversee the liquidation and disposal of the FF&E from the Debtors' principal office in Philadelphia; upon final disposal of the FF&E, Great American will leave the Facility in its original condition, normal wear and tear excepted, and clean the Facility so it is in "broom-swept" condition; (c) determine and implement appropriate point of purchase, point of sale and external advertising to effectively sell the FF&E during the term of the Agreement; (d) determine pricing and discounting of the FF&E; (e) provide full-time supervisors as requested by Debtors or as allowed for and reflected in the budget; (f) provide other related service deemed necessary or prudent by Debtors and Great American under the circumstances giving rise to the Sale; (g) provide the Debtors with reporting and reconciliation of all accounting information in form acceptable to Debtors; and (h) conduct its business in an ethical and professional manner, equivalent to or exceeding industry standards, and in and for the Debtors' best interests. (4) Payment for Assets and Buyer's Premium Great American is authorized to accept, as the Debtors' agent, cash or cashiers', certified or "guaranteed" checks as payment for the FF&E sold, and to charge the purchasers a 10% buyer's premium -- 13% for Internet sales -- over the sale price which the Debtors and Great American will split equally. (5) Fees and Expenses Relating to Each Sale (a) At the completion of the sale, and payment by any buyer, Great American will be deemed to have earned a fee equal to 10% -- except the fee is 5% for artwork -- of the aggregate sale price less the sale expenses realized from the sale of the assets located at the Facility. (b) Great American will retain from the gross sale proceeds realized at any sale, without the need for filing a fee application or further Court order: * the sale fees; * sale expenses approved by the Debtors or otherwise allowed in accordance with the Agreement; and * one-half of the earned buyer's premium relating to the sale of the assets. The gross sale proceeds realized at each sale plus all sales taxes collected by Great American will be paid to the Debtors within 14 days of any sale. (c) Pursuant to Rule 6004(f) of the Federal Rules of Bankruptcy Procedure, Great American will provide an auctioneer's report within 14 days after the conclusion of any auction, which will include an itemization of the property sold, the buyer of the property, the consideration received, sales tax collected, and Great American's fees and expenses incurred in connection with the sale. (d) Great American will provide an appraisal of any asset or excluded asset at the Debtors' request. Mark P. Naughton, Great American's General Counsel and Vice President, assures the Court that the firm is "disinterested" as defined in Section 101(14) of the Bankruptcy Code. Mr. Naughton also attests that Great American neither holds nor represents an interest materially adverse to the interests of the Debtors, their estates, creditors or equity security holders. The Debtors will pay Great American pursuant to the terms of the Agreement without further court order. The Debtors explain that auctioneers are typically paid based on a percentage realized from their sales. Moreover, it would be burdensome for Great American to keep detailed time records or file a formal fee application with the Court. In accordance with Great American's customary practices, the Debtors will also reimburse the firm for out-of-pocket expenses. Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203). Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. (American Business Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMERIQUEST MORTGAGE: Fitch Affirms Five Low-B Equity Ratings ------------------------------------------------------------ Fitch Ratings has taken rating actions on Ameriquest Mortgage Securities Inc. home equity issues: Series 2001-A -- Class A affirmed at 'AAA'. Series 2002-A -- Class A affirmed at 'AAA'. Series 2002-B -- Class A affirmed at 'AAA'. Series 2002-3 -- Class AF affirmed at 'AAA'; -- Class AV affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'; -- Class M-4 affirmed at 'BBB-'. Series 2002-4 -- Class AF-1 affirmed at 'AAA'; -- Class AV-1 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A+; -- Class M-3 affirmed at 'BBB'; -- Class M-4 affirmed at 'BBB-'. Series 2002-5 -- Class AF-4 affirmed at 'AAA'; -- Class AV-1 affirmed at 'AAA'; -- Class AV-3 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'. Series 2004-R1 -- Class A-1A affirmed at 'AAA'; -- Class A-1B affirmed at 'AAA'; -- Class A-2 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA-'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A-'; -- Class M-7 affirmed at 'BBB+'; -- Class M-8 affirmed at 'BBB'; -- Class M-9 affirmed at 'BBB-'; -- Class M-10 affirmed at 'BB+'. Series 2004-W1 -- Class AV-1 affirmed at 'AAA'; -- Class AV-2 affirmed at 'AAA'; -- Class AV-3 affirmed at 'AAA'; -- Class AV-4 affirmed at 'AAA'; -- Class AF affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A-'; -- Class M-4 affirmed at 'BBB+'; -- Class M-5 affirmed at 'BBB'; -- Class M-6 affirmed at 'BBB-'; -- Class M-7 affirmed at 'BB+'. Series 2004-W2 -- Class AV-1 affirmed at 'AAA'; -- Class AV-2 affirmed at 'AAA'; -- Class AF affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A-'; -- Class M-4 affirmed at 'BBB+'; -- Class M-5 affirmed at 'BBB'; -- Class M-6 affirmed at 'BBB-'; -- Class M-7 affirmed at 'BB+'. Series 2004-W3 -- Class A-1 affirmed at 'AAA'; -- Class A-2 affirmed at 'AAA'; -- Class A-3 affirmed at 'AAA'; -- Class M-1 affirmed at 'A-'; -- Class M-2 affirmed at 'BBB+'; -- Class M-3 affirmed at 'BBB'; -- Class M-4 affirmed at 'BBB-'; -- Class M-5 affirmed at 'BB+'. Series 2004-W4 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'BBB+'; -- Class M-2 affirmed at 'BBB'; -- Class M-3 affirmed at 'BBB-'; -- Class M-4 affirmed at 'BB+'. With regard to 2001-A, 2002-A, and 2002-B, the affirmations on the class A certificates reflect the Freddie Mac guarantee of timely distribution on interest and ultimate distribution of principle on the offered certificates and affect approximately $290,705,176 of outstanding certificates. All other affirmations reflect credit enhancement and deal performance in line with expectations and affect $3,237,314,039 of outstanding certificates detailed above. The pools are seasoned from a range of 13 to 40 months and pool factors (current principal balance as a percentage of original) range from approximately 15% to 67%. The underlying collateral consists of fully amortizing 15- to 30-year fixed- and adjustable-rate mortgages secured by first liens on one- to four-family residential properties. The mortgage loans were originated or acquired by Ameriquest Mortgage Company. Ameriquest Mortgage Company is a specialty finance company engaged in the business of originating, purchasing, and selling retail and wholesale subprime mortgage loans. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings Web site at http://www.fitchratings.com AMES TRUE: Weak Performance Cues S&P to Pare Ratings to B- ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Ames True Temper Inc., a manufacturer of non-powered lawn and gardening tools, to 'B-' from 'B'. The outlook remains negative. Camp Hill, Pennsylvania-based Ames True Temper had about $330 million of debt outstanding as of March 26, 2005. The downgrade reflects Ames True Temper's weak operating performance and credit protection measures (adjusted for operating leases) below expectations. In addition, "We believe that high raw material and energy related costs and a cool and wet key- buying season would prevent the company from substantially improving its financial profile," said Standard & Poor's credit analyst Jean C. Stout. For the quarter ended March 26, 2005, EBITDA margins (adjusted for one-time items) fell to 11.2%, a 24% drop compared to the same time frame in 2004, on a 3% rise in overall net sales. The ratings on Ames True Temper reflect: (1) competitive industry dynamics, (2) its narrow product portfolio, (3) seasonal business characteristics, (4) limited geographic diversification, (5) product and customer concentration, and (6) its high debt leverage. BEAR STEARNS: S&P Junks Series 1999-CFL1 Class F Certificates ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on three classes of Bear Stearns Commercial Mortgage Securities Inc.'s corporate leased-backed certificates from series 1999-CFL1 and removed them from CreditWatch negative, where they were placed March 1, 2005. Concurrently, ratings are affirmed on the six remaining classes from the same transaction. The lowered ratings reflect a review of the transaction following Winn-Dixie Stores Inc.'s (Winn-Dixie) corporate rating default. The analysis utilized a draft appraisal valuation of a 47,192- square-foot retail property in Rainsville, Alabama for which Winn- Dixie rejected its lease as part of its Feb. 21, 2005 bankruptcy filing. The affirmed ratings reflect continued amortization of the loans and additional credit enhancement provided by a financial guarantee insurance policy issued by MBIA Insurance Corp. ('AAA'), which guarantees timely payment of principal and interest on all of the class A certificates. Midland Loan Services Inc., the master and special servicer, received a draft appraisal for the Rainsville, Ala. property indicating that class F will experience losses, which may be significant. Classes D and E will experience a reduction in credit support when anticipated losses are realized. Additionally, a Winn-Dixie store in Columbus, Mississippi secures an additional loan ($4.1 million), which is on Midland's watchlist. Currently, the credit tenant lease (CTL) is in place and the store is not listed for closure by Winn-Dixie. Should the lease be rejected, Standard & Poor's will review the transaction for possible additional downgrades. Midland reported two loans ($4.3 million, 1%) with the special servicer. Aside from the aforementioned loan formerly supported by the rejected Winn-Dixie lease, the second loan in special servicing ($594,700, less than 1%) is supported by a CTL with the U.S. Postal Service. Midland is in the process of collecting late real estate taxes for the collateral property and expects to return the loan to the master servicer shortly. No losses are expected on the loan. Midland reported 15 loans ($37.6 million, 11%) on its watchlist. Twelve loans ($24.4 million, 7%) are secured by properties tenanted by Rite Aid Corp. The loans appear on the watchlist as a result of Rite Aid Corp.'s credit rating, which has declined to 'B+' from 'BBB' at issuance. One loan ($6.3 million, 2%) is on the watchlist because CVS vacated the collateral property several years ago and subleased the property to Ohel Children's Home and Family Services (not rated). CVS Corp. remains obligated to make lease payments under the remaining term of its lease. The remaining loans on the watchlist ($6.9 million, 2%) consist of the aforementioned occupied Winn-Dixie store and a dark Econo Foods store ($2.8 million, 1%). Nash Finch Co. (B+/Positive) remains obligated to make lease payments under the remaining term of its lease. As of the March 21, 2005 distribution date, the collateral pool consisted of 166 loans supported by CTLs with an aggregate principal balance of $334.1 million, down 13% from $383.4 million and 171 loans at issuance. Fully amortizing loans account for 63% of the pool, while the remaining loans (37%) are amortizing with a balloon payment. Balloon risk is mitigated by residual value insurance (RVI) provided by three insurance companies. While two of the three insurers have current ratings ranging from 'A' to 'AAA', 16 loans with a total current balance of $83 million (25%) have RVI provided by Financial Structures Ltd., a subsidiary of Royal Indemnity Co. The financial strength rating on Royal is BB+/Negative, down from 'AA-' at issuance. All of the loans are current and no realized losses have occurred. Bondable CTLs support nine loans ($58.7 million, 18%), while 157 loans ($275.4 million, 82%) have triple- and double-net CTLs supplemented by lease enhancement policies provided by Lexington Insurance Co. ('AAA') or Chubb Custom Insurance Co. ('AA'). The top five tenants comprise 48% of the pool and include: (1) The U.S. Postal Service (12%), (2) Ahold Koninklijke N.V. (11%, BB/Positive), (3) CVS Corp. (10%, A-/Stable), (4) Rite Aid Corp. (8%, B+/Stable), and (5) Walgreen Co. (7%, A+/Stable). Additionally, Eckerd Corp. formerly occupied properties that serve as collateral for 10 loans ($21.9 million, 7%). The properties were sold to John Coutu Group Inc. (BB-/Negative). The transaction has an expense reserve account funded from fees payable by the borrowers for the non-U.S. Postal Service loans. The account is funded over the life of the transaction and has a ceiling of $1.5 million. The account is available to offset losses or shortfalls and was considered in Standard & Poor's analysis. The collateral for the loans in the pool consist of 167 properties located in 40 states, with New Jersey (12%) the only state exceeding a 10% concentration. The pool consists of retail (74%), office (24%), and lodging (2%) properties, with a significant concentration in drug store retail ($105.4 million, 32%). Because the transaction is a CTL pool, its ratings are correlated with the ratings assigned to the underlying tenants/guarantors. The ratings on the certificates may fluctuate over time as the ratings of the underlying tenants/guarantors change. Standard & Poor's revalued or stressed various loans in its analysis and reviewed the resultant credit enhancement levels in conjunction with the levels determined by Standard & Poor's credit lease default model. Ratings Lowered And Off Watch Negative Bear Stearns Commercial Mortgage Securities Inc. Corporate leased-backed certs series 1999-CFL1 Rating ------ Class To From Credit Enhancement ----- -- ---- ------------------ D BB+ BBB/Watch Neg 2.01% E B+ BB/Watch Neg 0.86% F CCC B-/Watch Neg 0.00% Ratings Affirmed Bear Stearns Commercial Mortgage Securities Inc. Corporate leased-backed certs series 1999-CFL1 Class Rating Credit Enhancement ----- ------ ------------------ A-2 AAA 18.93%* A-3 AAA 18.93%* A-4 AAA 18.93%* B AAA 14.06% C A+ 9.47% X AAA N.A. * Does not reflect financial guarantee insurance policy issued by MBIA Insurance Corp. on classes A-2 through A-4. N.A. -- Not applicable. BERWALD PARTNERSHIP: Court Approves Plan of Reorganization ---------------------------------------------------------- The Honorable Irvin N. Hoyt of the U.S. Bankruptcy Court for the District of South Dakota confirmed the Amended Plan of Reorganization filed by Berwald Partnership on Feb. 9, 2005. Judge Hoyt determined that the Plan satisfies the 13 standards for confirmation stated in 11 U.S.C. Sec. 1129(a). The Amended Plan states that all 16 classes of claims and interests are impaired. Class 1 to Class 14 Claims consist of secured claims asserted by Agstar, US Bank, Dacotah Bank, CHS Fin-Ag, Arlen and Eunice Berwald, VanBeek Scientific, LLC, AMPI, Aurora County Treasurer, Herc-U-Lift, Farm Credit Services, GMAC, New Equipment, Inc., New Holland Credit and Case Credit. Those claims will be paid in full in monthly payment installments specified under the Plan. Those payments will begin 90 days after the Effective Date of the Plan. Class 15 Claims consist of Administrative Convenience Unsecured Claims totaling $180,000. Those claims will be paid in full over a term of three years without interest, and 1/3 of those claims will be paid within one year after the Effective Date. Class 16 Claims consist of Unsecured Creditors Claims totaling approximately $1,100,000. Those claims will be paid with interest at a rate of 5% per annum, starting from the date of the Plan's confirmation, over an amortized term of 20 years, with a balloon payment due seven years after the Effective Date. Full-text copies of the Amended Disclosure Statement and Amended Plan are available for a fee at: http://www.researcharchives.com/bin/download?id=050222211352 Headquartered in Toronto, South Dakota, Berwald Partnership, dba Berwald Brothers, filed for chapter 11 protection on Aug. 23, 2004 (Bankr. D.S.D. Case No. 04-10273). Clair R. Gerry, Esq., at Stuart, Gerry & Schlimgen, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. BLEU SKIES: Case Summary & 29 Largest Unsecured Creditors --------------------------------------------------------- Lead Debtor: Bleu Skies Yacht Sales, LLC aka Bleu Skies Marine 225 Antibes West Mandeville, Louisiana 70448 Bankruptcy Case No.: 05-13963 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- William and Deborah A. Blythe 05-13967 Type of Business: The Debtor sells and charters yachts. See http://www.bleuskies.com/ Chapter 11 Petition Date: May 12, 2005 Court: Eastern District of Louisiana (New Orleans) Debtor's Counsel: Phillip K. Wallace, Esq. 2027 Jefferson Street Mandeville, Louisiana 70448 Tel: (985) 624-2824 Fax: (985) 624-2823 Estimated Assets Estimated Debts ---------------- --------------- Bleu Skies Yacht Less than $50,0000 $500,000 to Sales, LLC $1 Million William and Deborah $100,000 to $1 Million to A. Blythe $500,000 $10 Million A. Bleu Skies Yacht Sales, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ GE Finance Value of security: $514,391 P.O. Box 74666 $439,391 Chicago, IL 60675 Bombardier Capital, Inc. Value of security: $332,020 P.O. Box 991 $297,020 Colchester, VT 05446 Hibernia National Bank Line of credit $24,563 P.O. Box 61540 New Orleans, LA 70160 Donovan Marine Open account $13,332 The Squadron Cardmember Credit card $12,146 Services purchases Mariners Village Marina Slip rent $9,768 FR Place Holding Co., LLC Unpaid rent- $9,450 Building for boats Bank One (Chase) Credit card $9,304 purchases Home Depot Credit card $7,960 purchases Citi Business Card Credit card $7,272 purchases Land and Sea Open account $3,804 Regal Marine Industries Open account $3,666 Platinum Plus for Business Credit card $2,742 purchases Spader Business Management $2,702 Platinum Plus for Business Credit card $2,644 purchases NAPA Open account $2,331 Office Depot Credit card $2,355 purchases Parker Business Planning $2,250 Gulfmariner Inc of LA Open account $2,173 Platinum Plus for Business Credit card $2,164 purchases B. William and Deborah A. Blythe's 9 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ GE Finance Personal guarantee $514,391 P.O. Box 74666 Chicago, IL 60675 Bombardier Capital, Inc. Personal guarantee $332,020 P.O. Box 991 Colchester, VT 05446 Hibernia National Bank 40' Marine Trader $77,978 P.O. Box 61540 Value of security: New Orleans, LA 70160 $75,000 Iberia Bank Home Equity 30 Chamale Cove $22,851 Slidell, LA Value of security: $127,000 Countrywide 750 Ridgewood $20,550 Mandeville, LA Value of security: $125,000 Hibernia National Bank Line of credit $14,098 Hibernia National Bank 1998 Chevrolet Tahoe $7,016 Value of security: $5,825 Hibernia National Bank Line of credit $5,505 Service Merchandise Credit card purchases $1,092 BLOCKBUSTER: Fitch Downgrades One Notch Two Senior Debts -------------------------------------------------------- Fitch Ratings has downgraded Blockbuster, Inc. -- BBI: -- Senior secured debt to 'BB-' from 'BB'; -- Senior subordinated debt to 'B' from 'B+'. The Rating Outlook remains Negative. Approximately $1.1 billion in debt is affected by Fitch's action. The downgrade and Negative Outlook reflects Fitch's concern regarding the operational and financial policies of Blockbuster, the weakened operating performance and liquidity position. Fitch believes that the uncertainties related to Blockbuster's strategic direction and fiscal policies brought on by the expected appointment of Carl Icahn and his two nominees to the Board of Directors negatively affects bondholders. Carl Icahn, BBI's largest shareholder, with an 8.6% voting interest, has publicly stated that he plans to return capital to shareholders. Specifically, his plans entail increasing dividend payments, including a one-time special dividend. Fitch believes that bondholders will likely be negatively affected by his board membership as the potential changes in financial policies will likely increase leverage and further weaken Blockbuster's credit profile. Previous announcements made by Blockbuster, which include the potential for significant senior management changes, create further uncertainty to the long term strategic direction of the company. These concerns are heightened by Blockbuster's weakened operating performance that has resulted in reduction of liquidity and weakened credit metrics. Free cash flow as measured by cash flow from operations less capital expenditures and rental library purchases has decreased to $12.4 million during the latest twelve months ended March 31, 2005, from $128 million in fiscal year 2004, while the adjusted leverage ratio has increased to 6.5 times from 5.4x, the EBITDAR margin has declined to 15.3% from 18.8% and EBITDA margin has declined to 5.2% from 8.6% over the same period largely due to the elimination of late fees and increased expenses related to new initiatives. As previously stated by Fitch, ongoing credit concerns include competing technologies, particularly video-on-demand, pay-per- view, and Internet-based delivery services, which will increasingly result in easier access to home video rentals for the end-user. The increase in competition for DVD sales from large retailers is also a credit concern. Due to this increasing competition, Blockbuster has undertaken various new initiatives that include in-store and Internet-based subscription services for DVDs, video game subscriptions and the elimination of late fees. These actions are expected to result in cash flow weakness in the near term as late fees were anticipated to contribute $250-$350 million of operating income in 2005. This loss in operating income makes Blockbuster more dependent on retail sales growth, which continues to face strong competitive pressures. Fitch will continue to monitor the effect these new initiatives have on Blockbuster's margins and the long-term growth potential in other areas such as retail and video games as well as the impact of the purchase of Hollywood Entertainment by Movie Gallery Inc. on Blockbuster's competitive position within the industry. The ratings continue to be supported by Blockbuster's leading market position in the highly competitive/fragmented and mature home entertainment industry and its strong global brand-name recognition. Blockbuster's leading market share in the U.S. movie rental industry provides it with economies of scale not afforded to its smaller competitors. Blockbuster's liquidity position has weakened and is supported by approximately $246 million in availability under its credit facility and cash balances of $145 million. Blockbuster has recently obtained temporary waivers for certain financial covenants contained in its bank agreements including: a temporary decrease of the fixed charge coverage ratio requirement for the second, third and fourth quarters of 2005 and a temporary increase of the leverage ratio requirement for the second and third quarters of 2005. Further, the amended bank credit facilities allow for a change in the definition of EBITDA to now exclude certain non-recurring items which include the costs associated with the Hollywood acquisition. Blockbuster has traditionally generated annual free cash flow (cash flow from operations less capital expenditures and rental library purchases) in excess of $100 million. However, due to its new strategic initiatives, Fitch does not expect free cash flow to meaningfully contribute to Blockbuster's liquidity in 2005. Blockbuster's current debt maturities are manageable, as the company has approximately $5.1 million due in 2005 and $20.5 million due in both 2006 and 2007. BRIDGEPOINT TECHNICAL: Court Approves Disclosure Statement ---------------------------------------------------------- The Honorable Frank R. Monroe of the U.S. Bankruptcy Court for the Western District of Texas approved on May 11, 2005, the Amended Disclosure Statement explaining the Amended Plan of Reorganization filed by Bridgepoint Technical Manufacturing Corp. Judge Monroe found the Disclosure Statement to contain adequate information for creditors to make an informed decision whether to accept or reject the Debtor's Plan. The Debtor is now authorized to solicit acceptances of its Plan from creditors. Objections to the Plan, if any, must be filed by June 6, 2005, at 5:00 p.m. The Court will convene on June 13, 2005, at 1:30 p.m. to consider the merits of the Plan. About the Plan The Plan provides for the full payment of administrative claims, priority non-tax claims and priority tax claims on the Effective Date. Silicon Valley Bank's $1,128,506 will be paid in full pursuant to the terms of its existing loan agreement with the Debtor. Eos' claim amounting to $9,231,000 will be paid through a 6% unsecured promissory note amounting to $600,000. Claims of The CIT Group/Equipment Financing, Inc., Credence Capital Corporation, VenCore Solutions, LSC, Winthrop Resources Corp., Greater Bay Capital and Maxus Leasing Group, Inc., will receive payments in amounts agreed upon and approved by the Bankruptcy Court. The Debtor intends to recharacterize its equipment lease with General Electric Capital Corporation as a financing transaction. Pursuant to the Plan, the Debtor will retain two water prober equipment and will pay GECC $3,000 per month plus a 7% interest per annum after the Effective Date. General unsecured creditors owed $3 million in the aggregate will recover about 5% of their claims. Payments will be made quarterly over a three-year period 90 days after the Effective Date of the Plan. Equity interests will be cancelled. Headquartered in Austin, Texas, BridgePoint Technical Manufacturing Corp. -- http://www.bridgept.com/-- provides engineering, testing, packaging, and circuit board assembly services to semiconductor and computer companies. The Company filed for chapter 11 protection on September 3, 2004 (Bankr. W.D. Tex. Case No. 04-14555). Mark Curtis Taylor, Esq., at Hohmann & Taube, LLP, represents the Debtor in its restructuring efforts. When the Company 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. C&H QUICK: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------- Debtor: C & H Quick Mart/PFC Imports, Inc. 3415 Old Highway 3 and 3425 Old Highway Granite City, Illinois 62040 Bankruptcy Case No.: 05-32102 Type of Business: The Debtor operates a convenience store. Chapter 11 Petition Date: May 12, 2005 Court: Southern District of Illinois (East St. Louis) Debtor's Counsel: Robert T Bruegge, Esq. Bruegge and Mollet 400 Saint Louis Street, Suite 2 Edwardsville, Illinois 62025 Tel: (618) 659-0495 Fax: (618) 659-0527 Total Assets: $1,658,080 Total Debts: $630,315 Debtor's 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Illinois Department of Audit $58,018 Revenue Bankruptcy Section P.O. Box 64338 Chicago, IL 606640338 Madison County Business property $10,000 157 North Main Street taxes Edwardsville, IL 62025 OCWEN Federal Bank $8,568 P.O. Box 530289 Atlanta, GA 303530289 AllData Auto tech computer $1,034 Newton and Associates program P.O. Box 8510 Metairie, LA 700118510 Nolan Accounting $400 1911 Johnson Road, Suite 2 Granite City, IL 62040 Internal Revenue Service $294 3101 Constitution Drive Stop 5000 SPD Springfield, IL 62704 CALL-NET ENTERPRISES: Moody's May Upgrade Ratings After Review -------------------------------------------------------------- Moody's Investors Service placed the B3 Senior Implied, B3 Senior Secured and Caa1 Issuer ratings of Call-Net Enterprises Inc. under review for possible upgrade. The review is prompted by the announcement that Rogers Communications Inc. (Senior Implied Ba3) has entered into an agreement to acquire 100% of Call-Net in an all stock transaction, representing an equity value of C$330 million. As at March 31, 2005, Call-Net had outstanding net debt of C$190 million, excluding C$55 million of accounts receivable securitization amounts and a C$32 million "right-of-way" liability. The acquisition is subject to regulatory approvals and acceptance by at least two-thirds of Call-Net shareholders. The transaction is expected to close in the third quarter of 2005. The review will consider the potential for the transaction to be completed as well as the potential for the debt of Call-Net to be fully repaid pursuant to the noteholder put provision or otherwise assumed by Rogers. Ratings affected by this action: -- Call-Net Enterprises Inc. * Senior Implied rating, rated B3 * Senior Secured Notes, rated B3 * US$223 million 10.625% due Dec 31, 2008, (callable January 1, 2006) * Issuer rating, Caa1 Rogers Communications Inc. is a communications holding company that owns all of Rogers Cable Inc., Canada's largest cable company, Rogers Wireless Inc., Canada's largest wireless operator, and Rogers Media Inc., which owns radio, TV and publishing assets. All companies are headquartered in Toronto, Ontario, Canada. Call-Net Enterprises is a local, data and long distance alternative telecommunications company based in Toronto, Ontario. CALIFORNIA PACIFIC: Final Payout of Unsecureds Just Weeks Away -------------------------------------------------------------- Jon Tesar, the Plan Administrator appointed under California Pacific Rice Milling, Ltd.'s Amended Plan of Liquidation confirmed on March 5, 2002, says he is "in the process of calculating the distribution to be made to nonpriority unsecured creditors under the Plan." Mr. Tesar made this disclosure in the post- confirmation status report he filed with the Bankruptcy Court on May 6, 2005. Mr. Tesar says that he plans to file a motion asking the Court to approve the distribution in a few weeks, and that he'll bring a request for entry of a final decree formally closing the Debtor's chapter 11 case. As previously reported in the Troubled Company Reporter, the Debtor sold its assets and rice milling business to a group of investors headed by Tom Atkinson for $11.5 million. California Pacific's largest creditor, Union Bank of California, had no objection to that transaction, and the Honorable Michael S. McManus approved the sale. California Pacific Rice Milling, Ltd., filed for chapter 11 protection on May 3, 2001 (Bankr. E.D. Calif. Case No. 01-25416). Robert S. Bardwil, Esq., in Sacramento, Calif., represents the Plan Administrator. CALPINE CORP: Weak Performance Spurs Moody's to Slice Ratings ------------------------------------------------------------- Moody's Investors Service downgraded the debt ratings of Calpine Corporation (Calpine: Senior Implied to B3 from B2) and its subsidiaries, including Calpine Generating Company (CalGen: first priority credit facilities to B2 from B1). Separately, Moody's affirmed the ratings of Riverside Energy Center, LLC (Riverside) and Rocky Mountain Energy Center, LLC (Rocky Mountain) at Ba3. The rating outlook for Calpine and its subsidiaries is negative. The rating action reflects: (1) the company's very weak operating cash flow relative to its substantial debt leverage; (2) Moody's view that improvements in the merchant energy market will be slow and gradual over the next several years, prolonging the weakness in spark spreads and utilization rates for natural gas fired generation in most regions of the U.S.; (3) the need to raise external funds to fund capital outlays, meet debt maturities, or enhance liquidity over the next several years; (4) execution risk associated with completing various transactions that could be liquidity enhancing or reduce debt. Calpine's financial performance during 2004 was weak, with funds from operations of $147 million being equivalent to less than 1% of the company's $18 billion in consolidated adjusted debt. First quarter 2005 results were also poor, as the company reported a net loss of $168 million and had negative cash from operations of $115 million. The company has stated that financial results for 2005 will result in a loss and that it may need to rely upon asset sales proceeds and cash on hand to satisfy its operating requirements. Calpine's financial performance for year-end 2004 and first quarter 2005 reflects unfavorable conditions in the wholesale power market for natural gas-fired generators. While Calpine reported an improvement in spark spreads in most regions through March 31, 2005, its base load capacity factor declined to 44% for the quarter ending March 31, 2005, compared to 50% during the same period in 2004. Calpine's ability to improve its operating and financial results depends significantly upon a substantial improvement in spark spreads and capacity factors for natural gas fired generation, which Moody's expects to occur only gradually over the medium term as regional supply and demand for power move into better balance. Moody's notes that a meaningful portion of the company's existing generation fleet is located in the low reserve margin state of California, and that two new California- based plants, Pastoria and Metcalfe, will be coming on line this summer. Calpine has announced a number of specific transactions for 2005 that are intended to enhance liquidity and reduce debt. Successful execution of these transactions would improve short-term liquidity and could reduce overall indebtedness. Hovever, this financing strategy would also continue the trend of the past several years in which secured financings, monetization transactions, and project financing have effectively subordinated the claims of the company's senior unsecured debt against a substantial portion of the asset base. Ratings downgraded for which the rating outlook has been changed to negative: * Calpine's Senior Implied Rating to B3 from B2; * Calpine's Senior Unsecured Notes, Issuer Rating, and Senior Unsecured Convertible Notes to Caa3 from Caa1; * Calpine Canada Energy Finance Senior Unsecured Notes (guaranteed by Calpine) to Caa3 from Caa1; * Calpine Generating Company, LLC (CalGen) first priority senior secured revolving credit and term loan facilities to B2 from B1; * CalGen second priority term loans and floating rate notes to B3 from B2; * CalGen third priority notes to Caa1 from B3; * South Point Energy Center, LLC, Broad River Energy LLC and RockGen Energy LLC Pass Through Certificates to B3 from B2; * Tiverton Power Associates Ltd. Partnership and Rumford Power Associates Ltd Partnership Pass Through Certificates to Caa2 from B3; * Calpine Capital Trust Preferred Securities to Ca from Caa3; * Shelf registration for the issuance of various senior unsecured debt, trust preferred, and preferred securities to (P)Caa3, (P)Ca, and (P)C from (P)Caa1, (P)Caa3, and (P)Ca, respectively. The two notch downgrade for Calpine's senior unsecured debt to Caa3 reflects the increasing effective subordination of this class of debt within the company's capital structure. The downgrade of CalGen reflects the significant interdependence between CalGen and Calpine given the subsidiary's importance to the parent's financial performance and the numerous contractual arrangements and guarantees that exist between CalGen, Calpine Energy Services, and Calpine. CalGen's financial performance for 2004 was in line with expectations, as funds from operations of $202 million represented about 8.5% of total CalGen indebtedness. The downgrade of Tiverton to Caa2 from B3 reflects the potential for reliance on cash flows from Calpine as guarantor, as the plant operates in the NEPOOL energy market on a merchant basis, which could affect the value of the collateral package that underpins the transaction. The rating affirmation of the Rocky Mountain and Riverside term loans at Ba3 reflects the contracted nature of this project financing, with cash flows provided by long-term power purchase agreements with investment grade off-takers. The negative outlook for Riverside and Rocky Mountain reflects the substantial involvement by Calpine, which indirectly wholly owns Riverside and Rocky Mountain and operates both plants through a wholly owned subsidiary, Calpine Operating Services Company, Inc. The wide notching between the rating of Calpine and that of Riverside and Rocky Mountain reflects the degree of separateness of these project entities, including the project finance structure and the existence of an independent director. While these characteristics help to substantially insulate Riverside and Rocky Mountain from credit deterioration at its parent, the negative outlook incorporates the possibility that the rating would be likely to decline along with any further change in Calpine's rating. The negative rating outlook for Calpine and its subsidiaries reflect the challenging marketplace for natural gas fired merchant generation, based upon our expectation that natural gas prices will continue to be relatively high over the next several years and that there will be a slow pace for improvement of the supply and demand balance for electricity generation in most parts of the country. Headquartered in San Jose, California, Calpine is an independent power producer that leases and operates a significant fleet of geothermal plants at The Geysers in California, and has a net operating portfolio of 92 natural gas fired plants capable of producing 26,649 megawatts of generation in the US, Canada, and the United Kingdom. CATHOLIC CHURCH: Court Won't Extend Portland Claims Bar Date ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Oregon denied the Parishioners Committee's motion to further extend the deadline by which parishes and parishioners may file claims against the Archdiocese of Portland in Oregon, until the time the Court resolves issues in an adversary proceeding related to parties and representation. As previously reported, a request by the Tort Claimants Committee for a proposed Amended Complaint would add a class of defendants comprised of all parishioners in Western Oregon, not simply those represented by the Committee of Catholic Parishes, Parishioners and Interested Parties in the Archdiocese of Portland in Oregon. Further refinements are anticipated that, if accepted by the Court, would result in the establishment of classes with the Parishioners Committee acting as the representative of one or more proposed classes. Douglas R. Pahl, Esq., at Perkins Coie LLP, in Portland, Oregon, maintains that if the proposed Amended Complaint is allowed, this would significantly expand the parties represented by the Parishioners Committee. In particular, tens of thousands of parishioners in parish communities not currently participating in the Parishioners Committee would be represented. The Parishioners Committee believes that parishes and parishioners should file contingent claims in the Chapter 11 case. Questions regarding the appearance by and representation of parties in the Adversary Proceeding, and whether certain parties exist at all for purposes of the bankruptcy case, remain unsolved. The institution of one or more statutorily appropriate classes would possibly affect the filing of proofs of claim on behalf of parish communities. While Portland has the authority to file proofs of claim on behalf of creditors and may do so, the Parishioners Committee finds it unlikely that Portland will file proofs of claim on behalf of parishioners. Furthermore, due to confusion regarding issues raised in the Adversary Proceeding, it is not clear how parish claims should be filed or by whom. These continuing questions regarding parties with potential interests have frustrated efforts to prepare appropriate proofs of claim and threaten to impair the ability of parties-in-interest to effectively assert their rights. The Parishioners Committee anticipates that the Court's determinations regarding a number of issues in the Adversary Proceeding will clarify the proper method for filing proofs of claim on behalf of parishes and parishioners, as well as the parties for whom claims should be asserted. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTRAL GARDEN: Moody's Ups Rating on $150M Sr. Sub. Notes to B1 ---------------------------------------------------------------- Moody's Investors Service has changed its rating outlook on Central Garden & Pet Company to positive from stable, upgraded the rating on Central's $150 million senior subordinated notes to B1 from B2, and affirmed Central's other existing ratings. The rating action reflects diminished event risk in light of a reduction in large acquisition targets, as well as the expectation for continued sales and margin expansion as Central benefits from its focus on branded consumer goods. These ratings were affected: * Senior implied rating, affirmed at Ba3; * $125 million senior secured revolving credit facility due 2008, affirmed at Ba2; * $175 million senior secured term loan "B" due 2009, affirmed at Ba2; * $150 million senior subordinated notes due 2013, upgraded to B1 from B2; * Senior unsecured issuer rating, upgraded to Ba3 from B1. The outlook revision and upgrade of Central's subordinated notes reflects the materially lower event risk the company faces as a result of the reduction in large acquisition targets that could have significantly altered its balance sheet and integration requirements. With Rayovac's recent purchases of United Industries, United Pet Group and Tetra, and Sumitomo's acquisition of Hartz in 2004, a large garden products company and the three largest U.S. pet supply companies (behind Central) have been taken off the market. Further, Moody's does not believe that the acquisitions will greatly alter competitive dynamics in these industry segments, given Central's still leading U.S. market positions, its strong and diverse brand portfolio, and favorable long-term industry growth potential. Although Central is expected to remain acquisitive, its targets are likely to be relatively small (less than $75 million) and, in the aggregate, financed with internal cash or existing debt commitments. Management is expected to continue its discipline with respect to purchase multiples, in a range of 5-7x trailing EBIT, and more aggressively target operating efficiency opportunities. Further supporting the rating actions are the benefits of Central's continued successful transition into a relevant branded lawn, garden and pet products manufacturer and away from a distributor of third party products. Improved diversification and margin enhancement from this strategy, which enabled strong sales, earnings, and free cash flow levels during a challenging fiscal 2004, are expected to continue going forward and reflect the durability of Central's enterprise value. Moody's expects relatively easy comparisons during the second half of fiscal 2005, as the company anniversaries the weak grass seed market from the prior year and benefits from acquisitions over the past year. Given these expectations, Moody's could consider a rating upgrade if Central's full year fiscal 2005 operating results and financial position suggest sustainable debt-to-EBITDA levels under 3.0x (excluding seasonal debt requirements) and EBITDA margins over 9%. Although a ratings downgrade is seen as unlikely over the coming year, a return to a stable outlook would be possible if Moody's expectations regarding Central's competitive position and acquisition strategy do not materialize, resulting in margin, cash flow, and leverage pressures that preclude the company from achieving the above stated targets. Additional challenges could stem from unanticipated problems associated with operational efficiency initiatives. Negative rating pressures would develop at debt-to-EBITDA levels over 4.5x and free cash flow to debt levels below 10%. Ongoing rating restraints include possible challenges associated with pressure from certain competitors that are either better capitalized or have more advanced core competencies and financial flexibility. Additional risks include Central's high customer concentrations and its exposure to commodity-based price volatility. Central Garden & Pet Company, located in Walnut Creek, California, manufactures a broadening array of branded lawn and garden and pet supply products, and operates as a distributor for other manufacturers' products in both of these segments. Central's subsidiaries have leading positions in niche markets, including Pennington (grass seed), AMDRO (fire ant bait), Norcal Pottery, and New England Pottery in the Garden Products Group and Four Paws (dog and cat supplies), Kaytee (birdseed), All-Glass Aquarium, Nylabone, and TFH (pet books and dog chews) names in the Pet Products group. Net sales for the twelve-month period ended March 2005 were approximately $1.3 billion. COLLINS & AIKMAN: David Stockman Resigns & Becker Named Acting CEO ------------------------------------------------------------------ The Board of Directors for Collins & Aikman Corporation (NYSE: CKC) accepted the resignation of David A. Stockman as Chief Executive Officer, Chairman of the Board and a director of the company. Charles E. Becker, a former director of the company, has agreed to serve as acting Chief Executive Officer of the company. In addition, the Board has asked three directors, Anthony Hardwick, Timothy D. Leuliette and Daniel P. Tredwell, to support Mr. Becker as a Temporary Steering Committee of the Board while it spearheads a search for a full time replacement to serve as Chief Executive Officer of the company. In addition, Marshall Cohen, a current director of the company, was named as non-executive interim Chairman of the Board of Directors. Mr. Becker was Vice Chairman of the Board from July 2001 until July 2002 and ceased to serve as a director in May 2004. For over 25 years, through 1998, Mr. Becker was the Chief Executive Officer and co-owner of Becker Group, Inc., a global automotive interior components supplier. Mr. Becker is the owner and Chairman of Becker Ventures, which was established in 1998 to invest in a variety of business ventures, including the manufacturing, real estate and service industries, and which is a lessor of properties to the company. Mr. Becker is also a director of Metaldyne Corporation and TriMas Corporation. Mr. Hardwick has been a director since September 2004 and is currently Executive Vice President and Chief Financial Officer of Easley Custom Plastics, Inc. He was employed by the company from 1976 through 1995, when he served as Vice President, Administration and Control of the company's automotive group and then Vice President and Controller of the company. Messrs. Leuliette and Tredwell are each Senior Managing Directors and co-founders of Heartland Industrial Partners, the company's largest shareholder. Mr. Leuliette is currently the Chief Executive Officer of Metaldyne Corporation, and also serves on a number of corporate and charitable boards, and served as a director of The Federal Reserve Bank of Chicago, Detroit Branch. In 1996, Mr. Leuliette joined Penske Corporation as President and Chief Operating Officer to address operational and strategic issues. From 1991 to 1996, he served as President and Chief Executive Officer of ITT Automotive. Mr. Tredwell also serves on a number of corporate boards and has two decades of leveraged financing and buyout experience. Prior to co-founding Heartland, he served as a Managing Director at Chase Securities Inc. and had been with Chase Securities since 1985. Collins & Aikman Corporation, a Fortune 500 company, is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. Headquartered in Troy, Michigan, we have a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. Information about Collins & Aikman is available on the Internet at http://www.collinsaikman.com/ * * * As reported in the Troubled Company Reporter on March 28, 2005, KPMG LLP, serves as Collins & Aikman's outside auditing firm. The Audit Committee has retained Davis Polk & Wardwell to assist it in its investigation of the Company's accounting for questionable supplier rebates. As reported in the Troubled Company Reporter on April 1, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Troy, Mich.-based Collins & Aikman Corp. to 'CCC+' from 'B' and removed the rating from CreditWatch where it was placed March 5, 2005. At the same time, the senior secured, senior unsecured, and subordinated debt ratings on the company were also lowered and removed from CreditWatch. Collins & Aikman has total debt of about $2 billion. S&P says the rating outlook is negative. "The rating actions reflect the company's poor cash flow generation, high debt leverage, and constrained liquidity that have resulted from the intense challenges of the automotive industry, combined with concerns about accounting misstatements and material internal financial control weaknesses," said Standard & Poor's credit analyst Martin King. "The industry outlook continues to be uncertain. Ratings could be lowered if it appears that Collins & Aikman's operating performance will remain depressed or liquidity constrained." COLLINS & AIKMAN: Gets Waiver Under Accounts Receivables Facility ----------------------------------------------------------------- Collins & Aikman Corporation (NYSE: CKC) obtained an amendment and waiver of its accounts receivables facility to address immediate liquidity issues arising from the recent simultaneous credit ratings downgrades of Ford Motor Company and General Motors Corporation by Standard & Poor's Corporation to below investment grade status. In addition, the company obtained a conditional waiver of a financial covenant relating to first quarter 2005 performance in its accounts receivable facility and the company also intends to seek a waiver under its senior credit facility for a breach of the same financial covenant. Under the terms of the company's receivables facility, the downgrades of Ford and General Motors resulted in a change in receivables concentration limits relative to these customers and, consequently, required a partial paydown of the receivables facility and reduced ongoing availability under the receivables facility. The amendment phases in modified customer concentration limits that take account of the changed credit ratings of Ford and General Motors and also increases the margins applicable to both base rate and LIBOR-based advances by 0.75% per annum. Based on receivables balances on the day following the downgrades, the company would have been obligated to reduce its receivables balances by approximately $70 million. An amendment and waiver was required since the company lacked the financial resources to timely make the paydown and availability would otherwise have been clearly inadequate for the company's ongoing operating obligations. As a result of the amendment, no immediate paydown was required. If the final phased-in terms that go into effect on May 23, 2005 were immediately in effect, the required reduction would have been approximately $15 million. The company is seeking more favorable payment terms from the downgraded customers to further benefit the company's liquidity prior to the final phase-in. With or without more favorable terms from these customers, the modified terms of the receivables facility will remain a challenge for the company. The waiver and amendment of the accounts receivable facility also provides relief for a financial covenant breach related to first quarter 2005 performance. The covenant at issue is the consolidated leverage ratio, or consolidated debt to EBITDA, as defined in the covenant. This covenant is the same under both the company's senior credit facility and receivables facility and was recently modified. The company is still reviewing its first quarter 2005 performance and is not yet in a position to comfortably disclose estimated first quarter 2005 results. However, it expects EBITDA to be materially lower than previously provided guidance and to not satisfy the covenant requirement. The financial covenant waiver under the receivables facility expires if similar relief is not timely obtained from lenders under the company's senior credit facility. The amendment also extends the previously granted waiver for financial statement delivery requirements until June 15, 2005, absent certain adverse events prior to that date (such as termination events). If the company is unable to obtain further necessary waivers or modifications, the company, its financial condition and performance will be materially and adversely impacted. Collins & Aikman continues to face significant near term liquidity challenges. The company is currently fully drawn under its senior credit facility and relies upon timely access to its receivables facility, foreign receivables factoring arrangement and fast pay financing programs to fund ongoing operations. In addition to the receivables facility, the company has a significant foreign factoring arrangement, under which outstanding factored balances were approximately $96 million at March 31, 2005. These are generally terminable on short notice. A material European factoring arrangement that relates principally to one customer is due to expire at the end of this month. If this facility is not extended or renewed on acceptable terms, the company will seek more favorable payment terms from the customer. As a general matter, the company has sought with some success and will continue to seek earlier collections or more favorable payment terms from customers or through third party fast pay programs. The company is in the process of transitioning the General Motors fast pay program administered by GECC to one administered by GMAC that will provide a commitment to October 2005. In addition, the company is continuing to work with its largest customers and suppliers to enhance commercial terms to improve operating results, cost recovery and liquidity. There can be no assurance that the company will be successful in these or any other efforts to improve results or enhance liquidity. As of May 11, 2005, the company had cash and availability under its financing arrangements of approximately $13.4 million. Taking account of the amended terms of the receivables facility, depending upon many factors, the company expects to operate for the near future on a global basis with approximately $15 million or less of daily available liquidity. The company's near term cash requirements, apart from financing its ongoing operating obligations, include capital expenditures and a scheduled interest payment on debt securities of approximately $26.9 million on June 30, 2005 and $26.7 million on August 15, 2005. Capital expenditures for 2005 may be higher than previous guidance and, for the first quarter, capital expenditures were approximately $50 million. The company continues to expect that the first quarter will be the highest quarter for capital expenditures in 2005. During this period of difficult liquidity, the company has extended payables to ensure adequate cash balances to support its operations and may continue to do so as it works with customers, suppliers and creditors. The company's ability to meet its obligations and to make necessary capital expenditures will depend on a number of factors, including, without limitation, its continuing cash flow from operations, its ability to address financial covenant defaults, continued compliance with its debt instruments generally and sufficient continuing availability to the previously mentioned financing arrangements. The company will also be impacted by the mounting competitive challenges facing its customers and the continuing pressure being placed upon it by rising raw material and other costs in the face of lower demand. Collins & Aikman Corporation, a Fortune 500 company, is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. Headquartered in Troy, Michigan, we have a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. Information about Collins & Aikman is available on the Internet at http://www.collinsaikman.com/ * * * As reported in the Troubled Company Reporter on March 28, 2005, KPMG LLP, serves as Collins & Aikman's outside auditing firm. The Audit Committee has retained Davis Polk & Wardwell to assist it in its investigation of the Company's accounting for questionable supplier rebates. As reported in the Troubled Company Reporter on April 1, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Troy, Mich.-based Collins & Aikman Corp. to 'CCC+' from 'B' and removed the rating from CreditWatch where it was placed March 5, 2005. At the same time, the senior secured, senior unsecured, and subordinated debt ratings on the company were also lowered and removed from CreditWatch. Collins & Aikman has total debt of about $2 billion. S&P says the rating outlook is negative. "The rating actions reflect the company's poor cash flow generation, high debt leverage, and constrained liquidity that have resulted from the intense challenges of the automotive industry, combined with concerns about accounting misstatements and material internal financial control weaknesses," said Standard & Poor's credit analyst Martin King. "The industry outlook continues to be uncertain. Ratings could be lowered if it appears that Collins & Aikman's operating performance will remain depressed or liquidity constrained." COLLINS & AIKMAN: Liquidity Pressures Prompt S&P to Junk Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Troy, Michigan-based Collins & Aikman Corp. to 'CCC-' from 'CCC+'. "The downgrade reflects our belief that this supplier of automotive interior products could be forced to seek bankruptcy protection in the near term because of severe liquidity pressures," said Standard & Poor's credit analyst Martin King. Collins & Aikman has total debt of about $2 billion. The rating outlook is negative. Reduced automotive production, increased raw material costs, rating downgrades of its key customers, and the termination of customer's accelerated payment programs have severely constrained Collins & Aikman's liquidity. On May 12, the company announced the following developments: * Collins & Aikman's board of directors has accepted the resignation of the company's CEO and chairman; * EBITDA for the first quarter of 2005 will be materially lower than previously provided estimates. In addition, the company withdrew all previous forecasts concerning 2005 financial information, but stated that capital spending is expected to exceed previous guidance; * The company expects to breach its first-quarter consolidated debt to EBITDA covenant, requiring a waiver from its bank group; * Cash and available credit totaled $13 million on May 11, 2005. Global daily liquidity is expected to be $15 million or less for the near future; * Downgrades of key customers will reduce liquidity under a U.S. accounts receivable securitization facility. Foreign receivable factoring arrangements remain in place, but can be terminated on short notice; and * An investigation into various accounting errors is ongoing and previously announced estimates of accounting adjustments will likely be understated. The prospects for Collins & Aikman receiving a covenant waiver is very uncertain given the numerous business, financial, liquidity, and accounting concerns surrounding the company. Failure to meet the covenant requirement or receive a waiver would result in an event of default, and could lead to the acceleration of outstanding loan amounts. CREDIT SUISSE: Poor Performance Prompts Moody's to Slice Ratings ---------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of eleven classes of certificates issued in Credit Suisse First Boston's 2002-NP14 and 2003-NP6 securitizations as a result of ongoing surveillance efforts. Both transactions were issued with non-performing mortgage loans as collateral. Nonperforming mortgage loans are typically defined as loans, which are delinquent by 90 days or more, are subject to bankruptcy or foreclosure proceedings, or are held as REO properties. The rating action is based upon the poorer than anticipated performance of the underlying mortgage pools as well as the deterioration of credit enhancement in relation to expected losses. Moody's will continue to review for possible further downgrade the ratings on the securities issued by CSFB Trust 2002-NP14. Complete rating actions are: Issuer: CSFB Trust 2002-NP14 Downgrade: * Class A, Previously: Aaa, Downgraded to A3 under review for possible further downgrade; * Class M-1, Previously: Aa2, Downgraded to Baa2 under review for possible further downgrade; * Class M-2, Previously: A2, Downgraded to Ba2 under review for possible further downgrade; * Class B-1, Previously: Baa2, Downgraded to B2 under review for possible further downgrade; * Class B-2, Previously: Ba2, Downgraded to Caa2 under review for possible further downgrade. Issuer: CSFB Trust 2003-NP6 Downgrade: * Class A-1, Previously: Aaa, Downgraded to A1. * Class A-2, Previously: Aaa, Downgraded to A1. * Class M-1, Previously: Aa2, Downgraded to Baa1. * Class M-2, Previously: A2, Downgraded to Baa3. * Class B-1, Previously: Baa2, Downgraded to Ba3. * Class B-2, Previously Ba2, Downgraded to B1. CYPRESS COMMUNICATIONS: Reports $547K Net Loss for First Quarter ---------------------------------------------------------------- Cypress Communications Holding Co., Inc. (OTCBB: CYHI) reported its consolidated operating and financial results for its first quarter ended March 31, 2005. "I am very pleased with Cypress Communications' first quarter 2005 results, including the eleventh consecutive quarter of achieving a positive EBITDA. Through the significant efforts of our employees and the loyalty of our customers and partners, we have been able to show continued improvement in our quarter-over-quarter operating results in spite of experiencing modest declines in our revenues. These financial improvements position us well as we invest in the programs, which we expect, will result in a return to revenue growth in the near future. These programs include new bundled service offerings within our Cypress EZ Office(sm) product suite of fully managed voice, data and Internet solutions and enhancements in the way in which we market and deliver these solutions to our current and prospective customers. At the same time, we see additional opportunities to continue the process of rationalizing and streamlining our operations to ensure a highly cost-effective network," said Gregory P. McGraw, President and Chief Executive Officer of Cypress Communications Holding Co. and its subsidiaries. Financial Highlights The company reported first quarter 2005 revenues of $18.6 million, a 7% decrease from revenues of $19.9 million in the first quarter of 2004. The decline in revenues is attributable to both a decrease in the total number of customers served by the Company and a slight reduction in the average revenue per customer. The company reported a net loss of $547,000 for the first quarter 2005 on 6,445,000 weighted average shares of common stock outstanding, as compared to a net loss of $631,000 for the first quarter of 2004 on 5,874,000 weighted average shares of common stock outstanding. First quarter 2005 results include $139,000 of costs associated with the pending acquisition of the company by an affiliate of Arcapita Inc. First quarter 2005 EBITDA (net income (loss) excluding net interest, income taxes, depreciation and amortization expense) increased to $1,432,000 from $1,287,000 in the first quarter of 2004, an 11% increase. The increase in EBITDA is reflective of the effects of reductions in direct costs and operating expenses in excess of the reduction in revenues which resulted from the various network and operating cost saving initiatives implemented by the company over the last several quarters. About Cypress Communications Cypress Communications (OTCBB: CYHI) -- http://www.cypresscom.net/ -- is the preferred communication solution provider in more than 1,300 commercial office buildings in 25 major metropolitan U.S. markets. Each day, Cypress uses its fiber optic and copper broadband infrastructure to connect more than 100,000 employees for over 8,000 small- and medium-sized businesses in commercial office buildings. As a single-source provider of communication solutions, Cypress supplies advanced digital and IP phone service, unlimited local and long distance calling, business-class Internet connectivity, firewalls, security and VPN solutions, audio/web conferencing and business television solutions. The Cypress EZ Office(sm) product suite provides a premium bundled solution with one number to call for support, one simple bill and the highest level of service available. Cypress Communications Holding Company, Inc., is headquartered in Atlanta, Ga. About Arcapita Arcapita -- http://arcapita.com/-- is a global investment group with offices in Atlanta, London, and Bahrain. Arcapita's main lines of business include corporate investment (private equity), real estate investment and asset-based investment. Arcapita's corporate investment business was founded in 1997 and operates out of Atlanta and London. Since 1998, Arcapita's corporate investment professionals have arranged for the investment of more than $1 billion in 17 completed or pending transactions with an aggregate enterprise value of over $2 billion. Until March 15, 2005, Arcapita's U.S. business was conducted as Crescent Capital Investments. * * * As reported in the Troubled Company Reporter on Apr. 19, 2005, Deloitte & Touche LLP, Cypress Communications' auditors, expressed substantial doubt about the Company's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 31, 2004. The Company said its recurring losses and its unfavorable working capital and uncertain liquidity position triggered Deloitte's going concern opinion. CYPRESS COMMS: Lenders OK Extension of $8M Debt Maturity to '06 ---------------------------------------------------------------- Cypress Communications Holding Co., Inc. (OTCBB: CYHI) reported updates on its efforts to restructure its debts. As discussed in the company's recently filed Form 10K for the year ended December 31, 2004, due to the pending acquisition of the company, no activities had previously been undertaken to restructure $8,000,000 of debt, as it is scheduled to be repaid at the closing of the acquisition under the terms of the merger agreement. In the event the acquisition was not closed by July 16, 2005, the original due date on the debt, the company would have been unable to repay the entire balance with available funds and borrowing capacity. On May 12, 2005, the company entered into an amendment with the holders of this debt, which was originally to come due on July 16, 2005. The amendment provides for, among other things, the extension of the due date of the debt to January 16, 2006, a reduction in the coupon interest rate on the debt from 14% to 12% effective July 16, 2005, and the payment to the debt holders of a loan commitment fee of $200,000 as an inducement to modify the terms of the agreement. The debt amendment was negotiated and approved by a special committee of the Board of Directors, consisting of directors not affiliated with the debt holders and taking into consideration the particular circumstances of the company and market conditions for similar transactions. Status Update on Pending Acquisition As previously disclosed, on November 5, 2004, Cypress reported that its Board of Directors approved a definitive Agreement and Plan of Merger with an affiliate of Arcapita, Inc. (formerly Crescent Capital Investments, Inc.), an Atlanta-based private equity investment firm. On March 15, 2005, the stockholders of Cypress approved the Agreement and Plan of Merger. The value of the transaction is approximately $40.3 million, with potential adjustments upwards or downwards, based on the achievement of certain conditions pertaining to changes in certain current assets and liabilities between the effective date of the Merger Agreement and closing date of the transaction. The Merger Agreement provides that the merger consideration will first be used to repay outstanding indebtedness. The remaining consideration, after transaction expenses, will be distributed to stockholders, with an estimated price per share of $1.70, subject to final merger consideration adjustments (The $1.70 per share cash consideration is estimated by Cypress Holding as of March 31, 2005 and is subject to adjustment upwards or downwards pursuant to the merger agreement). The closing of the transaction is subject to certain terms and conditions customary for transactions of this type, including receipt of regulatory approvals. As all of the closing conditions have not, as yet, been met, Cypress cannot predict when the closing of the transaction might occur. About Cypress Communications Cypress Communications (OTCBB: CYHI) -- http://www.cypresscom.net/ -- is the preferred communication solution provider in more than 1,300 commercial office buildings in 25 major metropolitan U.S. markets. Each day, Cypress uses its fiber optic and copper broadband infrastructure to connect more than 100,000 employees for over 8,000 small- and medium-sized businesses in commercial office buildings. As a single-source provider of communication solutions, Cypress supplies advanced digital and IP phone service, unlimited local and long distance calling, business-class Internet connectivity, firewalls, security and VPN solutions, audio/web conferencing and business television solutions. The Cypress EZ Office(sm) product suite provides a premium bundled solution with one number to call for support, one simple bill and the highest level of service available. Cypress Communications Holding Company, Inc., is headquartered in Atlanta, Ga. About Arcapita Arcapita -- http://arcapita.com/-- is a global investment group with offices in Atlanta, London, and Bahrain. Arcapita's main lines of business include corporate investment (private equity), real estate investment and asset-based investment. Arcapita's corporate investment business was founded in 1997 and operates out of Atlanta and London. Since 1998, Arcapita's corporate investment professionals have arranged for the investment of more than $1 billion in 17 completed or pending transactions with an aggregate enterprise value of over $2 billion. Until March 15, 2005, Arcapita's U.S. business was conducted as Crescent Capital Investments. * * * As reported in the Troubled Company Reporter on Apr. 19, 2005, Deloitte & Touche LLP, Cypress Communications' auditors, expressed substantial doubt about the Company's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 31, 2004. The Company said its recurring losses and its unfavorable working capital and uncertain liquidity position triggered Deloitte's going concern opinion. DEUTSCHE MORTGAGE: Adequate Credit Support Cues S&P to Up Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 10 classes from two Deutsche Mortgage Securities Inc. transactions. Concurrently, ratings are affirmed on 98 classes from seven transactions from the same issuer. The raised ratings reflect adequate actual and projected credit support percentages, as well as low-to-moderate delinquencies and minimal realized losses to date. The appreciated credit support percentages resulted from the shifting interest structures, which were accelerated by significant principal prepayments on the underlying collateral. Currently, the projected credit support percentages for each upgraded class is at least 2x the original loss coverage levels associated with the new ratings. The affirmed ratings are based on current and projected credit enhancement that is sufficient to maintain the current ratings. As of the April 2005 distribution date, serious delinquencies (90- plus days, foreclosure, and REO) ranged from 0.00% (series 2003-1) to 6.07% (series 2004-1 loan group 3). Despite moderate delinquencies in a few of the transactions, all collateral pools have been performing well. As of the April 2005 distribution date, cumulative losses ranged from 0.00% (series 2003-1) to 0.04% (series 2004-2). Credit enhancement for series 2002-1, 2003-1, 2004-1 loan groups 1 and 2, and 2004-4 loan groups 3-7, is provided through subordination. Credit enhancement for series 2004-1 loan group 3, 2004-2, 2004-3, 2004-4 loan groups 1 and 2, and 2004-5, is provided through a combination of overcollateralization, excess spread, and subordination. The underlying collateral consists of 15- and 30-year fixed- or adjustable-rate prime or Alt-A mortgage loans secured by first liens on residential properties. Ratings Raised Deutsche Mortgage Securities Inc. Mortgage Loan Trust Rating Series Class To From ------ ----- -- ---- 2002-1 M AAA AA 2002-1 B-1 AAA A 2002-1 B-2 AA BBB 2002-1 B-3 A BB 2002-1 B-4 BB+ B 2003-1 M AAA AA 2003-1 B-1 AA A 2003-1 B-2 A BBB 2003-1 B-3 BBB+ BB 2003-1 B-4 BB- B Ratings Affirmed Deutsche Mortgage Securities Inc. Mortgage Loan Trust Series Class Rating ------ ----- ------ 2002-1 A-17, A-18, A-P, A-X AAA 2003-1 I-A-4, I-A-5, I-A-6, I-A-7, I-A-8, I-A-PO AAA 2003-1 I-A-X, II-A, II-A-X AAA 2004-1 I-A-1, I-A-X, I-A-PO, II-A-1, II-A-2 AAA 2004-1 II-A-3, II-A-X, II-A-PO, III-A-2, III-A-3 AAA 2004-1 III-A-4, III-A-5, III-A-6, III-A-IO AAA 2004-1 M, III-M-1 AA 2004-1 III-M-2 A+ 2004-1 B-1 A 2004-1 III-M-3 BBB+ 2004-1 B-2 BBB 2004-1 B-3 BB 2004-1 B-4 B 2004-2 A-2, A-3, A-4, A-5, A-6, A-IO AAA 2004-2 M-1 AA 2004-2 M-2 A+ 2004-2 M-3 BBB+ 2004-3 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5, I-A-6 AAA 2004-3 I-A-7, I-A-IO, II-AR-1, II-AR-2 AAA 2004-3 II-MR-1 AA+ 2004-3 I-M-1 AA 2004-3 II-MR-2 AA- 2004-3 I-M-2 A 2004-3 I-M-3, II-MR-3 BBB+ 2004-4 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5, I-A-6 AAA 2004-4 I-A-IO, II-AR-1, II-AR-2, III-AR-1, IV-AR-1 AAA 2004-4 V-AR-1, VI-AR-1, VII-AR-1, VII-AR-2 AAA 2004-4 VII-AR-3 AAA 2004-4 II-MR-1 AA+ 2004-4 I-M-1, M AA 2004-4 I-M-2, II-MR-2, B-1 A 2004-4 I-M-3, II-MR-3, B-2 BBB 2004-4 B-3 BB 2004-4 B-4 B 2004-5 A-1, A-2, A-3, A-4A, A-4B, A-5A, A-5B, A-IO AAA 2004-5 M-1 AA+ 2004-5 M-2 A+ 2004-5 M-3 BBB+ DUFFUS & ASSOCIATES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Duffus & Associates, P.A. P.O. Drawer 5026 Greenville, North Carolina 27835 Bankruptcy Case No.: 05-03886 Type of Business: The Debtor is a law firm. Chapter 11 Petition Date: May 12, 2005 Court: Eastern District of North Carolina (Wilson) Judge: J. Rich Leonard Debtor's Counsel: Trawick H. Stubbs, Jr., Esq. Stubbs & Perdue, P.A. P.O. Drawer 1654 New Bern, North Carolina 28563 Tel: (252) 633-2700 Fax: (252) 633-9600 Total Assets: $680,201 Total Debts: $1,342,716 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ S. Diane Duffus Balance due from $294,271 3901 Wyneston Road personal line of Greenville, NC 27834 credit used in business Xerox Capital Services Remaining payments $90,015 Attn: Manager or Agent of lease of WCP90C 1301 Ridgevw Drive, Bldg 300 Workcentre Pro90 Lewisville, TX 75057 Castle & Cooke Lease payments due $74,265 Attn: Manager or Agent pursuant to 502 of 4601 Six Forks Road, the US Bankruptcy Code Suite503 Total remaining Raleigh, NC 27609 payments due under lease is $241,557 ($4,497 per month) First Citizens Bank Credit Card (Visa) $52,602 Attn: Manager or Agent P.O. Box 1580 Roanoke, VA 24007 International Yellow Page $35,000 Attn: Manager or Agent 5050 Quorum Drive #225 Dallas, TX 75254 Xerox Capital Services Remaining payments $29,707 Attn: Manager or Agent of lease of 1301 Ridgevw Drive, Bldg 300 Workcentre WCP55HC Lewisville, TX 75057 Marie D. Lang Out-of-pocket $25,593 7624 Pinecrest Road expenses: $676 Raleigh, NC 27613 Severance pay: $24,916 Curtis Media Group, Inc. "La Ley 96.9 FM" $24,610 Attn: Manager or Agent WYMYFM 3012 Highwood Boulevard, Suite 200 Raleigh, NC 27604 Internal Revenue Service 1st quarter 2005 - $19,832 Attn: Insolvency I 941 taxes - $2,771 320 Federal Place 941 940 taxes - $80 Greensboro, NC 27402 Silverstein & Cook $14,481 Attn: Manager or Agent 4020 West Chase Boulevard, Suite 325 Raleigh, NC 27607 Pitney Bowes Purchase Postage $9,462 Attn: Manager or Agent P.O. Box 856042 Louisville, KY 40285 LexisNexis $8,898 Attn: Manager or Agent P.O. Box 72470178 Philadelphia, PA 19170 Assoc Trial Lawyers $8,000 Attn: Manager or Agent P.O. Box 3717 Washington, DC 20027 Linda S. Sigmund, M.D. $6,829 5414 North 19th Street Arlington, VA 22205 News & Observer (The) $6,805 Attn: Manager or Agent P.O. Box 191 Raleigh, NC 27602 News & Observer (The) WNCTTV $6,070 Attn: Manager Agent P.O. Box 27625 Richmond, VA 23261 Sprint 910-484-7112-426, $5,253 ATTN: Managing Agent 252-5235115-023, P.O. Box 96064 910-483-9199-747, Charlotte, NC 28296 910-223-9606-144, 252-338-3331-802, 252-551-1000-661 Legal Files Software, Inc $5,225 Attn: Manager or Agent 2730 South MacArthur Blvd. Springfield, IL 62704 Que Pasa Latino Comm. $3,980 Attn: Manager or Agent P.O. Box 12876 Winston Salem, NC 27117 First South Leasing Remaining payments $3,630 Attn: Manager or Agent on lease of P.O. Box 2047 telephone system Washington, NC 27889 EAGLEPICHER PHARMACEUTICALS: Discloses Capital Improvement Plans ---------------------------------------------------------------- EaglePicher Pharmaceutical Services, LLC, reported a series of capital improvements that it believes will further strengthen its position as a comprehensive outsourcing partner to the pharmaceutical industry in the discovery and commercialization of anti-cancer and other high-potency drugs. At the same time, the company said its supply position has been unaffected by its recent Chapter 11 filing and that of its parent company, EaglePicher Incorporated, and confirmed that its current supply and key long- term agreements with customers continue without interruption. "Our customers have experienced a continuum of service, product and technical support," said Steve Westfall, president of EPPS. "We are particularly gratified with the support they have shown during this period. EPPS is committed to the growth of its business, and that of its customers, through the improvements we have undertaken." Among the improvements announced are: -- Completion of an isolated cGMP Radiolabeling Suite (Lenexa, KS facility), in recognition of the expectation to double Radiolabeling revenues over the next two to three years. -- New state of the art suite (Harrisonville, MO facility) that allows EPPS to double its commercial products capacity immediately and expand development suite/production capacity by an additional 30 percent. -- Analytical upgrades at both facilities, including instrumentations and data acquisition. Mr. Westfall said that the approximately $2 million in anticipated 2005 capital improvements were being funded from ongoing revenues, as well as from debtor-in-possession funding which became available when the company filed for Chapter 11 on April 11, 2005. Mr. Westfall said that capital spending is estimated to continue at roughly 15 percent of estimated 2005 sales, citing long-term plans to further broaden its technology and product offerings by adding large-scale hydrogenation and possible fermentation capabilities through future expansion at EPPS' manufacturing facility in Harrisonville, Missouri. Headquartered in Phoenix, Arizona, EaglePicher Incorporated -- http://www.eaglepicher.com/-- is a diversified manufacturer and marketer of innovative advanced technology and industrial products for space, defense, automotive, filtration, pharmaceutical, environmental and commercial applications worldwide. The company along with its affiliates filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Ohio Case No. 05-12601). When the Debtors filed for protection from their creditors, they listed $535 million in consolidated assets and $730 in consolidated debts. EGAIN COMMS: March 31 Balance Sheet Upside-Down by $1 Million ------------------------------------------------------------- eGain Communications Corporation (OTC BB: EGAN) reported financial results for the third quarter of fiscal year 2005. Revenue for the quarter ended March 31, 2005 was $4.7 million, a decrease of 10% from $5.2 million in the comparable year-ago quarter. License revenue was $1.1 million, a decrease of 16% from the comparable year-ago quarter. Support and services revenue was $3.6 million, a decrease of 9% from the comparable year-ago quarter. International revenue accounted for 46%, and domestic revenue 54% of total revenue for the quarter, compared to 47% international revenue and 53% domestic revenue in the comparable year-ago quarter. Revenue for the nine months ended March 31, 2005 was $14.6 million, a decrease of 2% from $14.9 million in the comparable year-ago period. License revenue was $3.7 million, an increase of 12% from the comparable year-ago period. Support and services revenue was $10.9 million, a decrease of 6% from the comparable year-ago period. Net loss before dividends on convertible preferred stock for the quarter ended March 31, 2005 was $725,000, compared with a net loss of $952,000 for the same period a year ago. Net loss applicable to common stockholders was $725,000, compared with $2.8 million, for the same period a year ago. Net loss before dividends on convertible preferred stock for the nine months ended March 31, 2005 was $565,000, compared with a net loss of $3.9 million for the same period a year ago. Net loss applicable to common stockholders for the nine months ended March 31, 2005 was $4.3 million, compared with $9.4 million, for the same period a year ago. Pro forma net loss for the quarter ended March 31, 2005 was $376,000, compared to a pro forma net income of $30,000, for the same period a year ago. Pro forma net loss for the nine months ended March 31, 2005 was $327,000, compared to a pro forma net loss of $529,000, for the same period a year ago. Total cash and cash equivalents were $4.9 million at March 31, 2005, a decrease of $287,000 from $5.2 million at June 30, 2004. Day's sales outstanding in receivables for the March 2005 quarter were 66 days compared to 59 days for the comparable year-ago quarter. "While our revenue in the quarter reflects some seasonality, our bookings continue to be healthy. We are pleased with the year- over-year growth in both our license and hosting revenue for the first nine months of fiscal 2005," said Ashu Roy, CEO of eGain. "We are raising the bar for enterprise-class eService suite offerings in the market -- Forrester Research rated us #1 among peers for our eGain Service(TM) 7 solution. Finally, our improved customer satisfaction ratings are translating into a growing demand in our customer base for our multi-channel service suite." Customer momentum In the March 2005 quarter, eGain acquired or expanded its business with several customers such as Adelphia Communications Corp., Aliant Inc., Absolute Entertainment, Carlson Wagonlit, CashTech Solutions, iGlobalMedia, Lavalife Inc., Rogers Communications, The May Department Stores Company, Wipro Technologies, and Telecom Italia Media-Internet Division. Also, the company significantly expanded its business with one of the top-tier North American financial services providers and a Japanese government agency. About the Company Headquartered in Mountain View, California, eGain Communications Corporation -- http://www.eGain.com/-- is a provider of customer service and contact center software and services, trusted by world-class companies to achieve and sustain customer service excellence for over a decade. eGain Service(TM) 7, the company's software suite, available licensed or hosted, includes integrated applications for customer email management, live web collaboration, service fulfillment, knowledge management, and web self-service. These robust applications are built on the eGain Service Management Platform(TM) (eGain SMP(TM)), designed to be a scalable next-generation framework that includes end-to-end service process management, multi-channel, multi-site contact center management, a flexible integration approach, and certified out-of-the-box integrations with leading call center, content and business systems. eGain has an operating presence in 18 countries and serves over 800 enterprise customers worldwide. At March 31, 2005, eGain Communications Corporation's balance sheet showed a $1,136,000 stockholders' deficit, compared to a $420,000 deficit at June 30, 2004. ELDON HOFFMAN: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Eldon R. Hoffman 341 Upper Toyon Road P.O. Box 622 Ross, California 94957 Bankruptcy Case No.: 05-11174 Type of Business: The Debtor is the founder and CEO of Any Mountain Ltd., which filed for chapter 11 protection on Dec. 23, 2004 (Bankr. N.D. Calif. Case No. 04-12989) with Honorable Alan Jaroslovsky presiding. Any Mountain Ltd.'s chapter 11 filing was reported in the Troubled Company Reporter on December 29, 2004. Chapter 11 Petition Date: May 13, 2005 Court: Northern District of California (Santa Rosa) Debtor's Counsel: John H. MacConaghy Law Offices of John H. MacConaghy 466 1st Street East Sonoma, California 95476 Tel: (707) 935-3205 Total Assets: $11,986,192 Total Debts: $10,173,593 Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Burton Corporation Corporate guaranty $532,734 80 Industrial Parkway Burlington VT 05401 Columbia Sportswear Corporate guaranty $449,436 P.O. Box 932762 Atlanta GA 31193 Skis Dynastar Corporate guaranty $432,239 95 Winter Sport Lane P.O. Box 466 FBJ Homestead Associates Corporate guaranty $408,821 2277 Alum Rock Ave San Jose CA 95116 Fera International Corporate guaranty $269,701 3521 Challenger St. Torrance CA 95116 Atomic Ski Corporate guaranty $254,317 9 Columbus Dr. Amherst NH 03031 Mountain Hardwear Corporate guaranty $222,760 Dalbello Corporate guaranty $140,563 Terramar Sports World Corporate Guaranty $45,444 Bank One Credit card $11,462 U.S. Bank Credit card $10,920 Clay Leong Professional services $7,055 Beneficial Finance Unsecured loan $6,873 Marker Ltd Corporate guaranty $4,467 Aaron Overhead Door Misc. services $848 Chilcote Refrigeration Misc. services $781 Rossi Pool Service Misc. services $694 Marker USA Corporate Guaranty $36 FOOTSTAR INC: Gets Court's Support to Continue Selling at Kmart --------------------------------------------------------------- The Honorable Adlai Hardin of the U.S. Bankruptcy Court for the Southern District of New York rejected Kmart Corp.'s latest pitch to throw Footstar Inc. out of its stores. Judge Hardin ruled that Footstar can continue selling shoes at Kmart stores. Kmart has been trying fruitlessly for months to sever the Master Agreement between Footstar and itself. In its latest motion, Kmart wants Footstar to vacate 43 Kmart stores that are being converted to "Sears Essentials" stores in July this year to revive sales by attracting more upscale shoppers. "Footstar is pleased with the court's decision and we look forward to continuing our steady progress through the Chapter 11 process," Footstar spokeswoman Kimberly Kriger told Tom Becker of Bloomberg News. Judge Adlai denied Kmart's request on the ground that it will be impossible for Footstar to reorganize and exit bankruptcy in the event that the contract will be cut. Footstar's plan of reorganization is centered on the assumption of the Master Agreement which will expire in 2012. "This is a very good decision for the debtor and for the creditors," Jay Indyke, Esq., counsel for Footstar's unsecured creditors committee, told Mr. Becker. "If the court had ruled against Footstar, it might have derailed the plan." The Court will convene a hearing in July to discuss Footstar's alleged breach of contract filed by Kmart's parent company, Sears Holding Corp. Sears claims Footstar failed to make payments and to put adequate staff on the shoe departments. Kmart's request for Footstar to vacate 43 stores will also be heard during the hearing in July. Headquartered in West Nyack, New York, Footstar Inc., retails family and athletic footwear. As of August 28, 2004, the Company operated 2,373 Meldisco licensed footwear departments nationwide in Kmart, Rite Aid and Federated Department Stores. The Company also distributes its own Thom McAn brand of quality leather footwear through Kmart, Wal-Mart and Shoe Zone stores. The Company and its debtor-affiliates filed for chapter 11 protection on March 3, 2004 (Bankr. S.D.N.Y. Case No. 04-22350). Paul M. Basta, Esq., at Weil Gotshal & Manges represents the Debtors in their restructuring efforts. When the Debtor filed for chapter 11 protection, it listed $762,500,000 in total assets and $302,200,000 in total debts. FORD MOTOR: Moody's Maintains Investment Grade Rating ----------------------------------------------------- Moody's Investors Service lowered the long-term debt ratings of Ford Motor Company to Baa3 from Baa1, and of Ford Motor Credit Company (Ford Credit) to Baa2 from A3; Ford Credit's Prime-2 short-term rating is affirmed. Moody's also lowered Hertz Corporation's long-term rating to Baa3 from Baa2, and its short- term rating to Prime-3 from Prime-2. The outlook for Ford and Ford Credit is negative; the outlook for Hertz is developing. The downgrade of Ford's ratings recognizes that the company will fall significantly short of the benchmarks identified by Moody's during October 2004. These benchmarks included: (1) achieving $4 billion in 2006 automotive profit before tax; (2) stabilizing North American market share above 19.5%; and, (3) remaining on track for delivering more robust credit metrics in 2006 and beyond. A number of market and operational challenges have outpaced the progress that Ford has continued to make since the implementation of its 2002 revitalization plan. As result, 2006 performance will be well below expectations, and the pace of recovery in the company's credit metrics will be delayed. The principal challenges facing Ford remain the need to sustain profitable market share despite a continuing shift in North American consumer demand away from high-margin trucks and SUVs to smaller crossover vehicles (CUV), an elevated cost structure due to excess production capacity, persistently high healthcare costs, rising prices for commodities such as steel and resins, and the need to effect a restructuring of a key supplier and former subsidiary, Visteon Corporation. Notwithstanding these challenges, Moody's recognizes that Ford has continued to make progress in key financial and operational areas. Ford has exceeded the cost reduction targets established as part of its 2002 revitalization plan, the new product introduction phase of the revitalization initiative is proceeding as planned and will continue into 2006, and the company is improving its position in the CUV segment. Ford's liquidity also remains very strong with $23 billion in cash, securities and short-term voluntary employee beneficiary association (VEBA) balances at March 31, 2005. The company also has $5.2 billion in long-term VEBA balances at March 31, 2005, which further enhance its liquidity. This sizable liquidity position could be further strengthened by Ford's potential monetization of its ownership of Hertz. The negative rating outlook for Ford reflects the intensely competitive nature of the automotive markets and the possibility of ongoing shifts in North American market demand. Over the next 12 to 18 months, it remains possible that these conditions could cause Ford's credit quality to erode and could contribute to a further downgrade of the company's ratings. The downgrade and negative outlook for Ford Credit reflects the business and financial interrelationships that exist between Ford Credit and its parent that influence Ford Credit's performance and financial condition. The one-notch rating differential is based on Moody's view that the severity of loss risk faced by unsecured creditors of Ford Credit is materially less than that faced by the unsecured creditors of Ford. Lenders to the finance company are likely to experience better asset recovery than the unsecured creditors of the parent company in the event of bankruptcy. The rating differential also reflects Moody's view that the probability of default for Ford Credit is somewhat lower than that of Ford - Ford Credit might avoid filing for bankruptcy in the unlikely event that Ford filed. Ford Credit's stand-alone profile also factors into the ratings, including its improved portfolio credit quality and profitability measures. The downgrade of Hertz's reflects the downgrade of its parent as well as the potential that the company could be burdened with higher leverage and greater financial risk as a result of Ford's interest in monetizing its holding in Hertz. The Baa3 rating recognizes Moody's expectation that Hertz will maintain a highly competitive position in the domestic on-airport car rental market and in the domestic equipment rental market. The rating also anticipates that Hertz's will make steady progress in expanding its position the US off-airport car rental sector. The company's operational strengths in these areas should enable it to sustain credit metrics that are supportive of the Baa3 rating under its current capital structure. These metrics include: debt to equity of approximately 3.2 to 1; interest coverage greater than 2.1 times; and pre tax return on capital near 8%; and pre-tax margins of around 6.5%. The developing rating outlook for Hertz recognizes the uncertainties around the capital structure, financial policies and growth strategies of the company following the potential disposition by Ford. As these post-disposal financial and operating issues become more defined, Moody's will reassess the Hertz rating. Moody's expects that during the next six months there will be a number of significant developments with respect to Ford's competitive position and its longer-term prospects. These developments relate to: (1) the amount, timing and uses of proceeds from any Hertz disposition; (2) the operational and financial impact of Ford's participation in any restructuring of Visteon; (3) the prospects for any near-term or long-term progress in addressing labor cost issues with the UAW, including health care; (4) the market acceptance and momentum of new product introductions; and, (5) details relating to the planned extension of Ford's long-range business plan. Any potential for stabilization of Ford's rating outlook would require the company to demonstrate meaningful progress in each of the above noted areas. The ultimate resolution of these operational, financial and market developments will have an important bearing on Ford's ability to strengthen its longer-term competitive position and maintain the Baa3 rating. Moody's believes that Ford's strong liquidity position, in combination with the operational progress that it has demonstrated since 2002, in combination with the proceeds that are likely to come from a Hertz disposition, will afford it the capacity to remain at the Baa3 rating level during the near term, provided the company's US market share remains close to 19% (including PAG); cash, securities, and VEBA balances exceed $22 billion; market acceptance of newly introduced vehicles must remain strong; the Hertz and Visteon issues must be resolved in an operationally and financially beneficial manner; and, there is no further erosion in the company's earnings and cash generation guidance. In its ongoing assessment of the Ford rating, Moody's will evaluate the company's ability to remain on track to deliver credit metrics by 2007 that support an investment grade rating. These metrics include: EBITA margins that approximate 4%; fixed charge coverage in the 3.5 to 4.0 times range; and free cash flow to total lease and pension adjusted debt of more than 15%. Moody's believes that Ford Credit's tighter underwriting has led to reduced loss frequency, while recovery in the value of used cars has factored into lower loss severity and improved lease residual realization. Ford Credit faces headwinds in the form of higher borrowing costs from increased interest rates and credit spreads, declining revenues due to portfolio shrinkage, and practical limits for further reductions in loss provisions and residual gains. In that regard, cost management, efficient funding and sustaining credit quality improvements will be key to the maintenance of the firm's profitability. Moody's will continue to monitor the impact that Ford Credit's rating level has on its ability to access various sources of funding. While traditional unsecured sources have become constrained, the ABS market is expected to provide strong alternative capacity. The less mature whole-loan-sale market may provide additional funding. In Moody's view, Ford Credit is well- positioned to access these alternatives for a significant portion of its assets. The rating agency also recognizes that Ford Credit can generate significant cash flow by reducing the scale of its portfolio. In Moody's opinion, Ford Credit has the necessary flexibility to manage foreseeable near-term liquidity stresses. Ford Motor Company-related actions include: Ford Motor Company: issuer rating, IRBs, and senior unsecured debt to Baa3 from Baa1; shelf registration of senior unsecured debt to (P)Baa3 from (P)Baa1; and, preferred stock to Ba2 from Baa3 Ford Capital B.V.: senior unsecured debt to Baa3 from Baa1; shelf registration of senior unsecured debt to (P)Baa3 from (P)Baa1. Ford Holdings, Inc.: senior unsecured debt to Baa3 from Baa1, and shelf registration of senior unsecured debt to (P)Baa3 from (P)Baa1. Ford Motor Company Capital Trust II: trust preferred stock to Ba1 from Baa2. Ford Motor Company Capital Trust III: shelf registration of trust preferred to (P)Ba1 from (P)Baa2. Ford Motor Company Capital Trust IV: shelf registration of trust preferred stock to (P)Ba1 from (P)Baa2. Ford Motor Company SA de C.V.: Prime-2 short-term rating withdrawn. Ford Motor Credit Company-related rating actions include: Ford Motor Credit Company: senior unsecured to Baa2 from A3, shelf registration of senior unsecured to (P)Baa2 from (P)A3, shelf registration of subordinated debt to (P)Baa3 from (P)Baa1; short-term ratings affirmed at Prime-2. FCE Bank plc: senior unsecured to Baa2 from A3; short-term ratings affirmed at Prime-2. Ford Credit Canada Limited: senior unsecured to Baa2 from A3, shelf registration of senior unsecured to (P)Baa2 from (P)A3; short-term ratings affirmed at Prime-2. Ford Credit Australia Limited: senior unsecured to Baa2 from A3; short-term ratings affirmed at Prime-2. Ford Motor Credit Company of New Zealand Ltd: senior unsecured to Baa2 from A3; short-term ratings affirmed at Prime-2. Ford Credit Capital Trust I: shelf registration of preferred securities to (P)Baa3 from (P)Baa1. Ford Credit Capital Trust II: shelf registration of preferred securities to (P)Baa3 from (P)Baa1. Ford Credit Capital Trust III: shelf registration of preferred securities to (P)Baa3 from (P)Baa1. Primus Financial Services, Inc.: senior unsecured to Baa2 from A3; short-term ratings affirmed at Prime-2. USL Capital Corporation: senior unsecured to Baa2 from A3, shelf registration of senior unsecured to (P)Baa2 from (P)A3. Hertz Corporation rating actions include: Hertz Corporation: issuer rating and senior unsecured to Baa3 from Baa2; shelf registration of senior unsecured debt to (P)Baa3 from (P)Baa2, and subordinated debt to (P)Ba1 from (P)Baa3; and, short-term to Prime-3 from Prime-2. Hertz Australia Pty. Limited: short-term to Prime-3 from Prime-2. Hertz Canada Limited: short-term to Prime-3 from Prime-2. Hertz Finance Centre plc: senior unsecured to Baa3 from Baa2; and, short-term to Prime-3 from Prime-2. Hertz Holdings Netherlands BV: short-term to Prime-3 from Prime-2. Ford Motor Company, headquartered in Dearborn, Michigan, is the world's second largest automobile manufacturer. Ford Motor Credit Company, also headquartered in Dearborn, Michigan, is the world's largest auto finance company. Hertz Corporation, headquartered in Park Ridge, New Jersey, is the largest automobile rental company in the United States. * * * Earlier this month, Standard & Poor's Ratings Services lowered its long- and short-term corporate credit ratings on Ford Motor Co., Ford Motor Credit Co., and all related entities -- except those of Hertz Corp. -- to 'BB+/B-1' from 'BBB-/A-3', and said the rating outlook is negative. S&P's ratings on Hertz (BBB-/Watch Dev/A-3) remain on CreditWatch, where they were placed on April 21, 2005, following Ford's disclosure that it was evaluating strategic options for Hertz, including its potential sale. S&P said the downgrade to non-investment-grade reflects the rating agency's skepticism about whether management's strategies will be sufficient to counteract mounting competitive challenges. As reported in the Troubled Company Reporter on April 11, 2005, Ford Motor Co. delivered it's 2004 annual report on Form 10-K to the Securities and Exchange Commission on March 10, 2005. While financial results show some improvements from 2003, the company's performance has steadily declined over the past five years: Total Assets Total Liabilities ------------ ----------------- 1998 $237.5 +++ 1998 $213.5 + 1999 $270.2 +++++ 1999 $241.9 ++++ 2000 $284.4 +++++++ 2000 $265.1 ++++++ 2001 $276.5 ++++++ 2001 $268.1 ++++++ 2002 $295.2 +++++++ 2002 $283.9 ++++++++ 2003 $310.7 +++++++++ 2003 $298.4 +++++++++ 2004 $305.3 ++++++++ 2004 $288.4 ++++++++ Shareholder Equity Current Assets ------------------ -------------- 1998 $24.0 +++++++ 1998 $41.7 ++ 1999 $28.3 +++++++++ 1999 $44.9 +++ 2000 $19.3 ++++ 2000 $40.1 ++ 2001 $8.4 . 2001 $36.9 + 2002 $11.3 . 2002 $48.6 ++++ 2003 $12.3 + 2003 $61.2 +++++++ 2004 $16.9 +++ 2004 $59.2 +++++++ Current Liabilities Working Capital ------------------- --------------- 1998 $106.9 ++++++ 1998 ($65.2) 1999 $115.5 +++++++ 1999 ($70.6) 2000 $114.9 +++++++ 2000 ($74.8) 2001 $93.9 ++++ 2001 ($57.0) 2002 $61.5 . 2002 ($12.9) 2003 $112.7 +++++++ 2003 ($51.5) 2004 $122.8 ++++++++ 2004 ($63.6) Leverage Ratio Liquidity Ratio -------------- --------------- 1998 8.9 . 1998 0.4 +++ 1999 8.5 . 1999 0.4 +++ 2000 13.7 + 2000 0.3 +++ 2001 31.9 +++++++ 2001 0.4 +++ 2002 25.1 +++++ 2002 0.8 +++++++ 2003 24.3 +++++ 2003 0.5 +++++ 2004 17.1 +++ 2004 0.5 ++++ Net Sales Interest Expense --------- ---------------- 1998 $144.4 +++++ 1998 $0.8 +++++ 1999 $160.6 +++++++ 1999 $1.3 +++++++++ 2000 $170.1 ++++++++ 2000 $1.4 +++++++++ 2001 $162.4 +++++++ 2001 $1.4 +++++++++ 2002 $162.5 +++++++ 2002 $1.4 +++++++++ 2003 $164.3 ++++++++ 2003 $1.3 +++++++++ 2004 $171.6 ++++++++ 2004 $1.2 ++++++++ EBITDA Net Income ------ ---------- 1998 $23.3 +++++++ 1998 $22.0 +++++++ 1999 $24.9 ++++++++ 1999 $7.2 ++ 2000 $24.1 ++++++++ 2000 $3.4 + 2001 $10.7 +++ 2001 ($5.4) 2002 $16.1 +++++ 2002 ($1.0) 2003 $15.9 +++++ 2003 ($0.5) 2004 $11.4 +++ 2004 $3.5 + EBITDA Margin Profit Margin ------------- ------------- 1998 16.1%++++++++ 1998 15.2%+++++++ 1999 15.5%+++++++ 1999 4.5%++ 2000 14.2%+++++++ 2000 2.0%. 2001 6.6%+++ 2001 -3.3% 2002 9.9%++++ 2002 -0.6% 2003 9.7%++++ 2003 -0.3% 2004 6.6%+++ 2004 2.0%+ Ford estimates that it manufactures and sells 21% of all cars and trucks in the United States. General Motors' market share is about 28%; DaimlerChrysler captures 14%; Toyota's market share is about 11%; and Honda accounts for another 8%. U.S. automakers' share of the U.S. market has declined steadily for the past five years while Toyota, Honda, and other companies based in Europe, Korea and Japan have steadily increased. Ford employs approximately 327,500 workers. Ford's $162 billion in annual sales account for nearly 1-1/2% of the United States' gross domestic product. If Ford were a sovereign nation, it would rank as the 28th-largest country according to 2003 data from the World Bank -- larger than Finland, South Africa or Hong Kong, and smaller than Poland, Indonesia or Greece. Ford faces asbestos-related liability. Plaintiffs allege various health problems as a result of asbestos exposure, either from (i) component parts found in older vehicles (ii) insulation or other asbestos products in Ford's facilities or (iii) asbestos aboard Ford's former maritime fleet. Claims against the automaker have been rising: Date Active Claims ---- ------------- 12/31/01 18,000 ++++++++++++ 12/31/02 23,000 +++++++++++++++++ 02/28/03 25,000 ++++++++++++++++++ 02/03/04 41,500 ++++++++++++++++++++++++++++++ Ford does not disclose the number of claims filed against it after Feb. 3, 2004. Ford says that while annual payout and related defense costs in asbestos cases increased between 1999 and 2003, those amounts were not significantly higher in 2004. GEORGETOWN HEALTHCARE: Negative Income Cues S&P's Negative Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook to negative from stable on Georgetown Health Facilities Development Corp., Texas' $21 million series 1999 hospital revenue bonds, issued for Georgetown Healthcare System (GHS). In addition, Standard & Poor's affirmed its 'BB' rating on GHS' series 1999 bonds. Although Georgetown Healthcare System is located in a market with very rapid organic population growth, it is in a very precarious business position due to: (1) declining patient volumes, (2) weakening -- and now solidly negative -- operating margins, and (3) a highly constrained balance sheet with reduced operational liquidity and a high leverage position. Decreases in fiscal 2004's inpatient volumes, operating margins, and liquidity position have necessitated the negative outlook. "The outlook revision to negative reflects negative operating income levels in fiscal 2004, which resulted in maximum annual debt service coverage of only 1.0x," said Standard & Poor's credit analyst Kevin Holloran. The negative operating income reflects, in part, a growingly competitive marketplace and the departure of a key physician. In addition, the outlook revision was due to: (1) an increasingly constrained balance sheet, highlighted by: * high leverage, * reduced days' cash on hand, and * the recent addition of new debt; (2) GHS' high dependence on the top physician admitters; and (3) continued decreases in patient activity. Factors precluding a lower rating include the hospital's location within the demographically favorable 'A+' rated Georgetown, Texas market and first-quarter results that demonstrated a return to profitability. GHS has $36.584 million in long-term revenue bonds and notes payable. The hospital's financial position has historically been very favorable, reflecting the limited competition in the area and Georgetown's favorable demographics. However, unaudited year-end numbers for fiscal 2004 indicate a significant deterioration in GHS' operations. Operating losses in fiscal 2004 (unaudited) were almost $1.8 million (a negative 3.3% margin) and compared very unfavorably with fiscal 2003's operating loss of $564,000 (a negative 1.1% margin) and almost break-even excess income. Given the downward trend that GHS has been experiencing in the past two years, it is likely that the rating will be lowered in the next year or two unless both operations and volume levels stabilize and return to GHS' historically profitable levels, without any further deterioration in its liquidity position. HAYES LEMMERZ: Joint Venture in Turkey Set to Begin Production -------------------------------------------------------------- In its 2004 Annual Report filed with the Securities and Exchange Commission, Hayes Lemmerz International, Inc., reports that the Company's aluminum wheel joint venture in Manisa, Turkey, is expected to begin production at the end of 2005 and to produce up to 1.5 million wheels annually. The joint venture -- Jantas Aliminyum Jant Sanayi ve Ticaret A.S. also known as Jantas Aluminum Wheels -- will serve the Turkish and other European markets. The joint venture is owned 40% by Hayes, 35% by Cromodora Wheels S.p.A, and 25% by Inci Holding A.S. As of January 31, 2005, Hayes has provided $1.6 million in funding to the aluminum wheel joint venture. Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Del. Case No. 01-11490) and emerged in June 2003. Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meager & Flom represent the Debtors. (Hayes Lemmerz Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on April 11, 2005, Moody's Investors Service assigned a B2 rating for HLI Operating Company, Inc.'s proposed $150 million guaranteed senior secured second-lien term loan facility. HLI Opco is an indirect subsidiary of Hayes Lemmerz International, Inc. The rating outlook remains stable. While the company has reaffirmed its earning guidance and the senior implied and guaranteed senior secured first-lien facility ratings remain unchanged at B1, Moody's determined that widening of the downward notching of HLI Opco's guaranteed senior unsecured notes was necessary to reflect additional layering of the company's debt. The senior unsecured notes are effectively subordinated to the proposed new senior secured second-lien term facility, and approximately $75 million of higher-priority debt will be added to the capital structure. These specific rating actions were taken by Moody's: * Assignment of a B2 rating for HLI Operating Company, Inc.'s proposed $150 million guaranteed senior secured second-lien credit term loan C due June 2010; * Downgrade to B3, from B2, of the rating for HLI Operating Company, Inc.'s $162.5 million remaining balance of 10.5% guaranteed senior unsecured notes maturing June 2010 (the original issue amount of $250 million was reduced as a result of an equity clawback executed in conjunction with Hayes Lemmerz's February 2004 initial public equity offering); * Affirmation of the B1 ratings for HLI Operating Company, Inc.'s approximately $527 million of remaining guaranteed senior secured first-lien credit facilities, consisting of: * $100 million revolving credit facility due June 2008; * $450 million ($427.3 million remaining) bank term loan B facility due June 2009 (which term loan is still expected to be partially prepaid through application of about half of the net proceeds of the proposed incremental debt issuance); * Affirmation of the B1 senior implied rating; * Downgrade to Caa1, from B3, of the senior unsecured issuer rating (which rating does not presume the existence of subsidiary guarantees). HILL CITY: Judge Brahney Confirms Amended Chapter 11 Plan --------------------------------------------------------- The Honorable Thomas M. Brahney III of the U.S. Bankruptcy Court for the Eastern District of Louisiana confirmed the Amended Plan of Reorganization filed by Hill City Oil Company, Inc., at a hearing on May 12, 2005. Judge Brahney approved the adequacy of the Debtor's Amended Disclosure Statement on April 6, 2005, and the Plan was sent to Hill City's creditors for a vote. The Amended Plan provides for the Debtor's operations to change its business model to the consignment model of operations for its retail locations. That model of operations proposes to convert 17 of the Debtor's retail locations into the consignment model, which is expected to generate new rent revenues of over $130,000 per month and reduce overhead by over $260,000 per month by cutting on payroll expenses. Other key assumptions on which the Debtor's Plan is based include the renegotiation of certain existing operating leases on terms more favorable to the Debtor, the restructuring of the Debtor's existing secured debt to ease the stress on the Debtor's cash flow and forge accommodations with the Debtor's suppliers to allow the Debtor to deal with those suppliers on credit terms, rather than on an advance payment or cash-delivery basis. As a result of those operational changes and corresponding reductions in overhead and improvements in cash flow proposed under the Plan, the Debtor will have sufficient operating profit to pay all its Allowed Priority Tax Claims over six years, pay all of its Allowed General Unsecured Claims over five years, and continue to service its secured debt as restructured. Judge Brahney concludes, among others, that: a) the Plan complies with the applicable provisions of the Bankruptcy Code, including 11 U.S.C. Sections 1122 and 1123, in accordance with 11 U.S.C. Section 1129(a); b) Article IV of the Plan specifies the treatment of each impaired Class in accordance with 11 U.S.C. Section 1123(a)(3), and the Plan provides the same economic treatment of each Claim in a particular Class, except to the extent the holder of a particular Claim has agreed to less favorable treatment in accordance with 11 U.S.C. Section 1123(a)(4); c) The Plan provides adequate means for its implementation in accordance with Sections 1123(a)(5), 1129(a)(1) and 1129 (a)(2) of the Bankruptcy Code; and d) the Plan is feasible and its confirmation is not likely to be followed by a need for further liquidation or financial reorganization of the Debtor or the reorganized Debtor. A full-text copy of the Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=050513021836 The Debtor expects that the Plan will take effect on or before June 15, 2005. Headquartered in Houma, Louisiana, Hill City Oil Company, Inc. -- http://www.hillcityoil.com/-- sells industrial oil, metalworking fluids, automotive and off-highway lubricants, oilfield products, and service products. The Company filed for chapter 11 protection on October 25, 2004 (Bankr. E.D. La. Case No. 04-18007). W. Christopher Beary, Esq., at Orrill, Cordell & Beary, L.L.C., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets and liabilities of $50 million to $100 million. INDYMAC ARM: Moody's Reviewing Ba2 Rating on Class B-3 Certs. ------------------------------------------------------------- Moody's Investors Service has placed under review for possible downgrade two subordinate certificates issued by IndyMac ARM Trust, Series 2001-H1. The underlying loans consist primarily of first-lien hybrid adjustable-rate mortgage loans originated by IndyMacBank, F.S.B. The two subordinate certificates from the Series 2001-H1 transaction are being placed on review for downgrade because existing credit enhancement levels may be low given the current projected losses on the underlying pools. To date, higher than anticipated losses have resulted in the two most subordinate classes (class B-5 and class B-6) to be completely written-down, leaving the class B-3 certificates only protected by $11,282 balance from class B-4 as of April 2005. Moody's complete rating actions are: Issuer: IndyMac ARM Trust, Series 2001-H1 * Class B-2, rated A2, under review for possible downgrade * Class B-3, rated Ba2, under review for possible downgrade INTEGRATED HEALTH: Wants Objection Deadline Extended to Sept. 6 --------------------------------------------------------------- IHS Liquidating, LLC, as successor to Integrated Health Services, Inc., and certain of its direct and indirect subsidiaries, asks the U.S. Bankruptcy Court for the District of Delaware to further extend its deadline to file objections to all administrative and other proofs of claim in the Debtors' Chapter 11 cases to September 6, 2005, without prejudice to its right to seek additional extensions. IHS Liquidating believes that it has identified substantially all claims, which could be made subject to a future objection. However, IHS Liquidating wants to extend its Claims Objection Deadline to avoid a circumstance where objectionable claims are inadvertently allowed. According to Kenneth J. Enos, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, "the extension will provide IHS Liquidating with much-needed time to effectively evaluate all claims, prepare and file additional objections to claims and, where possible, attempt to consensually resolve disputed claims." The Court will hold a hearing on May 24, 2005 at 2:00 p.m. to consider IHS Liquidating's request. By application of Del.Bankr.LR 9006-2, IHS Liquidating's Claims Objection Deadline is automatically extended through the conclusion of that hearing. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 91; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERPUBLIC GROUP: Reporting Delays Continue -------------------------------------------- The Interpublic Group of Companies, Inc., didn't file its Quarterly Report for the period ending ended March 31, 2005, by the normal May 10, 2005 deadline. "The delay in preparation of the Company's financial statements is attributable to the breadth of the additional internal work and analysis required due to the material weaknesses management has identified as part of its assessment of the Company's internal control over financial reporting and to the need to determine whether certain matters will require a restatement of financial statements for prior periods," Interpublic told the Securities and Exchange Commission in a May 11 regulatory filing. The Company says it doesn't know when its financial statements will be ready. Eroding Revenues In its 2003 Annual Report, Interpublic identified General Motors Corporation, Johnson & Johnson, Microsoft, Nestle and Unilever as its five largest clients, accounting for 17.4% of the Company's revenue in the aggregate. Individually, these five clients accounted for 1.8% to 8.3% of the Company's revenue. "[T]he loss of the entire business of any one of the Company's largest clients might have a material adverse effect upon its business," Interpublic said in its 2003 Annual Report. Brian Steinberg at The Wall Street Journal reported on May 12, 2005, that General Motors is shifting business away from Interpublic. On March 10, 2005, Ian King and Aimee Picchi at Bloomberg News reported that Nestle pulled business away from Interpublic. Loan Covenant Waivers On March 31, 2005, Interpublic Group of Companies obtained waivers from the lenders under its bank loan agreements: -- a 364-Day Credit Agreement dated as of May 10, 2004, as amended on Sept. 29, 2004, to redefine EBITDA; and -- a 3-Year Credit Agreement dated as of May 10, 2004, as amended on Sept. 29, 2004, to redefine EBITDA, with: * CITIBANK, N.A., as Agent and a Lender * JPMORGAN CHASE BANK * KEYBANK NATIONAL ASSOCIATION * LLOYDS TSB BANK PLC * HSBC BANK USA * ING CAPITAL LLC * ROYAL BANK OF CANADA * UBS LOAN FINANCE LLC * SUNTRUST BANK and * CALYON NEW YORK BRANCH. The 364-Day Revolving Credit Facility provides for borrowings of up to $250,000,000. The Three-Year Revolving Credit Facility provides up to $450,000,000, of which $200,000,000 supports Letters of Credit. The Waivers to the credit agreements waive any breach or condition to borrowing related to: (i) the Company's inability to provide audited 2004 financial statements and file its annual report on Form 10-K for the fiscal year ending December 31, 2004 until June 30, 2005, and to provide unaudited financial statements for the first quarter of 2005 and file its quarterly report on Form 10-Q for the period ending March 31, 2005 until July 31, 2005, (ii) the restatements for one or more periods ending prior to December 31, 2004, unless the restatements of the Company's financial statements result from intentional misstatements that have a material negative impact on the Company's financial condition, and (iii) the failure to comply with the Company's reporting requirements under Section 404 of the Sarbanes-Oxley Act of 2002 until March 1, 2006. The Amendments to the credit agreements, among other things, (i) provide for certain additional negative covenants and (ii) amend financial covenants with respect to the Company's interest coverage ratio, debt to EBITDA ratio and minimum EBITDA. The Amendment to the 364-Day Credit Agreement also extends the termination date under that agreement from May 9, 2005, to July 11, 2005. About the Company Manhattan-headquartered The Interpublic Group of Companies, Inc., is one of the world's leading organizations of advertising agencies and marketing-services companies. Major global brands include Draft, Foote Cone & Belding Worldwide, GolinHarris International, Initiative, Jack Morton Worldwide, Lowe & Partners Worldwide, MAGNA Global, McCann Erickson, Octagon, Universal McCann and Weber Shandwick. Leading domestic brands include Campbell-Ewald, Deutsch and Hill Holliday. At Sept. 30, 2004, Interpublic's balance sheet showed $11.2 billion in assets and $9 billion in liabilities. IVACO INC.: Court Sets June 3 as D&O Claims Bar Date ---------------------------------------------------- By Order of the Ontario Superior Court of Justice, June 3, 2005, at 5:00 p.m. is fixed as the last day and time to file claims against the directors and officers of: a. Ivaco Inc. (including Sivaco Quebec and Sivaco Ontario) b. Ivaco Rolling Mills Inc., on its own behalf or on behalf of Ivaco Rolling Mills Limited Partnership c. Ifastgroupe Inc., on its own behalf or on behalf of Ifastgroupe and Company, Limited Partnership (including Infasco, Infasco Nut, Ingersoll Fasteners, Infatool and Galvano) d. IFC (Fasteners), Inc. e. Ifastgroupe Realty, Inc. f. Docap (1985) Corporation g. Florida Sub One Holdings, Inc. and h. 3632610 Canada Inc. Failure to submit proofs of claims to the monitor, Ernst & Young Inc., by the filing deadline will bar and forever extinguish any D&O claim. Persons requiring information or claim documentation may contact: Ernst & Young Inc. Phone: 1-866-259-1420 Fax: (514) 395-4933 Web site: http://www.ey.com/ca/ivaco About the Company Ivaco is a Canadian corporation and is a leading North American producer of steel, fabricated steel products and precision machined components. Ivaco's modern steel operations include Canada's largest rod mill, which has a rated production capacity of 900,000 tons of wire rods per annum. In addition, its fabricated steel products operations have a rated production capacity in the area of 350,000 tons per annum of wire, wire products and processed rod, and over 175,000 tons per annum of fastener products. The Company filed for protection pursuant to the Companies' Creditors Arrangement Act on Sept. 16, 2003, and sold substantially all of their operating businesses were sold (with the exception of Docap (1985) Corp.) in a court-approved sale which was completed in December 2004. Pursuant to the sale agreements, Ivaco will also be required to take steps to change its name to avoid any confusion with the continuing business being operated by the purchaser. The sale proceeds were not sufficient to pay the claims of creditors in full and there can be no expectation of any distribution to Ivaco shareholders. The Court extended the Company's stay proceedings until June 15, 2005. JOHN KEMP: Case Summary & 9 Largest Unsecured Creditors ------------------------------------------------------- Debtor: John Eric Kemp mem Summit Orthopedics, LLC 10321 Charissglen Circle Highlands Ranch, Colorado 80126-5524 Bankruptcy Case No.: 05-21670 Chapter 11 Petition Date: May 13, 2005 Court: District of Colorado (Denver) Judge: Elizabeth E. Brown Debtor's Counsel: Jeffrey Weinman, Esq. Weinman and Associates 730 17th Street, Suite 240 Denver, Colorado 80202 Tel: (303) 572-1010 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 9 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Stromberg Cleveland Crawford & Schmidt $75,000 4600 South Ulster Street, Suite 300 Denver, CO 80237-4327 Bank One $48,981 United Mileage Plus PO Box 9001950 Louisville, KY 40290-1950 Wells Fargo Bank $40,000 1740 Broadway Denver, CO 80274-0001 MBNA $36,334 Wyeth Pharmaceuticals $15,228 Smith And Nephew $14,321 Wells Fargo/Visa $9,576 Medical Imaging Technologies $4,216 Littleton Adventist Hospital $673 KMART CORP: Dawson Wants to Modify Injunction to Pursue Claim ------------------------------------------------------------- Glenda Dawson sustained injuries after the Petition Date while on Kmart's property. Ms. Dawson filed a complaint in the Territorial Court of the Virgin Islands, Division of St. Thomas/St. John. The action was stayed pending the outcome of Kmart's bankruptcy case. On November 2, 2004, Ms. Dawson timely filed a claim for $750,000 with Kmart's claims agent, Trumbull Services, as required. Julie G. Evert, Ms. Dawson's counsel in the Virgin Islands Lawsuit, received Kmart's "Questionnaire for Personal Injury Claimants." Ms. Dawson submitted to Kmart her answers to the Questionnaire on February 10, 2005. In response, Kmart reserved the Claim at less than or equal to $25,000. Ms. Dawson rejected the offer. On July 17, 2002, the Bankruptcy Court approved procedures for liquidating and settling personal injury claims through direct negotiation and the alternative dispute resolution. Thaddeus J. Hunt, Esq., in Chicago, Illinois, asserts that, pursuant to the Procedures Order, Ms. Dawson is entitled to the modification of the automatic stay and the discharge injunction with her compliance with the Settlement Procedures. Under the Settlement Procedures, Ms. Dawson was required to perform these acts before being entitled to relief from the automatic stay: (a) Submit a response to the Questionnaire by February 15, 2005; (b) Receive a response to the Questionnaire; and (c) Reply to Kmart's Response. Ms. Dawson rejected Kmart's response to the Questionnaire on March 10, 2005. According to Mr. Hunt, Ms. Dawson has exhausted the Procedures and made good faith effort to resolve the claim within the Procedures to no avail. Ms. Dawson is prejudiced each and every day her claim remains unresolved. In this regard, Ms. Dawson asks Judge Sonderby to lift the Discharge Injunction so she may pursue her claim in the Territorial Court of the Virgin Islands without further delay. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Rosalie Countryman Wants Stay Lifted to Pursue Claim ---------------------------------------------------------------- Pursuant to Section 362 of the Bankruptcy Code, Rosalie Countryman asks Judge Sonderby to lift the automatic stay to pursue her claim against Kmart Corporation. On August 31, 2002, Ms. Countryman, a resident of Greenfield, County of Penobscot and State of Maine, fell on a liquid area inside a Kmart store on Hogan Road in Bangor, Maine, and permanently injured her knee. She also suffered back injuries as a result of the accident. Ms. Countryman wants to pursue a personal injury claim against Kmart in the courts of the State of Maine. On January 25, 2005, Ms. Countryman submitted a completed questionnaire stating the basis for her personal injury claim pursuant to the alternative dispute resolution procedures for personal injury claims approved by the Bankruptcy Court. On March 17, 2005, Kmart made a settlement offer to Ms. Countryman, which she found unacceptable. Kmart then suggested that Ms. Countryman seek modification of the automatic stay so she can pursue her personal injury claim in the Penobscot County Superior Court, in Penobscot County, Maine. Ms. Countryman tells Judge Sonderby that based on the information she received from Kmart, she does not anticipate that Kmart will object to her request. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000) KITCHEN ETC: July 7 is Administrative Claims Objection Deadline --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Joseph Myers, the Plan Administrator appointed in the chapter 11 case of Kitchen Etc., pursuant to the Company's confirmed Chapter 11 Plan, an extension, through and including, July 7, 2005, to object to Administrative Claims filed against the Debtor's estate. The Court confirmed the Debtor's Second Amended Plan of Liquidation on Jan. 31, 2005, and the Plan took effect on Feb. 1, 2005. Mr. Myers gave the Court three reasons in support of his request to extend the Administrative Claims objection deadline: a) the claims administration process has been initiated, but the requested extension is necessary in order to review requests for allowance of administrative claims, review the Debtor's books and records, and resolve disputed administrative claims; b) the requested extension is in the best interests of the Debtor's estate because it will permit a through review of administrative claims objection to ensure that all objectionable claims have been made the subject of a filed claims objection; and c) the requested extension will not prejudice the Debtor's creditors and other parties-in-interest. Headquartered in Exeter, New Hampshire, Kitchen Etc., Inc. -- http://www.kitchenetc.com/-- was a multi-channel retailer of household cooking and dining products. Kitchen Etc. filed for chapter 11 protection on June 8, 2004 (Bankr. Del. Case No. 04- 11701) and quickly retained DJM Asset Management to dispose of all 17 Kitchen Etc. stores throughout New England, New York, Delaware, Pennsylvania, Maryland and Virginia. Bradford J. Sandler, Esq., at Adelman Lavine Gold and Levin, PC, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $32,276,000 in total assets and $33,268,000 in total debts. KITCHEN ETC: Joseph Myers Wants Until Aug. 29 to Object to Claims ----------------------------------------------------------------- Joseph Myers, the Plan Administrator appointed in the chapter 11 case of Kitchen Etc., pursuant to the Company's confirmed Chapter 11 Plan, asks the U.S. Bankruptcy Court for the District of Delaware for an extension, through and including Aug. 29, 2005, to object to prepetition claims filed against the Debtor's estate. The Court confirmed the Debtor's Second Amended Plan of Liquidation on Jan. 31, 2005, and the Plan took effect on Feb. 1, 2005. Mr. Myers gives the Court two reasons in support of his request to extend the claims objection deadline: a) Mr. Myers is still in the process of reviewing requests for allowance of claims, reviewing the Debtor's books and records, and reviewing the resolutions for disputed claims; and b) since the Petition Date, more than 700 proofs of claim have been filed against the Debtor's estate, and the requested extension is necessary for Mr. Myers to complete his review to ensure all objectionable claims have been objected to on each distinct basis for objection. The Court will convene a hearing at 1:30 p.m., on May 23, 2005, to consider Mr. Myer's request. Headquartered in Exeter, New Hampshire, Kitchen Etc., Inc. -- http://www.kitchenetc.com/-- was a multi-channel retailer of household cooking and dining products. Kitchen Etc. filed for chapter 11 protection on June 8, 2004 (Bankr. Del. Case No. 04- 11701) and quickly retained DJM Asset Management to dispose of all 17 Kitchen Etc. stores throughout New England, New York, Delaware, Pennsylvania, Maryland and Virginia. Bradford J. Sandler, Esq., at Adelman Lavine Gold and Levin, PC, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $32,276,000 in total assets and $33,268,000 in total debts. LEE'S TRUCKING: Case Summary & 32 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Lee's Trucking P.O. Box 1552 2054 Southfield Road El Dorado, Arkansas 71731 Bankruptcy Case No.: 05-73565 Type of Business: The Debtor transports bulk chemicals, non- hazardous materials, hazardous materials, and hazardous waste. See http://www.leestrucking.com/ Chapter 11 Petition Date: May 13, 2005 Court: Western District of Arkansas (El Dorado) Debtor's Counsel: Robert L. Depper, Jr., Esq. Depper Law Firm 314 East Oak Street El Dorado, Arkansas 71730-5834 Tel: (870) 862-5505 Fax: (870) 862-7591 Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million Debtor's 32 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $1,820,926 PO Box 201 STOP 5225 Texarkana, TX 75504 Jimmy & Patsy Lee $795,162 424 Pinetree Road El Dorado, AR 71730 AR Dept. of Finance-WH Branch $97,552 PO Box 9941 Little Rock, AR 72203-9941 Bridge Benefits, Health Claims $83,912 Aon Insurance $79,000 Lisa Owens $58,700 AR Dept. of Finance WH-Branch $52,998 PJ's Tank Wash $49,987 One Beacon $43,044 Keeman $30,000 Quala Tank Wash $29,217 AR Employment Security $29,153 Internal Revenue Service $23,078 Tank Trailers of Arkansas $18,167 MHC Kenworth $13,974 Paragon Trailer Lease $13,916 Mississippi Bureau of Revenue $13,480 Zurich North America $13,398 Peterbilt of Little Rock $11,978 Bridge Benefits $9,647 Qualcom $8,831 G.E. Capital $8,418 Southern Tire Mart $7,423 Aon Insurance $7,337 Internal Revenue Service $5,945 James P. HIll Oil $4,733 Stover Auto Supply $4,341 Express Container Services $3,804 Readmond Auto Supply $3,511 Mask Tank Cleaning $3,468 Phillips Services Tank Wash $3,026 Royal Oil Company $1,811 LEHMAN BROTHERS: Fitch To Put Low-B Ratings on Two Note Classes --------------------------------------------------------------- Fitch Ratings expects to rate Lehman Brothers Small Balance Commercial net interest margin notes, series 2005-1: -- $16,423,000 class N1 notes 'BBB'; -- $11,290,000 class N2 notes 'BB'; -- $7,186,000 class N3 notes 'B'. The notes are backed primarily by prepayment penalties and monthly excess spread not used to offset losses in the LBSBC, series 2005-1, transaction (see Fitch press release 'Fitch Rates Lehman Brothers Small Balance Commercial, Series 2005-1,' dated April 29, 2005). The collateral in that transaction consists of conventional business loans made to small businesses that are secured by first liens on commercial or mixed-use real estate. None of the underlying business loans are insured or guaranteed by any governmental agency. The loans were originated by Lehman Brothers Small Business Finance or its predecessors. The expected ratings on the net interest margin notes are based on Fitch's analysis of cash flows reflecting stressed default rates and stressed recovery rates and timing lags under several default timing and prepayment speed scenarios. The ratings also took into consideration of the origination, underwriting, and servicing experience of LBSBF; the role of LBSBF as servicer; and the sound legal and payment structure. The N1 notes also benefit from a reserve fund that will be maintained at nine months of interest on the outstanding principal balance of the N1 notes. The N2 notes also benefit from a reserve fund that will initially be funded at three months of interest on the outstanding N2 principal balance and that will grow to and be maintained at six months of interest on the outstanding N2 principal balance. Interest is expected to paid monthly and principal payments are expected to be allocated on a sequential basis. LIBERTY GROUP: Fortress Investment Sale Cues S&P to Watch Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit and senior secured debt ratings on Liberty Group Publishing Inc. and its operating subsidiary, Liberty Group Operating Inc., on CreditWatch with developing implications. The CreditWatch listing reflects the approval by Liberty Group Publishing's Board of Directors and its shareholders, including affiliates of Leonard Green & Partners L.P., of a definitive agreement for the company to be acquired by an affiliate of Fortress Investment Group LLC. Terms of the transaction were not disclosed. Standard & Poor's will review its ratings on Liberty Group Publishing and Liberty Group Operating after evaluating the financial structure of the acquisition, as well as future financial and operating strategies. "We expect that the transaction will be funded with a combination of debt and equity," said Standard & Poor's credit analyst Donald Wong. Headquartered in Northbrook, Ill., Liberty Group Publishing owns and operates nearly 300 community publications, including 64 daily newspapers, located in 15 states. MARTHA FINELLI: Case Summary & 3 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Martha Ann Finelli 6613 Persimmon Tree Road Cabin John, Maryland 20818 Bankruptcy Case No.: 05-21274 Chapter 11 Petition Date: May 12, 2005 Court: District of Maryland (Greenbelt) Judge: Nancy V. Alquist Debtor's Counsel: Katherine M. Sutcliffe Becker, Esq. Stinson Morrison Hecker LLP 1150 18th Street Northwest, Suite 800 Washington, DC 20036 Tel: (202) 785-9100 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 3 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Shady Grove Radiology $558 6094 Franconia Road, Suite D Alexandria, VA 22310-4433 Citi Cards (Sears) $211 8725 West Sahara Avenue The Lakes, NV 89163-0001 Certegy $30 PO Box 30046 Tampa, FL 33630-3046 MAYTAG CORP: Declares $0.09 per Share Quarterly Dividend -------------------------------------------------------- The Maytag Corporation (NYSE: MYG) board of directors declared a quarterly dividend of 9 cents a share on the firm's common stock. The quarterly dividend is payable June 15, 2005, to shareowners of record at the close of business June 1, 2005. Maytag Chairman and CEO Ralph Hake said, "T[he] decision by the board to immediately reduce the dividend by 50 percent should allow the company more financial flexibility to fund our restructuring plan and to have additional cash available for debt reduction and pension funding. Also, the additional cash will be invested in our business as we step up our advertising and R&D expenses in the second half of 2005 with the many new product introductions that are planned. "The decision to reduce the dividend was not taken lightly," Hake noted. "The board understands the importance of the dividend to our shareholders; however, it is essential that our dividend payout is more in line with current earnings trends." Hake explained that over the balance of this year, Maytag will be finalizing its plan to restructure certain manufacturing operations and determining the investments necessary to support these initiatives. "These actions may require asset write-offs and accelerated depreciation as well as cash costs and investments," he said. "We are currently seeking a new credit agreement that will provide us substantially more covenant flexibility and funding stability to meet our financing requirements. We have received financing commitments from banks for multi-year credit facilities and expect to replace our current agreement with a new facility during the second quarter 2005." Maytag Corporation is a leading producer of home and commercial appliances. Its products are sold to customers throughout North America and in international markets. The corporation's principal brands include Maytag(R), Hoover(R), Jenn-Air(R), Amana(R), Dixie-Narco(R) and Jade(R). * * * At Jan. 1, 2005, Maytag's balance sheet reflected a $75,024,000 stockholders' deficit, compared to $65,811,000 of positive equity at Jan. 3, 2004. As reported in the Troubled Company Reporter on Apr. 29, 2005, Moody's Investors Service downgraded Maytag Corporation's senior unsecured ratings to Ba2 from Baa3 and the short-term rating to Not Prime from Prime-3. At the same time the Ba2 senior unsecured note rating was placed on review for possible further downgrade. Moody's also assigned a new senior implied rating of Ba2. Moody's says the outlook for the ratings remains negative. The ratings downgraded are: * Senior unsecured rating to Ba2 from Baa3; the rating is placed on review for possible further downgrade * Issuer rating to Ba2 from Baa3, * Short term rating to Not Prime from P-3. The rating assigned: * Senior implied rating of Ba2. As reported in the Troubled Company Reporter on Apr. 28, 2005, Fitch Ratings has downgraded the senior unsecured rating on Maytag Corporation to 'BB' from 'BB+' and has withdrawn the commercial paper rating. Fitch says the Rating Outlook is Negative. On Jan. 1, 2005, Maytag had approximately $979 million of senior unsecured debt and no commercial paper outstanding. As reported in the Troubled Company Reporter on Apr. 26, 2005, Standard & Poor's lowered its long-term corporate credit and senior unsecured debt ratings on home and commercial appliance manufacturer Maytag Corp. to 'BB+' from 'BBB-'. At the same time, the 'A-3' short-term corporate credit and commercial paper ratings on the Newton, Iowa-based company were withdrawn. The ratings were removed from CreditWatch, where they were placed Jan. 28, 2005, following weaker-than-expected fourth quarter results and Standard & Poor's ongoing concerns about Maytag's ability to improve its operation performance. S&P says the outlook is stable. Total debt outstanding at April 2, 2005, was about $970 million. MERIDIAN AUTOMOTIVE: Wants to Hire Ordinary Course Professionals ---------------------------------------------------------------- Meridian Automotive Systems, Inc., and its debtor-affiliates regularly utilize the services of various attorneys, accountants, financial advisors and other professionals in the ordinary course of their business operations. The OCPs provide services to the Debtors in a variety of discrete matters unrelated to the Debtors' Chapter 11 cases, including, but not limited to, general litigation, employment and labor law, intellectual property law, accounting, auditing, financial advisory and tax matters. The Debtors seek authority from the U.S. Bankruptcy Court for the District of Delaware to continue to utilize the services of the OCPs postpetition without the necessity of filing formal applications for the employment and compensation of each OCP pursuant to Sections 327, 328, 329, 330 and 331 of the Bankruptcy Code. Due to the number and geographic diversity of the OCPs that are utilized by the Debtors, it would be costly and administratively burdensome to both the Debtors and the Court to ask each OCP to apply separately for approval of its employment and compensation. The Debtors represent that: (a) they wish to employ the OCPs as necessary for the day-to- day operations of their businesses; (b) the fees and expenses incurred by the OCPs will be kept to a minimum; and (c) the OCPs will not perform substantial services relating to bankruptcy matters without Court permission. The Debtors ask the Court to approve uniform procedures for the retention and compensation of the OCPs: (1) The Debtors will pay the OCPs 100% of its fees and expenses, provided that the fees (excluding expenses) do not exceed $30,000 per month on average over the prior rolling three-month period. (2) If the fees exceed the cap, the OCP will be required to seek Court approval. (3) Each OCP will file with the Court and serve on parties-in- interest an affidavit within 30 days of commencing postpetition services to the Debtors. (4) The Notice Parties have 10 days after receiving an affidavit to object to the Debtors' retention of an OCP. The parties are encouraged to resolve their dispute before seeking Court intervention. (5) Beginning on September 30, 2005, and on each December 31, March 31, June 30 and September 30 of every year thereafter in which the Debtors' Chapter 11 cases are pending, the Debtors will file with the Court and serve on the Notice Parties a statement that provides information about the OCPs retained. (6) The Debtors are free to supplement or revise their list of OCPs, as applicable. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Wants to Give $10 Million to Foreign Units --------------------------------------------------------------- Meridian Automotive Systems, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to continue to advance funds to their non-debtor foreign subsidiaries. Based on their internal financial projections, the Debtors estimate that they will be required to advance approximately $10,000,000 to: (1) Meridian Automotive System, S. de R.L. de C.V., their Mexican subsidiary, (2) Voplex of Canada, and (3) Meridian Automotive Systems-DO Brazil LTDA over the next 14 months to ensure that these subsidiaries have sufficient financing for their operations. The Debtors explain that, absent adequate financing, there is a substantial likelihood that the Foreign Subsidiaries would not be able to continue operations. Moreover, the Foreign Subsidiaries' continued operations provide additional revenue to the Debtors and strengthens customer relations with various OEM customers. The DIP Credit Agreement with JPMorgan Chase Bank, N.A., permits the Debtors to advance funds to the Foreign Subsidiaries. Meridian Mexico Meridian Mexico supports the Debtors' OEM customers in Mexico and the United States. Its Celaya operations molds, assembles and paints automotive and heavy truck exterior composite components and assemblies, which are supplied to OEM customers, including General Motors, DaimlerChrysler, Ford and Nissan. Meridian Mexico's Muzquiz operations manufactures interior automotive plastic components, which are shipped to other manufacturing facilities to be incorporated into end-product component parts that are in turn shipped to the Debtors' various OEM customers. Meridian Mexico will open a third facility in Sabanis, Mexico, later this year. The Sabanis operations will also manufacture various automotive component parts. Debtor Meridian Automotive Systems - Mexico Operations, LLC, owns a 99.97% interest in Meridian Mexico, and the remaining 0.03% interest is owned by Debtor Meridian Automotive Systems, Inc. The current book value of the Debtors' equity interests in Meridian Mexico is approximately $17,000,000. The Debtors expect to advance $8,500,000 to Meridian Mexico to fund the start up costs of the Sabanis facility and the Muzquiz facility, pay for tools used to manufacture parts for DaimlerChrysler at the Celaya operations, and fund working capital shortages and address timing issues. Voplex Voplex is a wholly owned subsidiary of Debtor Meridian Automotive Systems - Composites Operations, Inc. The Branford, Ontario- based subsidiary manufactures interior automotive plastic components for the Debtors' OEM customers, including General Motors, DaimlerChrysler, Honda and Mitsubishi. The Debtors' current internal projections indicate that Voplex's financial performance for fiscal year 2005 will not be as strong as in fiscal year 2004. Based on those projections, the Debtors estimate that that they will need to advance up to, but no more than, $200,000 to finance Voplex's operations. Meridian Brazil Meridian Brazil is a wholly owned subsidiary of Meridian Automotive Systems - Composites Operations. It manufactures exterior composite components for the automotive and other industries. Meridian Brazil's customers include Eaton, Valeo, General Electric and Singer. The Debtors estimate that they will need to advance up to, but no more than, $1,000,000 to Meridian Brazil to pay past due and owing taxes. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Seeks Priority Status for Intercompany Claims ------------------------------------------------------------------ In the normal operation of their businesses, Meridian Automotive Systems, Inc., and its debtor-affiliates engage in intercompany transactions involving intercompany trade and intercompany capital needs. Intercompany trade relates to the transaction for goods and services. The intercompany capital needs are transactions through which the Debtors fund their working capital needs. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, informs the U.S. Bankruptcy Court for the District of Delaware that there are numerous intercompany claims that reflect intercompany receivables and payments made in the ordinary course of the Debtors' businesses, including, but not limited to: 1. Trade receivables and trade payables Certain Debtors receive checks and wire transfers from customers, and fund payables on behalf of various other Debtors. In many instances, the Debtors' funds are commingled throughout the Cash Management System. At any given time, there may be Intercompany Claims owing among the Debtors. The Debtors' intercompany accounts reflect the net position of both receipts and disbursements received or made on behalf of the each Debtor. 2. Centrally billed expenses The Debtors incur centrally billed expenses, like insurance premiums, payroll, 401(k) payments, benefits, payroll taxes, other taxes, workers' compensation obligations, and leased equipment. Leased equipment charges are allocated among to the Debtors. 3. Corporate expense allocation Charges for corporate expenses provided by the Debtors are allocated to each Debtor based on the cost of the service provided, directly identifiable costs and other allocation methods. 4. Advances The Debtors may make advances to each other to fund their operations. 5. Accrued interest The Debtors may owe interest to each other for outstanding Intercompany Claims. The interest is charged quarterly based on the net intercompany Claims outstanding at the end of quarter month. To ensure each individual Debtor will not fund, at the expense of its creditors, the operations of another entity, the Debtors ask the Court to grant all postpetition Intercompany Claims administrative priority expense status pursuant to Sections 503(b)(1) and 364(b) of the Bankruptcy Code. Each entity will continue to bear ultimate repayment responsibility for the ordinary course transactions. Mr. Brady tells Judge Walrath that administrative expense treatment for intercompany transactions has been granted in other comparable Chapter 11 cases in the Delaware District, such as In re Federal-Mogul Global, Inc., Case No. 01-10578 (Bankr. D. Del. Oct. 4, 2001); In re NationsRent Inc., Case No. 01-11628 (Bankr. D. Del. Dec. 18, 2001); In re FFC Holding, Inc., Case No. 01-2399 (Bankr. D. Del. July 18, 2001). According to Mr. Brady, the Debtors maintain records of all Intercompany Transactions and can ascertain, trace and account for all Intercompany Transactions. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000). MIRANT CORP: Court Approves IRS & Southern Co. Closing Agreement ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas approved a closing agreement among Mirant Corporation and its debtor-affiliates, The Southern Company and the Internal Revenue Services. As reported in the Troubled Company Reporter on April 14, 2005, Mirant Corporation was a wholly owned subsidiary of The Southern Company from the date of its incorporation until September 27, 2000. Mirant was later spun off from Southern as an independent, publicly traded company in 2001. The transition was accomplished in two steps. Mirant issued approximately 20% of its stock to the public in an "initial public offering." Then, Southern "spun off" the remaining stock of Mirant as a tax-free stock dividend to its shareholders. Prior to the Spin-Off, Southern was the "common parent" within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended, of a group of affiliated corporations, which included the Debtors and their non-debtor affiliates. As the "common parent," Southern filed a consolidated federal income tax return on behalf of itself and its affiliates on a calendar year basis. Additionally, Southern filed consolidated, combined or unitary state income tax returns on behalf of its affiliates. As a result of, and with respect to tax periods subsequent to, the Spin-Off, Southern is no longer the "common parent" of the Mirant Entities and, therefore, no longer files federal and state returns on behalf of the Mirant Entities. The Tax Indemnification Agreement In conjunction with the Spin-Off, the Mirant Entities and Southern and its affiliates entered into various "separation agreements," including a Tax Indemnification Agreement, dated September 1, 2000. The Tax Indemnification Agreement provides that Mirant will indemnify Southern for tax liabilities attributable to the Mirant Entities prior to the Spin-Off. To date, Southern has filed a number of proofs of claim against the Debtors asserting both contingent and liquidated claims and non- contingent and unliquidated claims under the various separation agreements including the Tax Indemnification Agreement. Mirant's Dual Resident Corporations As of the date of the Spin-Off, Mirant indirectly owned, through its subsidiaries, certain dual resident corporations. A DRC is a domestic corporation or any "separate unit" of a domestic corporation that is subject to the income tax of a foreign country on its worldwide income or on a residence basis. A net operating loss incurred by a DRC in a year in which the corporation is a DRC is a "dual consolidated loss" unless the loss cannot be used by the DRC or any of its affiliates under the foreign country's income tax laws. As a general rule, Section 1503(d) of the Internal Revenue Code provides that, if a member of an affiliated group incurs a DCL, the DCL may not be used to reduce the taxable income of any domestic affiliate for either the taxable year in which the loss occurred or any other taxable year, regardless of whether the loss may be applied to reduce the income of a foreign affiliate under the applicable income tax laws of another country, and regardless of whether the income of the foreign affiliate that the loss may offset is, has been or will be, subject to tax in the United States. Rather, a DCL may only be used to offset the income of the member that incurred the loss. Notwithstanding, DCLs may be utilized by other domestic affiliates within a consolidated group if the group has filed an agreement with the IRS permitting the utilization, in accordance with the elective relief provisions set forth in Treas. Reg. Sections 1.1503-2(g)(2) and 1.1503-2T(g)(2). For the taxable years ending December 31, 1999, and December 31, 2000, and the short year ending April 2, 2001 -- Pre-Spin-Off Years -- Southern filed all of the appropriate elections and agreements with the IRS to take advantage of the elective provisions. Accordingly, Southern applied all of the DCLs generated by the Mirant Entities' DRC subsidiaries during the Pre-Spin-Off Years against income incurred by entities contained in Southern's consolidated group during the time period. Use of the DCLs in accordance with Treas. Reg. Section 1.1503-2(g)(2), however, is not unconditional. Rather, these elective relief provisions delineate various "triggering events," which in the event of their occurrence require a consolidated group to recapture and report as income the amount of any DCL that was previously utilized plus an interest charge in the taxable year in which the triggering event occurred. In the absence of a waiver by the IRS, the Spin-Off itself is considered a "triggering event" and, as the parent of the group, Southern is liable to the IRS for any additional taxes owing as a result of the recapture. The Debtors estimate that if the IRS requires Southern to recapture the Pre-Spin DCLs, this will result in a recapture by Southern of approximately $75 million in income, which would cause an income tax liability of approximately $26.5 million. Upon Southern satisfying its obligations to the IRS, Southern could assert a claim against Mirant for a corresponding amount under the Tax Indemnification Agreement for the Recapture Tax Liability. The Closing Agreement The IRS can waive a "triggering event" that would otherwise require a recapture of the DCLs as income, provided that the consolidated group and the DRC or domestic owner, as the case may be, leaving the group enters into a "closing agreement" with the IRS. Under the Treasury Regulations, the closing agreement must provide that both the parent and the separating subsidiary will be jointly and severally liable for the total amount of the recapture of DCLs and interest charges should a subsequent "triggering event" occur after the date of the closing agreement. Additionally, a domestic corporation separating from its consolidated group must further agree to treat any potential recapture amount as an unrealized built-in gain for purposes of Section 384(a) of the Internal Revenue Code, subject to any applicable exceptions thereunder. To prevent the Spin-Off from being considered a "triggering event" that would otherwise require Southern to recapture the Pre-Spin DCLs, the Mirant Entities entered into the Closing Agreement with the IRS and Southern. Under the Closing Agreement, the IRS agreed that the Spin-Off will not be considered a "triggering event" that would require Southern to report the Recapture Amount. In exchange, Mirant agreed to be liable to the IRS -- and Southern agrees to be jointly liable -- for any Pre-Spin DCLs in the event of the occurrence of a subsequent "triggering event." The salient terms of the Closing Agreement are: (a) The parties agree that the Spin-Off constitutes a triggering event under Treas. Reg. Section 1.1503- 2(g)(2)(iii)(A)(2) that would otherwise require the recapture of Pre-Spin DCLs under Treas. Reg. Section 1.1503-2(g) (2) (vii). Notwithstanding, the parties agree that the triggering event does not require the recapture of the Pre-Spin DCLs plus an interest charge; (b) Southern and the Mirant Entities will be jointly and severally liable for the total amount of recapture of the Pre-Spin DCLs caused by any subsequent triggering event, as described under Treas. Reg. Section 1.1503- 2(g)(2)(iii), and any related interest charge, under Treas. Reg. Section 1.1503-2(g)(2)(vii), to the extent the triggering event does not fall under the express exceptions provided in Treas. Reg. Section 1.1503- 2(g)(2)(iv)(A) or (B); (c) Transactions otherwise constituting triggering events applicable to the Pre-Spin DCLs under Treas. Reg. Section 1.1503-2(g)(2)(iii)(A) will not constitute a triggering event if the transactions occur in any taxable year after the 15th taxable year following the year in which the Pre-Spin DCLs were incurred. These events under Section 1.1503(g)(2)(iii)(A) include transactions pursuant to which an affiliated DRC or affiliated "domestic owner" -- a domestic corporation that owns one or more separate units -- ceases to be a member of the consolidated group that filed the election; (d) The Mirant Entities agree to treat any potential recapture amount under Treas. Reg. Section 1.1503-2(g)(2)(vii) as unrealized built-in gain for purposes of Section 384(a) of the IRC, to the extent the amount is not subject to any applicable exceptions. The Mirant Entities agree that the total recapture amount will constitute a recognized built- in gain for the Mirant Entities for purposes of Section 384(a) of the Internal Revenue Code, to the extent the is not subject to any applicable exceptions; (e) The Mirant Entities agree to comply with all of the reporting requirements with respect to the taxable years ended December 31, 1999, December 31, 2000, and the short period ended April 2, 2001; and (f) If the amount of the Pre-Spin DCLs is adjusted by the IRS, judicial authority, or otherwise in a final determination of taxes for taxable years ending December 31, 1999, December 31, 2000, or for the short period ended April 2, 2001, the provisions of the Closing Agreement will apply mutatis mutandis to the final adjusted loss amounts. The Closing Agreement identifies four sources of DCLs that could potentially be the subject of recapture after the Spin-Off, as a result of subsequent triggering events. All the losses are attributable to entities defined in the Section 1503 Regulations as "hybrid entity separate units," which are entities that are not taxable as corporations for United States income tax purposes but are subject to income tax in a foreign country as corporations either on world-wide income or based on their residence. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Court Approves Seattle Settlement Agreement -------------------------------------------------------- Before Mirant Corporation and its debtor-affiliates filed for bankruptcy, Mirant Americas Energy Marketing, LP, and the Light Department of the City of Seattle were parties to a Western Systems Power Pool Agreement, where the parties agreed to sell and purchase electricity through a series of transactions, each for an amount to be determined at a later date. The terms of each Transaction would be governed by the Pool Agreement and by written confirmation agreements. At the end of each monthly billing cycle, monthly net bills are sent to the appropriate party detailing the total charges for electricity delivered pursuant to that month's aggregate Transactions. Pursuant to a Confirmation Agreement dated April 12, 2002, MAEM agreed to purchase from Seattle a maximum of 81,600 MWhs of electricity at a contract price of $25.00/MWh for the period from May 1, 2003, to June 30, 2003. Pursuant to the April 12th Confirmation, as of the Petition Date, MAEM owed Seattle $1,000,000 for electricity purchased. Pursuant to a Confirmation Agreement dated September 5, 2002, MAEM purchased real power loss energy to MAEM, to be delivered to the Bonneville Power Administration at a location and on a schedule that fulfilled the requirements of the BPA Open Access Transmission Tariff, for the period from October 1, 2002, to September 30, 2003. Pursuant to the September 5th Confirmation, as of the Petition Date, MAEM owed Seattle $179,726 for loss provider sales, representing $138,990 for June loss provider sales and $40,735 for loss provider sales in the portion of July arising prior to the Petition Date. Additionally, MAEM owes Seattle $279 arising from an adjustment to the amount originally invoiced by Seattle in May 2003. Pursuant to various written confirmations and verbally confirmed transactions from June 2003 through October 2003, Seattle purchased electricity from MAEM. As a result of the written confirmations and verbally confirmed transactions, Seattle owes MAEM $124,502 for electricity purchases prior to the Petition Date and $423,038 for electricity purchases subsequent to the Petition Date, for an aggregate amount of $547,540. Prior to the Petition Date, MAEM secured its performance obligations under the Pool Agreement through the issuance of a $500,000 Irrevocable Standby Letter of Credit, dated February 4, 2003, as amended, with Wachovia Bank, N.A. As a result of MAEM's bankruptcy filing, on July 25, 2003, Seattle drew upon the Letter 0of Credit and applied the funds to MAEM's June 2003 energy purchases, thus reducing the amount owed to Seattle by MAEM on account of prepetition energy sales to $680,006. In addition to the Seattle Prepetition Claim, MAEM owes Seattle $24,109 on account of postpetition energy sales. On January 12, 2004, Seattle filed Claim No. 7568 in the Mirant Chapter 11 case on account of the Seattle Prepetition Claim. Seattle amended the Claim with Claim No. 8007 on August 18, 2004. Seattle has not remitted to MAEM the amounts owed on account of MAEM's claim. Seattle alleges that it has a valid right of recoupment or set-off. MAEM disputes Seattle's right to withhold the amounts. Specifically, the Debtors believe Seattle does not have the right to recoup the Seattle Prepetition Claim against MAEM's Postpetition Claim. MAEM and Seattle agree that any set-off of the MAEM Prepetition Claim against the Seattle Prepetition Claim requires approval pursuant to Section 553 of the Bankruptcy Code by the Bankruptcy Court. To resolve the dispute, the Debtors entered into a settlement agreement with Seattle, which was approved by the Court. The Debtors agree that Seattle may set off the MAEM Prepetition Claim against the Seattle Prepetition Claim. The set-off will result in a $555,504 prepetition claim in favor of Seattle. Seattle will pay to MAEM $398,928 -- the amount by which the MAEM Postpetition Claim exceeds the Seattle Postpetition Claim. The Settlement Agreement bars each party from asserting any claim, cause of action or right to payment against the other in respect of the Pool Agreement based in whole or in part on any fact, event, occurrence, condition or thing first coming into existence on or prior to October 31, 2003. The Debtors find the Settlement Agreement fair and reasonable. Although they would likely succeed in the litigation of the issue, the Debtors believe that that success would likely be limited to the amount of the Net MAEM Claim. By entering into the Settlement Agreement, the Debtors will receive the Net MAEM Claim without the necessity of litigation. 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. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: EPA Says Plan Proposes Provisions "Forbidden by Law" ----------------------------------------------------------------- The United States of America, on behalf of the Environmental Protection Agency, tells Judge Lynn that Mirant Corporation and its debtor-affiliates' Disclosure Statement contains inadequate information to permit the Government, interested parties, and the Court from determining and fully understanding whether the Plan, as proposed, is lawful. Specifically, the Government says, the Plan: -- appears to violate Sections 1129(a)(1) and 1129(a)(3) of the Bankruptcy Code by proposing provisions that are "forbidden by law" and inconsistent with the Bankruptcy Code; and -- fails to provide adequate information as to the legality of the Debtors' basis for including provisions that threaten public health and safety. Alan S. Tenenbaum, Esq., National Bankruptcy Coordinator, Environmental Enforcement Section, Environment and Natural Resources Division of the U.S. Department of Justice, in Washington, D.C., explains that the United States, through the EPA, is charged with the police and regulatory responsibility to protect public health and the environment under several environmental statutes, including the: -- Resources Conservation and Recovery Act; -- Clean Water Act; -- Oil Pollution Act; -- Toxic Substances Control Act; and -- Comprehensive Environmental Response, Compensation and Liability Act. The Environmental Statutes are designed, inter alia, to ensure that owners and operators of industrial facilities in the United States take necessary steps to protect the public from serious environmental dangers. As pointed out in Westland Oil Development v. Mcorp Management Solutions, 157 B.R. 100, 102 (S.D. Tex 1993), Mr. Tenenbaum relates, disclosure is "the pivotal concept in Chapter 11 reorganization." The Debtors are required to disclose fully what they are proposing to do and may not attempt to hide what they are doing, particularly on matters affecting public health and safety. Discharge of Causes of Law Mr. Tenenbaum argues that the Plan seeks to provide the Debtors a "superdischarge" beyond that provided by the Bankruptcy Code and contrary to applicable Fifth Circuit law. For example, the Plan seeks to discharge or preclude "causes of action," a term that is not used in the Bankruptcy Code, and seeks to go beyond the Code's already expansive definition of a "claim." Mr. Tenenbaum contends that including that term would rewrite the Code's provisions governing equitable remedies -- like injunctions to protect public health and safety -- that are not within the Code's definition of claim. According to Mr. Tenenbaum, the Disclosure Statement should, at a minimum: (a) disclose exactly what the Plan is proposing with regards to correct term definition so that there is no room for confusion; (b) set forth the specific equitable remedies that may not be claims that the Plan seeks to discharge or preclude; (c) set forth the specific acts or conduct that may not yet have resulted in claims that have arisen but that the Plan seeks to discharge or preclude; (d) describe the effect on public health and safety that may be involved; and (e) state the legal basis for the provisions in a Plan. In particular, Mr. Tenenbaum contends that if the Debtors are proposing to dispute their obligation to comply with public health and safety protection with respect to property they will own and operate in the future, their Disclosure Statement (i) should clearly set forth that this is what they are proposing to do, (ii) describe the effects and risks to public health and safety, and (iii) discuss in detail the legal basis for why that Plan should not be found to be forbidden by law, in bad faith, against public policy, and contrary to the Bankruptcy Code. Mr. Tenenbaum notes that the Bankruptcy Code does not mandate that every company be reorganized at all costs. Thus, he says, if the Debtors are not prepared to comply with environmental laws governing their ongoing properties and operations, they cannot reorganize. Release of Protected Persons Furthermore, Mr. Tenenbaum continues, the Plan is ambiguous as to whether the Plan releases numerous categories of non-debtors, called "Protected Persons." "The Release Provisions are inconsistent with Section 524(e) of the Bankruptcy Code and Fifth Circuit case law on non-debtor releases." Section 524(e) provides that a debtor's discharge does "not affect the liability of any other entity . . . for the debt." Exclusive Jurisdiction Article XVI of the Plan, Mr. Tenenbaum says, provides the Bankruptcy Court with "exclusive jurisdiction" over various vague categories of matters, including matters "relating in any way" to the Plan or interpreting the Plan. Mr. Tenenbaum observes that the Exclusive Jurisdiction Provision could be misconstrued to divest other courts and tribunals with jurisdiction over the activities of Reorganized Mirant, including activities regulated under environmental laws. "Exclusive jurisdiction" is a particular danger, Mr. Tenenbaum says, given that the Debtors have included language in their Plan that they may contend immunizes them from having to comply with public health and safety laws governing their future operations and property. Mr. Tenenbaum asserts that the Disclosure Statement should state more clearly whether or not it is trying to divest other tribunals of their valid jurisdiction and state more precisely which tribunals and statutes for which the Plan seeks to divest jurisdiction. The Disclosure Statement should also discuss why the Exclusive Jurisdiction Provision is not directly contrary to the Fifth Circuit's limitations on the post-confirmation jurisdiction of the bankruptcy courts over the activities of a reorganized debtor, Mr. Tenenbaum adds. The United States Government asks the Court not to approve the Amended Disclosure Statement as currently drafted. 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. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) NDCHEALTH CORP: Moody's Holds Ratings as Lenders Waive Default -------------------------------------------------------------- Moody's Investors Service confirmed NDCHealth Corporation's senior secured bank debt rating at B1, its senior subordinated notes rating at B3, and its senior implied rating at B1, concluding a review for downgrade initiated January 6, 2005. The rating outlook is negative. Ratings Confirmed: * Senior Implied Rating of B1 * $125 Million Term Loan due 2008 rated B1 * $100 Million Revolving Credit Facility due 2008 rated B1 * $200 Senior Subordinated Notes due 2012 rated B3 * Long Term Issuer Rating rated B2 The ratings confirmation reflects the company's March 2005 attainment of a waiver from lenders restoring access to its revolving credit facilities, its continued focus on debt reduction, and its divestiture of operations detrimental to its operating profitability. The confirmation also reflects Moody's expectation that the company, with its current debt to EBITDA leverage of just under 3.0x, will experience modest cash inflows in the near term and a return to stable financial operating performance, further debt reduction, and more ample free cash flow generation over the longer term. Moody's believes the company's near term challenges include its management of cyclically subdued industry demand for pharmaceutical information from its pharmaceutical manufacturer clients, the potential for increased investment associated with the protracted development of its strategically important chain pharmacy network processing solution (EnterpriseRx), subdued growth prospects from its network clients in the secularly declining U.S. independent pharmacy market, and working capital use associated with integration projects in its information services business. Moody's considered NDCHealth in the context of key transaction processor rating drivers, including: 1) Market Position NDCHealth has a leading market position for regional and independent U.S. pharmacy prescription claims processing (company processes over 70% of U.S. 3rd party pharmacy claims) and is the second largest vendor of prescription drug data information to pharmaceutical manufacturers. However, the company has much smaller positions in growing U.S. chain and no position mail order pharmacy systems markets, which it plans to enlarge. In its prescription drug information business, NDCHealth's U.S. focused business faces ongoing competition from a much larger rival with a worldwide presence. In Moody's view, EnterpriseRx represents a strategically important potential growth driver for both the company's pharmacy systems and information businesses; a successfully executed launch would likely increase the company's market position in an attractive pharmacy systems market and could potentially enable the company to rely less on the purchase of third party prescription drug data in its information business, which has been a growing expense. 2) Exposure to businesses in secular decline Moody's believes that ongoing consolidation of the U.S. retail pharmacy industry has positioned NDCHealth's pharmacy processing client base of independent pharmacies in secular decline. 3) Customer Concentration The company maintains a diversified client base within its hospital, physician, and pharmacy network processing and systems businesses. However, the company only has one client currently under agreement to develop EnterpriseRx and system test is unproven. In addition, client revenues in its information business are concentrated; revenues from the company's top five pharmaceutical manufacturer clients (global pharmaceutical manufacturers experiencing capital spending constraints cyclical through at least 2005) represented over 17% of the company's fiscal 2004 revenues. 4) Event Risk The company's weaker than anticipated financial performance has led its Board of Directors to announce in February 2005 their consideration of a potential sale of the company, which may further weaken cash flow coverage of debt. However, covenant limitations on asset sales and change in control provisions protect bank debt and unsecured note holders for sales of assets in excess of $15 million and for changes in control of 50% or more of voting stock. 5) Technology Risk Given the unproven track record of EnterpriseRx, Moody's believes the potential exists for further software investment to develop the customized features of the software, which could further depress cash flow. 6) Liquidity The company's cash and cash equivalents amounted to a modest $20 million at February 25, 2005. However, the company has achieved waivers to regain access to its $100 million revolving credit facilities and have expanded the under the financial covenants of the facilities, especially the debt to EBITDA financial covenant of the facilities, which should allow for greater financial flexibility over at least the near term. For its fiscal year ending May 27, 2005, Company expects to reduce debt outstanding to below $312 million at February 25, 2005, primarily from proceeds from its completed sale of its Canadian operations and equity interests in HealthTrans and the potential sale of its German operations. Financial covenants for senior credit facilities have been amended three times within the past five months to provide flexibility. The debt to EBITDA covenant of the facilities ratchets to 3.75x in the fourth fiscal quarter ending May 2005, to 3.5x for the first and second fiscal quarters ending August 2005 and November 2005, and to 3.25x thereafter. The company's trailing twelve months free cash flow has weakened to $15 million for the period ended February 2005 from approximately $50 million in each of the company's prior two fiscal years ended May 2004 and May 2003, due to subdued pharmaceutical manufacturer client demand, declining sales of legacy pharmacy network systems, operating losses from international divisions which are being divested, working capital outflows associated with challenges of information business integration projects, sustained software development costs, and higher legal, audit, and internal financial controls costs. Ongoing liquidity needs include $10.5 million semiannual interest payments (June 1st and December 1st) on the company's 10% $200 million subordinated notes (due 2012). Rating Outlook The negative outlook reflects the company's challenge to launch its national chain pharmacy network product offering, EnterpriseRx, to offset flat to declining sales to secularly declining independent and regional pharmacies. The ratings could be stabilized upon material evidence of EnterpriseRx sales and profit traction subsequent to its beta site implementation, which the company anticipates will occur in the second half of calendar 2005 and upon improvements to project work completion, which has weakened working capital and free cash flow generation over the trailing twelve months. NDCHealth, headquartered in Atlanta, Georgia, is a network-based health information company. Revenues for 2004 approximated $433 million. NORTH AMERICAN MEMBERSHIP: Moody's Junks Planned $20M Term Loan --------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to North American Membership Group Inc.'s proposed $75 million first lien term loan B and a Caa1 rating to its proposed $20 million second lien term loan, which are intended to replace its proposed $95 million term loan B (rated B2 on April 8, 2005) that was cancelled. Concurrently, Moody's withdrew the B2 rating assigned to the proposed $95 million term loan B. Pro-forma for the aforementioned capital mix changes, Moody's affirmed the B2 senior implied rating and the B2 rating assigned to the company's proposed $20 million first lien revolving credit facility. The ratings reflect significant leverage, significant customer attrition rates consistent with the industry and modest operating margins. The ratings also reflect the company's large and diverse membership base, long-term track record and solid growth in long term memberships and product revenues. Moody's took these rating actions: * affirmed $20 million senior secured first lien revolving credit facility due 2010, rated B2; * assigned $75 million senior secured first lien term loan B facility due 2011, rated B2; * assigned $20 million senior secured second lien term loan facility due 2011, rated Caa1; * withdrew $95 million senior secured first lien term loan B facility due 2011, rated B2; * affirmed senior implied rating, rated B2; * lowered senior unsecured issuer rating to Caa2; The ratings outlook is stable. The ratings are subject to the review of the final executed documents. NAMG is a wholly owned subsidiary of North American Membership Group Holdings Inc., a company, which is controlled by Doughty Hanson & Company, the financial sponsor. Proceeds from the $75 million first lien term loan B facility and $20 million second lien term loan facility are expected to be used to pay a $48 million distribution to the company's parent to redeem preferred stock, repay existing senior secured indebtedness, pay transaction expenses and for working capital purposes. The revolver is expected to be unused and fully available at closing. Upon the closing of the proposed financing, North American Membership Group Holdings Inc. is expected to have about $54 million of preferred stock outstanding. The preferred stock will have no fixed mandatory redemption date, will allow for cash dividends only after the maturity of the senior secured credit facility and will be redeemable at the option of the holder in the event of a change in control. The ratings reflect the challenges facing the company's membership based business including significant customer attrition rates consistent with the industry, modest growth of the membership base and modest operating margins. The company has historically spent over 30% of sales on member marketing and retention expenses. Due to the high level of marketing expenses, operating margins are relatively low at about 6% in 2004. The company has managed to increase revenues and profitability despite these challenges. Revenues have increased from $180 million in 2002 to $211 million in 2004. Operating income during this time frame has grown from about $5 million to $12 million. The growth in revenues and operating profits is mainly attributable to the increased sale of long term memberships and products. Product revenues grew from about $80 million in 2002 to about $101 million in 2004, comprising 48% of 2004 revenues. The sale of books, videos and other targeted products represent a large portion of the company's operating profit. Product revenues have benefited from the increase in long term members, who generally respond more favorably to product offers. The company has a long track record in the industry and a large membership base. At the end of 2004, the company had 4.5 million active members and sponsored 10 clubs, the oldest of which was started in 1978. Club benefits include a magazine, which is generally distributed six to eight times a year, club website, special events and product offers. Club magazines are targeted to the interests of club members and have circulations that are generally strong within the special interest category. The company has minimal capital expenditure requirements. The stable ratings outlook reflects Moody's expectation that increased products sales and long term memberships will lead to modest revenue growth and operating margin improvements. Moody's believes that it will be difficult for the company to substantially grow its membership base due to continued significant industry attrition rates and modest plans for new club launches. Free cash flow from operations is expected to be utilized to reduce borrowings under the credit facility. The ratings or outlook could be upgraded if significant membership growth or stronger than expected product sales leads to sustainable free cash flow to debt in the 8-10% range and a reduction in debt to EBITDA to about 4 times. The ratings or outlook could be pressured if a decline in the membership base or product revenues leads to reduced operating margins and free cash flow from operations. The proposed $75 million first lien term loan B facility and $20 million second lien term loan facility are each secured by first and second liens, respectively, on all of the company's assets, including the stock and assets of its domestic subsidiaries. The Caa1 rating assigned to the second lien facility recognizes the effective subordination of second lien debt holders to a substantial level of first security debt and lower expected recovery rates in a distress scenario. Free cash flow to debt pro forma for the new credit facility was about 2% in 2004 and is expected to be about 1%-3% in 2005. Pro forma debt to EBITDA was about 5.9 times in 2004 and is expected to be about 5.5 times in 2005. North American Membership Group, Inc., headquartered in Minnetonka, Minnesota, is the largest club-based affinity marketing company with about 4.5 million active members. The company's revenues are derived from membership fees, product sales, advertising in the company's targeted magazines and other ancillary activities. Revenue for the year ended December 31, 2004 was about $211 million. PEGASUS SATELLITE: Felton Street Asserts Interest in Fixtures ------------------------------------------------------------- Felton Street Limited Partnership owns certain commercial real estate in High Ridge Business Center, in Marlborough, Massachusetts. Felton Street leased the Marlborough Facility to Pegasus Satellite Television, Inc., which consisted of a building and a surrounding tract of land on which the building is situated. Bruce B. Hochman, Esq., at Lambert Coffin, in Portland, Maine, relates that at the time the Lease between Felton Street and PST was entered into, the building and the surrounding tract of land were still under construction. Felton and PST contemplated that certain construction work and the installation of certain fixtures would take place prior to PST taking possession. Following completion or substantial completion of the construction work and the installation of the fixtures, PST took possession as tenant. The Lease was to terminate by its terms on September 30, 2007. The Lease was amended to, among other things, include PST's option to purchase. PST rejected the Lease effective December 31, 2004. Under the Lease, Felton Street has an ownership interest in: -- all alterations and improvements made by PST for which Felton Street's consent was required to be requested; -- all additions and improvements remaining at the building and surrounding tract of land at the Marlborough Facility upon expiration or sooner termination of the Lease; and -- those fixtures which Felton Street affixed to, built into, and or attached to the building and surrounding tract of land at the Marlborough Facility. On November 10, 2004, the U.S. Bankruptcy Court for the District of Maine gave PST permission to sell certain property located in the Marlborough Facility through an auction held by Garcel, Inc., doing business as The Great American Group. Felton Street's right to assert a claim for payment from the proceeds of the Auction for items sold at the Auction that Felton Street claimed were owned by it as fixtures was reserved. Prior to the Auction, Great American valued all of Pegasus Satellite Communications, Inc. and its debtor-affiliates' auction lots and the Fixtures between $96,600 and $123,075. According to Mr. Hochman, Felton Street relied on Great American's valuation in calculating its bid. At the Auction, Felton Street made a successful bulk bid for certain property in the Marlborough Facility inclusive of the Fixture Lots for $288,750, comprised of: Bulk Bid $250,000 10% Premium 25,000 5% Sales Tax 13,750 Felton Street believes that, since it was the owner of the Fixtures, it is entitled to the proceeds of the Auction arising from the sale of the Fixture Lots. And since it was the successful bidder at the Auction, Felton Street is also entitled to a refund of the related sales tax and 10% premium it paid on its winning bid for the Fixtures Lots. Accordingly, Felton Street asks the Court to declare that: (a) the Fixtures that it purchased at the Auction as part of its bulk purchase are its property; and (b) it is entitled to payment from Pegasus of the value of the Fixture Lots based on Great American's valuation from the proceeds of the Auction, along with the attendant sales taxes and 10% premium. Despite Felton Street's requests, PST has failed and refused to agree to the value of the Fixture Lots or to pay to Felton Street the amounts due it on the Reserved Claim from the proceeds of the Auction. Felton Street asks the Court to direct Pegasus to turn over to it the proceeds from the Auction equal to the value of the Fixture Lots plus sales taxes and 10% premium. 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. Maine 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. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) REHOBOTH MCKINLEY: Fitch Lowers Rating on $3.7 Mil. Loan to BB+ --------------------------------------------------------------- Fitch Ratings has downgraded the rating on $3.7 million of outstanding New Mexico Hospital Equipment Loan Council hospital facility improvement and refunding revenue bonds (Rehoboth McKinley Christian Hospital Project), series 1996 to 'BB+' from 'BBB-'. The bonds remain on Rating Watch Negative. The downgrade reflects Fitch's concern regarding the reliability of Rehoboth McKinley Christian Hospital's financial statements and continued turnover in the finance department. In addition, Rehoboth's liquidity measures are very weak and there are upcoming capital needs that may further reduce thin liquidity levels. Historical disclosure and communication with Fitch has been poor and sporadic. Fitch placed Rehoboth's bonds on Rating Watch Negative on Feb. 22, 2005, due to the delay in providing audited financial information (fiscal year ended Aug. 31, 2004. Due to this action, the CEO and Chairman of the Board have been more responsive and intend to have ongoing communication with Fitch. While Fitch received draft audited financial statements, management had indicated that the final audit would be available in March of 2005. The final audit is still not available. Since Fitch's initial rating in 1996, four different individuals have held the chief financial officer position. Rehoboth is again in a transition period with a new chief financial officer beginning on May 16, 2005. Management has stated that there may be material changes to the draft audit for fiscal year 2004 and the timeline for the completion of the audit is unknown. Fitch notes that other executive management positions have been stable and the CEO has been with the organization for over 10 years. Rehoboth's draft audit for FY 2004 currently indicates a 1.5% operating margin, 18.6 days cash on hand, and 2.7 times (x) debt service coverage. The current draft audit contains significant changes to the method for calculating the allowances for accounts receivable and bad debt. In addition, there were errors in the estimate of contractual adjustments, which resulted in overpayments by third party payors. Fitch is uncertain of the magnitude of the potential change in performance from the current draft audit figures. The bonds will remain on Rating Watch Negative until Fitch has had the chance to review the final audit and most recent interim financial statements, as well as having further discussion with the management team. Located in Gallup, NM, approximately 137 miles west of Albuquerque, Rehoboth McKinley Christian Hospital is a sole community provider with 113-staffed beds. Continuing disclosure to bondholders from the series 1996 issue consists of annual financial information submitted to the nationally recognized municipal information repositories through the bond trustee within 150 days, which Fitch views as inadequate. REGIONAL DIAGNOSTICS: U.S. Trustee Picks 5-Member Creditors Comm. ----------------------------------------------------------------- The United States Trustee for Region 9 appointed five creditors to serve on the Official Committee of Unsecured Creditors in Regional Diagnostics, L.L.C., and its debtor-affiliates' chapter 11 cases: 1. Hitachi Medical Systems America, Inc. Attn: Richard S. Katz 1959 Summit Commerce Drive Twinsburg, Ohio 44087 Phone: 330-425-1313 ext. 4100, Fax: 330-405-8066 2. Centura X-Ray, Inc. Attn: Mark A. Hale 4381 Renaissance Parkway Cleveland, Ohio 44128 Phone: 216-831-7640, Fax: 216-831-6959 3. Toshiba America Medical Systems, Inc. Attn: Fredric J. Friedberg 2441 Michelle Drive Tustin, California 92780 Phone: 714-669-5520 4. MXR Attn: Ted Sloan 4640 Hinckley Industrial Blvd. Cleveland, Ohio 44109 Phone: 216-739-9599, Fax: 216-621-3298 5. Sourceone Healthcare Tech. Inc. Attn: Anthony D. Record 8020 Tyler Blvd. Mentor, Ohio 44060 Phone: 440-701-1294, Fax: 216-274-9557 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 Warrensville Heights, Ohio, Regional Diagnostics, L.L.C., -- http://www.regionaldiagnostic.com/-- owns and operates 27 medical clinics located in Florida, Illinois, Indiana, Ohio and Pennsylvania. The Company and its debtor-affiliates filed for chapter 11 protection on April 20, 2005 (Bankr. N.D. Ohio Case No. 05-15262). Jeffrey Baddeley, Esq., at Baker & Hostetler LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets of $10 million to $50 million and debts of $50 million to $100 million. REGISTER.COM INC: Delays Form 10-Q Due to Manual Processing ----------------------------------------------------------- Register.com, Inc. (Nasdaq: RCOM) reported that the filing of its Quarterly Report on Form 10-Q for the period ended March 31, 2005, and its related earnings release will be delayed. Internal Control The Company is in the process of completing its financial statements for the first quarter of 2005. As previously disclosed in Register.com's 2004 Annual Report on Form 10-K, the Company's remediation of certain material weaknesses in its internal control over financial reporting, which include temporary manual controls and procedures, require extensive and time consuming manual processing. Similar manual processing was required in connection with the preparation of the Company's financial statements included in its Form 10-K. Further, the Company devoted substantial resources towards the completion of its Form 10-K until its filing on May 4, 2005. These efforts delayed the commencement of work on the financial statements for the quarter ended March 31, 2005. As a result of the additional work and delayed start, the Company's Form 10-Q could not be filed by May 10, 2005 and the Company believes that it will be out of compliance with Nasdaq marketplace rules as a result of the late filing. The Company is working to complete and file its Form 10-Q by the end of May, however, it cannot provide any assurances that it will meet this target. The Company will issue its earnings release and hold its investor conference call after filing its Form 10-Q. Nasdaq Delisting Notice Register.com also received a notice on May 9, 2005 from Nasdaq providing an update on the delisting notice the Company received from Nasdaq on April 5, 2005, related to its delayed Form 10-K filing. The update states that as of the date of the notice, the Company had satisfied Nasdaq's listing requirements and that the Company's ticker symbol would be restored to RCOM as of the opening of trading on Wednesday, May 11, 2005. However, as a result of the delay in the Company's Form 10-Q filing, the Company expects to receive a subsequent notification from Nasdaq regarding potential delisting, which the Company believes would result in a change in the Company's ticker symbol to RCOME once again. About the Company Register.com, Inc. -- http://www.register.com/-- is a leading provider of global domain name registration and Internet services for businesses and consumers that wish to have a unique address and branded identity on the Internet. With approximately 3.0 million domain names under management, Register.com has built a brand based on quality domain name management services for small and medium sized businesses, large corporations, as well as ISPs, telcos and other online businesses. The company was founded in 1994 and is based in New York. S-TRAN HOLDINGS: Case Summary & 30 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: S-Tran Holdings, Inc. aka STACAS Holdings, Inc. 728 South Jefferson Avenue Cookeville, Tennessee 38501 Bankruptcy Case No.: 05-11391 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Service Transport, Inc. 05-11391 Dixie Trucking Company, Inc. 05-11393 Type of Business: The Debtors provide common carrier services and specialized in less-than-truckload shipments. The Debtors supplied overnight and second-day service to shippers in 11 states in the Southeast and Midwestern United States. The Debtors also serve several other states and Canada through strategic partnerships with carriers in those regions. Chapter 11 Petition Date: May 13, 2005 Court: District of Delaware Debtors' Counsel: Laura Davis Jones, Esq. Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. 919 North Market Street, 16th Floor Wilmington, Delaware 19899-8705 Tel: (302) 652-4100 Fax: (302) 652-4400 Total Assets Total Debts ------------ ----------- S-Tran Holdings, Inc. $10 Million to $10 Million to $50 Million $50 Million Service Transport, Inc. $10 Million to $10 Million to $50 Million $50 Million Dixie Trucking Company, Inc. $100,000 to $10 Million to $500,000 $50 Million Consolidated List of Debtor' 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Intercraft Trade Debt $479,851 Newell 10B Glenlake Parkway, Suite 600 Atlanta, GA 30328 Best Overnite Trade Debt $238,082 406 Live Oak Avenue Irwindale, CA 91706 Dartmoor Realty Judgement Debt $199,249 P.O. Box 2709 Cookeville, TN 38502 c/o Garry E. McNabb Hugh E. Bailey & Associates, PLLC 714 North Dixie Avenue Cookeville, TN 38501 Pilot Travel Center LLC Trade Debt $145,166 MSC 1602901 5508 Lonas Road Knoxville, TN 37909 Norrenberns Truck Service Trade Debt $108,742 Benton Express Trade Debt $99,092 Daylight Transport Trade Debt $96,381 Volunteer Volvo and GMC Inc. Trade Debt $91,094 Ryder/Phillips Trade Debt $86,129 BDO Seidman LLP Trade Debt $80,049 Transport International Pool Trade Debt $70,846 Nacarato Volvo and GMC Trucks Trade Debt $65,791 Shippers Express Trade Debt $61,471 Xtra Lease Inc. Trade Debt $60,013 Standard Insurance Company Trade Debt $57,560 Three Way Transfer of Arkansas Trade Debt $55,230 Yokohama Tire Corporation Trade Debt $53,696 JNJ Logistics Trade Debt $52,657 aka JNJ Express Inc. Midland Transport Trade Debt $51,803 Red Roof Inn Corporation Trade Debt $41,029 Trans States Express Trade Debt $40,695 Bass Berry and Sims PLC Trade Debt $40,622 General Trailer Services Inc. Trade Debt $39,696 Bandag Inc. Trade Debt $39,502 American Tire Company Trade Debt $38,706 Dillon Transportation LLC Trade Debt $37,900 Lockton Insurance Company Trade Debt $37,896 Schneider Logistics Trade Debt $37,047 Colonial Supplemental Trade Debt $35,640 Insurance ComData Network Trade Debt $32,369 SAFETY-KLEEN: Injunction Modified for Moore to Pursue Lawsuit ------------------------------------------------------------- Barbara Lou Moore, individually and as Executrix of the Estate of Larry Lee Moore, alleged that on October 29, 1994, her husband Larry was involved in an accident during the course of his employment and allegedly due to the Safety-Kleen Corporation and its debtor-affiliates' negligence. On August 7, 1998, Ms. Moore filed a Second Amended Complaint in the Court of Common Pleas of Lucas County, Ohio, seeking damages against one or more of the Debtors in connection with the Accident. In a Court-approved stipulation, the Reorganized Debtors and Ms. Moore agree that the discharge injunction set forth in the Confirmation Order, the Plan and the Bankruptcy Code will be modified for the sole purpose of permitting Ms. Moore to prosecute the Civil Action to a final judgment, including any and all appeals. Ms. Moore will enforce or execute any settlement or judgment entered by a court of competent jurisdiction or other disposition of the Civil Action against the Reorganized Debtors without further Court order, only if the settlement or judgment is satisfied by the proceeds of the Debtors' applicable liability insurance policies. Headquartered in Delaware, Safety-Kleen Corporation -- http://www.safety-kleen.com/-- provides specialty services such as parts cleaning, site remediation, soil decontamination, and wastewater services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Del. Case No. 00-02303) on June 9, 2000. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,031,304,000 in assets and $3,333,745,000 in liabilities. (Safety-Kleen Bankruptcy News, Issue No. 88; Bankruptcy Creditors' Service, Inc., 215/945-7000) SR TELECOM: Incurs $13.8 Million Net Loss in First Quarter ---------------------------------------------------------- SR Telecom Inc. (TSX: SRX, NASDAQ: SRXA) reported its results for the first quarter of fiscal 2005 ended March 31, 2005. "During our fourth quarter conference call in March we explained how the effect of reduced supplier credit would result in a significant decrease in overall sales volumes in the first quarter of the current fiscal year," said Pierre St-Arnaud, SR Telecom's President and Chief Executive Officer. "However, we are encouraged by the support we have received from our customers and the current level of bookings. In fact, we have just delivered our first equipment order for the major rural project in Mexico. Once our recapitalization plan is finalized, we will be able to resume production at a more normal level and we expect our sales and deliveries to increase." Consolidated First Quarter Results Consolidated revenues for the first quarter of fiscal 2005 totalled $17.9 million, compared to $26.2 million in the first quarter of fiscal 2004. The consolidated operating loss for the first quarter of fiscal 2005 was reduced to $10.7 million, compared to an operating loss of $13.6 million in the same period in 2004. The consolidated net loss for the first quarter of 2005 was $13.8 million, compared to a consolidated net loss of $16.9 million in the corresponding period in 2004. "Our gross margins were also negatively impacted by the decreased sales volumes and under-absorbed overhead costs related to lower manufacturing volumes," Mr. St-Arnaud said. Wireless Telecommunications Products Segment Revenues in SR Telecom's core wireless business segment for the first quarter of fiscal 2005 were $12.8 million, compared to $21.6 million reported during the same period in 2004. The net loss for the first quarter of fiscal 2005 totalled $12.9 million, compared to a $15.1 million net loss in the corresponding period last year. Selling, general and administrative expenses in the core wireless business segment decreased sharply to $9.8 million for the first quarter of 2005, compared to $13.2 million for the same period in 2004. This decrease was primarily due to the effects of the restructuring that was implemented in the second and third quarters of 2004. Research and development expenses in the core wireless business segment also decreased significantly, from $7.3 million in the first quarter of 2004 to $3.5 million in the first quarter of 2005. This decrease is also attributable to the restructuring initiative that was implemented by the Corporation in 2004. At this time, the Corporation expects that R&D expenses will remain stable in comparison to the first quarter levels. In January 2005, SR Telecom took additional steps to align its costs with current levels of business activity and temporarily laid-off 127 employees. The Corporation expects that employees will be recalled as production returns to customary levels. Telecommunications Service Provider Segment For the first quarter of fiscal 2005, CTR's revenues increased to $5.1 million, compared to $4.6 million in the same period last year. In peso terms, net revenue in the first quarter of 2005 was 2,408 million pesos, compared to 2,075 million pesos in the prior period. The improvement is largely attributable to the increase in access tariffs approved by the Chilean regulator, Subtel, which took effect on March 1, 2004, and to the deployment of new lines in urban areas of Chile. Operating earnings for CTR totalled $350,000 in the first quarter of fiscal 2005, compared to an operating loss of $259,000 in the same period last year. CTR's net loss for the first quarter of 2005 was $879,000 compared to a net loss of $1.8 million in the corresponding period in 2004. "As previously forecast, we are confident that CTR will be able to continue to realize positive EBITDA, and we expect it will generate approximately $7 million of EBITDA in fiscal 2005," said Mr. Adams, SR Telecom's Senior Vice-President, Finance and Chief Financial Officer. Financial Position SR Telecom's consolidated cash and short-term investment position, including restricted cash, increased to $8.3 million at March 31, 2005, compared to $6.4 million at December 31, 2004. Subsequent to quarter end, SR Telecom's Debenture Holders agreed to provide a five-year secured Credit Facility of up to $50.0 million, subject to execution of final documentation and the fulfillment of certain conditions. An amount of up to $20.0 million will be available to the Corporation as certain approvals are received. The balance will be available over the next three quarters, subject to certain conditions. An initial drawdown of this Credit Facility is anticipated in May 2005. Subject to final documentation and registration of the Credit Facility, the Convertible Debentures, and the CTR loan restructuring, SR Telecom will have sufficient cash and cash equivalents, short-term investments, and cash from operations going forward to satisfy its working capital requirements and continue operations as a going concern for the next twelve months. Recent Events -- On April 22, 2005, a restricted group representing approximately 75% of the outstanding 8.15% debentures, agreed to waive compliance with certain covenants and extended the maturity and interest payment dates to the earlier of June 30, 2005 and the closing of the proposed re-capitalization plan. -- On April 18, 2005, SR Telecom announced that it had entered into an agreement in principle with the Debenture Holders regarding a proposed re-capitalization plan. The terms of the plan include the exchange of the outstanding $71.0 million of principal and approximately $2.9 million of accrued interest into 47,266,512 common shares and approximately $63.9 million of new 10% Convertible Redeemable Secured Debentures, due in 2010. Each $1,000 in principal amount of new Convertible Debentures may be converted at the option of the Debenture Holders into 4,727 common shares, representing a conversion price of $0.21 per common share. The debenture exchange is expected to close in June 2005, subject to the approval of the lenders of CTR. -- On April 18, 2005, SR Telecom also announced that the Debenture Holders agreed to provide a five-year secured Credit Facility of up to $50.0 million, subject to execution of final documentation and the fulfillment of certain conditions. An amount of up to $20.0 million will be available to the Corporation as certain approvals are received. The balance will be available over the next three quarters, subject to certain conditions. An initial drawdown of this Credit Facility is anticipated in May 2005. -- On April 18, 2005, SR Telecom announced the intention to file a preliminary prospectus relating to Rights Offering to existing shareholders. Pursuant to the Rights Offering, the Corporation will offer to existing shareholders the right to subscribe up to $40.0 million of new common shares at a price to be determined, but no less than $0.254 per share. The funds raised from the Rights Offering will be used for working capital and general corporate purposes and the pro-rata redemption of the new Convertible Debentures and the CTR US debt at 95% of their face value. -- On April 18, 2005, SR Telecom announced that it has engaged Mr. William Aziz, Managing Partner of Blue Tree Advisors, as Chief Restructuring Officer on a contract basis to assist in identifying and implementing strategies to capitalize on opportunities for the enhancement of operating performance. -- On April 4, 2005, SR Telecom announced that it had received purchase orders valued at approximately $11 million from Siemens for the ongoing Telefonica TRAC initiative. The new orders are for the WiMAX-ready symmetry(TM) solution, which Telefonica intends to use for the rest of the TRAC deployment. Deliveries are scheduled to commence immediately. -- On March 21, 2005, SR Telecom announced that it had received follow-on purchase orders valued at approximately $4 million of SR500(TM) from Sonatel, the national telecommunications provider in Senegal as part of a universal access program. Deliveries are scheduled to commence in the second quarter of 2005. -- On February 14, 2005, SR Telecom engaged Genuity Capital Markets to act as financial advisor and investment banker to assist the Corporation in its refinancing activities. Since its engagement, Genuity and the Corporation have commenced and are continuing discussions with the Debenture Holders with respect to a proposed re-capitalization of the Corporation. -- On February 14, 2005, SR Telecom reached an agreement with the lenders of Comunicacion y Telefonia Rural S.A. -- CTR, its service provider subsidiary in Chile. Pursuant to the agreement, CTR's lenders have waived compliance with certain financial and operational covenants contained in CTR's loan documents to May 16, 2005. The Corporation and the CTR lenders are in discussions regarding the proposed re-capitalization plan and the restructuring of the debt at CTR. -- On January 26, 2005, SR Telecom announced it had taken steps to reduce its costs in order to align them with the current level of business activity and laid-off an additional 127 employees on a temporary basis. The Corporation expects to recall employees as soon as production returns to normal volumes. -- On January 26, 2005, SR Telecom announced follow-on orders for 15 angel(TM) base stations from Siemens for the ongoing Telefonica TRAC project. Telefonica selected angel over a number of competing technologies for an extensive multi- service Broadband Fixed Wireless Access (BFWA) network, which will ultimately see the deployment of approximately 100,000 lines throughout Spain. The TRAC initiative will deliver high quality voice and high-speed data to suburban and rural areas throughout the country. The entire TRAC project calls for approximately 475 base stations. -- On January 26, 2005, SR Telecom announced that its airstar(TM) product was selected by Teleunit S.P.A, a major Italian telecommunications operator, for the deployment of its BFWA network in the Tuscany region. The total value of the current phase of this project, which marks the first extension of Teleunit's initial roll-out of airstar systems, is approximately $1.2 million. Further expansions of the WLL infrastructure in the Tuscany and Marche regions of Central Italy are expected to take place throughout 2005. -- On January 19, 2005, SR Telecom received new orders valued at approximately $1 million from PT Aplikanusa Lintasarta, the largest data and corporate network communications provider in Indonesia. These add-on orders are for a project initiated in September 2003. Lintasarta has selected airstar wireless broadband solution to provide ATM, frame relay and clear channel services to its customers in the Java, Kalmantan and Sulawesi regions of Indonesia. With these orders, Lintasarta will add airstar base stations and Customer Premises Equipment to its growing network of airstar systems. -- On January 19, 2005, SR Telecom announced the receipt of purchase orders valued at approximately $10 million from a major telecommunications operator in Latin America. These orders are part of a previously announced frame contract under which the operator selected SR500 family of fixed wireless access systems. Deliveries are scheduled to take place in the first half of 2005. SR TELECOM (TSX: SRX, Nasdaq: SRXA) designs, manufactures and deploys versatile, Broadband Fixed Wireless Access solutions. For over two decades, carriers have used SR Telecom's products to provide field-proven data and carrier-class voice services to end- users in both urban and remote areas around the globe. SR Telecom's products have helped to connect millions of people throughout the world. * * * As reported in the Troubled Company Reporter on Jan. 24, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on wireless communications equipment provider, SR Telecom, Inc., to 'CC' from 'CCC'. At the same time, the senior unsecured debt rating on the company's C$71 million debentures due April 22, 2005, was lowered to 'CC' from 'CCC'. In addition, the ratings were placed on CreditWatch with negative implications. A 'CC' rating indicates that the company's obligations are currently highly vulnerable to nonpayment. The ratings actions and CreditWatch placement follow the Montreal, Quebec-based company's announcement concerning its refinancing efforts as well as revised financial guidance. STELCO INC: Prepares Plan Outline for Presentation to Stakeholders ------------------------------------------------------------------ Stelco Inc.'s (TSX:STE) Monitor, Ernst & Young, filed its 29th Report in the matter of the Company's Court-supervised restructuring. The Report notes that the capital expenditure program, a portion of which is currently underway, will take a further 18 to 24 months to implement and Stelco's estimated cost is between $360 and $467 million. In addition, Stelco is continuing its Phase II upgrade at the Lake Erie Hot Strip Mill and has commenced two mini-cogeneration projects, one at Lake Erie and one at Hamilton. The Report notes that Stelco has prepared a plan outline following discussions with various stakeholders and their advisors. The Monitor also reports that the Company will present the plan outline and supporting information immediately to stakeholders on a confidential basis. The Report notes that the views of stakeholders vary widely with respect to the restructuring alternatives for the Company. The Report indicates the Company's view is that a Court-supervised mediation process would be an efficient and effective method of assisting Stelco and its stakeholders in attempting to build a consensus around which a restructuring plan could be formulated. The Report states that the Monitor agrees with this view, and notes that several stakeholders have indicated their support for the concept of a mediation to the Monitor. The Monitor notes that Stelco, with the Monitor's assistance, intends to develop the terms of a mediation process in consultation with its stakeholders. The Report adds that Stelco and various stakeholders have expressed their views to the Monitor on how such a mediation process could be structured. In an Appendix to the Report, the Monitor provides its own views as to the key elements of such a process. Those views contemplate the appointment of an acceptable mediator, following which the mediator, with the assistance of the Monitor and others as required, would determine the nature, format and duration of the process itself. Company Comments The Company said that the proposal to hold discussions on a confidential and mediated basis is designed to engage the skills of an expert to help all stakeholders move towards a common goal. That common goal is to see Stelco emerge from court protection as soon as possible as a long-term viable business enterprise able to satisfy all of its obligations, including its future pension and benefit obligations. Stelco believes that all stakeholders will have a better chance of making progress and achieving results by following the process outlined today. The mediator would be expected to take charge of the process, assisted by the Court-appointed Monitor. Courtney Pratt, Stelco's President and Chief Executive Officer, noted that the plan delivered to stakeholders today will constitute a basis for full and candid discussions with stakeholders. Any agreement resulting from the planned discussion will be made public and will be subject to required stakeholder approval. Courtney Pratt, said, "Stelco's restructuring is now entering its critical stage. The procedures we're proposing will help all parties focus on results. Stakeholders have clearly stated their positions in public. Now it's time to conduct the serious and sincere discussions that have to succeed if we are to achieve a positive outcome. As we've said before, no stakeholder group can get everything it wants. Our goal is to find a middle ground that all groups can support with the common objective of seeing Stelco emerge as a successful competitor - one that is able to compete with the very best steel producers in North America. We already have some of the critical building blocks in place, including a dedicated, highly skilled and committed workforce. "I hope we can secure swift agreement on the way in which these crucial discussions will proceed. We want a process that is fair, reasonable, and that protects the interests of all stakeholders. The plan outline provides a platform for further discussion. I urge all parties to make good use of what may be the last, best opportunity to achieve our objective - a timely exit from the restructuring, and a viable and competitive Stelco going forward." United Steelworkers Comments The United Steelworkers indicated that it views the mediation proposal contained in the Monitor's 29th Report as potentially an important and constructive step forward in Stelco's restructuring. "The Steelworkers agree that the Monitor needs to play a more central role in directing and supervising this restructuring," said Steelworkers' Local 8782 President Bill Ferguson. "We want an effective mediation process to start as soon as possible. We expect talks to start in days, not weeks as real discussions are long overdue. "We further believe that the Monitor's report clearly recognizes that all stakeholders, need to be in a position to present their own realistic and achievable restructuring ideas during the mediation. "All stakeholders need a level playing field," said Scott Duvall, president of the Steelworkers' Local 5328 (Stelwire). "To ensure that the mediation process is effective, our active and retired members need to be able to present their own realistic and achievable restructuring ideas. Critical to this is permitting Tricap to complete its due diligence. The sooner this gets done, the sooner we will be in a position to engage constructively and fully in the mediation." Steelworkers also congratulated Tony Valeri, government house leader and MP for Hamilton East-Stoney Creek for the letter he sent on May 11, 2005, to Stelco CEO Courtney Pratt. "Valeri said it best when he told Courtney Pratt that 'pension issues should take priority over the treatment of the unsecured creditors'," said Steelworkers' National Director Ken Neumann. "He advised Mr. Pratt also that 'any acceptable (restructuring) proposal should include an immediate and substantial down-payment on the pension deficit combined with a clear plan to address the deficit in the medium and long term'. "Steelworkers are pleased that the federal government has confirmed that pensioners should be taken care of before unsecured creditors. This is a very helpful intervention as we begin the mediation process." Stelco, Inc. -- http://www.stelco.ca/-- is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. In early 2004, after a thorough financial and strategic review, Stelco concluded that it faced a serious viability issue. The Corporation incurred significant operating and cash losses in 2003 and believed that it would have exhausted available sources of liquidity before the end of 2004 if it did not obtain legal protection and other benefits provided by a Court-supervised restructuring process. Accordingly, on January 29, 2004, Stelco Inc. and certain related entities filed for protection under the Companies' Creditors Arrangement Act. THOMAS WILSON: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Thomas Christopher & Carolyn S. Wilson 5555 Cliff Wilson Road Corning, Ohio 43730 Tel: (850) 698-9989 Bankruptcy Case No.: 05-58192 Chapter 11 Petition Date: May 12, 2005 Court: Southern District of Ohio (Columbus) Debtor's Counsel: Guy R. Humphrey, Esq. Chester, Willcox and Saxbe, LLC 65 East State Street, Suite 1000 Columbus, Ohio 43215-3413 Tel: (614) 334-6138 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ AARP Credit Card Services Unstated P.O. Box 15153 Wilmington, DE 19886-5153 ABC Concrete, Inc. Unstated Finney Stagnaro Saba & Klusmei 2623 Erie Avenue, Hyde Park Office Cincinnati, OH 45230 American Express Co. Unstated P.O. Box 722901 Houston, TX 77072 Bank One Unstated P.O. Box 9001008 Louisville, KY 40290 Caterpillar Financial Corp. Unstated 2120 West End Avenue P.O. Box 34000 Nashville, TN 37203 Century National Bank Unstated 505 Market Street Zanesville, OH 43701 Charles "Jeff" Booth Unstated Great Eastern Real Estate 3315 Creamery Road Nashport, OH 43830 Chase Bank One Unstated P.O. Box 15153 Wilmington, DE 19886 Discover Card Unstated P.O. Box 15251 Wilmington, DE 19886 Diversified Consultants, Inc. Unstated P.O. Box 551268 Jacksonville, FL 32255 Fifth Third Bank Unstated P.O. Box 740789 Cincinnati, OH 45274 Fin Pan Inc. Unstated 520 Fifth Third Bank 2 South Third Street Hamilton, OH 45011 General Electric Power and Ind. Unstated c/o Joseph M. Ruwe, Esq. 11340 Montgomery Road, Suite 210 Cincinnati, OH 45249 MBNA America Unstated P.O. Box 15102 Wilmington, DE 19886 National City Bank Unstated P.O. Box 856176 Louisville, KY 40285 Ohio CAT, a Division of Ohio Unstated 5252 Walcutt Road Columbus, OH 43228 Platinum Plus for Business Unstated P.O. Box 15469 Wilmington, DE 19886 Sharon A. Kornman Unstated P.O. Box 1041 283 North South Street Wilmington, OH 45177 Shihab & Assocoates Unstated 65 East State Street, Suite 1550 Columbus, OH 43215 USAA Credit Card Services Unstated 10750 McDermott Fwy San Antonio, TX 78288 TOWER AUTOMOTIVE: Can't File Quarterly Report on Time ----------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Christopher T. Hatto, Chief Accounting Officer of Tower Automotive, Inc., discloses that Tower has not had an opportunity to gather all of the information required in the Form 10-Q. As a result, Tower was unable to timely file its Form 10-Q for the quarter ended March 31, 2005, due May 10, 2005, without unreasonable effort and expense. According to Mr. Hatto, the necessary work associated with Tower's Form 10-Q for the quarter ended March 31, 2005, will not be completed within the extended time frame permitted under Rule 12b-25 of the General Rules and Regulations under the Securities Exchange Act of 1934 because: (1) Tower has not yet finalized its Form 10-K for the year ended December 31, 2004; (2) the audit and other necessary work pertaining to the Form 10-K have not been completed; (3) Tower is completing its year-end financial closing; and (4) Tower is still in the process of evaluating its internal controls over financial reporting. Tower intends to file its Form 10-K for the year ended December 31, 2004, and its Form 10-Q for the quarter ended March 31, 2005, as soon as all information necessary to complete the reports is available. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05- 10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOWER AUTOMOTIVE: Wants Until Sept. 30 to File Chapter 11 Plan -------------------------------------------------------------- Section 1121(b) of the Bankruptcy Code provides for an initial 120-day period after the Petition Date during which a debtor has the exclusive right to file a Chapter 11 plan. Section 1121(c)(3) provides that if a debtor proposes a plan within the exclusive filing period, it has a period of 180 days after the Petition Date to obtain acceptances of the plan. The Exclusive Periods are intended to afford Chapter 11 debtors a full and fair opportunity to rehabilitate their business and to negotiate and propose a reorganization plan without the deterioration and disruption of their business that might be caused by the filing of competing reorganization plans by non- debtor parties. By this motion, the Tower Automotive Inc. and its debtor- affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend their exclusive period to: (1) file a plan through September 30, 2005; and (2) solicit and obtain acceptances of that plan through November 29, 2005. Matthew A. Cantor, Esq., at Kirkland & Ellis LLP, in New York, asserts that the Debtors' Exclusive Periods should be extended because: (a) the Debtors' Chapter 11 cases are large and complex and they need more time to craft a plan of reorganization; (b) the Debtors are progressing in their good faith attempts to formulate a viable reorganization plan; (c) the Debtors are generally making required postpetition payments and effectively managing their businesses and properties; and (d) the Debtors are not seeking the extension to delay administration of their cases or to pressure creditors to accept an unsatisfactory reorganization plan. "The size and complexity of these Reorganization Cases supports a finding of cause to extend the Exclusive Periods. There is no question that these Reorganization Cases involving 26 Debtors, approximately 50,000 creditors, assets of approximately $788 million, and liabilities of approximately $1.3 billion constitute a large bankruptcy proceeding," Mr. Cantor says. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05- 10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOWER AUTOMOTIVE: Files Amendments to DIP Financing Agreement ------------------------------------------------------------- As previously reported, Tower Automotive Inc. and its debtor- affiliates asked the U.S. Bankruptcy Court for the Southern District of New York to approve the $725,000,000 of secured postpetition financing with JPMorgan Chase Bank. The Debtors and JPMorgan engaged in good faith and extensive arm's-length negotiations that culminated in an agreement to provide the Debtors with new capital on the terms and subject to the conditions set forth in that certain Revolving Credit, Term Loan and Guaranty Agreement. The Debtors have filed amendments to the Revolving Credit, Term Loan and Guaranty Agreement, dated as of February 2, 2005, among R.J. Tower Corp., as Borrower, Tower Automotive, Inc. and its subsidiaries, as Guarantors, and JPMorgan Chase Bank, N.A., as Agent for the Lenders: (1) The First Amendment changed a number of definitions, modified certain provisions and added a couple of new exhibits; (2) The Second Amendment modified certain voting provisions and the interest rate applicable to Tranche B Loans; and (3) The Third Amendment allowed JPMorgan, as the Original Lender wishes, to assign to certain financial institutions, and each of the lenders, to assume a pro rata portion of JPMorgan's interests, rights and obligations under the Credit Agreement. On April 29, 2005, the Debtors and the DIP Lenders entered into a Fourth Amendment to the DIP Agreement. The Amendment redefines "Global EBITDA" in its entirety as the consolidated net income or net loss of the Global Entities for the period: (a) plus, to the extent deducted in the calculation of consolidated net income, the sum of: (i) depreciation expense; (ii) amortization expense; (iii) other non-cash charges; (iv) consolidated foreign, federal, state and local income taxes expense; (v) gross interest expense for the period less gross interest income for the period; (vi) extraordinary losses; (vii) any restructuring charges; (viii) professional fees and expenses incurred by, and costs under employee retention programs of, the Domestic Entities; (ix) without duplication, "Chapter 11 expenses" or "administrative costs reflecting Chapter 11 expenses" of the Domestic Entities as shown on the Domestic Entities' consolidated statement of income for the period; (x) plus or minus the cumulative effect of any change in accounting principles; and (xi) plus or minus equity in the earnings of Metalsa; (b) less extraordinary gains; (c) plus or minus the amount of cash received or expended in the period in respect of any amount which was taken into account in determining Global EBITDA for the or any prior period; and (d) plus cash dividends and distributions received from Metalsa. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05- 10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) TRUMP HOTELS: Wants to Modify Plan to Fix May 20 Record Date ------------------------------------------------------------ Trump Hotels & Casino Resorts, Inc., and its debtor-affiliates seek Judge Wizmur's permission to modify their confirmed Second Amended Plan of Reorganization to: a. provide that the "Distribution Record Date" and the "New Class A Warrants Record Date" will be the Effective Date, which is expected to be on May 20, 2005; and b. adjust Plan provisions to allow for the Effective Date to occur on or before May 23, 2005. Charles A. Stanziale, Jr., Esq., at Schwartz Tobia Stanziale Sedita & Campisano, in Montclair, New Jersey, relates that at the Plan confirmation hearing, the Official Committee of Equity Security Holders asked the Court to establish a Record Date of March 28, 2005. The trading activity since March 28, 2005, however, seems to suggest possible market confusion regarding the impact of the Record Date on the Plan's distributions for holders of Old THCR Shares, Mr. Stanziale notes. The Debtors tell the U.S. Bankruptcy Court for the District of New Jersey that the Old THCR Shares' trading pattern since March 28 suggests that parties in the market are either: -- confused regarding the intended function of the Plan's Record Date, or -- aware of a mechanism external to the Plan that will cause Plan distributions to be made to holders of Old THCR Shares as of some date subsequent to the Record Date. "Harmonizing the Record Date and the Effective Date will resolve this confusion," Mr. Stanziale contends. "Establishing a Record Date that is the same day as the Effective Date will provide the greatest certainty that the party who holds Old THCR Shares when the Plan distribution process begins will be the same party who receives [the] distributions." The Debtors assure Judge Wizmur that establishing May 20 as the Record Date will: -- result in a distribution that will be most consistent with the trading of Old THCR Shares since March 28, 2005; and -- avoid any unjust enrichment based on the sale of Old THCR Shares since that time. Mr. Stanziale notes that the requested modification to the Plan is technical in nature and the Plan will remain confirmed exactly as it was by the Court's Amended Confirmation Order. As previously reported, the Debtors, Donald J. Trump, the TAC Noteholder Committee and the TCH Noteholder Committee, in a Court-approved stipulation, modified the Plan to allow for the Effective Date to occur "on or before May 13, 2005." At that time, the parties expected the Effective Date to occur on May 12, 2005. To allow for a hearing on the establishment of the May 20 Record Date, the Debtors now expect that the Effective Date will occur on or about May 20, 2005. The parties to the Effective Date Stipulation agreed to a corresponding modification to the Plan, to allow for the Effective Date to occur "on or before May 23, 2005." * * * The Court will hold a telephonic hearing on the Debtors' request on May 18, 2005, at 2:00 p.m. Objections must be filed and served by 5:00 p.m. E.D.S.T., on May 17, 2005. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005. TRUMP HOTELS: NJ Sports Authority Says Easement Was Terminated -------------------------------------------------------------- As previously reported in the Troubled Company Reporter on May 3, 2005, Trump Hotels & Casino Resorts, Inc., and its debtor- affiliates sought and obtained an extension, on an interim basis, from the Honorable Judge Wizmur of the U.S. Bankruptcy Court for the District of New Jersey for the deadline by which they must assume, assume and assign, or reject all unexpired nonresidential real property leases through and including May 16, 2005. NJ Sports Authority Responds Through various conveyances, the New Jersey Sports and Exposition Authority and Trump Plaza Associates are parties to a certain lease agreement relating to parking under the West Hall of the historic Atlantic City Convention Center. This lease was originally entered into in connection with the development of a hotel on the World's Fair Site. The NJ Authority and Trump Plaza Associates are also parties to an Easement Agreement, pursuant to which an enclosed loggia was constructed across the front of the East Hall of the historic Atlantic City Convention Center to provide direct enclosed pedestrian access between the Trump Plaza Casino and the World's Fair Casino. Jay Samuels, Esq., at Windels Marx Lane & Mittendorf, LLP, in Princeton, New Jersey, tells the Court that the Debtors listed the World's Fair Parking Lease and the East Hall Loggia Easement, in their Contract or Lease schedule, as executory contracts of Debtor Trump Plaza Associates. Pursuant the Debtors' Amended Disclosure Statement, the World's Fair Parking Lease and the East Hall Loggia Easement are identified as a portion of the rights to be sold under the Debtors' Plan of Reorganization. The NJ Authority believes that the World's Fair Parking Lease cannot be assumed and assigned under the applicable provisions of the Bankruptcy Code when applied to the terms of and parties to the Lease. The NJ Authority reserves all rights to take actions with respect to the current status or termination of the World's Fair Parking Lease. The NJ Authority also asserts that the East Hall Loggia Easement cannot be assumed or rejected by Debtor Trump Plaza Associates. According to Mr. Samuels, Trump Plaza Associates terminated the East Hall Loggia Easement on January 1, 2000. The termination, Mr. Samuels says, did not affect Trump Plaza Associates' obligation to restore the easement area to its original condition. The NJ Authority filed Claim No. 1452 asserting that obligation. The termination however terminated the executory nature of the relationship, Mr. Samuel says. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005. VISTEON CORP.: Hires J.P. Morgan Chase as Financial Advisor ----------------------------------------------------------- Citing unnamed people familiar with the situation as their source, Joann S. Lublin and Joseph B. White at The Wall Street Journal report that Visteon Corporation has hired J.P. Morgan Chase as its financial advisor. On May 11, 2005, Standard & Poor's Rating Services lowered its corporate credit rating on Visteon Corporation to 'B-' from 'B+', reflecting concerns about liquidity and ongoing viability after the company said its cash flow from operations will be insufficient to fund obligations in 2005. The rating remains on CreditWatch with developing implications. Also on May 11, 2005, Moody's Investor Services lowered its senior implied and senior unsecured ratings on Visteon to 'B3' from 'B1', and cut the Speculative Grade Liquidity Rating to SGL-4 from SGL-3. Reporting Delays Visteon Corporation (NYSE:VC) said last week that it would delay the filing of its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005. This action is the result of the decision by the Audit Committee of the Board of Directors, as recommended by the company's management, to conduct an independent review of the accounting for certain transactions originating primarily in the company's North American purchasing activity. During the preparation of Visteon's first quarter 2005 Form 10-Q, the company's management identified errors in its accruals for costs principally associated with freight and material surcharges that relate to prior periods. During the course of the company's internal review, allegations of potential improper conduct by a former senior finance employee responsible for the accounting oversight for North American purchasing activities were raised. As a result of these allegations, the Audit Committee intends to engage outside accounting and legal advisors to further investigate these matters. As a result of its internal review, to date, Visteon's management has identified two items which were recorded in the company's first quarter 2005 unaudited financial results as previously reported on April 27, 2005, that relate to prior periods: (a) Approximately $13 million of freight expense payable to third party North American transportation providers for services rendered prior to the end of 2004; and (b) Approximately $18 million of material surcharges payable to North American suppliers of certain raw materials used in the manufacture of the company's products that were incurred prior to the end of 2004. As the Audit Committee's independent investigation is just commencing, Visteon is not able to determine whether these items or any other adjustments that may be identified will require restatement of prior period results or further adjustments to the previously reported first quarter 2005 financial results. Therefore, Visteon is not currently able to determine the effects of all potential adjustments to its results of operations for any particular period, or whether these or other errors will result in the determination that one or more additional material weaknesses in the company's internal control over financial reporting exist for purposes of Section 404 of the Sarbanes-Oxley Act. While the Audit Committee intends to conduct its investigation in an expedient manner, Visteon cannot provide an estimate of when the first quarter 2005 Form 10-Q, or if necessary, any amended SEC filings, will be made. Ford Discussions and Liquidity Visteon has been exploring strategic and structural changes to its business in the United States that would involve restructuring its agreements with Ford. Visteon and Ford have been discussing a concept designed to address operating needs of both companies. Recent discussions with Ford have been constructive and are progressing, Visteon says, and the delay in filing its first quarter 2005 Form 10-Q is not expected to impact these discussions. Absent significant structural changes to Visteon's U.S. business, including an agreement with Ford that will allow the company to achieve a sustainable and competitive business model, Visteon believes that cash flow from operations, including the impact of the Ford funding agreement, will not be sufficient to fund capital spending, debt maturities and other cash obligations in 2005, and, therefore, Visteon will need to incur additional debt. Liquidity from internal or external sources to meet these obligations is dependent on a number of factors, including availability of cash balances and access to borrowing facilities and/or capital markets. Visteon isn't sure the liquidity it will need will be available at the times or in the amounts needed, or on terms and conditions acceptable to Visteon, because of the uncertainty regarding economic and market conditions, as well as the ultimate outcome of our strategic and structural discussions with Ford. At March 31, 2005, Visteon was in compliance with its covenants relating to its existing credit facilities, although given current market conditions and the need to complete strategic and structural discussions with Ford, Visteon says there's no assurance that it will remain in compliance with those covenants in the future, especially during the third quarter which normally requires the use of liquidity resources due to seasonal effects. If a covenant were violated and not cured within 30 days, or otherwise waived, the availability of the company's credit facilities could be withdrawn, and repayment of outstanding borrowings could be accelerated. In this event, Visteon would seek to replace its existing credit facilities with other credit facilities or secured borrowings, although the company cannot provide assurance that sufficient replacement sources would be available. In addition, the company's credit facilities and bond indenture require it to submit interim financial information within prescribed time periods. Although Visteon's failure to file its first quarter 2005 Form 10-Q does not result in immediate non- compliance under such agreements, a significant delay in completing the investigation and submitting its Form 10-Q could result in non-compliance in the future. Exploring Financing Alternatives In light of the upcoming expiration of Visteon's existing 364-day revolving credit facility in June 2005, the company is actively exploring its financing alternatives. Given current market conditions, the company's financial performance and its credit ratings, any financing alternative will likely require significantly more restrictive covenants and collateralization. Visteon's ability to provide lenders with collateral at the times and in amounts needed may be limited by the results, if any, of its negotiations with Ford, restrictive covenants regarding limitations on liens in its indenture and any contractual rights that Ford may successfully assert to offset against payables to Visteon amounts Ford claims are owed to it by Visteon. In addition, the results of any discussions with Ford could significantly impact the carrying value of certain assets and related liabilities that support and are dependent upon Ford's North American business. The 364-Day Revolver VISTEON CORPORATION, as Borrower, is party to a 364-DAY CREDIT AGREEMENT dated as of June 18, 2004, with a Lending Consortium led by JPMORGAN CHASE BANK, as Administrative Agent, and CITIBANK, N.A., as Syndication Agent. The Lenders' aggregate commitments under that facility total $565,000,000. As of December 31, 2004, there were no outstanding borrowings under the 364-day facility. Visteon also has a $775,000,000 five- year revolving credit line in place which expires June 2007. As of December 31, 2004, there were no outstanding borrowings under 5-year facility, although $100 million of obligations under stand- by letters of credit have been issued against the 5-year facility. Visteon is also the borrower under a $250,000,000 delayed-draw term loan expiring in 2007, which is used primarily to finance new construction for the Company's facilities consolidation in Southeast Michigan. As of December 31, 2004, Visteon had borrowed $223 million against the delayed-draw term loan facility. About Visteon Visteon Corporation is a leading full-service supplier that delivers consumer-driven technology solutions to automotive manufacturers worldwide and through multiple channels within the global automotive aftermarket. Visteon has about 70,000 employees and a global delivery system of more than 200 technical, manufacturing, sales and service facilities located in 25 countries. VISTEON CORP.: Michael Johnston Elected as New Board Chairman ------------------------------------------------------------- Michael F. Johnston, 57, president and chief executive officer of Visteon Corporation(NYSE: VC), was elected chairman of the board, effective June 1, 2005, by the Visteon Board of Directors at its regularly scheduled meeting. Johnston's new title will be chairman, chief executive officer and president. Mr. Johnston replaces Chairman Peter J. Pestillo, 67, who will retire effective May 31, 2005, and depart from Visteon's Board of Directors. Mr. Pestillo has served as Visteon's chairman since January 2000. "Mike Johnston is one of the most respected executives in the automotive industry. His leadership, integrity and vision will serve Visteon well as the company transitions itself for long-term success in these most challenging times," said William H. Gray, III, chair of the corporate governance and nominating committee of the Visteon Board of Directors. "We believe Mike's drive to improve operational performance and his focus on customer service will move Visteon forward to future success. We also want to express our appreciation and gratitude to Pete Pestillo for his leadership through the company's early years." Mr. Johnston was named president and CEO of Visteon in July 2004 after serving as president and chief operating officer since he joined Visteon in 2000. Mr. Johnston was elected to the Board of Directors in April 2002. With nearly three decades of experience in the automotive supplier and aerospace industries, Mr. Johnston has extensive expertise in manufacturing, product development, sales and customer relations. He has established a strong track record of delivering on business commitments and improving shareholder value. Prior to joining Visteon in September 2000, Mr. Johnston had been with Johnson Controls Inc. since 1989 and held leadership positions of progressively increased responsibility. About the Company Visteon Corporation is a leading, full-service supplier that delivers consumer-driven technology solutions to automotive manufacturers worldwide and through multiple channels within the global automotive aftermarket. Visteon has about 70,000 employees and a global delivery system of more than 200 technical, manufacturing, sales and service facilities located in 24 countries. WELLMAN INC.: Declining Imports Cue S&P to Hold Rating to B+ ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Wellman Inc. to stable from negative. At the same time, Standard & Poor's affirmed all ratings on the Shrewsbury, New Jersey-based company, including its 'B+' corporate credit rating. "The outlook revision reflects the improvement in operating results over the past year, aided by the continued strong demand for polyethylene terephthalate (PET) products and a favorable supply-demand relationship following significant capacity additions in 2003," said Standard & Poor's credit analyst George Williams. Wellman also has benefited from a reduction in Asian imports. Tight global raw-material markets and higher shipping costs have eroded the Asian raw-material cost advantage, thus improving the competitiveness of North American producers. The combination of robust PET demand and declining imports has pushed the domestic industry operating rates close to full capacity. With limited domestic capacity additions and favorable business conditions expected over the next two years, Wellman should be well positioned to preserve or further strengthen its financial profile. The ratings on Wellman reflect: (1) a below-average business-risk profile that recognizes its sizable positions in the polyester staple fiber and PET segments of the polyester market, offset by inherent industry cyclicality, (2) considerable import pressure from foreign fiber producers, and (3) exposure to volatile raw-material costs. The ratings are supported by: (1) good product demand in the PET segment, (2) satisfactory availability under committed bank facilities, and (3) a manageable debt maturity profile following the company's February 2004 debt refinancing. Wellman, with about $1.4 billion in annual revenues, is a midtier, U.S.-based chemical company and producer of polyester staple fibers primarily for the home textile, fiberfill, and apparel markets. The company also is the second-largest producer of PET resins used in beverage bottles and food containers. Despite Wellman's strong market share, the company lacks the diversity of some of its major competitors and industry peers, which heightens its exposure to industry downturns in both the fibers and PET segments. WESTPOINT STEVENS: Wants to Settle Nan Ya Litigation Claims ----------------------------------------------------------- John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New York, relates that on August 12, 2003, the WestPoint Stevens, Inc. and its debtor-affiliates commenced an action in the United States District Court for the Middle District of Alabama against: -- Nan Ya Plastics Corporation, America, -- Nan Ya Plastics Corporation, -- Robert Bradley Dutton, -- Wellman, Inc., -- Arteva Specialties, S.A.R.L., -- Arteva Services S.A.R.L., -- Troy F. Stanley, Sr., -- DAK Fibers LLC, and -- E.I. DuPont de Nemours and Company. The Action was amended in March 2004 to include certain other defendants. The Debtors alleged in its complaint that the defendants engaged in a conspiracy to fix, raise, maintain or stabilize the price of polyester staple fiber beginning 1999 and continuing until 2001. In January 2004, the Action was transferred to the United States District Court for the Western District of North Carolina, where it was consolidated with the actions of over 30 other parties setting forth similar causes of action. In the interests of reaching a compromise, the Debtors, certain of the other plaintiffs, and the Nan Ya Defendants entered into good faith, arm's-length negotiations to settle the claims arising in the Action and the other actions asserted against the Nan Ya Defendants. The negotiations culminated in a settlement agreement among the parties. The Settlement Agreement provides that the Debtors and the Other Settling Plaintiffs will receive a lump sum settlement payment from the Nan Ya Defendants in a joint settlement fund. In exchange, the Debtors and the Other Settling Plaintiffs agreed to release their claims against the Nan Ya Defendants. The Debtors and the Other Settling Plaintiffs entered into an allocation agreement to provide for the allocation and distribution of the settlement payments. Mr. Rapisardi reports that the outcome of any litigation with the Nan Ya Defendants has been rendered more uncertain due to recent developments. Robert Bradley Dutton, a sales representative of certain of the Nan Ya Defendants, was acquitted of criminal charges relating to the Litigation Claims asserted against the Nan Ya Defendants. Consequently, any eventual recovery associated with the continued pursuit of the Litigation Claims against the Nan Ya Defendants may not necessarily justify the attendant costs and risks associated therewith, Mr. Rapisardi says. The Debtors ask the Court to approve the Settlement Agreement. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) WODO LLC: Wants Exclusive Filing Period Extended Until Aug. 16 -------------------------------------------------------------- Wodo, LLC, asks the U.S. Bankruptcy Court for the Western District of Washington for an extension, through and including Aug. 16, 2005, of the time within which it alone can file a chapter 11 plan. The Debtor also ask the Court for more time to solicit acceptances of that plan from its creditors, through Oct. 15, 2005. The Debtor gives the Court three reasons why its exclusive periods should be extended: a) In working towards reorganization, the Debtor's ongoing discussions with creditors have focused on two primary parties who can influence the most favorable transactions that will determine the framework of a proposed chapter 11 plan, and the negotiations with other major creditors are still continuing; b) The Debtor's chapter 11 case is large and complex, involving a substantial number of parcels of real property facing numerous issues to be addressed necessary for development a proposed chapter 11plan; and c) The requested extension is in the best interest of the Debtor's estate and its creditors and is not an attempt to pressure those creditors into submitting to the Debtor's reorganization demands. Headquartered in Bellingham, Washington, Wodo, LLC, fka Trillium Commons, LLC, is a real estate company. The Company filed for chapter 11 protection on January 18, 2005 (Bankr. W.D. Wash. Case No. 05-10556). Gayle E. Bush, Esq., at Bush Strout & Kornfeld represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $90,380,942 and total debts of $21,451,210. WMG HOLDINGS: IPO Prompts Moody's to Put Positive Outlook --------------------------------------------------------- Moody's Investors Service revised the outlook to positive from negative for WMG Holdings Corp (Warner Music Group parent) and Warner Music Group following the completion of Warner's initial public offering and reported intentions to apply proceeds to debt repayment. Net debt reduction of approximately $325 million as well as expectation for continued improvement in operating results, warrant the change in outlook to positive. Notably, the ratings continue to reflect the strength of the turnaround of the company. Moreover, the decision to forego some of the planned dividend payments in order to enable all of the planned debt reduction tempers some of Moody's concerns regarding the equity sponsor group's willingness to distribute funds to shareholders. However, the ratings also incorporate ongoing volatility in the music sector, uncertainty regarding the sustainability of the cost savings, and expectations for annual dividends of $80 million to shareholders. Ratings affirmed are: -- WMG Holdings * B1 senior implied rating, * Caa2 senior unsecured issuer rating * Caa2 rating on $250 million of senior unsecured floating rate notes (to be withdrawn following repayment) * Caa2 rating on $397 million (face amount) of senior unsecured discount notes * Caa2 rating on $200 million of senior unsecured floating rate PIK notes (to be withdrawn following repayment) -- Warner Music Group * B1 ating on the $250 million senior secured revolving credit facility, * B1 rating on the $1.2 billion senior secured term loan * B3 ratings on the $650 million ($465 US dollar, GBP100 sterling) of senior subordinated notes due 2014. Moody's also assigned a B1 rating to the $250 million add-on to the Warner Music Group senior secured term loan. The rating outlook has been revised to positive from negative. The B1 senior implied rating considers the company's significant financial risk while operating in a challenging, cyclical and seasonal business environment. The music industry faces modest top line growth opportunities as well as both volume and pricing pressure driven by high levels of physical and on-line piracy, maturation of the CD product, price competition, and vulnerability to mass market operators. Warner's ability to de-lever depends on the continued successful execution of management's restructuring. While evidence of progress exists, the company has not established a clear track record that provides firm underpinnings for expectations of sustained growth in the future. The lag in publishing financial reports due to the change in year-end, including a 10-K, adds to the lack of clarity about the company's performance. Warner's attractive asset base, including diverse recordings with a concentration in rock, and copyrights to many timeless, popular songs, however, supports the rating. Warner has a sizable market share as the third largest of four global music operators. Moody's believes the company has potential to generate free cash flow (although modest relative to total debt), given low capital expenditures and attractive cash flow margins. The positive outlook reflects Moody's expectations for continued improvement in margins and consequent reduction in leverage. Warner's ability to perform in line with projections and maintain current operating success, along with evidence of management commitment to limit annual dividends to the proposed $80 million, will drive upward rating momentum. Moody's ability to independently validate the financial performance on a run rate basis is also a prerequisite for positive ratings action. Conversely, greater than expected shareholder rewards, deterioration in operations, or an inability to resolve internal control issues as highlighted in the company's Form S-1, could cause downward pressure. Based in New York, Warner Music Group, is a leading recorded music and music publishing company. XYBERNAUT CORP: Nasdaq Delists Securities Due to Low Stock Price ---------------------------------------------------------------- Xybernaut(R) Corporation (NASDAQ:XYBRE) reported that the Company's securities have been delisted from The Nasdaq Stock Market starting May 13, 2005. On May 11, 2005, Xybernaut Corporation received notice from The Nasdaq Stock Market that the Company's securities would be delisted from the Nasdaq SmallCap Market. As previously disclosed, the Company received notices from Nasdaq of its intent to delist the Company's securities because: (1) the Company's stock price has closed below the minimum $1.00 per share requirement for the stock's continued listing under Market Place Rule 4310(c)(4), (2) the Company failed to file its Annual Report on Form 10-K with Nasdaq and the U.S. Securities and Exchange Commission pursuant to Market Place Rule 4310(c)(14) and (3) Nasdaq has public interest concerns under Market Place Rules 4300 and 4330(a)(3). The Company requested an oral hearing before the Nasdaq Listing Qualifications Panel to review Nasdaq's determination. The hearing before the Panel was held on May 5, 2005. The Panel determined that the continued listing of the Company's common stock on the Nasdaq SmallCap Market would not serve Nasdaq's goals of preserving and strengthening the quality of and public confidence in its market, in addition to the Company not being in a position to provide appropriate disclosure to the investing public within a reasonable period of time, noting the following: -- The lack of reliable financial data available to the public about the Company extends back to the fiscal year ended December 31, 2002; -- The Company cannot predict the amount of time it will take to provide reliable historical or current financial information; -- The Company needs to continue to pursue and hire new auditors; -- The Board of Directors and senior management staff needs to be rebuilt; and -- The Company's cash resources are scarce for these rebuilding efforts. The Company does not presently intend to appeal the decision to delist its securities. The Company's securities are quoted on the Pink Sheets(R) under the symbol "XYBR" and may be accessed under that symbol or "XYBR.PK," depending on the financial site accessed for quotations. The Company cannot provide assurance that its securities will continue to be quoted on the Pink Sheets or in any other market or quotation service. The Company confirmed that it continues to face a severe liquidity crisis and possible insolvency, and as a result, the Company has retained Alfred F. Fasola, a consultant with extensive financial and management restructuring expertise to advise the Company with respect to reducing costs, conserving cash, restructuring and other alternatives to attempt to maximize shareholder value. There can be no assurance that the Company's restructuring efforts will be successful. Currently, the Company has not engaged a new accounting firm to perform auditing services; however, the Audit Committee is considering engaging a new accounting firm to perform auditing services. In the event the Company engages a new accounting firm, the Company intends to instruct such new accounting firm to perform audits of the Company's Annual Reports on Form 10-K for the years ended December 31, 2002, 2003 and 2004 and perform reviews, in accordance with applicable accounting standards, of the interim periods for the quarters ended March 31, 2003, June 30, 2003, September 30, 2003, March 31, 2004, June 30, 2004, September 30, 2004 and March 31, 2005. Upon the conclusion of such audits and reviews, the Company would file, as may be required, any amended Form 10-K and Form 10-Q, and its Annual Report on Form 10-K for the year ended December 31, 2004 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, which have not been filed. At this time, the Company cannot provide assurance that it will engage a new accounting firm, and if so, when such filings will be made. As a result of the foregoing, the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 could not be filed by the prescribed due date without unreasonable effort or expense. About the Company Xybernaut Corporation -- http://www.xybernaut.com/-- provides wearable/mobile computing hardware, software and services, bringing communications and full-function computing power in a hands-free design to people when and where they need it. Headquartered in Fairfax, Virginia, Xybernaut has offices and subsidiaries in Europe (Benelux, Germany, UK) and Asia (Japan, China, Korea). * * * As reported in the Troubled Company Reporter on May 4, 2005, Xybernaut(R) Corporation received an additional letter from the Nasdaq staff indicating that four issues raise significant public interest concerns pursuant to Nasdaq Marketplace Rules 4300 and 4330(a)(3) and are an additional basis for delisting the Company's securities from the Nasdaq SmallCap Market: 1) Investors are currently unable to determine the current or historical financial status of the Company or whether the Company will be able to continue as a going concern. 2) Since the Company currently has no outside auditors, it is impossible to predict when accurate financial statements can be released. 3) Investors currently do not know the complete extent of the Company's internal control failures, or whether appropriate remedial measures have been taken. 4) Neither Edward G. Newman nor Steven S. Newman resigned their Director positions despite a request by the Board that they do so. YUKOS OIL: Taps Alvarez & Marsal as Restructuring Advisor --------------------------------------------------------- As previously reported in the Troubled Company Reporter on February 14, 2005, Yukos Oil Company sought authority from the U.S. Bankruptcy Court for the Southern District of Texas to employ Alvarez & Marsal, LLC, as its restructuring advisor, effective as of the Petition Date. Pursuant to an employment agreement between the parties, Alvarez & Marsal will provide: * assistance with respect to strategic, financial, operational and bankruptcy process management matters relative to the Debtor's Chapter 11 proceeding; * assistance with the development and approval of a Disclosure Statement and Plan of Reorganization; * testimony as may be necessary during the course of the Chapter 11 proceeding and agreed to by Alvarez & Marsal; and * other services as requested or directed by the Debtor and agreed to by Alvarez & Marsal. The Debtor will compensate Alvarez & Marsal for its services based on these hourly rates: Managing Directors $475 - $690 Directors $375 - $510 Associates $275 - $400 Analysts $150 - $300 * * * The Court approved the Debtor's request. 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. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Moody's Credit Trends: Talking Points on Various Issues --------------------------------------------------------- 1. Retail Sales Imply Spending's Respite May Have Been Brief A much thinner-than-anticipated trade gap and unexpectedly brisk retail sales have boosted the likely growth of 2005's real GDP from +3.5% to a revised +3.7%. Regardless of the investment mistakes of hedge funds, the still stunning vigor of consumer spending warns of year-end readings of 4.25% for fed funds and of 5.25% for the 10-year Treasury yield. In terms of their relative importance to the US economy, the American consumer towers over hedge fund managers in the same way that Everest towers above Murray Hill. Apparently, the US economy roared over its latest soft patch. Despite sharply higher oil prices, the average monthly increase of retail sales barely dipped from yearlong 2004's +0.7% to the +0.6% of January-April 2005. 2. Autodealership Sales Break Ranks With Several of the Big Three Do not mistake the difficulties of several of the US' big three automakers with an economy-wide lack of demand. April's autodealership sales were up by +2.5% from March 2005 and soared higher by a patently unsustainable +10.0% from April 2004. In stark contrast to the gloom surrounding certain "fallen angel" downgrades of major motor vehicle manufacturers, the year-over-year increase of autodealership sales rose from yearlong 2004's +3.9% to the +6.6% of 2005-to- date. Prior to April's jump, the annual increase of autodealership sales had sagged from 2004's +6.2% to Q1 2005's +5.4%. 3. Retail Sales Transcend Costlier Energy The recent performance of autodealership sales suggest that record-high prices for energy have yet to hammer consumer spending. Retail sales excluding gas station sales advanced by +1.3% monthly in April. Through the first four months of 2005, the +0.5% average monthly increase of retail sales ex gas station sales nearly matched its +0.6% pace of yearlong 2004. In a damaging blow to the argument that higher energy prices have severely crimped US economic activity, the annual increase of retail sales ex gas station sales rose from 2004's +6.5% to the +6.7% of January-April 2005. 4. Core Retail Sales Outrun 1996-2000's Trend Core retail sales have surprised on the upside thus far in 2005. Our preferred version of core retail sales not only excludes autodealership sales, but also omits the sales of gasoline stations and food stores. April's +1.0% monthly increase left this measure of the underlying pace of US consumer spending growing at +0.6% per month through the first four months of 2005, which matches its robust pace of yearlong 2004. Following yearlong 2004's unsustainably robust annual surge of +8.2%, core retail sales slowed to a better-than- anticipated +7.2% year-over-year increase for January-April 2005. The latter tops its +6.8% average annualized increase of 1996-2000. Also, retail sales ex gas station sales' +6.7% annual increase of 2005's first four months beat its +6.0% average annual increase of 1996-2000, which further implies that consumer spending now grows at an above-trend pace. 5. General Merchandise And Apparel Store Sales Blossom in April One behemoth from the general merchandise store category recently lowered its outlook for the second quarter. Nevertheless, this behemoth may be losing ground to rivals according to April's sharp +1.5% monthly increase by general merchandise store sales, which left this category's sales higher by +7.4% yearly. Although the annual increase of general merchandise store sales slowed from 2004's +6.9% to 2005-to-date's +6.2%, the latter still bettered its +6.0% average annual growth rate of 1996-2000. April's +2.8% monthly jump by apparel store sales might be partly ascribed to a pick up in hiring activity. According to April's +7.9% annual increase, an extended improvement in the pace of hiring will allow 2005's year-over-year increase by apparel store sales to rise above the +5.2% of January-April to at least the +6.1% of yearlong 2004. Apparel store sales grew by +5.0% annually, on average, during 1996-2000. 6. Lumber Price Deflation Curbs Growth Of Building Material Store Sales Sales at both building material stores and furniture and appliance stores should benefit from what has been and what should continue to be a brisk pace for home sales. April's building material store sales advanced by a big +1.2% for the month, but their annual increase slowed from Q1 2005's steep +11.3% to April's +7.4%. Lumber price deflation may explain part of the drop in the annual increase of building material store sales. Our index of lumber product prices was recently down by -38% from a year earlier, which differed radically from the concurrent +31% advance of the industrial metals price index. The year-over- year change of the lumber product price index has plunged from yearlong 2004's +34% surge to the -9% deflation of January- April 2005, which helps to explain why the comparably measured growth of building material store sales slowed from +14.0% to +10.3%, respectively. Building material store sales grew by +7.0% annually, on average, during 1996-2000. Furniture and appliance store sales have yet to benefit as much as has been expected from the extraordinarily rapid pace of home sales. Nevertheless, despite being unchanged in April from the prior month, the average monthly increase of furniture and appliance store sales rose from 2004's +0.3% to the +0.6% of 2005-to-date. Still, the annual increase of furniture and appliance store sales sagged from 2004's +6.7% to January-April's +4.9%, both of which lagged the category's +7.0% average annual increase of 1996-2000. 7. Inflation Boosts Drug Store Sales Pharmaceutical prices are growing more rapidly as inferred from the rise by the annual growth rate of drug store sales from yearlong 2004's +5.6% to the +6.1% of 2005-to-date. Drug store sales expanded by +8.9% annually, on average, during 1996-2000, possibly because of a faster rate of growth for pharmaceutical prices. 8. Sales at Restaurants And Non-Stores Top Trend Although the annual increase of bar and restaurant sales slowed from yearlong 2004's +8.4% to the +6.9% of 2005-to- date, hotel occupancy rates apparently remain comparatively high. Restaurant sales still expand at a pace that well exceeds their +5.5% average annual growth rate of 1996-2000. A possible proxy for internet retailing -- nonstore sales -- still grow at a breakneck pace. The +12.8% annual advance of non-store sales for January-April 2005 was only marginally lower than 2004's blistering 13.2% pace, both of which bettered 1996-2000's economy-leading average annualized increase of +11.8%. 9. Unemployment Rate's Slide Should Continue Initial state unemployment claims rose for the week of May 7, but the 4-week moving average of jobless claims fell by -4% form the 4-weeks-ended April 9th and was down by -5% from a year earlier. The latest 4 week average of first-time jobless claims trailed its average of the previous 13 weeks by merely -0.1%. Although the shrinkage of jobless claims has petered-out, they remain at levels that are consistent with the creation of at least +225,000 new jobs per month. April's deeper -13.0% year-over-year decline in the number of people collecting state unemployment benefits versus the shallower -5.9% yearly drop in the number of unemployed favors further declines by both joblessness and the unemployment rate. In a manner that should support at least a +6% annual increase by 2005's retail sales, the unemployment rate ought to decline from April's 5.2% to 4.9% by year's end. 10. Credit Risk Premia Were Wider From July 1998 To September 2003 The problems of corporate credit appear to be highly concentrated among companies from the US' motor vehicle and parts industry. Although one investment-grade index of credit default swap spreads has risen from February 28, 2005's record low 23 basis points to the 64 points of May 11th, the latter still trails its 88 basis points mean of 2003, as well as its even higher 173 basis points average of April-December 2002. The yield spread over Treasuries of the speculative-grade composite widened from May 10th's 418 to May 11th's 426 basis points, which was up from the 275 points prior to the mid- March release of GM's downwardly revised outlook. The latest speculative-grade spread tops each of its previous monthly averages going back to the 441 points of November 2003. However, this latest measure of high-yield credit risk still lags its 615 point average of 2003, as well as each annual average covering the span 1998-2002. In reaction to the financial crises of the summer and fall of 1998, the speculative-grade yield spread widened from June 1998's 335 basis points to the 452 points of December 1998. The latter credit risk premium might yet be realized fairly soon. Even before mid-March's enhanced likelihood of a swelling of the high-yield universe by mega fallen-angel downgrades, the speculative-grade corporate bond market was arguably overpriced. One huge difference between today's high-yield market and that of 1998 is that upgrades' share of US high yield credit rating revisions is unlikely to mimic its plunge from the 61% of Q4 1997 to the 23% of Q4 1998. Thus far, the dip in the high-yield upgrade ratio has been quite limited -- from Q2 2004's 56% to the 52% of Q2-2005-to-date. Both profitability and profit margins, as well as other aggregate measures of corporate debt repayment capacity are holding up better today than in 1998. Downgrades have yet to soar relative to upgrades in a manner that might otherwise indicate the end of a credit cycle upturn. * BOND PRICING: For the week of May 9 - May 13, 2005 ---------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- AAIPharma Inc. 11.000% 04/01/10 45 ABC Rail Product 10.500% 01/15/04 0 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 73 Aetna Industries 11.875% 10/01/06 7 Allegiance Tel. 11.750% 02/15/08 25 Allied Holdings 8.625% 10/01/07 52 Amer. & Foreign Power 5.000% 03/01/30 74 Amer. Color Graph. 10.000% 06/15/10 66 Amer. Plumbing 11.625% 10/15/08 14 Amer. Restaurant 11.500% 11/01/06 60 Amer. Tissue Inc. 12.500% 07/15/06 2 American Airline 7.377% 05/23/19 66 American Airline 7.379% 05/23/16 65 American Airline 8.839% 01/02/17 74 American Airline 8.800% 09/16/15 74 American Airline 10.180% 01/02/13 69 American Airline 10.190% 05/26/16 73 American Airline 10.600% 03/04/09 66 American Airline 10.680% 03/04/13 65 AMR Corp. 4.500% 02/15/24 71 AMR Corp. 9.200% 01/30/12 70 AMR Corp. 9.750% 08/15/21 61 AMR Corp. 9.800% 10/01/21 67 AMR Corp. 9.880% 06/15/20 68 AMR Corp. 10.000% 04/15/21 66 AMR Corp. 10.125% 06/01/21 68 AMR Corp. 10.150% 05/15/20 60 AMR Corp. 10.200% 03/15/20 60 AMR Corp. 10.290% 03/08/21 63 AMR Corp. 10.400% 03/15/11 62 AMR Corp. 10.450% 11/15/11 63 Anadigics 5.000% 10/15/09 69 Apple South Inc. 9.750% 06/01/06 20 AT Home Corp. 0.525% 12/28/18 22 AT Home Corp. 4.750% 12/15/06 30 ATA Holdings 12.125% 06/15/10 45 ATA Holdings 13.000% 02/01/09 45 Atlantic Coast 6.000% 02/15/34 16 Atlas Air Inc. 8.770% 01/02/11 29 Atlas Air Inc. 9.702% 01/02/08 51 B&G Foods Holding 12.000% 10/30/16 8 Bank New England 8.750% 04/01/99 10 Bank New England 9.500% 02/15/96 8 BBN Corp. 6.000% 04/01/12 0 Bearingpoint Inc. 2.750% 12/15/24 71 Bethlehem Steel 10.375% 09/01/03 0 Broadband Tech. 5.000% 05/15/01 0 Budget Group Inc. 9.125% 04/01/06 0 Burlington Northern 3.200% 01/01/45 60 Calpine Corp. 4.000% 12/26/06 73 Calpine Corp. 4.750% 11/15/23 51 Calpine Corp. 7.625% 04/15/06 74 Calpine Corp. 7.750% 04/15/09 54 Calpine Corp. 7.875% 04/01/08 56 Calpine Corp. 8.500% 07/15/10 72 Calpine Corp. 8.500% 02/15/11 53 Calpine Corp. 8.625% 08/15/10 53 Calpine Corp. 8.750% 07/15/07 65 Calpine Corp. 8.750% 07/15/13 70 Calpine Corp. 9.875% 12/01/11 72 Charter Comm Hld. 8.625% 04/01/09 71 Charter Comm Hld. 9.625% 11/15/09 72 Charter Comm Hld. 10.000% 04/01/09 74 Charter Comm Hld. 10.000% 05/15/11 69 Charter Comm Hld. 10.250% 01/15/10 73 Charter Comm Hld. 10.750% 10/01/09 75 Charter Comm Hld. 11.125% 01/15/11 73 Chic East ILL RR 5.000% 01/01/54 55 Citadel Broadcas 1.875% 02/15/11 73 Coeur D'Alene 1.250% 01/15/24 69 Collins & Aikman 10.750% 12/31/11 69 Comcast Corp. 2.000% 10/15/29 43 Comdisco Inc. 7.230% 08/16/01 0 Comprehens Care 7.500% 04/15/10 0 Cone Mills Corp. 8.125% 03/15/05 10 Continental Airlines 7.461% 04/01/13 72 Continental Airlines 8.312% 04/02/11 72 Corecomm Limited 6.000% 10/01/06 5 Covad Communication 3.000% 03/15/24 73 Cray Research 6.125% 02/01/11 61 Curagen Corp. 4.000% 02/15/11 54 Curative Health 10.750% 05/01/11 70 Delta Air Lines 2.875% 02/18/24 31 Delta Air Lines 7.299% 09/18/06 58 Delta Air Lines 7.700% 12/15/05 72 Delta Air Lines 7.711% 09/18/11 60 Delta Air Lines 7.779% 11/18/05 71 Delta Air Lines 7.779% 01/02/12 50 Delta Air Lines 7.900% 12/15/09 30 Delta Air Lines 7.920% 11/18/10 44 Delta Air Lines 8.000% 06/03/23 29 Delta Air Lines 8.270% 09/23/07 70 Delta Air Lines 8.300% 12/15/29 23 Delta Air Lines 8.540% 01/02/07 32 Delta Air Lines 8.540% 01/02/07 45 Delta Air Lines 9.000% 05/15/16 21 Delta Air Lines 9.200% 09/23/14 42 Delta Air Lines 9.250% 03/15/22 21 Delta Air Lines 9.300% 01/02/10 68 Delta Air Lines 9.300% 01/02/10 63 Delta Air Lines 9.300% 01/02/11 32 Delta Air Lines 9.320% 01/02/09 42 Delta Air Lines 9.750% 05/15/21 21 Delta Air Lines 9.875% 04/30/08 73 Delta Air Lines 10.000% 08/15/08 32 Delta Air Lines 10.000% 06/01/10 36 Delta Air Lines 10.000% 06/18/13 50 Delta Air Lines 10.060% 01/02/16 50 Delta Air Lines 10.125% 05/15/10 33 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 26 Delta Air Lines 10.375% 12/15/22 28 Delta Air Lines 10.500% 04/30/16 45 Delta Air Lines 10.790% 03/26/14 29 Delta Air Lines 10.790% 03/26/14 37 Delphi Auto System 6.500% 05/01/09 74 Delphi Auto System 7.125% 05/01/29 68 Delphi Corp. 6.500% 08/15/13 71 Delphi Trust II 6.197% 11/15/33 43 Diva Systems 12.625% 03/01/08 0 Duane Reade Inc. 9.750% 08/01/11 74 Dura Operating 9.000% 05/01/09 75 Dura Operating 9.000% 05/01/09 70 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 Eagle-Picher Inc. 9.750% 09/01/13 64 Eagle Food Center 11.000% 04/15/05 0 Edison Brothers 11.000% 09/26/07 0 Encompass Service 10.500% 05/01/09 0 Enron Corp. 6.400% 07/15/06 32 Enron Corp. 6.500% 08/01/02 33 Enron Corp. 6.625% 10/15/03 33 Enron Corp. 6.625% 11/15/05 33 Enron Corp. 6.725% 11/17/08 31 Enron Corp. 6.750% 09/01/04 31 Enron Corp. 6.750% 09/15/04 30 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 30 Enron Corp. 6.950% 07/15/28 33 Enron Corp. 7.000% 08/15/23 33 Enron Corp. 7.125% 05/15/07 34 Enron Corp. 7.375% 05/15/19 33 Enron Corp. 7.625% 09/10/04 29 Enron Corp. 7.875% 06/15/03 30 Enron Corp. 8.375% 05/23/05 33 Enron Corp. 9.125% 04/01/03 33 Enron Corp. 9.875% 06/15/03 11 Epic Resorts LLC 13.000% 06/15/05 2 Evergreen Intl. Avi. 12.000% 05/15/10 72 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 Fedders North Am. 9.875% 03/01/14 64 Federal-Mogul Co. 7.500% 01/15/09 22 Federal-Mogul Co. 8.120% 03/06/03 28 Federal-Mogul Co. 8.160% 03/06/03 27 Federal-Mogul Co. 8.250% 03/03/05 28 Federal-Mogul Co. 8.370% 11/15/01 28 Federal-Mogul Co. 8.370% 11/15/01 24 Federal-Mogul Co. 8.460% 10/27/02 28 Federal-Mogul Co. 8.800% 04/15/07 24 Fibermark Inc. 10.750% 04/15/11 73 Finova Group 7.500% 11/15/09 43 Firstworld Comm 13.000% 04/15/08 1 Fleming Cos. Inc. 10.125% 04/01/08 3 Flooring America 9.250% 10/15/07 0 Foamex L.P. 9.875% 06/15/07 53 Ford Motor Co 6.625% 02/15/28 70 Ford Motor Co 7.125% 11/15/25 73 Ford Motor Co 7.400% 11/01/46 70 Ford Motor Co 7.700% 05/15/97 69 Ford Motor Co 7.750% 06/15/43 71 Ford Motor Credit 5.150% 08/20/09 70 Ford Motor Credit 5.250% 03/21/12 74 Ford Motor Credit 5.750% 01/21/14 75 Ford Motor Credit 6.000% 01/21/14 75 Ford Motor Credit 6.000% 11/20/14 75 Ford Motor Credit 6.000% 01/20/15 74 Ford Motor Credit 6.000% 02/20/15 75 Ford Motor Credit 6.050% 12/22/14 73 Ford Motor Credit 6.150% 12/22/14 72 Ford Motor Credit 6.250% 12/20/13 74 Ford Motor Credit 6.250% 03/20/15 74 Ford Motor Credit 7.500% 08/20/32 75 Fruit of the Loom 8.875% 04/15/06 0 General Motors 7.400% 09/01/25 69 General Motors 8.100% 06/15/24 71 General Motors 8.250% 07/15/23 74 General Motors 8.375% 07/15/33 74 General Nutrition 8.500% 12/01/10 74 GMAC 5.250% 01/15/14 72 GMAC 5.350% 01/15/14 70 GMAC 5.700% 06/15/13 75 GMAC 5.700% 12/15/13 74 GMAC 5.750% 01/15/14 73 GMAC 5.850% 06/15/13 73 GMAC 5.900% 01/15/19 64 GMAC 5.900% 01/15/19 66 GMAC 5.900% 02/15/19 64 GMAC 5.900% 10/15/19 64 GMAC 6.000% 11/15/13 73 GMAC 6.000% 12/15/13 75 GMAC 6.000% 02/15/19 69 GMAC 6.000% 02/15/19 69 GMAC 6.000% 02/15/19 65 GMAC 6.000% 03/15/19 68 GMAC 6.000% 03/15/19 65 GMAC 6.000% 03/15/19 66 GMAC 6.000% 03/15/19 60 GMAC 6.000% 03/15/19 66 GMAC 6.000% 04/15/19 65 GMAC 6.000% 09/15/19 68 GMAC 6.000% 09/15/19 66 GMAC 6.050% 08/15/19 67 GMAC 6.050% 08/15/19 60 GMAC 6.050% 10/15/19 66 GMAC 6.100% 09/15/19 67 GMAC 6.125% 10/15/19 69 GMAC 6.150% 08/15/19 67 GMAC 6.150% 09/15/19 66 GMAC 6.150% 10/15/19 66 GMAC 6.200% 04/15/19 70 GMAC 6.250% 12/15/18 68 GMAC 6.250% 01/15/19 66 GMAC 6.250% 04/15/19 65 GMAC 6.250% 05/15/19 68 GMAC 6.250% 07/15/19 68 GMAC 6.300% 08/15/19 66 GMAC 6.300% 08/15/19 72 GMAC 6.350% 04/15/19 67 GMAC 6.350% 07/15/19 67 GMAC 6.350% 07/15/19 70 GMAC 6.400% 12/15/18 72 GMAC 6.400% 11/15/19 68 GMAC 6.400% 11/15/19 67 GMAC 6.500% 06/15/18 70 GMAC 6.500% 11/15/18 69 GMAC 6.500% 12/15/18 70 GMAC 6.500% 12/15/18 71 GMAC 6.500% 05/15/19 70 GMAC 6.550% 12/15/19 66 GMAC 6.600% 08/15/16 75 GMAC 6.600% 05/15/18 69 GMAC 6.600% 06/15/19 71 GMAC 6.650% 06/15/18 74 GMAC 6.650% 10/15/18 74 GMAC 6.650% 10/15/18 75 GMAC 6.650% 02/15/20 74 GMAC 6.700% 08/15/16 73 GMAC 6.700% 06/15/18 72 GMAC 6.700% 11/15/18 70 GMAC 6.700% 06/15/19 70 GMAC 6.700% 12/15/19 64 GMAC 6.750% 06/15/17 75 GMAC 6.750% 03/15/18 72 GMAC 6.750% 07/15/18 70 GMAC 6.750% 09/15/18 74 GMAC 6.750% 10/15/18 71 GMAC 6.750% 11/15/18 70 GMAC 6.750% 05/15/19 70 GMAC 6.750% 05/15/19 72 GMAC 6.750% 06/15/19 70 GMAC 6.750% 06/15/19 73 GMAC 6.800% 09/15/18 72 GMAC 6.800% 10/15/18 75 GMAC 6.875% 07/15/18 67 GMAC 6.900% 06/15/17 70 GMAC 6.900% 07/15/18 70 GMAC 6.900% 08/15/18 72 GMAC 7.000% 06/15/16 74 GMAC 7.000% 06/15/16 74 GMAC 7.000% 07/15/16 74 GMAC 7.000% 06/15/17 73 GMAC 7.000% 07/15/17 72 GMAC 7.000% 02/15/18 72 GMAC 7.000% 02/15/18 73 GMAC 7.000% 02/15/18 72 GMAC 7.000% 03/15/18 74 GMAC 7.000% 05/15/18 73 GMAC 7.000% 05/15/18 73 GMAC 7.000% 08/15/18 72 GMAC 7.000% 09/15/18 72 GMAC 7.000% 02/15/21 72 GMAC 7.000% 09/15/21 69 GMAC 7.000% 09/15/21 69 GMAC 7.000% 06/15/22 72 GMAC 7.000% 11/15/23 71 GMAC 7.000% 11/15/24 66 GMAC 7.000% 11/15/24 66 GMAC 7.000% 11/15/24 69 GMAC 7.050% 05/15/17 74 GMAC 7.050% 03/15/18 73 GMAC 7.050% 04/15/18 72 GMAC 7.150% 09/15/18 73 GMAC 7.150% 01/15/25 71 GMAC 7.150% 03/15/25 70 GMAC 7.250% 05/15/17 74 GMAC 7.250% 09/15/17 74 GMAC 7.250% 01/15/18 74 GMAC 7.250% 04/15/18 74 GMAC 7.250% 08/15/18 75 GMAC 7.250% 01/15/25 74 GMAC 7.250% 02/15/25 69 GMAC 7.250% 03/15/25 74 GMAC 7.300% 01/15/18 75 GMAC 7.375% 04/15/18 74 GMAC 7.400% 12/15/17 72 GMAC 7.500% 11/15/17 73 GMAC 7.500% 03/15/25 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 65 GST Network Funding 10.500% 05/01/08 0 Guilford Pharma 5.000% 07/01/08 74 Gulf States STL 13.500% 04/15/03 0 HNG Internorth. 9.625% 03/15/06 31 Icon Health & Fit 11.250% 04/01/12 71 Icos Corp. 2.000% 07/01/23 72 Idine Rewards 3.250% 10/15/23 75 Imperial Credit 9.875% 01/15/07 0 Impsat Fiber 6.000% 03/15/11 74 Inland Fiber 9.625% 11/15/07 50 Intermet Corp. 9.750% 06/15/09 51 Intermune Inc. 0.250% 03/01/11 70 Iridium LLC/CAP 10.875% 07/15/05 15 Iridium LLC/CAP 11.250% 07/15/05 16 Iridium LLC/CAP 13.000% 07/15/05 16 Iridium LLC/CAP 14.000% 07/15/05 15 Isis Pharmaceutical 5.500% 05/01/09 75 Jordan Industries 10.375% 08/01/07 50 Kaiser Aluminum & Chem. 12.750% 02/01/03 10 Key Plastics 10.250% 03/15/07 1 Kmart Corp. 6.000% 01/01/08 12 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 67 Lehman Bros. Holding 6.000% 05/25/05 63 Lehman Bros. Holding 7.500% 09/03/05 37 Level 3 Comm. Inc. 2.875% 07/15/10 45 Level 3 Comm. Inc. 6.000% 09/15/09 47 Level 3 Comm. Inc. 6.000% 03/15/10 41 Liberty Media 3.750% 02/15/30 59 Liberty Media 4.000% 11/15/29 62 Loral Cyberstar 10.000% 07/15/06 75 Lukens Inc. 7.625% 08/01/04 0 LTV Corp. 8.200% 09/15/07 0 MacSaver Financial 7.875% 08/01/03 5 Metamor Worldwide 2.940% 08/15/04 1 Mirant Corp. 2.500% 06/15/21 72 Mirant Corp. 5.750% 07/15/07 75 Mississippi Chem. 7.250% 11/15/17 4 Molten Metal Tec 5.500% 05/01/06 0 Muzak LLC 9.875% 03/15/09 48 MSX Intl. Inc. 11.375% 01/15/08 74 New Orl Grt N RR 5.000% 07/01/32 74 North Atl Trading 9.250% 03/01/12 72 Northern Pacific Railway 3.000% 01/01/47 60 Northwest Airlines 7.875% 03/15/08 47 Northwest Airlines 8.070% 01/02/15 54 Northwest Airlines 8.130% 02/01/14 51 Northwest Airlines 8.700% 03/15/07 49 Northwest Airlines 9.875% 06/01/06 71 Northwest Airlines 9.875% 03/15/07 60 Northwest Airlines 10.000% 02/01/09 46 Northwest Steel & Wir. 9.500% 06/15/01 0 Nutritional Src. 10.125% 08/01/09 74 NWA Trust 11.300% 12/21/12 67 Oakwood Homes 7.875% 03/01/04 17 Oakwood Homes 8.125% 03/01/09 24 Oscient Pharm 3.500% 04/15/11 74 O'Sullivan Ind. 13.375% 10/15/09 35 Orion Network 11.250% 01/15/07 50 Orion Network 12.500% 01/15/07 54 Outboard Marine 9.125% 04/15/17 1 Owens Corning Fiber 8.875% 06/01/02 75 Owens Corning Fiber 9.375% 06/01/12 65 Pegasus Satellite 9.625% 10/15/05 58 Pegasus Satellite 9.750% 12/01/06 60 Pegasus Satellite 12.375% 08/01/06 56 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings Inc. 9.875% 06/15/08 62 Penn Traffic Co. 11.000% 06/29/09 46 Pharm Resources 2.875% 09/30/10 74 Piedmont Aviat 9.900% 11/08/06 8 Piedmont Aviat 10.000% 11/08/12 0 Piedmont Aviat 10.250% 01/15/07 23 Pixelworks Inc. 1.750% 05/15/24 66 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 7.250% 01/15/07 1 Polaroid Corp. 11.500% 02/15/06 0 Portola Packaging 8.250% 02/01/12 68 Primedex Health 11.500% 06/30/08 45 Primus Telecom 3.750% 09/15/10 27 Primus Telecom 5.750% 02/15/07 32 Primus Telecom 8.000% 01/15/14 53 Primus Telecom 12.750% 10/15/09 46 Psinet Inc 10.000% 02/15/05 0 Psinet Inc 11.500% 11/01/08 0 Railworks Corp. 11.500% 04/15/09 0 Radnor Holdings 11.000% 03/15/10 70 Read-Rite Corp. 6.500% 09/01/04 56 Reliance Group Holdings 9.000% 11/15/00 22 Reliance Group Holdings 9.750% 11/15/03 2 RJ Tower Corp. 12.000% 06/01/13 54 Salton Inc. 10.750% 12/15/05 62 Salton Inc. 12.250% 04/15/08 55 Scotia Pac Co. 7.110% 01/20/14 72 Solectron Corp. 0.500% 02/15/34 65 Specialty Paperb. 9.375% 10/15/06 65 Startec Global 12.000% 05/15/08 0 Syratech Corp. 11.000% 04/15/07 35 Teligent Inc. 11.500% 03/01/08 1 Tops Appliance 6.500% 11/30/03 0 Tower Automotive 5.750% 05/15/24 20 Trans Mfg Oper 11.250% 05/01/09 50 Triton PCS Inc. 8.750% 11/15/11 63 Triton PCS Inc. 9.375% 02/01/11 64 Tropical SportsW 11.000% 06/15/08 35 Twin Labs Inc. 10.250% 05/15/06 17 United Air Lines 6.831% 09/01/08 15 United Air Lines 6.932% 09/01/11 53 United Air Lines 7.270% 01/30/13 41 United Air Lines 7.811% 10/01/09 41 United Air Lines 8.030% 07/01/11 15 United Air Lines 8.250% 04/26/08 20 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 9.020% 04/19/12 32 United Air Lines 9.060% 09/26/14 46 United Air Lines 9.125% 01/15/12 6 United Air Lines 9.300% 03/22/08 38 United Air Lines 9.350% 04/07/16 48 United Air Lines 9.750% 08/15/21 8 United Air Lines 10.110% 01/05/06 41 United Air Lines 10.110% 02/19/06 36 United Air Lines 10.125% 03/22/15 45 United Air Lines 10.250% 07/15/21 8 United Air Lines 10.360% 11/13/12 54 United Air Lines 10.360% 11/20/12 54 United Air Lines 10.670% 05/01/04 7 United Air Lines 11.210% 05/01/14 8 Univ. Health Services 0.426% 06/23/20 67 United Homes Inc. 11.000% 03/15/05 0 Uromed Corp. 6.000% 10/15/03 0 US Air Inc. 9.330% 01/01/06 42 US Air Inc. 10.250% 01/15/07 4 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 Airways Inc. 7.960% 01/20/18 48 US West Cap. Fdg 6.875% 07/15/28 73 Utstarcom 0.875% 03/01/08 61 Venture Hldgs 9.500% 07/01/05 1 Visteon Corp. 7.000% 03/10/14 65 WCI Steel Inc. 10.000% 12/01/04 70 Werner Holdings 10.000% 11/15/07 74 Westpoint Stevens 7.875% 06/15/05 0 Westpoint Stevens 7.875% 06/15/08 0 Winn-Dixie Store 8.875% 04/01/08 50 Winstar Comm 14.000% 10/15/05 1 Winstar Comm Inc. 10.000% 03/15/08 0 Winstar Comm Inc. 12.500% 04/15/08 0 World Access Inc. 4.500% 10/01/02 7 World Access Inc. 13.250% 01/15/08 1 Xerox Corp. 0.570% 04/21/18 47 ********* 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, Lucilo Pinili, Jr., 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 ***