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/raid1/www/Hosts/bankrupt/TCR_Public/050530.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 30, 2005, Vol. 9, No. 126 Headlines ADELPHIA COMMS: Wants to Terminate Long Distance Service Business ADELPHIA COMMS: Board Approves Amendments to Code of Ethics ADVOCAT INC: Lenders Extend $24M Loan Maturity Until April 2006 AEROSPACE CONSULTING: Case Summary & 16 Largest Creditors ALIQUIPPA COMMUNITY: Gets Exit Financing from Bridge Healthcare AMERICAN SAFETY: Poor Performance Prompts S&P to Lower Ratings AVALON DIGITAL: Delays Form 10-Q Filing to Finalize Financials BLACK DIAMOND: Moody's Puts $35 MM Class E Rate Notes on Ba2 BMJ HOLDINGS: Case Summary & 18 Largest Unsecured Creditors BROADCAST INT'L: Insufficient Cash Flow Spurs Going Concern Doubt CATHOLIC CHURCH: Tucson Taps Haralson Miller as Insurance Counsel CATHOLIC CHURCH: Tucson Disclosure Hearing Set for June 1 CELLSTAR CORP: Asks Wells Fargo to Waive Reporting Delay Again CEMEX S.A.: Moody's Revises Ba1 Ratings Outlook to Positive CHASE FUNDING: Fitch Affirms B Rating on Class B-5 Mortgage Certs. CITIZENS COMM: Fitch Says Stock Repurchase Won't Affect Ratings CONSUMER DIRECT: Recurring Losses Trigger Going Concern Doubt COSINE COMMS: Restructuring Activities Spur Going Concern Doubt CURATIVE HEALTH: Moody's Junks $185M Senior Unsecured Notes DATALOGIC INT'L: Kabani Issues Going Concern Opinion in Form 10-K DIVERSIFIED CORPORATE: Delays 10-Q Filing to Complete Review DYKESWILL LTD: Smith & Henault to Serve as Accountants ECOLOCLEAN INDUSTRIES: Losses & Deficits Spur Going Concern Doubt ELANTIC TELECOM: Six Creditors Transfer $2,024,953 in Claims ELDON R. HOFFMAN: Section 341(a) Meeting Slated for June 17 EYE CARE: Moody's Assigns SGL-2 Affecting B2 Sr. Implied Rating FOOTSTAR: Must Vacate Stores Converting to Sears Essential Format FOOTSTAR: Wants to Depose Two Former Kmart Employees GE-RAY FABRICS: Employs Avrom R. Vann as Bankruptcy Counsel GINGISS GROUP: Fox Rothschild Approved as Ch. 7 Trustee's Counsel GINGISS GROUP: Ch. 7 Trustee Taps Giuliano Miller as Accountants GMAC: Fitch Affirms CMBS Transactions Despite GM's Downgrade GMAC AUTO: Fitch Says GM's Downgrade Won't Affect ABS Transactions GMAC COMMERCIAL: Fitch Downgrades Corporate Credit Rating to BB+ GRUPPO COVARRA SA: Section 304 Petition Summary HEALTHGATE DATA: Deregisters Stock & Suspends SEC Reporting HEALTHGATE DATA: Auditors Express Going Concern Doubt J/Z CBO: Fitch Upgrades $19.4 Mil. Class C Fixed-Rate Notes to B- JACUZZI BRANDS: Unclear Strategy Prompts S&P to Watch Ratings JILLIAN'S ENT: Wants Until Sept. 30 to Remove Civil Actions KB HOME: Fitch Rates $300 Million 6.25% Unsecured Notes at BB+ LARRY BJURLIN: Wants Serena W. Bjurlin to Make Full Disclosure LEAP WIRELESS: Lenders Waive Credit Pact Defaults Until June 15 LEXINGTON RESOURCES: Losses & Deficits Spur Going Concern Doubt LIBERTY GROUP: Moody's Raises $330M Sr. Sec. Loan Rating to B1 LOCATEPLUS HOLDINGS: Auditors Express Going Concern Doubt in 10-K LONG BEACH: Fitch Lowers Seven Mortgage Issues to C MERIDIAN AUTOMOTIVE: Proposes Reclamation Claim Procedures MERIDIAN AUTOMOTIVE: Hires Gavin Anderson as PR Consultant MERIDIAN AUTOMOTIVE: Can Pay Prepetition Shipping Claims MIRANT CORP: Asks Court to Approve Deerpark Settlement Agreement MIRANT CORP: Court Seals Estimation Motion on Gunderboom Claims MIRANT CORP: Creditors Comm. Comments on Withdrawal of Reference MERRILL LYNCH: Fitch Rates Class B-3 Mortgage Certificates at BB MORGAN STANLEY: Fitch Junks $40.3 Million Mortgage Certificates MTI TECHNOLOGY: April 2 Balance Sheet Upside-Down by $2 Million NANOMAT INC.: Trustee Wants Until Sept. 30 to Decide on Leases NATIONAL GARAGE: Case Summary & 20 Largest Unsecured Creditors NATIONSLINK FUNDING: S&P Holds Ratings on Class E & F Certificates NAUTILUS RMBS: Fitch Puts Double B Rating on Classes CV & CF NETWORK INSTALLATION: March 31 Balance Sheet Upside-Down by $2MM NEW HEIGHTS: Court Delays Entry of Final Decree to Sept. 21 NEXICON INC: Losses & Deficits Trigger Going Concern Doubt NHC COMMS: Apr. 29 Balance Sheet Upside-Down by C$3.5 Million NORVERGENCE: Michigan AG Settles Fraud Claims with Finance Cos. ONE PRICE: Judge Blackshear Converts Case to Chap. 7 Liquidation OPTION ONE: Moody's Reviews Class B Cert. Ba1 Rating & May Upgrade OPTINREALBIG.COM: U.S. Trustee Unable to Form Creditors' Committee PASADENA GATEWAY: Hires Millard Johnson as Special Counsel PENTON MEDIA: Financial Report Filing Cues S&P to Remove Watch PHH MORTGAGE: Fitch Rates $220,373 Private Class B-5 Certs. at B POPE & TALBOT: Moody's Lowers $135M Bond Ratings to B1 from Ba3 RADNOR HOLDINGS: Poor Performance Prompts Moody's to Junk Ratings RAMP CORP: Delays Form 10-Q Filing Following Auditor Resignation ROCK 2001-C1: Moody's Junks $4.54 Million Class N Certificate ROYAL GROUP: Shareholders Approve Single Class of Voting Shares SATELITES MEXICANOS: Evaluates Options After Involuntary Petition SCIENTIFIC LEARNING: Mar. 31 Balance Sheet Upside-Down by $6.6M SMC HOLDINGS: Emerges From Chapter 11 Bankruptcy SOFTBRANDS INC: May Get $12M Distribution from AremisSoft Trust SOUTHAVEN POWER: Gets Interim OK on DIP Loan & Cash Collateral Use SOUTHAVEN POWER: Can Continue Hiring Ordinary Course Professionals STELCO INC: Mediator Agrees Not to Force Union Participation STRUCTURED ASSET: Fitch Rates $4.7 Million Class B1 at BB+ TELENETICS CORP: Executive Changes Delay Financial Report Filing THE MARKET: Committee Taps Winstead Sechrest as Bankruptcy Counsel THE WATCH LTD: Case Summary & 20 Largest Unsecured Creditors TOWER PARK: Unsatisfactory Cash Flow Spurs Going Concern Doubt TRIMAS CORP: Poor Performance Prompts Moody's to Review Ratings TRUMP HOTELS: CNA Insurance Objects to $0 Cure Amounts TRUMP HOTELS: CNA Insurance Wants Admin. Priority Claim Status TUCSON ELECTRICAL: Fitch Upgrades Senior Unsecured Debt to BB UAL CORP: Flight Attendants Want Pension Plan Termination Halted UNITED HOME: Case Summary & 20 Largest Unsecured Creditors UNIVERSAL AUTOMOTIVE: Files Chapter 11 Petition in New Jersey UNIVERSAL AUTOMOTIVE: Case Summary & 55 Largest Unsec. Creditors US AIRWAYS: Court Allows Sabre's $7,131,989 Administrative Claim US AIRWAYS: Asks Court to Allow Amadeus' $1,565,533 Admin. Claim US AIRWAYS: Gets Court Nod to Reject Lease for Tail No. N586US USG CORP: Equity Committee Wants to Continue Securities Trading US WIRELESS: Plan Agent Wants Until Nov. 11 to Object to Claims VIRTRA SYSTEMS: Auditors Express Going Concern Doubt in Form 10-K VISTEON CORPORATION: Moody's Confirms Senior Implied Rating at B3 W.R. GRACE: Court Approves Hatco Settlement & Remediation Deals WCI STEEL: Noteholders File Competing Plan of Reorganization WELLSFORD REAL: Waits for Shareholders to Okay Liquidation Plan WINN-DIXIE: Has Until August 15 to File Notices of Removal WINN-DIXIE: Objects to Old Dixie & Dole PACA Claims WINN-DIXIE: Thrivent Wants to Foreclose Interest In Property XSTREAM BEVERAGE: Auditors Raise Going Concern Doubt * Alvarez & Marsal Hires Patrick McCormick as Managing Director * Alvarez & Marsal Hires Kevin Redmon as Atlanta Senior Director * BOND PRICING: For the week of May 23 - May 27, 2005 ********* ADELPHIA COMMS: Wants to Terminate Long Distance Service Business ----------------------------------------------------------------- Adelphia Communications Corporation seek the Court's permission to terminate their long distance business. The ACOM Debtors currently provide long distance services to around 110,000 subscribers in 27 states throughout the United States. According to Shelley C. Chapman, Esq., at Willkie Farr & Gallagher LLP, in New York, Adelphia Long Distance is not a core segment of the Debtors' operations. Ms. Chapman points out that even if the ACOM Debtors' long distance service is offered in 27 states, around 95% of total long distance revenue is generated in only 15 states. In 2004, ACOM Long Distance had $8.6 million in revenue and about $1 million in earnings before interest, taxes, depreciation, amortization, reorganization expenses and corporate allocations. ACOM Long Distance's financial performance has however been in decline and is expected to continue to decline, Ms. Chapman states. ACOM Long Distance segment is not included in the assets that will be sold to Time Warner NY Cable LLC and Comcast Corporation. The ACOM Debtors believe that continuing the operation of their Long Distance business would be a distraction to management and would divert attention that would be better focused elsewhere as they work to finalize the Time Warner-Comcast Transaction and their Plan of Reorganization. Ms. Chapman relates that in the past several months, the ACOM Debtors contacted several prospective purchasers of Adelphia Long Distance. Of the parties contacted, three executed Non- Disclosure Agreements and requested additional diligence. However, none of the three parties submitted a bid. The lack of interest led the ACOM Debtors to conclude that their only viable option is to terminate the business. Ms. Chapman assures the Court that the costs associated with the Termination are negligible in comparison to the ongoing drain on resources that the business segment imposes on the Debtors' estates. The ACOM Debtors estimate the total cost to carry out the Termination at around $700,000. The ACOM Debtors believe that the Termination is appropriate under the circumstances and should be approved. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMS: Board Approves Amendments to Code of Ethics ----------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Adelphia Communications Corporation said its Board of Directors approved amendments to the company's Code of Business Conduct and Ethics. According to Brad M. Sonnenberg, EVP, general counsel and secretary of ACOM, the changes include the addition of new sections relating to privacy and responsibilities of supervisors and the expansion of provisions already in the ACOM's Code. A full-text copy of the Amended Code is available for free at http://tinyurl.com/9cqgp Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADVOCAT INC: Lenders Extend $24M Loan Maturity Until April 2006 --------------------------------------------------------------- Advocat Inc. (NASDAQ OTC: AVCA) executed an agreement to extend the maturities of certain borrowings from a commercial mortgage lender. Under terms of the agreement, the lender has agreed to extend the maturity dates of mortgage indebtedness with an aggregate outstanding balance of approximately $23.6 million to April 1, 2006. The interest rate and other terms of the indebtedness did not change. 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. AEROSPACE CONSULTING: Case Summary & 16 Largest Creditors --------------------------------------------------------- Debtor: Aerospace Consulting Corporation (Spain) SA 205 Inverness Drive Southeast Rio Rancho, New Mexico 87124 Bankruptcy Case No.: 05-14244 Chapter 11 Petition Date: May 25, 2005 Court: District of New Mexico Judge: James S. Starzynski Debtor's Counsel: William F. Davis, Esq. Davis & Pierce, P.C. P.O. Box 6 Albuquerque, New Mexico Tel: (505) 243-6129 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 16 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lawrence E. Joseph Loan to parent $800,000 Sherry Stingfield corporation 308 South Peck Drive Beverly Hills, CA 90212 Dr. Richard White Loan to parent $400,000 800 Loma Linda Southeast corporation Albuquerque, NM 87108 Dale Baker Loan to parent $225,000 15826 Winriver Road corporation Brookings, OR 97415-9338 Jonathan Quinn Loan to parent $200,000 3167 San Mateo Boulevard corporation Northeast Albuquerque, NM 87110 Berry Rinck Loan to parent $150,000 Ivan and Betty corporation Revocable Living Trust 5180 Solar Heights Eugene, OR 97405 EK Bullington Loan to parent $130,000 42570 Pacific Coast Highway corporation Malibu, CA 90265-2220 Nancy Pastore, Esq. Legal Services $130,000 Barr Law Firm, PC 3003 Louisiana Boulevard Notheast Albuquerque, NM 87110 Thomas J. Burgess Loan to parent $125,000 636 Lakeview Circle corporation Southeast Rio Rancho, NM 87124 Ignacio Parellada, Abogado Legal Services $120,000 Edifice La Porta de Barcelona Av. Diaonal 682, 08034 Barcelona, Spain New Mexico Law Group, PC Legal Services $115,000 P.O. Box 25565 Albuquerque, NM 87125 Kobe Associates, LLC Loan to parent $90,000 205 Inverness Drive corporation Southeast Rio Rancho, NM 87124 JT Hamilton Loan to parent $75,000 3379 Calle Vista Drive corporation Medford, OR 97504 Rynd and Vickie Miller Loan to parent $65,000 5607 Cloverlawn Drive corporation Grants Pass, OR 97527 Zia Trust Company Loan to parent $65,000 P.O. Box 25565 corporation Albuquerque, NM 87125 William Kasoff Loan to parent $60,000 726-21 Tramway Vista corporation Drive Northwest Albuquerque, NM 87122 Russell and Eloise Barry Loan to parent $55,000 The Barry Family Trust corporation 121 Meadowview Drive Medford, OR 97504 ALIQUIPPA COMMUNITY: Gets Exit Financing from Bridge Healthcare --------------------------------------------------------------- Bridge Healthcare Finance completed a $3 million revolver and $4.5 million secured term loan to Aliquippa Community Hospital, a community healthcare provider located near Pittsburgh, Pennsylvania. Aliquippa Community Hospital is an acute-care, not-for-profit community healthcare provider located just North of Pittsburgh, Pennsylvania. This facility will provide the hospital with working capital and will allow it to finally exit Chapter 11 bankruptcy. Aliquippa filed voluntary bankruptcy in 2002 due to poor management and underutilization of resources. In October 2003, the Board of Directors of Aliquippa named a new CEO, Tony Puorro. Under Mr. Puorro's leadership, Aliquippa has pursued significant changes leading to significant fiscal improvements. Tony Puorro, chief executive officer of Aliquippa said, "With the help of Bridge Healthcare Finance, we can continue to focus on improving our bottom line while exploring opportunities to provide other patient services to increase capacity. Bridge was able to help us capture this opportunity by committing a facility in a matter of days." "This facility allows us to demonstrate our working knowledge of bankruptcy financing and help Aliquippa focus on rebuilding," says Randy Abrahams, President and CEO of Bridge Healthcare Finance. "It also demonstrates our ability to move on a transaction in a number of days allowing the company to create an opportunity that may not have otherwise come to fruition." About Bridge Healthcare Finance Bridge Healthcare Finance -- http://www.bridgehcf.com/-- offers a combination of comprehensive loan products, decades of financial expertise and an unparalleled service approach unique to the healthcare lending industry. Through accounts receivable, cash flow and real estate based term loan lending products, Bridge is able to address the differing capital needs of the healthcare industry. Bridge is based in Chicago, Illinois with an office in Hartford, Connecticut. Headquartered in Aliquippa, Pennsylvania, Aliquippa Community Hospital is a 104-acute care hospital established in 1957. The hospital employs 480 people, has a medical staff of 200 and 90 volunteers enrolled in the volunteer program. The hospital provides extensive community health education programs and works with other community organizations in providing primary care in medically underserved areas. The Company filed a chapter 11 petition on Sept. 5, 2002 (Bankr. W.D. Penn. Case No. 02-29616). Anthony L. Lamm, Esq., at Groen, Laveson, Goldberg & Rubenstone, and David W. Lampl, Esq., at Leech Tishman Fuscaldo & Lampl, LLC, represent the Debtor in its restructuring efforts. The Court confirmed the Debtor's plan on Sept. 23, 2004. AMERICAN SAFETY: Poor Performance Prompts S&P to Lower Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on American Safety Casualty Insurance Co. and its affiliate, American Safety RRG Inc., to 'Bpi' from 'BBBpi'. ASC is a member of an intercompany pool with ASRRG, American Safety Indemnity Co. (unrated), and American Safety Reinsurance Ltd. (unrated). Each pool participant has a 25% share. "The downgrade is based on ASC's and ASRRG's participation in the intercompany pooling arrangement as well as ASC's deteriorating operating performance, high one-year loss reserve development for the intercompany pool, and weak capitalization, offset by slight product diversification and good geographic diversification," explained Standard & Poor's credit analyst Puiki Lok. "Because ASC is the larger company, the ratings reflect the impact of its weakness on both companies." Both ASC and ASRRG are wholly owned subsidiaries of American Safety Insurance Holdings Ltd (NYSE:ASI), a Bermudian holding company. ASC and ASRRG are rated based on their combined position, including some impact from the overall pool performance. ASC is a property/casualty insurance company organized under the laws of Delaware. It was incorporated on June 8, 1981, and commenced business on July 1, 1981. ASC underwrites, manages, and markets primary property/casualty insurance and insurance program business in the specialty insurance market for environmental remediation risks and other specialty risks. During the year ended Dec. 31, 2004, the company's core business segments were the underwriting of environmental risks, excess and surplus risk, program business and other. Other risks include surety and de- emphasized lines such as workers' compensation and assumed liability program business. Ratings with a 'pi' subscript are based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings. AVALON DIGITAL: Delays Form 10-Q Filing to Finalize Financials -------------------------------------------------------------- Avalon Digital Marketing Services Inc. was not able to complete the preparation of financial data and other narrative information in sufficient time to complete its quarterly report for the year ended March 31, 2005, by the May 15 filing deadline, without unreasonable effort and expense. As a result, the Company has been unable to finalize its financial statements for its quarterly report on Form 10-QSB for the quarter ended March 31, 2005. The Company expects to file such quarterly report as soon as practicable. The Company has emerged from Chapter 11 Bankruptcy within the past fiscal year and anticipates changes in its financial statements and results of operations for the quarter ended March 31, 205, compared to the corresponding period for the prior fiscal year, due primarily to the substantial change resulting from the application of fresh start accounting treatment in December 2004. The Board of Directors approved and reserved for issuance of 1 million shares of Company common stock to be issued upon exercise of stock options on Jan. 14, 2005. These options have an exercise price of $0.01 with one-fourth vesting upon issuance and the remainder vesting equally in January 2006, 2007 and 2008. Additionally, the Board of Directors issued approximately 850,000 options to employees and members of the Board of Directors. On Feb. 14, 2005, the Company made a loan to Hubbard Acquisition Corp. in the amount of $125,000. The Company's largest secured creditor is affiliated with Hubbard Acquisition Corp. The loan was collateralized by a Note and Warrant Purchase and Security Agreement previously executed by the Company. The loan was personally guaranteed by an individual affiliated with the Company's largest secured creditor. The Company issued a promissory note to the Law Debenture Trust Company of New York on March 8, 2005, in the amount of $45,000 for services to be rendered associated with the Plan of Reorganization and review and approval of Company's unsecured claims. $15,000 remains outstanding under this note. In April 2005, Hubbard Acquisition Corp., under a certain Settlement Agreement with the Company, repaid the $125,000 loan made on February 14, 2005. Additionally, the Company was compensated for legal fees and other costs associated with reviewing a joint venture proposal made by Hubbard Acquisition Corp. In addition to the repayment of the loan, Hubbard Acquisition Corp. issued a promissory note to the Company for $33,500. This promissory note was to be repaid on or before April 16, 2005. Currently the note is in default and has not been repaid. Headquartered in Provo, Utah, Avalon Digital Marketing Systems is a provider of email marketing management software and strategic digital marketing services. On September 5, 2003, Avalon Digital Marketing Systems, Inc., filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court in Salt Lake City, Utah. The case has been assigned to Judge Glen E. Clark and is being administered under Case No. 03-35180. The Court confirmed the Company's First Amended Plan of Reorganization on Nov. 3, 2004, allowing the Company to emerge from chapter 11 in January 2005. BLACK DIAMOND: Moody's Puts $35 MM Class E Rate Notes on Ba2 ------------------------------------------------------------ Moody's Investors Service has assigned ratings of: * Aaa to the U.S. $16,000,000 Class X Notes Due June 2010; * Aaa to the U.S. $200,000,000 Class A-1A Floating Rate Notes Due June 2017; * Aaa to the U.S. $50,000,000 Class A-1B Floating Rate Notes Due June 2017; * Aaa to the U.S.$431,000,000 Class A-1 Floating Rate Notes Due June 2017; * Aa2 to the U.S. $75,000,000 Class B Floating Rate Notes Due June, 2017; * A2 to the U.S. $70,000,000 Class C Floating Rate Notes Due June 2017; * Baa2 to the U.S$61,000,000 Class D-1 Floating Rate Notes Due June, 2017; * Baa2 to the U.S. $6,000,000 Class D-2 Fixed Rate Notes Due June 2017; * Ba2 to the U.S. $35,000,000 Class E Floating Rate Notes Due June, 2017; * Baa3 to the $12,000,000 Class I Combination Notes; and * Ba1 to the $4,000,000 Class II Combination Notes, all issued by Black Diamond CLO 2005-1 Ltd. and Black Diamond CLO 2005-1(Delaware) Corp. Also issued were $83,200,000 Income Notes not rated by Moody's. This transaction, a managed cash flow high yield CLO deal, is brought to the market by Bear Stearns & Co. The ratings assigned to the Class X, A1, A-1A, A-1B, B, C, D-1, D-2 and E Notes address the ultimate cash receipt of the interest and principal payments set forth in the notes' governing documents; the ratings assigned to the Class I and Class II Combo Notes only address the ultimate cash receipt of the principal payments set forth in the notes' governing documents. The ratings are based on the expected loss posed to the noteholders relative to the promise of receiving the present value of such payments. The collateral pool of Black Diamond CLO 2005-1 Ltd. consists primarily of senior secured bank loans and high yield bonds. The reinvestment period is about 6 years. The Collateral Manager is Black Diamond Capital Management, LLC. This is the third CLO deal under management (The first two CLOs are Black Diamond CLO 1998-1 Ltd. and Black Diamond CLO 2000-1 Ltd.). BMJ HOLDINGS: Case Summary & 18 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: BMJ Holdings Inc. P.O. Box 8176 Rochester, Minnesota 55903 Bankruptcy Case No.: 05-33570 Type of Business: The Debtor owns and manages commercial and residential property. Chapter 11 Petition Date: May 24, 2005 Court: District of Minnesota (St. Paul) Judge: Chief Judge Gregory F. Kishel Debtor's Counsel: William I. Kampf, Esq. Henson & Efron, P.A. 220 South 6th Street, Suite 1800 Minneapolis, Minnesota 55402 Tel: (612) 339-2500 Financial Condition as of April 4, 2005 Total Assets: $1,734,267 Total Debts: $1,782,237 Debtor's 18 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Richard Wayne, CPA $11,298 500 First Street, SW #201 Rochester, MN 55902 Culligan $5,298 P.O. Box 336 Saint Charles, MN 55972 Onyx Waste $1,955 P.O. Box 9273 Rochester, MN 55903 Nagel Heating & Air $1,503 302 3rd Avenue Southeast Stewartville, MN 55976 Waste Management $1,291 Receivable Management Services P.O. Box 523 Richfield, OH 44288 RSM McGladrey Inc. $1,090 102 South Broadway #400 Rochester, MN 55904 Aquila $861 P.O. Box 219703 Kansas City, MO 64121 Rochester Drain Rite $523 P.O. Box 6380 Rochester, MN 55903 Jim Pfeffer Apartments $487 2727 Osjor Court Northeast Rochester, MN 55906 Superior Plumbing $475 1244 60th Avenue Northwest Rochester, MN 55901 Rochester Plumbing & Heating $467 P.O. Box 7125 Rochester, MN 55903 Chuck's Appliance & Repair $417 1912 2nd Street Southwest Rochester, MN 55902 Squires Electric Inc. $288 210 Woodlake Drive Southeast, #Unit A Rochester, MN 55904 Safeguard Business Systems $147 P.O. Box 910947 Los Angeles, CA 90091 Post Bulletin $119 P.O. Box 6118 Rochester, MN 55903 Gary's Appliance Service $75 1318 Apache Drive Southwest Rochester, MN 55902 Service Pros $54 3800 10th Avenue Southwest Rochester, MN 55902 Olson Motor Repair $35 P.O. Box 531 Pine Island, MN 55963 BROADCAST INT'L: Insufficient Cash Flow Spurs Going Concern Doubt ----------------------------------------------------------------- Broadcast International Inc. reported a $16.5 million net loss for the year ended Dec. 31, 2004, compared to a $3.9 million net loss for the year ended December 31, 2003. The net loss before taxes increased by $12,559,468, which was primarily the result of an increase of $12,659,094 in research and development in process, an increase of $913,443 of shares issued for services included in administrative and general expense, and an increase of $992,736 in interest expense. The majority of the total net loss of $16,488,712 is composed of non-cash expenses. At December 31, 2004, the Company had cash of $173,536, total current assets of $865,865, current liabilities of $661,814, and total stockholders' deficit of $14,827. The Company experienced negative cash flow used in operations during the fiscal year ended December 31, 2004 of $1,500,720 compared to negative cash flow used in operations for the year ended December 31, 2003 of $709,033. The negative cash flow was met by borrowings under the line of credit and sales of common stock to investors. The Company expects to continue to experience negative operating cash flow as long as the Company continues its technology development program or until it increases its sales by adding new customers. Going Concern Doubt The Company's audited consolidated financial statements for the year ended Dec. 31, 2004, contain a "going concern" qualification. The Company has incurred losses and has not demonstrated the ability to generate sufficient cash flows from operations to satisfy its liabilities and sustain operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company will continue to have the need for infusions of capital over an undetermined period of time. The Company experienced negative cash flow of approximately $125,000 per month and its development plan calls for additional expenditures of approximately $100,000 per month to complete the development initiatives identified at this time. The Company believes it is important to increase expenditures for development to take advantage of the opportunities currently available and delay in implementing the increased expenditures of the CodecSys technology could adversely affect the Company's ability to bring products to market and take a meaningful market share. To date, the Company has met its working capital needs through sale of common stock under subscription agreements and through a convertible line of credit, and anticipates that availability of such capital will continue over the next year. The Company is actively engaged in raising additional equity capital to meets its development and operational needs. However, as of this date, the Company has not been able to secure a placement of sufficient size to satisfy estimated short term liquidity needs. Additional investor capital will result in future dilution to the existing shareholders. Future investment may depend, to some extent, on results of operations, but there can be no assurance that the Company will be able to attract new investors or that the current investors and lenders will continue to fund operations if the Company does not demonstrate increased revenues and other favorable operating results over the next several months. In the event capital is not secured, or if additional loans are not secured, the Company would be in immediate need of another source of capital. There can be no assurance that, in such event, the Company will be able to locate a source of capital, or on terms acceptable to the Company, or to reduce costs sufficient to maintain the operations of the Company at its current level. Broadcast International Inc. provides communication network and related services for large retailers and other organizations with widely dispersed locations and operations. As an integrator of broadband delivery technologies, including satellite, Internet streaming and WiFi, the Company offers turnkey communication solutions based on the specific needs of its customers. Companies such as Caterpillar, Albertsons, Safeway, Sprint Communications, Chevron and other customers use the Company's services to communicate with their personnel and others regarding training programs, product announcements, news releases and other applications. CATHOLIC CHURCH: Tucson Taps Haralson Miller as Insurance Counsel ----------------------------------------------------------------- The Diocese of Tucson has engaged in extensive negotiations with its insurers and has achieved a substantial settlement with Hartford Fire Insurance Company and First State Insurance Company. Other insurers, however, have not negotiated in good faith, notwithstanding that the issues addressed in the Reorganization Case are among the precise risks for which these parties provided insurance. The Diocese finds it necessary to commence insurance actions to obtain a just recovery. Accordingly, the Diocese sought and obtained authority from the U.S. Bankruptcy Court for the District of Arizona to engage: 1. Haralson, Miller, Pitt, Feldman & McAnally, PLC; and 2. Stanley F. Feldman, a retired U.S. Supreme Court justice and Of Counsel at Haralson Miller, to investigate, and if necessary, commence litigation with the non-settling Insurers like Pacific Employers Insurance Company. Justice Feldman and Haralson Miller are among the pre-eminent lawyers in Arizona for insurance bad faith litigation claims. As an Arizona Supreme Court Justice, Justice Feldman wrote much of the law in Arizona with respect to key topics like insurance, bad faith, sex abuse torts, and repressed memory. Moreover, Haralson Miller has some leading plaintiff trial attorneys in Tucson and the entire State of Arizona. Haralson Miller will be paid based on the Firm's hourly rates for investigation of Insurance Actions up to $1,000. If prosecution of the claim is warranted, Haralson Miller will work on a contingent fee basis at 30% of any recovery on a settlement achieved until 29 days before trial, and 37.5% of any recovery after that. The professionals who will be responsible for the representation, and their hourly rates are: Professional Hourly Rate ------------ ----------- Stanley G. Feldman $500 Thomas G. Cotter $275 Mr. Feldman assures Judge Marlar that Haralson Miller does not hold or represent any interest adverse to the Diocese with respect to the Insurance Actions and is "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Tucson Disclosure Hearing Set for June 1 --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona will convene a hearing on June 1, 2005, at 1:30 p.m., to consider approval of a revised disclosure statement the Diocese of Tucson will file. The Court will keep the week of July 11, 2005, open for the confirmation hearing. If need be, Judge Marlar said at a hearing on May 19, 2005, that the days "can be reduced as time gets closer." Robert B. Millner, Esq., at Sonnenschein Nath & Rosenthal, LLP, in Chicago, Illinois, as counsel to Pacific Employers Insurance Co., suggested during the hearing that the Disclosure Statement be moved to June 3, 2005, with objections due by June 2. Judge Marlar said the dates will have to stand due to other court conflicts. Susan G. Boswell, Esq., at Quarles & Brady Streich Lang LLP, in Tucson, Arizona, the Diocese's counsel, advised the Court that the Diocese would not need an entire week set aside for the confirmation hearing if the issues are resolved with Pacific. Judge Marlar further held that five years is a more realistic estimation of the time the Debtors can push the legal issues through the courts -- not the 10 years projected by the Debtors. The Court suggests that the Disclosure Statement provide examples regarding the different tiers. Judge Marlar also points out that: * a panel of three people looking at the problems, instead of one person, might increase the chance of the results being accepted; and * if there is an arbitration process, the Diocese should to try to get it to be a "binding" arbitration, with no rights of appeal. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) CELLSTAR CORP: Asks Wells Fargo to Waive Reporting Delay Again -------------------------------------------------------------- CellStar (Nasdaq: CLSTE) won't be able to file its Form 10-K for fiscal 2004 by May 31, 2005. The Audit Committee of the Company's Board of Directors needs more time to complete its independent review of certain accounts receivable and revenue issues in the Asia Pacific Region. As a result of the delay, the Company expects to be delisted from The Nasdaq National Market. The Company's common stock may be quoted in the Pink Sheets, which provide electronic quotation information. However, the Company can give no assurance the common stock will be so quoted. Also, as a result of not filing its Form 10-K for fiscal 2004 by May 31, 2005, the Company will be in violation of its secured domestic revolving credit facility. The Company has talked to Wells Fargo Foothill and requested an extension to file its Form 10-K, but there can be no assurance that the waiver will be granted. The Company has retained the services of Raymond James & Associates, Inc. to act as its investment-banking advisor to assist the Company with the evaluation of its financial and strategic alternatives. About the Company CellStar Corporation is a leading global provider of value-added logistics services to the wireless communications industry, with operations primarily in the North American, Latin American and Asia-Pacific regions. CellStar facilitates the effective and efficient distribution of handsets, related accessories and other wireless products from leading manufacturers to network operators, agents, resellers, dealers and retailers. CellStar also provides activation services in some of its markets that generate new subscribers for wireless carriers. Additional information about CellStar may be found on its Web site at http://www.cellstar.com/ CEMEX S.A.: Moody's Revises Ba1 Ratings Outlook to Positive ----------------------------------------------------------- Moody's Investors Service has revised the ratings outlook on Cemex S.A. de C.V.'s Ba1 ratings to positive from stable. Ratings affected include the company's Ba1 ratings on approximately $110 million in senior unsecured Euro notes and its senior implied rating. The positive outlook reflects Moody's recognition that Cemex's management has begun to mitigate the significant near-term refinancing risk associated with RMC Group acquisition debt. Recently, the company extended the median debt maturity profile from 2.8 years, following the RMC acquisition, to an average life of around 4 years. Moody's believes continued progress in both lengthening the average debt maturity profile to a minimum of 5 years and diversifying the company's funding sources, which have been heavily dependent on bank financing, will reduce the company's financial risk profile and are necessary for achieving an upgrade in the company's ratings to investment grade. The positive outlook also reflects Moody's belief that strong growth in consolidated revenue and free cash flow, which will continue to be primarily allocated towards absolute debt reduction of at least $1.2 billion in 2005 and additional incremental debt reduction over the intermediate term, will result in credit metrics that are consistent with a Baa3 rating. Specifically, over the next 12 months, Moody's could upgrade Cemex S.A. de C.V.'s Ba1 rating to Baa3 if, in addition to the lengthening of the average debt maturity to at least 5 years and the diversification of funding sources, it becomes evident the consolidated company will achieve lease adjusted debt-to-EBITDAR of under 3.0x, 20% retained cash flow to total debt, 15% free cash flow to total debt and 4.0x EBIT interest coverage. Moody's noted, however, that increased transparency with regard to the operating performance of the recently-acquired RMC Group assets will be required before an upgrade is achieved, given that the company has not filed public financial statements in almost a year. Moody's believes that increased transparency regarding the combined company's financial results will provide greater confidence that the company is successfully integrating the new assets while reducing the absolute level of debt outstanding and mitigating financial risk. Historically, the two stand-alone ratings at Cemex S.A. de C.V. and Cemex Espana differed because of dissimilar credit profiles, separate guarantor groups that did not provide upstream nor downstream guarantees, and restrictions on the movement of cash between the two companies. Now, however, Moody's believes it is appropriate to analyze the company as a consolidated entity, with equalized ratings, given strong operating performance in Mexico has improved the credit profile of Cemex S.A. de C.V. and there are no longer any limitations on the movement of cash between the two companies. Cemex's ratings are supported by the company's globally- diversified operations as a cement company with a leading vertical position in ready-mix concrete and aggregates production. The ratings also recognize Cemex's strong operating performance as evidenced by modest revenue growth, expanding operating margins and increasing free cash flow. Moody's anticipates there are significant potential cost reduction and working capital efficiencies at RMC, whose operations are largely in investment grade countries. Over the near-term, Moody's believes that Cemex's legacy markets should continue to experience moderate operating performance improvement with increasing amounts of free cash flow, particularly due to the company's dominant market share in Mexico, where the company has above industry average margins, high return on capital invested and significant barriers to entry. Nevertheless, the ratings also recognize the business risks associated with the RMC acquisition, including: * a higher concentration in lower operating margin regions; * the lower barrier to entry ready-mix concrete business; and * high financial leverage. As well, while operations have benefited from improved economic conditions over the last year or so, the company remains exposed to economic cycles in many developed countries where revenue growth tends to track GDP growth. Cemex, headquartered in Monterrey, Mexico, is a growing global building solutions company that provides building products to customers in more than 60 countries throughout the world. CHASE FUNDING: Fitch Affirms B Rating on Class B-5 Mortgage Certs. ------------------------------------------------------------------ Fitch has taken these rating actions on the Chase Funding issues listed below: Chase Funding, mortgage loan asset-backed certificates, series 1998-1 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'. Chase Funding, mortgage loan asset-backed certificates, series 1998-2 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB affirmed at 'BBB'. Chase Funding, mortgage loan asset-backed certificates, series 1999-1 Group 1 -- Class IA-4 affirmed at 'AAA'; -- Class IA-5 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB affirmed at 'BBB'. Chase Funding, mortgage loan asset-backed certificates, series 1999-2 Group 1 -- Class IA-4 affirmed at 'AAA'; -- Class IA-5 affirmed at 'AAA'; -- Class IM-1 upgraded to 'AAA' from 'AA'; -- Class IM-2 upgraded to 'AA' from 'A'; -- Class IB affirmed at 'BBB'. Chase Funding, mortgage loan asset-backed certificates, series 1999-3 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB affirmed at 'BBB'. Chase Funding, mortgage loan asset-backed certificates, series 1999-4 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB affirmed at 'BBB'. Chase Funding, mortgage loan asset-backed certificates, series 2000-1 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB downgraded to 'BBB-'from 'BBB'. Chase Funding, mortgage loan asset-backed certificates, series 2000-2 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB downgraded to 'BBB-'from 'BBB'. Chase Funding, mortgage loan asset-backed certificates, series 2000-3 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 downgraded to 'A-'from 'A'; -- Class IB downgraded to 'BB' from 'BBB'. Chase Funding, mortgage loan asset-backed certificates, series 2001-4 Group 1 -- Class IA-4 affirmed at 'AAA'; -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB affirmed at 'BBB'. Chase Funding, mortgage loan asset-backed certificates, series 2001-4 Group 2 -- Class IIA-1 affirmed at 'AAA'; -- Class IIM-1 affirmed at 'AA'; -- Class IIM-2 affirmed at 'A'; -- Class IIB downgraded to 'BBB-'from 'BBB'. Chase Funding Loan Acquisition Trust, mortgage loan asset- backed certificates, series 2001-AD1 Group 1 -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB affirmed at 'BBB'. Chase Funding Loan Acquisition Trust, mortgage loan asset- backed certificates, series 2001-AD1 Group 2 -- Class IIA-1 affirmed at 'AAA'; -- Class IIM-1 affirmed at 'AA'; -- Class IIM-2 affirmed at 'A'; -- Class IIB affirmed at 'BBB'. Chase Funding Loan Acquisition Trust, mortgage loan asset- backed certificates, series 2001-C2 Group 1 -- Class IA-4 affirmed at 'AAA'; -- Class IA-5 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB downgraded to 'BBB-'from 'BBB'. Chase Funding Loan Acquisition Trust, mortgage loan asset- backed certificates, series 2001-C2 Group 2 -- Class IIA-1 affirmed at 'AAA'; -- Class IIM-1 affirmed at 'AA'; -- Class IIM-2 affirmed at 'A'; -- Class IIB affirmed at 'BBB'. Chase Funding Loan Acquisition Trust, mortgage loan asset- backed certificates, series 2001-FF1 -- Class A-1 affirmed at 'AAA'; -- Class A-2 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B affirmed at 'BBB'. Chase Funding Loan Acquisition Trust, mortgage loan asset- backed certificates, series 2003-C1 Group 1 -- Class IA-2 affirmed at 'AAA'; -- Class IA-3 affirmed at 'AAA'; -- Class IA-4 affirmed at 'AAA'; -- Class IA-5 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB affirmed at 'BBB'. Chase Funding Loan Acquisition Trust, mortgage loan asset- backed certificates, series 2003-C1 Group 2 -- Class IIA-2 affirmed at 'AAA'; -- Class IIM-1 affirmed at 'AA'; -- Class IIM-2 affirmed at 'A'; -- Class IIB affirmed at 'BBB'. Chase Funding Loan Acquisition Trust, mortgage loan asset- backed certificates, series 2003-C2 -- Classes I-A affirmed at 'AAA'; -- Classes II-A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Chase Funding, mortgage loan asset-backed certificates, series 2004-1 Group 1 -- Class IA-1 affirmed at 'AAA'; -- Class IA-2 affirmed at 'AAA'; -- Class IA-3 affirmed at 'AAA'; -- Class IA-4 affirmed at 'AAA'; -- Class IA-5 affirmed at 'AAA'; -- Class IA-6 affirmed at 'AAA'; -- Class IA-7 affirmed at 'AAA'; -- Class IM-1 affirmed at 'AA'; -- Class IM-2 affirmed at 'A'; -- Class IB affirmed at 'BBB'. Chase Funding, mortgage loan asset-backed certificates, series 2004-1 Group 2 -- Class IIA-2 affirmed at 'AAA'; -- Class IIM-1 affirmed at 'AA'; -- Class IIM-2 affirmed at 'A'; -- Class IIB affirmed at 'BBB'. All of the mortgage loans in the aforementioned transactions consist of fixed- and adjustable-rate subprime mortgage loans and are secured by first- and/or second-lien mortgages or deeds of trust on residential properties. As of the April 2005 distribution date, the transactions are seasoned from a range of 14 to 80 months, and the pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) range from approximately 10% (series 2001-C2 Group 2) to 78% (series 2004-1 Group 1). The affirmations reflect credit enhancement consistent with future loss expectations and affect approximately $1.90 billion of outstanding certificates. The upgrades reflect a substantial increase in credit enhancement relative to future loss expectations and affect approximately $16.5 million of outstanding certificates. The negative rating actions, which affect approximately $14.3 million of outstanding certificates, are taken due to worse than expected performance of the underlying collateral as well as concerns regarding the adequacy of credit enhancement for the remaining subordinate bonds. Upgrades: As of the April 2005 distribution date, the pool factor for series 1999-2 Group 1 is approximately 15%. Class IM-1 currently benefits from 51.22% credit enhancement (originally 7.75%) in the form of subordination and overcollateralization; and Class IM-2 currently benefits from 26.36% credit enhancement (originally 4%) in the form of subordination and OC. This transaction also currently fails its cumulative loss trigger, which results in the principal payments to be paid sequentially and prevents the Target OC to fall below $2,500,000. Downgrades: As of the April 2005 distribution date, the pool factor for series 2000-1 Group 1 is approximately 16%, and the 6-month average monthly loss is $42,378. Cumulative losses have resulted in the decline of OC to $886,863, representing 4.18% credit enhancement for class IB. 90+ delinquencies (including all bankruptcies, foreclosures and real estate owned) currently stand at 12.16%. Group 2 of this series has been paid in full, and thus Group 1 does not benefit from cross-collateralization of net excess cash flow. The pool factor for series 2000-2 Group 1 is approximately 15%, and the 6-month average monthly loss is $32,595. Cumulative losses have resulted in the decline of OC to $632,919, representing 3.19% credit enhancement for class IB. 90+ delinquencies (including all bankruptcies, foreclosures and real estate owned) currently stand at 12.56%. Group 2 of this series has been paid in full, and thus Group 1 does not benefit from cross-collateralization of net excess cash flow. The pool factor for series 2000-3 Group 1 is approximately 18%, and the 6-month average monthly loss is $114,209. Cumulative losses have resulted in the decline of OC to $621,126, representing 2.18% and 6.67% credit enhancement for class IB and IM-2, respectively. 90+ delinquencies (including all bankruptcies, foreclosures and real estate owned) currently stand at 15.16%. Group 2 of this series has been paid in full, and thus Group 1 does not benefit from cross-collateralization of net excess cash flow. The pool factor for series 2001-4 Group 2 is approximately 17%, and the 6-month average monthly loss is $293,067. Cumulative losses have resulted in the decline of OC to $1,999,610, representing 3.10% credit enhancement for class IIB. 90+ delinquencies (including all bankruptcies, foreclosures and real estate owned) currently stand at 11.64%. Group 2 also benefits from cross-collateralization through the application of net excess cash flow generated by Group 1 to fund shortfalls due to losses and to build OC. The pool factor for series 2001-C2 Group 1 is approximately 21%, and the 6-month average monthly loss is $234,414. Cumulative losses have resulted in the decline of OC to $2,123,159, representing 2.33% credit enhancement for class IB. 90+ delinquencies (including all bankruptcies, foreclosures and real estate owned) currently stand at 12.96%. Group 1 also benefits from cross-collateralization through the application of net excess cash flow generated by Group 2 to fund shortfalls due to losses and to build OC. Fitch will continue to closely monitor these transactions. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings website at http://www.fitchratings.com/ CITIZENS COMM: Fitch Says Stock Repurchase Won't Affect Ratings --------------------------------------------------------------- Fitch Ratings believes Citizens Communications Company's announced $250 million stock repurchase program and $228 million 2006 debt retirement is neutral to its credit profile within the context of its current 'BB' senior unsecured rating. The stock repurchase program is anticipated to take place over a 12-month period, which would extend into the first half of 2006. The company also stated that it will retire $228 million in 2006 debt maturities from cash on hand. Fitch believes the announced commitment to retire the debt in mid- 2006 from cash on hand is an important balance to the company's ongoing stock repurchase activities and contributes to credit stability. Citizens Utilities Trust 5% company obligated mandatory redeemable convertible preferred securities due 2036 are rated 'BB-'. Citizens' Rating Outlook is Stable. Citizens' liquidity is good, as evidenced by $284 million in cash and cash equivalents on March 31, 2005. This cash and future free cash flow would appear to be sufficient to fund the stock repurchase program and the debt retirement. Citizens' guidance calls for free cash flow in the range of $500 million to $540 million in 2005, which, after its annual dividend requirement of approximately $340 million, would leave approximately $160 million to $200 million in cash to supplement the existing cash on hand in financing the stock repurchase and debt retirement. Citizens' rating reflects its historically stable rural wireline operations, which has been less affected by competition than its urban-based peers. The lower business risk environment is offset by its higher leverage and lower degree of financial flexibility. Citizens' total telecommunications revenue declined 1.0% in the first quarter of 2005, relative to the prior period, and EBITDA from the ongoing telecommunications business was relatively stable, as it declined 0.7% in the first quarter of 2005 to $284.8 million (excluding the management succession and strategic alternative charges in 2004). Year-over-year, access lines declined 3.2% to 2.298 million but were more than offset by the addition of nearly 101,000 digital subscriber line subscribers. Rochester, New York, represents Citizens' largest nonrural market, and Citizens faces competition from Time Warner Cable's voice- over-Internet protocol offering, which was launched in mid-2004. In the first quarter of 2005, Citizens reported approximately 45% of its line losses were in Rochester, double Rochester's proportion of lines in the company's total base. At the current time, losses in Rochester do not appear to be accelerating. Competitive rivalry is less intense in Citizens' other markets, but it should be noted that the economy and the substitution of wireless and high-speed data services have contributed to line erosion. Citizens' gross debt-to-EBITDA was 3.7 times at the end of the first quarter of 2005, and Fitch expects it to be relatively stable in 2005. In Fitch's view, leverage is expected to be relatively stable over the next several years, given the flat performance of its wireline-only telecommunications business and expectations for modest debt reductions. More aggressive debt reductions are not anticipated given the stock repurchase program and the initiation of a relatively high dividend payout in 2004. In the intermediate term, Citizens' cash flows could be pressured by reforms to the universal service program (the current program expires in mid-2006), and the intercarrier compensation structure in the industry (currently under review by the Federal Communications Commission). Policymakers are generally supportive of rural carriers, but the outcome of reforms is uncertain. Fitch believes the positive steps taken in the second half of 2004 to address Citizens' 2006 debt maturities (which totaled approximately $1.3 billion prior to the actions) have materially reduced the risks regarding its maturity profile. On Nov. 12, 2004, the company completed a $700 million offering of 6.25% senior unsecured notes due 2013. The proceeds were used to fund a significant portion of the redemption of all of its $700 million outstanding 8 1/2% debentures due in May 2006 and the related call premium. In 2005, the company will save approximately $15 million annually in interest costs due to this refinancing. Interest savings in total from the refinancing and the net reduction in debt are expected to be $60 million annually. Currently, the company has a nominal amount of debt maturing in 2005 ($6 million) and approximately $228 million and $37 million in 2006 and 2007, respectively. Although the company expects to retire its 2006 maturities from cash on hand, Fitch notes the amount of maturing debt is also manageable within the capacity of the company's current $250 million five-year credit facility, which was entered into on Oct. 29, 2004. CONSUMER DIRECT: Recurring Losses Trigger Going Concern Doubt ------------------------------------------------------------- Consumer Direct of America's auditors expressed substantial doubt about the Company's ability to continue as a going concern after it audited its financial statements for the year ended Dec. 31, 2004. De Joya and Company, in Henderson, Nevada, points to the Company's recurring losses from operations and $17.8 million aggregate net losses it has incurred. Consumer Direct had a $7.8 million loss from operations for the year ended Dec. 31, 2004, compared to a $1.9 million loss for the year ended December 31, 2003. It reported an $11.2 million net loss in 2004, a $1.9 million net loss in 2003 and a $2.2 million net loss in 2002. The primary reason for the loss was the costs associated with the consolidation of the Company's operations, according to its business plan, and by eliminating non profitable units and restructuring the Company's base of operations to eliminate certain costs to outsourcing. The Company incurred certain costs associated with the debt amortization discount of one of its notes for approximately $2.5 million. Liquidity and Capital Resources Management currently believes that cash flows from operations should be sufficient to meet the Company's current liquidity and capital needs at least through fiscal 2005. However, if they are not, management will seek equity funding from the public capital markets. So long as there are no material adverse changes to the terms or availability of its warehouse lines of credit, management believes the Company can meet its liquidity and capital needs at current production levels at least through fiscal 2005. However management is currently exploring possible liquidity sources either through additional borrowings or potential capital partners to enable the Company to increase its loan production and expansion. Future offerings are probable in order to fund the acquisition growth by the Company. The Company anticipates raising equity capital in the amount of $3 million during 2005 in order to fund the integration of this growth. If such financing is not available on satisfactory terms, the Company may be unable to expand or continue its business as desired and operating results may be adversely affected. Any equity financing could result in dilution to existing stockholders. Consumer Direct of America, formerly known as Blue Star Coffee, Inc., is a Nevada corporation formed in July 2000 to sell specialty coffee beans, brewed coffee and espresso-based beverages through company-owned and franchised retail locations. In February 2002, Blue Star, which was then in the development stage, acquired all of the outstanding stock of Consumer Capital Holdings, Inc., and Consumer Capital Holdings became a wholly owned subsidiary of Blue Star. After its acquisition of Consumer Capital Holdings, Blue Star changed its name to Consumer Direct of America. Consumer Direct of America is a direct-to-consumer mortgage broker and banker with revenues derived primarily from origination commissions earned on the closing of first and second mortgages on single-family residences. The Company has acquired and intends to acquire other businesses in the direct-to-consumer mortgage brokerage business and may acquire other businesses that are outside the direct-to-consumer mortgage brokerage business. The Company believes it has the infrastructure, systems, direct marketing call center support and operational management necessary to properly integrate more acquisitions in order to establish and support a national network. At present, the Company sells its loan servicing through correspondent relationships with Flagstar, BNC, Wells Fargo and Countrywide with agreements pending with Aurora, CitiFinancial, NovaStar, Principal Mortgage and Washington Mutual. COSINE COMMS: Restructuring Activities Spur Going Concern Doubt --------------------------------------------------------------- CoSine Communications said it is not generating sufficient revenue to fund its operations. The Company expects operating losses and net operating cash outflows to continue and expects that revenue will continue to decline. The Company's restructuring activities and ongoing review of strategic alternatives raise substantial doubt as to the ability of CoSine Communications to continue as a going concern. On July 29, 2004, CoSine said it was exploring various strategic alternatives and that the Company had hired an investment bank as its financial advisor. After extensive evaluation of strategic alternatives, CoSine initiated actions to lay-off most of its employees, retaining a limited team of employees to provide customer support and handle matters related to the ongoing exploration of strategic alternatives. Since Sept. 8, 2004, the Company has taken a number of actions to reduce its operating expenses and conserve its cash. CoSine has notified its existing customers that the CoSine products are now formally discontinued and that existing customers may place "lifetime buy" orders to support their platform transition plans. The Company has sold, scrapped or written its inventory down to estimated net realizable value at December 31, 2004 and March 31, 2005. The Company has taken steps to terminate contract manufacturing arrangements, contractor and consulting arrangements and facility leases. These activities continued through March 31, 2005 and will continue in 2005. CoSine's business currently consists primarily of a customer service capability operated under contract by a third party. This customer service capability is set to expire on, or before, Dec. 31, 2005. On Jan. 7, 2005, CoSine entered into an Agreement and Plan of Merger with Tut Systems, Inc., in a stock-for-stock transaction pursuant to which CoSine will merge into a wholly owned subsidiary of Tut Systems, Inc. Tut Systems, Inc., will issue approximately 6.0 million shares of its common stock to the shareholders of CoSine. The merger is subject to shareholder approval and normal closing conditions. There can be no assurance that the merger will be approved by the shareholders. On Jan. 18, 2005, CoSine and each of its directors and officers were named as defendants in a class action lawsuit filed in the San Mateo County Superior Court on behalf of CoSine shareholders. The complaint alleges that the CoSine directors and officers breached their fiduciary duty to the corporation in connection with the proposed merger with Tut Systems, Inc., and requests that the merger be enjoined. CoSine and its directors believe that the allegations are without merit and intend to defend the action vigorously. Should the merger with Tut Systems, Inc., not be completed, the Company would continue to explore strategic alternatives, including: -- sale of the Company; -- sale or licensing of products and intellectual property; -- winding-up and liquidation of the business; and -- return of capital. Pending the completion of the proposed merger or, should the merger not be completed, the outcome of the Company's review of strategic alternatives, and pending any definitive decisions to close or liquidate the business, the Company will continue to prepare its financial statements on the assumption that it will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As such, the Company's financial statements do not include any adjustments to reflect possible future effects of the recoverability and classification of assets, or the amounts and classification of liabilities that may result from any decisions made with respect to the Company's assessment of its strategic alternatives. If at some point the Company were to decide to pursue alternative plans, the Company may be required to present the financial statements on a different basis. As an example, if the Company were to decide to pursue a liquidation and return of capital, it would be appropriate to prepare and present financial statements on the liquidation basis of accounting, whereby assets are valued at their estimated net realizable values and liabilities are stated at their estimated settlement amounts. During the quarter ended Dec. 31, 2004, the Company continued the actions initiated and announced in September 2004. These actions included: -- the termination of all but eight of the remaining employees; -- negotiation of transition support plans for its customers; -- termination of a facility lease in Japan; and -- termination of supplier, contractor and consulting agreements, as well as the initiation of liquidation procedures for certain of its foreign operations. The Company also completed the sale, scrap or write-off of its remaining inventory, property and equipment. In January 2005, the Company terminated its remaining employees and retained only its chief executive officer as a consultant. As a result of these activities, as of Dec. 31, 2004 and March 31, 2005, CoSine's business consisted of primarily a customer service capability operated by a third party. About the Company CoSine Communications was founded in 1998 as a global telecommunications equipment supplier to empower service providers to deliver a compelling portfolio of managed, network-based IP and broadband services to consumers and business customers. Currently, CoSine's business consists primarily of a customer service capability operated under contract by a third party. Burr, Pilger & Mayer LLP, in Palo Alto, California, serves as CoSine's independent auditing firm. CURATIVE HEALTH: Moody's Junks $185M Senior Unsecured Notes ----------------------------------------------------------- Moody's Investors Service lowered the ratings of Curative Health Services Inc. (senior implied to Caa1 from B2; senior unsecured notes to Caa2 from B3) based on heightened concerns regarding the company's prospects for cash flow generation and liquidity. The company's speculative grade liquidity rating of SGL-4 was affirmed. The rating outlook is negative. Moody's said that it does not anticipate that the company will easily rebound from the effects of lower reimbursement trends experienced under California's MediCal program. The rating downgrade also incorporates the belief that high leverage and weak liquidity provide very little cushion for near term liabilities - including an interest payment in November 2005 - operations and execution of the company's newly instituted strategy, which focuses on expanding its home infusion business. Finally, there is concern that other state Medicaid programs and managed care payors may adopt similar methods of reimbursement, which could place additional pressure on the company's cash flow. Ratings downgraded: Curative Health Services, Inc.: * senior implied to Caa1 from B2; * senior unsecured notes to Caa2 from B3; and * issuer rating to Caa2 from B3. Rating affirmed: Curative Health Services, Inc.: * SGL-4 speculative grade liquidity rating. Changes in reimbursement for hemophilia drugs under the MediCal program in California (which represented 12% of total revenues in 2004 and only 5% of revenues during the first quarter of 2005) have contributed to material cash flow deterioration for the company. During 2004, California switched to a method relying on Average Selling Price versus Average Wholesale Price. More recently, Medicare rates for the provision of hemophilia have also declined under the Medicare Modernization Act, resulting in about a 40% decline in earnings from that payor. At year end 2004, the company took a very large goodwill and intangible asset impairment charge related to the specialty infusion business due largely to changes in reimbursement. This essentially eliminated the entire equity base of the company. Reimbursement pressures continue with first quarter 2005 income from operations down 60% compared to the same period last year. Free cash flow during fiscal 2004 and the period ended March 31, 2005 was significantly lower than expected when the B2 senior implied rating was assigned in early 2004 (zero free cash flow versus a Moody's forecast of about $20 million). In April 2004, Curative's debt levels increased significantly following the $150 million acquisition of CCS - the linchpin of the company's new strategic venture into home infusion; at that time, the ratings assumed that Curative would have sufficient free cash flow to deleverage. Outside of California, most of the company's hemophilia-related and Synagis revenues rely on reimbursement methods based on the AWP of its products. A future risk factor is the possibility that other states and commercial payors may also adopt an ASP-based reimbursement model. The company may also be subject to the possibility that revenue and margins may suffer from the effects of outstanding government investigations related to AWP. The drug benefit program under MMA provides some uncertainty; although only about 7% of specialty infusion revenues are derived from Medicare, it is not yet clear whether infusion drugs will be covered under the same Part D regulations as other drugs. Furthermore, we are concerned that potential pressure from managed care payors on per diem and nursing rate reimbursement in the home infusion business could affect profitability. Very weak liquidity, as reflected by Curative's SGL-4 liquidity rating, stems from poor operating cash flow as well as virtually no free cash flow - even after assuming receipt of a $3.4 million tax refund - to service near term liabilities, which consist of an outstanding DOJ settlement, and several promissory notes related to previous acquisitions. After considering these obligations, Curative is expected to have less than $5 million remaining under its credit facility from GE Capital. We believe that this provides an unacceptable cushion in light of potential further changes in governmental or managed care reimbursement and ongoing working capital needs associated with: (1) the seasonal build-up of Synagis beginning in the September timeframe; and (2) the company's plans to continue to invest in branch service centers to support its home infusion strategy. Curative is in the process of opening nine more branches. Moody's anticipate that this will require about $2.25 million in annual working capital during the 12- 18 months of development. Any variability in this figure could place pressure on cash flow expectations. Delays in MediCal payments have also been problematic although a recent dispute settlement with the Department of Health Services in California included a provision to address faster claims processing. During the first quarter of this year, collections improved, but not to the extent expected. Future delays in payments could place additional pressure on liquidity. Although the home infusion business may offer greater diversity to the specialty distribution business, we believe that near term liquidity concerns are mounting. While a bank amendment may help the company meet its bank covenants for the remainder of 2005, in order to remain compliant during fiscal 2006, Curative will need to renegotiate covenants. The negative outlook reflects our concerns that, in the event of bankruptcy, with minimal tangible assets, recovery values would not be sufficient to cover outstanding senior unsecured debt. If cash flow does not improve or if liquidity worsens such that the company will likely need to restructure its debt, the ratings could be lowered further. If the company is able to increase its levels of external liquidity, and grow its home infusion business to help provide an improved source of cash flow, the outlook may become stable. The $185 million in senior unsecured notes have been notched below the Caa1 senior implied rating due largely to concerns regarding recovery value and the presence of $40 million in secured bank debt. Curative Health Services, Inc., headquartered in Nashua, New Hampshire, provides services to patients experiencing serious acute or chronic medical conditions through its specialty infusion and wound care management business units. DATALOGIC INT'L: Kabani Issues Going Concern Opinion in Form 10-K ----------------------------------------------------------------- Kabani & Company, Inc., expressed substantial doubt about Datalogic International'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 auditors cite the Company's net losses of $1,403,837 and $911,582 during the years ended Dec. 31, 2004, and 2003, respectively. There was an accumulated deficit of $3,328,978 as of December 31, 2004, and total liabilities exceeded total assets by $168,515 as of December 31, 2004. The Company recently undertook several actions to revise its operating and financial requirements to provide it with sufficient liquidity to continue to fund operations for the next twelve months that included arranging working capital financing. Further, the Company was awarded an expansion of several multi- year contracts with several State Agencies. These awards can provide the Company with an increase level of revenues that should support the Company's current overhead expenses and provide for increasing cashflows that can improve the current stockholders' equity and allow the Company to continue its operations through the next twelve months. There can be no assurance that additional financing, over and above that stated, may not be required, in which case, the Company will need to depend on finding sufficient funding at acceptable terms. Such funding may not be readily available. On June 29, 2004, Datalogic issued $3 million of convertible secured debt, including the issuance of warrants to purchase a total of 705,000 shares of its common stock. The proceeds from the $3 million financing improved its working capital position. As of Dec. 31, 2004, the Company had $643,847 in cash and $1,258,689 in restricted cash. Given its Dec. 31, 2004, cash balance and the projected operating cash requirements, management anticipates that existing capital resources will be adequate to satisfy cash flow requirements through Dec. 31, 2005. The Company's cash flow estimates are based upon achieving certain levels of sales, gross profit and operating expenses. Datalogic's liquidity primarily consists of $643,847 in cash, restricted cash of $1,258,689, plus $1,630,570 in accounts receivable. The Company's current liabilities consist of $2,691,536 in accounts payable, accrued expenses, and short-term debts. The Company's consulting services business segment is cash- intensive and often consumes most of the Company's working capital. Market conditions and assessments prevented it from accessing additional funding from the restricted cash during the period ended December 31, 2004. Because of this the Company was unable to fully execute its business plan as well as aggressively market its products and services. This resulted in lower than projected sales and net profits for 2004. Datalogic may elect to raise additional capital in the future, from time to time, through equity or debt financings in order to capitalize on business opportunities and market conditions and to insure the continued marketing of current product and service offerings together with development of new technology, products and services. There can be no assurance that it can raise additional financing with favorable terms. Management believes that the current cash position is sufficient to meet the Company's capital expenditures and working capital requirements for the near term; however, the growth and technological change of the market make it difficult to predict future liquidity requirements with certainty and management's forecast is based upon certain assumptions, which may differ from actual future outcomes. Over the longer term, the Company must successfully execute plans to increase revenue and income streams that will generate significant positive cash flow if it is to sustain adequate liquidity without impairing growth or requiring the infusion of additional funds from external sources. Additionally, a major expansion, such as would occur with the acquisition of a major new subsidiary, might also require external financing that could include additional debt or capital. There can be no assurance that additional financing, if required, will be available on acceptable terms, if at all. DataLogic International, Inc., through its wholly owned subsidiaries, provides Information Technology outsourcing and consulting services to a wide range of U.S. and international governmental agencies and commercial enterprises. The Company's services capitalize on the ongoing trend toward strategic IT outsourcing and addresses growing markets such as public safety and homeland security. The Company also leverages its technology expertise, customer relationships and supplier channels to develop solutions addressing rapidly growing communications markets, including VoIP (Voice over Internet Protocol) communications and GPS vehicle tracking. DIVERSIFIED CORPORATE: Delays 10-Q Filing to Complete Review ------------------------------------------------------------ Diversified Corporate Resources, Inc., was not able to complete and file its quarterly report for the period ended March 31, 2005, by the May 16 filing deadline. The Company's auditors are still completing the review of the Company's financial statements after the Company experienced delays in the preparation of its financial statements and related disclosure. The Company anticipates that it will report a significant improvement in its results of operations (excluding expenses related to options & warrants) for the quarter ended March 31, 2005, as compared to the prior year. At this time, it is unable to provide a reasonable estimate of the results due to delays experienced in the preparation of the financial statements for the quarter ended March 31, 2005. In its latest Form 10-Q for the quarterly period ended June 30, 2004, the company's current liabilities exceed its current assets by $7.3 million. The company reported net losses for the last three fiscal years, as a result of the decline in business, and expects to report a net loss for the 2004 fiscal year. The company currently finances itself through factoring of, or lines of credit based on, its accounts receivable. The amount of funds available under these agreements depends on the amount of accounts receivable accepted by the lenders. While the company has generally sought to borrow the maximum amounts available from these facilities during 2004, the facilities have been inadequate in providing enough funds to maintain operations, and the company has to use other measures to continue to fund operations. About the Company Diversified Corporate Resources, Inc., is a national employment services and consulting firm, servicing Fortune 500 and larger regional companies with permanent recruiting and staff augmentation in the fields of Engineering, Information Technology, Healthcare, BioPharm and Finance and Accounting. The Company currently operates a nationwide network of nine regional offices. * * * As reported in the Troubled Company Reporter on Dec. 20, 2004, Diversified Corporate Resources, Inc. (OTC Pink Sheets: HIRD) has filed with the Securities and Exchange Commission its Annual Report on Form 10-K for fiscal year ended Dec. 31, 2003. The audited statements included in the 10-K were accompanied by an audit opinion, which contains a going concern qualification. Weaver and Tidwell, L.L.P., in Dallas, Texas, audited the company's 2003 financial statements. DYKESWILL LTD: Smith & Henault to Serve as Accountants ------------------------------------------------------ Ben B. Floyd, the Chapter 11 trustee for Dykeswill, Ltd., sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, to employ the accounting firm of Smith & Henault, P.C. as his accountants. James P. Smith will act as lead accountant for the trustee. Smith & Henault will: a) prepare any necessary federal and federal and state income, payroll, sales, franchise and excise tax returns and reports of the bankruptcy estate; b) provide evaluations and advice to Trustee on Tax matters which may arise, including the evaluation of the tax effect of the sale of assets of the estate; c) analyze the Debtor's books and record and financial transactions regarding possible fraudulent post-petition and/or preferential transfers to which the estate may be entitled to recovery. d) analyze the books and records and financial transactions of entities and individuals to which the Debtor is related, may be related or may have been related at some prior date to determine the value of any assets and the existence of possible fraudulent transfers to which the estate may be entitled to a recovery; e) locate, obtain, inventory and preserve the accounting, business and computer records of the Debtor for use in performing the tasks assigned to Applicant and in Trustee's administration of the estate; f) assist the Trustee in the identification and recovery of assets of the estate requested; g) prepare monthly operating reports of the Debtor; h) assist with the formulation of the Plan of Reorganization and Disclosure Statement as requested; i) assist with the formulation of the Plan of Reorganization and Disclosure Statement as requested; j) assist Trustee as an accountant and/or expert witness in litigation of the estate, assist in examinations and discovery under Federal Rule of Civil Procedure 2004 and the Federal Rules of Civil Procedure and to prepare any required expert reports related to litigation matters. The current hourly billing rates of Smith & Henault's personnel are: Designation Rate ----------- ---- Shareholders $175 - $225 Managers $265 Staff Consultants $95 - $125 Paraprofessionals $80 To the best of the Mr. Floyd's knowledge, Smith & Henault does not have any interest materially adverse to the Debtor and its estate. Headquartered in Corpus Christi, Texas, Dykeswill Ltd., filed for Chapter 11 protection on July 26, 2004 (Bankr. S.D. Tex. Case No. 04-20974). Harlin C. Womble, Jr., Esq., at Jordan, Hyden Womble and Culbreth, P.C., represents the Debtor in its restructuring efforts. When the company filed for protection from its creditors, it listed over $10 million in assets and debts of more than $1 million. ECOLOCLEAN INDUSTRIES: Losses & Deficits Spur Going Concern Doubt ----------------------------------------------------------------- Ecoloclean Industries, Inc., reported a $489,100 net loss, compared to a $309,086 net loss for the same period last year. At March 31, 2005, Ecoloclean's balance sheet showed a $2,510,859 stockholders' deficit, compared to a $2,049,759 deficit at Dec. 31, 2004. The Company has experienced significant recurring operational losses and negative cash flows from operations and at March 31, 2005 has an accumulated deficit of $4,134,380. These factors raise doubt about the Company's ability to continue as a going concern if changes in operations are not forthcoming. Management, in the first quarter of 2005 has taken a position that by discontinuing operations in certain of its wholly owned subsidiaries, and concentrating its efforts on more productive resources, the Company will achieve more favorable operating results. The Company's ability to continue as a going concern will depend on management's ability to successfully implement a business plan which will increase revenues, control costs, and obtain additional forms of debt and/or equity financing. The Company believes that it will continue to incur losses for at least the next six months, and as a result will require additional funds from debt or equity investments to meet such needs. Without realization of additional capital, it would be unlikely for the Company to continue as going concern. The Company anticipates that its officers will contribute a portion of the funds needed to satisfy the cash needs of the Company for the next six months. However, there can be no assurances to that effect, as the Company has limited revenues and the Company's need for capital may change dramatically if it is successful in acquiring a new business. If the Company cannot obtain needed funds, it may be forced to curtail, or cease, its activities. To meet these objectives, management's plans are to: (i) raise capital by obtaining financing through private placement efforts; (ii) issue common stock for services rendered in lieu of cash payments and (iii) obtain loans from officers to the extent possible. The Company's future ability to achieve these objectives cannot be determined at this time. Although the Company expended substantial financial resources to establish all three of its field service operations, the expected results were not achieved. Accordingly, as indicated above, two of the field service operations were discontinued during the first quarter of 2005 and their assets have been, or are being, liquidated. The Company is concentrating its efforts on the marketing and sales of its Coale Separator and liquid waste remediation services along with the development of its Agricultural Clean-Up Program. In addition, the Company is investigating new opportunities related to its area of interest. All future activities of the Company will be dependent on its ability to obtain additional funding in the near future. Subsidiary Performance Reliant Drilling Systems, Inc. Reliant Drilling Systems, Inc., Ecoloclean Industries' subsidiary, has specialized in providing drilling support services including solids controls programs to oil and gas production and exploration companies. RDS had 2004 revenues of $718,025 and an operating loss of $280,091. These operating losses, along with continued pricing pressures which caused reduced margins, in addition to high overhead costs, led to management's decision to also close RDS's operations during February although a number of equipment rentals continued in the first quarter. Shortly after the management's decision, the Company began selling certain of its equipment assets which were utilized by this subsidiary. Most of these assets were sold by the end of the first quarter 2005. Total proceeds were approximately $243,000, which resulted in a loss of $49,000 from these sales. Sales efforts for the remaining equipment to be sold are continuing. Ecoloclean, Inc. Ecoloclean, Inc., the Company's wholly owned subsidiary, continues to devote efforts to the Dairy Industries as it pertains to the animal waste created by cows, swine and chickens. Recently, during the first quarter of 2005, ECI formed an alliance with another company in this field. By combining its EC Units technology with that of its new partner, the Company was successfully able to demonstrate a ninety-nine percent plus (99%+) phosphate removal from dairy waste. During the second quarter of 2005, the Company will be performing another demonstration for approximately 200 dairy farmers, representatives from Texas A&M University, American Dairy Association, Texas Farm Bureau, the EPA and other interested parties. Based on the test results from the initial demonstration, management expects to be able to offer the dairy industry, along with swine and chicken producers, a much needed solution to their waste disposal problems. Currently, there are insufficient revenues and resources to offset annual operating overhead, which is now projected to be approximately $750,000, taking into consideration management's decision not to offer solids-control and industrial field services after mid-February and mid-March 2005, respectively. Until the Company obtains the amount of working capital required to meet its operating overhead, it will be necessary to continue to call upon the investment community and/or the Company's officers and directors for financial assistance. During the fourth quarter, the Company's officers provided $155,251 in loans to the Company. All of the funds advanced during the fourth quarter were utilized to offset operating overhead expenses. The officers have not indicated a willingness to continue providing funds during 2005 in amounts commensurate to the $1,166,439 advanced during 2004. Efforts are ongoing to obtain funding from sources outside of the Company. At this time, the Company has not received any financing commitments although certain initiatives are ongoing. World Environmental Technologies, Inc. World Environmental Technologies, Inc., a wholly owned subsidiary of Ecoloclean, Inc., has utilized its Louisiana statewide Water Discharge Permit and its patented Electro Coagulation treatment systems to aggressively market its services for oil field and industrial liquid waste remediation. These efforts have resulted in WET acquiring Master Service Agreements from several Refinery Groups and Petroleum Operators, which it is waiting to implement. However, at this time there are no pending contracts or orders. Ecoloclean of Texas Ecoloclean of Texas has been engaged in providing industrial maintenance services including dredging waste-filled ponds and lagoons and cleaning piping, brew kettles and frac tanks. Ecoloclean Industries, Inc. owns two wholly owned subsidiaries: Ecoloclean, Inc., a Texas corporation and Reliant Drilling Systems, Inc., a Louisiana corporation. Ecoloclean, Inc., owns two wholly owned subsidiaries: World Environmental Technologies, Inc., and Ecoloclean of Texas, Inc. Each is involved in wastewater treatment and removal. ELANTIC TELECOM: Six Creditors Transfer $2,024,953 in Claims ------------------------------------------------------------ From March 1 through May 24, 2005, six creditors transferred their claims against Elantic Telecom, Inc., aggregating $2,024,953, to Revenue Management and Debt Acquisition Company of America V, LLC. Transferor Transferee Claim No. Amount ---------- ---------- --------- ------ Les Murray Inc. Debt Acquisition 50 $225 Company of America V, LLC Woodlawn Construction Debt Acquisition $722 Company Company of America V, LLC Insignia Esg Inc. Revenue Management $1,902,166 Insignia Esg Inc. Revenue Management $116,662 Aggreko LLC Revenue Management 162 $1,938 Verdis Companies Inc. Revenue Management $1,100 Verdis Companies Inc. Revenue Management $1,100 Guisti Enterprises Revenue Management $1,040 Headquartered in Richmond, Virginia, Elantic Telecom, Inc. -- http://www.elantictelecom.com/-- provides wholesale fiber bandwidth and carrier services to long-distance, international wireless carriers and competitive local exchange carriers across its fiber optic network. The Company filed for chapter 11 protection on July 19, 2004 (Bankr. E.D. Va. Case No. 04-36897). Lynn L. Tavenner, Esq., and Paula S. Beran, Esq., at Tavenner & Beran, PLC, represent the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors is represented by Danielle M. Varnell, Esq., and David Neier, Esq., at Winston & Strawn. When the Company filed for protection from its creditors, it listed $19,844,000 in total assets and $24,372,000 in total debts. ELDON R. HOFFMAN: Section 341(a) Meeting Slated for June 17 ----------------------------------------------------------- The United States Trustee for Region 15 will convene a meeting of Eldon R. Hoffman's creditors at 1:30 p.m., on June 17, 2005, at 235 Pine Street, Suite 700 in San Francisco, California. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Ross, Calif., Eldon R. Hoffman, is the founder and CEO of Any Mountain Ltd. which filed for bankruptcy on Dec. 23, 2004 (Bankr. N.D. Calif. Case no. 04-12989). Mr. Hoffman filed for chapter 11 protection on May 13, 2005 (Bankr. N.D. Calif. Case No. 05-11174). John H. MacConaghy, Esq., of Sonoma, Calif., represents Mr. Hoffman. When the Debtor filed for protection from his creditors, he reported $11,986,192 in assets and $10,173,593 in debts. EYE CARE: Moody's Assigns SGL-2 Affecting B2 Sr. Implied Rating --------------------------------------------------------------- Moody's Investors Service assigned an SGL -2 speculative grade liquidity rating to Eye Care Centers of America. The SGL-2 rating reflects Moody's expectation that the company will have good liquidity over the next twelve months. ECCA's SGL-2 rating recognizes that ECCA's cash flow generation and existing cash balances are expected to cover cash needs for working capital, scheduled debt amortization, and capital expenditures. A $25 million senior secured revolving credit facility, maturing in 2010, which the company does not plan to access in the near term, provides good liquidity to fund the company's operating needs if there is a misstep in operating cash flow over the next twelve months. Additionally, the company's covenant cushions under the credit facility are adequate. The rating also considers that ECCA's assets are largely encumbered. ECCA's SGL-2 speculative grade liquidity rating is a positive factor supporting the company's long-term B2 senior implied rating. Key restraints to the SGL rating are: * modest to low free cash flow expectations (cash from operations less capital expenditures); * the small size of ECCA'S revolving credit facility; and * relatively few sources of alternate liquidity to draw on in the event of an unexpected business slowdown. The SGL rating is supported by: * modest quarterly EBITDA margins ranging from 7% to 18%; * quarterly cash balances ranging from $6 million to $18 million; * lack of significant maturities; and * expected cash flow from operations. The company's credit facility contains leverage and interest coverage ratios. The leverage covenant (debt/LTM EBITDA) ratchets down from 6.25 times in 2005 to 6.0 times in 2006 and the interest coverage covenant (EBITDAR/Interest) increases from 1.3 times in 2005 to 1.35 times in 2006. Moody's expects ECCA will exceed its leverage and interest coverage ratio over the next twelve months, even under reasonably stressed scenarios. The SGL rating could be positively affected if favorable market conditions lead to significant improvement in cash flow generation and financial flexibility. The SGL rating could be pressured if cash flow generation were to deteriorate or if margins were to weaken and put pressure on covenant compliance. Eye Care Centers of America, Inc., has a senior implied rating of B2 and a negative outlook. Revenue for the LTM ended April 2, 2005 was approximately $400 million. FOOTSTAR: Must Vacate Stores Converting to Sears Essential Format ----------------------------------------------------------------- Judge Adlai S. Hardin, Jr., of the U.S. Bankruptcy Court for the Southern District of New York directs Footstar, Inc., to vacate certain Kmart stores that will be converted into Sears Essentials stores. Judge Hardin holds that upon completion of the conversion, the Kmart stores will no longer constitute "Store(s)" as defined in Footstar's Master Agreement with Kmart and, therefore, will no longer fall within the grant of license provided to Footstar under Section 3.1 of the Master Agreement. Footstar is required to vacate the stores at these locations: (a) by July 9, 2005: * 3973 Stuart, Florida; * 4887 Port St. Lucie, Florida; * 7282 Clinton, Maryland; * 3630 Nashua, New Hampshire; * 7707 Warrenton, Virginia; * 9406 Peoria, Arizona; * 4776 San Diego, California; * 7422 Tustin, California; * 4384 Palatine, Illinois; * 3399 South Plainfield, New Jersey; * 3076 Spring Valley, California; * 3920 El Monte, California; * 4260 San Diego, California; * 4290 San Diego, California; * 4484 St. Petersburg, Florida; * 4767 Hialeah, Florida; * 4180 Louisville, Kentucky; * 4488 Rochester, Michigan; * 4446 Bethlehem, Pennsylvania; and * 4241 East Ridge, Tennessee; (b) by July 13, 2005: * 3638 Tewksbury, Massachusetts; * 3760 No. Ft. Myers, Florida; * 3825 Parsippany, New Jersey; * 3985 Lakeland, Florida; * 4496 Keene, New Hampshire; * 7427 Londonderry, New Hampshire; and * 3124 Corona, California; (c) by July 20, 2005: * 4224 Denver, Colorado; * 7772 Noblesville, Indiana; * 3559 Homer Glen, Illinois; * 3988 Putnam, Connecticut; and * 4206 Warren, Michigan; and (d) by August 10, 2005: * 7678 San Diego, California; * 3476 Clearwater, Florida; * 4039 South Bend, Indiana; * 4869 Deland, Florida; * 9395 Lawnside, New Jersey; and * 4343 West Palm Beach, Florida. Kmart Signage Will Be Removed Footstar argued that the stores presently being converted from Kmart to Sears Essentials are prominently displaying both indoors and outdoors signs saying "Kmart + Sears = Sears Essentials" highlighting the Sears Essentials concept as "Two great stores. One big idea." Footstar asserted that the transition signage promotes the fact that the Pharmacy in the converting stores will be the "same great" Kmart pharmacy, and a draft preliminary services license agreement between Kmart and Sears states that Kmart "shall be permitted to continue to use the name [Kmart Pharmacy] in the Designated Stores even after such Designated Stores are renamed [Sears Mart]." Kmart, however, assured the Court that the use of the transition signage is both transitional and temporary, and that all signs referring to the Kmart trade name will be removed within a matter of weeks after the opening of each Sears Essentials store. With respect to the pharmacies, Kmart said Sears intends to apply for pharmaceutical licenses with respect to each converted store, and that the Kmart trade name will be used in connection with the pharmacy only until each converted store obtains the necessary license to operate as a pharmacy. The Court accepted Kmart's assurances. Definition of "Stores" is Ambiguous Judge Hardin notes that the third element in the definition of "Store(s)" is that of a store operated by Kmart "under the service mark KMART (or some other service mark incorporating KMART in whole or in part or under which the Stores are operated)" or, as applicable to the larger stores, a store "operated by [Kmart] under the service mark SUPER KMART CENTER (or some other service mark incorporating KMART in whole or in part or under which the Stores are operated)." Footstar had argued that the parenthetical clause "or under which the Stores are being operated" must be construed to wholly eliminate the third element limiting the "Store(s)" definition to stores utilizing in some form the Kmart service mark. Any other construction, Footstar said, would render the clause "surplusage or nugatory." Judge Hardin, however, finds the clause ambiguous. Judge Hardin says the substantive provision is the requirement for a store "operated . . . under the service mark KMART." To construe the clause as reflecting an understanding and intention of the parties to nullify and render surplusage the explicit references to the Kmart service mark which immediately precede it is nonsense. According to Judge Hardin, the ambiguity appears to result from a typographical error, a redundant and inadvertent "or" at the beginning of the clause. If the "or" is eliminated from the clause, Judge Hardin says the clause and the parenthetical as a whole make sense. Considering both the specific language employed in the definition of "Store(s)," the language used in the parenthetical and the entire context of the Master Agreement, Judge Hardin finds it perfectly clear as a matter of fact and law that the parties contemplated and intended that the definition of "Store(s)" and the grant of a license was understood and intended to be limited to operation under the trade name "Kmart" or the other trade name employing the mark "Kmart in whole or in part" as Kmart might designate. "This conclusion is in accord with Michigan law," Judge Hardin says. Termination is a Consequence of Conversion Judge Hardin also points out that the relevant Termination provision of the Master Agreement provides for termination "with respect to any Store(s) with a Footwear Department which ceases to operate and be open for business to the public. . . ." Therefore, the conversion of a Kmart Store to a Sears Essentials store does, indeed, constitute a Termination event under the literal language of this provision. "When each of the thirty Kmart stores in question closes its doors on a given day and reopens a day or two later as a Sears Essentials store, the Kmart Store will have 'cease[d] to operate and be open for business to the public;' that particular store will no longer be a Kmart Store with respect to which Footstar is granted a license to operate a Footwear Department under the Master Agreement," Judge Hardin explains. This conclusion, according to Judge Hardin, is not the "exercise [of] a termination provision that does not exist." Termination upon the conversion is a consequence that necessarily follows from a termination provision, which does exist, as provided in the Master Agreement. Footstar Wants Ruling Stayed Pending Appeal Pursuant to Rules 8001(b) and 8005 of the Federal Rules of Bankruptcy Procedures, Footstar, Inc., asks the Bankruptcy Court to stay enforcement of Judge Hardin's ruling pending the outcome of an appeal to the U.S. District Court for the Southern District of New York. Paul M. Basta, Esq., at Weil, Gotshal, & Manges LLP, in New York, asserts that there are numerous grounds on which Judge Hardin's Decision should be reversed. These grounds, coupled with the severe and irreversible harm facing Footstar upon enforcement of any order implementing the Decision, heavily favor the entry of a Stay Order. Mr. Basta contends that the Decision negatively impacts the value of Footstar, Inc.'s business and results in the loss of customers and goodwill. The negative consequences will irreparably harm Footstar absent a stay. The impact of a stay on Kmart is not severe. Mr. Basta points out that Kmart has proceeded with its grand openings of Sears Essentials with the Footstar footwear departments in place. If the Bankruptcy Court issues a stay, the District Court will be able to review the case while Kmart proceeds as planned. Footstar believes that there is a substantial possibility the District Court will disagree with the Bankruptcy Court's view that it can declare the properly spelled and grammatically correct word "or" a typo in two clauses of the Master Agreement and thereby change its meaning to render Kmart free to simply change the name of a store and, on that basis, evict Footstar from footwear departments. Mr. Basta asserts that the effect of deleting "or" is a sea change from the plain meaning of the Agreement as written and signed that no court can impose a rewrite of that plain language based on inferences. While the Bankruptcy Court views the explicit references to the KMART service mark as "surplusage," Footstar maintains that many lawyers would consider them carefully inclusive drafting. Moreover, Mr. Basta argues that the provision is not the grant of a license, it is the promise to grant a license when Kmart starts operating stores under new service marks. The Bankruptcy Court's interpretation precludes this perfectly plausible and sensible interpretation of the Master Agreement in favor of one that creates a forfeiture by deleting the word "or". Additionally, Footstar submits the District Court will determine that the Decision should have concluded that Kmart's use of the KMART + SEARS = SEARS ESSENTIALS signage permanently incorporates the KMART service mark into the SEARS ESSENTIALS service mark by incorporating the goodwill of the KMART service mark regardless of Kmart's assertion that it will discontinue the signage later. The use of the signage to date renders Sears Essentials equal to Kmart today and after. The District Court may well assign error in connection with the Decision's factual resolutions that Kmart did not prove. The Official Committee of Equity Holders and the Official Committee of Unsecured Creditors appointed in Footstar's bankruptcy cases support the request. Kmart Objects Kmart asks Judge Hardin to deny Footstar's request. Amy R. Wolf, Esq., at Wachtell, Lipton, Rosen & Katz, in New York, asserts that Footstar failed to meet its burden for these reasons: (a) for all the reasons stated in the Decision, Footstar is entirely unlikely to prevail on appeal; (b) Footstar has not shown that it will suffer irreparable harm if a stay is denied or that Kmart and Sears will not be substantially harmed by a stay; and (c) Footstar has not shown that the public interest weighs in favor of a stay. According to Ms. Wolf, without presenting a shred of evidence to support its request for a stay, Footstar asserts that the cessation of its operations in the Sears Essentials stores would cause harm that could not be undone if it prevails on appeal. Footstar merely argues, without evidence, that a stay that permits it to remain in the Sears Essentials stores would not substantially harm Kmart and Sears. Footstar's assertion that a stay would serve the public interest because it would preserve Footstar jobs apparently assumes that the public has no interest in the creation of Sears jobs and ignores the fact that, Footstar is seeking to assume a purportedly "amended" Master Agreement that would permit it to reduce store hours and employment. Footstar's argument that the temporary use of the "Kmart" mark on the signage intended for use in the Stores prior to their Grand Opening as Sears Essentials means that the "Sears Essentials" mark will permanently include the "Kmart" mark is no more likely to succeed on appeal than its argument regarding the definition of "Store." There is no case supporting the notion that when a company temporarily uses another company's signage to attract customers, the company will "operate[] under" the other company's mark forever as a matter of law. Ms. Wolf tells the Bankruptcy Court that the fact that Kmart and Sears have been forced by the exigencies of this litigation to tolerate Footstar's presence in certain Sears Essentials stores does not mean that its presence has not materially harmed Kmart and Sears. Footstar's continued presence in stores after they have been converted to Sears Essentials has: (a) drastically complicated the store conversion process; (b) harmed Sears' goodwill for its brand-new Sears Essentials stores; (c) created logistical headaches for store managers and management throughout Kmart and Sears; and (d) deprived Sears of the productive use of 3000 square feet of selling space. "It is astounding that Footstar would characterize the issuance of a stay as allowing the District Court to review the case 'while Kmart proceeds as planned,'" Ms. Wolf says. "There is nothing about having Footstar in the Sears Essentials stores that is what Kmart or Sears 'planned' for these stores." Footstar has presented no evidence that remaining in the Sears Essentials stores would facilitate its reorganization. Considering the disconnect between Footstar's brands and the average Sears Essentials customer, it is equally possible, if not probable, that operating in the Sears Essentials stores will harm Footstar's overall business. 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. FOOTSTAR: Wants to Depose Two Former Kmart Employees ---------------------------------------------------- Anthony J. Albanese, Esq., Weil, Gotshal & Manges LLP, in New York, relates that in connection with the Assumption Litigation, Footstar, Inc., and Kmart Corporation have taken discovery, including numerous depositions. On May 11, 2005, just days before the completion of depositions, Kmart disclosed two former employees, Paul Hueber and Ian Scott, as having "discoverable information on staffing/coverage issues that Kmart may use to support its positions at trial." Kmart also informed Footstar that Messrs. Hueber and Scott currently work and reside in China. Notably, Kmart disclosed Messrs. Hueber and Scott as potential witnesses just days after they completed a weeklong visit to the United States. According to Mr. Albanese, when Kmart disclosed Messrs. Hueber and Scott, Footstar immediately requested to take their depositions in person. Given the distance between New York and China, Footstar offered to take the depositions at any location convenient to the witnesses, including China. Footstar also suggested that other parties be given the option to participate telephonically to avoid imposing additional costs on any other party. Kmart refused to allow Footstar to take the depositions of Messrs. Hueber and Scott in person at this time, and refused to accept service of subpoenas for the depositions. Kmart declared that Footstar could take the depositions of Messrs. Hueber and Scott either by telephone at this time or in person if it waited until the eve of trial. Thereafter, Kmart told Footstar that depositions are not permitted in China, even by telephone, and thus Footstar would have to wait until the eve of trial to depose Kmart's newly disclosed witnesses. Thus, Kmart has unilaterally refused to allow the witnesses' depositions to be procured before the eve of trial -- even though Footstar has agreed to travel to the witnesses. Mr. Albanese asserts that it is extremely prejudicial for Footstar to be forced to wait until the eve of trial to take the depositions of Messrs. Hueber and Scott. Footstar is unaware of the testimony Kmart seeks from these witnesses. This lack of knowledge could have a severe impact on Footstar's ability to effectively lay out its arguments in its pre-trial submissions, which are due prior to the time proposed by Kmart for these two depositions, Mr. Albanese explains. Additionally, Footstar may determine that it wants to call additional witnesses to rebut the testimony of Messrs. Hueber and Scott, which will be virtually impossible if these depositions occur on the eve of trial. Mr. Albanese tells Judge Adlai Hardin of the U.S. Bankruptcy Court for the Southern District of New York that Messrs. Hueber and Scott are not recently discovered witnesses. They have been referenced numerous times by other deponents in Footstar's case. Furthermore, based on the testimony to date, it appears that Messrs. Hueber and Scott may have relevant testimony on issues in this litigation. Mr. Albanese informs the Court that Mr. Hueber was a senior level manger at Kmart overseeing store operations, and there has been testimony that he was a key Kmart representative with respect to certain matters at issue in Footstar's case. In fact, Kmart deems both witnesses significant enough to warrant flying them from China to New York to appear at trial. In this regard, Footstar asks for a protective order: -- compelling Kmart to produce the witnesses immediately for an in person deposition; or -- prohibiting Kmart from introducing their testimony at trial. 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. GE-RAY FABRICS: Employs Avrom R. Vann as Bankruptcy Counsel ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Ge-Ray Fabrics, Inc., to employ Avrom R. Vann, Esq., and his firm, Avrom R. Vann P.C. as bankruptcy counsel. Mr. Vann's services include, but are not limited to: (1) providing legal advice with respect to the Debtor's duties, responsibilities, and powers; (2) assisting the Debtor in its investigation of its acts, conduct, assets, liabilities and financial condition, and as appropriate or warranted, any principals, affiliates and insiders; (3) providing legal advise with respect to the formulation of a plan of reorganization, preparing, filing and processing of: (a) any and all disclosure statements and plans of reorganization or liquidation proposed and any negotiations relating thereto; (b) prosecution of claims against various third parties; and (c) any other matters relevant to the chapter 11 case. (4) assisting and advising the Debtor relative to the administration of its chapter 11 case; (5) attending meetings and negotiating with the representatives of the creditors, and any plan proponents or objectors; (6) assisting the Debtor in the review, analysis, and negotiation of any financing, funding, lock-up or other agreements warranting analysis, review of input of Vann to the Debtor; (7) assisting in assessing and resolving any dispute claims which may be interposed against the Debtor's estate; (8) taking any and all necessary action to protect and preserve the Debtor's business and finances; (9) preparing all necessary reports to the Court and the United States Trustee, assisting in the preparation of the monthly operating statements, preparing all motions, applications, answers, orders, reports and papers in support of the positions taken by the Debtor; (10) appearing as appropriate, before the Bankruptcy Court, the Appellate Courts, and the United States Trustee to protect the Debtor's interest; and (11) performing other legal services as may be required by the Debtor in the administration of its estate and the conduct and operation of its business. Mr. Vann will bill $350 per hour for his services. His associate attorneys bill $175 per hour. His paralegal charges $50 per hour. Mr. Vann assures the Court that he and his firm are disinterested as defined in Sec. 101(14) of the Bankruptcy Code. Headquartered in Manhattan, Ge-Ray Fabrics, Inc. -- http://www.geray.com/-- supplies circular knitted fabrics to the apparel industry. The fabrics include cottons and synthetics, with and without spandex, and range from basic jersey to high fashion knits. Lustar Dyeing & Finishing, Inc., its subsidiary, is a dyeing & finishing processing plant for textile fabrics. The Debtors filed for chapter 11 on April 4, 2005, (Bankr. S.D.N.Y. Case Nos. 05-12201 & 05-12207). When they filed for bankruptcy, the Debtors reported assets and debts totaling between $10 million to $50 million. GINGISS GROUP: Fox Rothschild Approved as Ch. 7 Trustee's Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Alfred T. Giuliano, the Chapter 7 Trustee overseeing the liquidation of The Gingiss Group, Inc., and its debtor-affiliates, permission to employ Fox Rothschild LLP as his counsel. The Court converted the Debtors' chapter 11 cases to a chapter 7 liquidation proceeding on March 30, 2005. Mr. Giuliano was appointed Chapter 7 Trustee on March 31, 2005. Fox Rothschild will: a) provide legal advice to Mr. Giuliano with respect to his powers and duties as a Chapter 7 Trustee in the Debtors' chapter 7 cases; b) prepare on behalf of the Mr. Giuliano all necessary applications, motions, answers, orders, reports and other legal papers in the Debtors' chapter 7 cases; c) analyze the Debtors' financial condition to determine the best course of action to follow in order to achieve the best possible outcome for the Debtors' estates and their creditors; d) appear in Bankruptcy Court to protect the interests of the Chapter 7 Trustee, the Debtors' estates and their creditors; and e) perform all other legal services for Mr. Giuliano that may be necessary and proper in the Debtors' chapter 7 liquidation proceedings. Michael G. Menkowitz, Esq., a Partner at Fox Rothschild, is one of the lead attorneys for Mr. Giuliano. Mr. Menkowitz charges $390 per hour for his services. Mr. Menkowitz reports Fox Rothschild's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Magdalena Schardt Associate $320 Mark G. McCreary Associate $275 Michele M. Padersky Associate $205 Joseph DiStanislao Paralegal $155 Fox Rothschild assures the Court that it does not represent any interest materially adverse to the Chapter 7 Trustee, the Debtors or their estates. Headquartered in Addison, Illinois, The Gingiss Group, Inc., a national men's formal wear rental and retail company, filed for chapter 11 protection on November 3, 2003 (Bankr. D. Del. Case No. 03-13364). James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub represent the Debtors. When the Debtors filed for chapter 11 protection, they listed estimated assets of $1 million to $10 million and estimated debts $50 million to $100 million. The Court converted the Debtors' chapter 11 cases to a chapter 7 liquidation proceeding on March 30, 2005. The Court also appointed Alfred T. Giuliano as the Debtors' Chapter 7 Trustee. GINGISS GROUP: Ch. 7 Trustee Taps Giuliano Miller as Accountants ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Alfred T. Giuliano, the Chapter 7 Trustee overseeing the liquidation proceedings of The Gingiss Group, Inc., and its debtor-affiliates, permission to employ Giuliano Miller & Company LLC as his accountants. Giuliano Miller will: a) provide general accounting and tax advisory services to the Mr. Giuliano regarding the administration of the Debtors' bankruptcy estate; b) review and assist in the preparation and filing of any tax returns, in existing and future IRS examinations and any and all other tax assistance as may be requested from time to time by Mr. Giuliano; c) interpret and analyze financial materials, including accounting, tax, statistical, financial and economic data regarding the Debtors and other relevant parties, and analyze the Debtors' books and records regarding potential avoidance actions; d) analyze and advise Mr. Giuliano regarding additional accounting, financial, valuation and related issues that may arise in the course of the Debtors' chapter 7 proceedings; e) assist Mr. Giuliano attorneys in the preparation and evaluation of any potential litigation and provide testimony on various matters, as requested; and f) perform all other services for Mr. Giuliano which are appropriate and proper in the Debtors' chapter 7 cases. The hourly rates of Giuliano Miller's professionals performing services to Mr. Giuliano are: Designation Hourly Rate ------------ ----------- Managing Member $315 Consultants/Managers $215 - $240 Associates $125 - $165 Administrative Staff $85 Giuliano Miller assures the Court that it does not represent any interest materially adverse to the Chapter 7 Trustee, the Debtors or their estates. Headquartered in Addison, Illinois, The Gingiss Group, Inc., a national men's formal wear rental and retail company, filed for chapter 11 protection on November 3, 2003 (Bankr. D. Del. Case No. 03-13364). James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub represent the Debtors. When the Debtors filed for chapter 11 protection, they listed estimated assets of $1 million to $10 million and estimated debts $50 million to $100 million. The Court converted the Debtors' chapter 11 cases to a chapter 7 liquidation proceeding on March 30, 2005. The Court also appointed Alfred T. Giuliano as the Debtors' Chapter 7 Trustee. GMAC: Fitch Affirms CMBS Transactions Despite GM's Downgrade ------------------------------------------------------------ Fitch Ratings affirms 91 U.S. CMBS transactions for which GMAC Commercial Mortgage is the master servicer. The recent downgrade of General Motors' and GMAC's corporate ratings to 'BB+' from 'BBB-' does not adversely affect the ratings of the transactions, nor is the potential divesture of GMACCM Holdings from GMAC expected to affect the ratings. Fitch today also affirmed the master servicer ratings of GMACCM at 'CMS2+'. For more information, see the separate press release, 'Fitch Affirms GMACCM'S US CMBS Servicer Ratings', which is available on the Fitch Ratings web site at http://www.fitchratings.com/ These transactions master serviced by GMACCM are affirmed by Fitch: -- 277 Park Avenue Finance Corp., Series 1997-C1; -- Aetna Comm'l Mtg Trust 1995-C5; -- American Southwest 1993-2; -- Asset Securitization 1995-MDIV; -- Asset Securitization 1996 MD VI; -- Asset Securitization 1996-D3; -- Asset Securitization 1997-D4; -- BACM 2001-1; -- CAPCO 1998-D7; -- CDC 2002-FX1; -- Chase CMSC 1996-1; -- Chase CMSC 1996-2; -- Chase CMSC 1997-2; -- Chase CMSC 1998-2; -- Chase CMSC 2000-FL1; -- Chase-First Union 1999-1; -- Citigroup Commercial Mortgage Securities Inc. 2005-EMG; -- COMM 2001-FL5; -- COMM 2004-LNB2; -- Commercial Trust I, Series 1993-K-A; -- CSFB 1995-M1; -- CSFB 2000-C1; -- CSFB 2001-SPG1; -- CSFB 2005-C1; -- CSFB/First Union 1995-MF1; -- DLJ 1996-CF1; -- DLJ 1997-CF1; -- Freehold Raceway Mall Trust; -- GFCM LLC 2003-1; -- GGP Malls Properties Trust 2001-GGP1; -- GMAC 2002-FL1; -- GMAC 1997-C1; -- GMAC 1998-C1; -- GMAC 1998-C2; -- GMAC 1999-C1; -- GMAC 1999-C2; -- GMAC 1999-C3; -- GMAC 2000-C1; -- GMAC 2000-C2; -- GMAC 2000-C3; -- GMAC 2000-FL-A; -- GMAC 2000-FL-F; -- GMAC 2001-C1; -- GMAC 2001-C2; -- GMAC 2002-C3; -- GMAC 2003-C2; -- GMACCM 2004-C3; -- GS Mortgage Sec Corp II 1997-GL I; -- GS Mortgage Sec Corp II 2001-GL III; -- GSMS 2005-GSFL VII; -- GSMSC II 2003-C1; -- Istar 2003-1; -- J.P. Morgan Chase 2001-A; -- JP Morgan Chase 2001-CIBC1; -- JPMC 2004-C1; -- JPMC 2004-CIBC9; -- LB 1998-C1; -- LTC Commercial 1996-1; -- Madison Square 2004-1; -- Merrill Lynch 1995-C1; -- Merrill Lynch 1995-C2; -- Merrill Lynch 1995-C3; -- Merrill Lynch 1996-C1; -- Merrill Lynch 1997-C1; -- Merrill Lynch 1998-C1-CTL; -- Morgan Stanley 1996-C1; -- Morgan Stanley 1997-C1; -- Morgan Stanley 1997-HF1; -- Morgan Stanley 1997-XL1; -- Morgan Stanley 1998-HF1; -- Morgan Stanley 1999-FNV1; -- Morgan Stanley 1999-RM-1; -- Morgan Stanley 2001-PPM; -- Morgan Stanley 2003-IQ4; -- Morgan Stanley DW 2001-IQ; -- Mortgage Capital Funding 1996-MC1; -- Mortgage Capital Funding 1996-MC2; -- Mortgage Capital Funding 1998-MC1; -- MSCI 2003-IQ5; -- NationsLink Funding Corp. 1996-1; -- Nomura Asset Sec. Corp. 1994-MD I; -- Nomura Asset Sec. Corp. 1996-MD V; -- Nomura Asset Sec. Corp. 1998-D6; -- Nomura Hotel Mtg Trust 1993-1; -- PaineWebber 1996-M1; -- Salomon Brothers 1999-C1; -- SASCO, Series 1995-C4; -- SASCO, Series 1997-LL1; -- SDG Macerich Properties, L.P. Mortgage Notes 2000-1; -- SL, Series 1997-C1; -- TIAA CMBS I Trust 2001-C1. GMAC AUTO: Fitch Says GM's Downgrade Won't Affect ABS Transactions ------------------------------------------------------------------ Fitch affirms the ratings of the GMAC's retail auto loan, lease and dealer floorplan asset backed securities. While Fitch downgraded the corporate ratings of General Motors and GMAC to 'BB+' from 'BBB-' on May 24, 2005, it is not anticipated that these changes will have a material effect on the performance of GMAC's auto related ABS in the near term. This affirmation affects approximately $10 billion of Fitch rated retail auto loan transactions issued through various Capital Auto Receivables Auto Trusts, approximately $9 billion of Fitch rated dealer floorplan ABS issued through various Superior Wholesale Inventory Finance Trusts and a $1.9 billion Fitch rated retail lease transaction issued in April 2005. Affected securities are listed at the end of this release. While financial pressures have increased for both GM and GMAC, the ABS affirmations are based on the high quality of the underlying receivables, available credit enhancement, the transactions' legal and cash flow structures, GMAC's servicing capabilities and collateral performance trends in each of GMAC's auto loan and lease portfolios. The corporate downgrades reflect the continuing decline in GM's North American sales of key mid-size and large SUV products, increasing product and price competition in the large pickup market, and the impact of these two segments on consolidated profitability. Fitch's Corporate Groupbelieves that declining volumes and profitability, paired with lack of tangible progress in attacking manufacturing and legacy costs will result in negative cash flow through at least 2006. The lowering of GMAC's long- and short- term ratings reflect the strong linkages between GM and GMAC. GM and GMAC's ratings remain on Outlook Negative. As non-investment grade entities, GM and GMAC will likely experience additional financial and operational pressures that may influence future collateral performance. Fitch recognizes the link between seller/servicer financial and operational condition and the collateral performance of ABS and treats it as a risk factor when evaluating credit enhancement and assigning ratings. Key risk factors in retail auto loan and lease ABS differ from corporate risk factors and primarily center on consumer credit risk, residual value risk and wholesale market conditions. Dealer floorplan transactions, however, are more exposed to the risks that resulted in negative credit migration at the corporate level most notably declining vehicle sales and net pricing. For loan and lease backed transactions, the near- to mid-term effect on collateral performance is considered to be well within the scenarios contemplated in assigning ratings, particularly given the strong credit quality and low level of defaults, losses and performance volatility. Longer term, a significant deterioration in servicing quality or a rapid, severe decline in wholesale values and a corresponding increase in loss severity, while also considered in the initial rating process, are more difficult to quantify and are being monitored closely. Financial and operational pressures will likely influence GMAC's dealer floorplan transactions more visibly given the dealer, manufacturer and finance company relationship. Performance of dealer floorplan transactions is dependent, to a certain degree, on the ability and willingness of GM to support vehicle sales and its dealer network through incentives and financing. Decreased sales are contemplated through structural enhancements, like early amortization events tied to dealer repayment rates and a reserve step up mechanism. Payment rates are influenced by consumer demand for GM vehicles since dealers typically repay a loan upon sale of the financed vehicle. As sales have slowed, SWIFT payment rates have been affected and are being closely monitored. GMAC's SWIFT dealer floorplan transactions have exhibited strong performance over the past several years. Losses have been very low and dealers are near historical peaks in terms of financial strength. Fitch is comfortable that conservative stress scenarios and credit enhancement considered at the time the transactions were rated continue to adequately protect investors at the corresponding rating levels. Fitch's Structured Finance teams will continue to work closely with both the Corporate and Financial Institutions analysts to monitor the status of developments at the corporate level and to consider how ABS performance is influenced by these developments. Fitch affirms the current ratings assigned to all the securities listed below: Retail Auto Loan ABS: Capital Auto Receivables Asset Trusts: Series 2002-2 Class A-4 notes 'AAA'; Certificates 'AAA'. Series 2002-3 Class A-3 notes 'AAA'; Class A-4 notes 'AAA'; Certificates 'AA+'. Series 2002-4 Class A-4 notes 'AAA'; Certificates 'AA+'. Series 2002-5 Class A-4 notes 'AAA'; Certificates 'AA+'. Series 2003-1 Class A3-A notes 'AAA'; Class A3-B notes 'AAA'; Class A4-A notes 'AAA'; Class A4-B notes 'AAA'; Certificates 'A'. Series 2003-2 Class A3-A notes 'AAA'; Class A3-B notes 'AAA'; Class A4-A notes 'AAA'; Class A4-B notes 'AAA'; Certificates 'AA-'. Series 2003-3 Class A-1A notes 'AAA'; Class A-1B notes 'AAA'; Class A-2A notes 'AAA'; Class A2-B notes 'AAA'; Class A3-A notes 'AAA'; Class A3-B notes 'AAA'; Class A4-A notes 'AAA'; Class A4-B notes 'AAA'; Class B-1 certificates 'A'; Class B-2 certificates 'A'. Series 2004-1 Class A-2 notes 'AAA'; Class A-3 notes 'AAA'; Class A-4 notes 'AAA'; Certificates 'A+'. Series 2004-2 Class A-1A notes 'AAA'; Class A-1B notes 'AAA'; Class A-2 notes 'AAA'; Class A-3 notes 'AAA'; Class A-4 notes 'AAA'; Class B notes 'A+'; Class C notes 'BBB+'; Class D notes 'BB+'. Retail Auto Lease ABS: Capital Auto Receivables Asset Trust Series 2005-SN1 Class A-1 notes 'F1+'; Class A-2A notes 'AAA'; Class A-2B notes 'AAA'; Class A-3A notes 'AAA'; Class A-3B notes 'AAA'; Class A-4 notes 'AAA'; Class B-1 notes 'A'; Class B-2 notes 'A'; Class C notes 'BBB'. Dealer Floorplan ABS: Superior Wholesale Inventory Finance Trust VIII 2003-A Term Notes 'AAA'; 2003-A Certificates 'A+'; 2004-A Term Notes 'AAA'. SWIFT IX 2004-A Term Notes 'AAA'; 2004-A Certificates 'A+'. SWIFT X 2004-A Class A Term Notes 'AAA' 2004-A Class B Term Notes 'A' 2004-A Class C Term Notes 'BBB' SWIFT XI 2005-A Class A Term Notes 'AAA' 2005-A Class B Term Notes 'A' 2005-A Class C Term Notes 'BBB+' 2005-A Class D Term Notes 'BB+'. GMAC COMMERCIAL: Fitch Downgrades Corporate Credit Rating to BB+ ---------------------------------------------------------------- Fitch Ratings affirms GMAC Commercial Mortgage's 'CMS2+' U.S. master servicer rating and 'CPS2+' primary servicer rating. The master servicer rating reflects GMACCM's proven ability to effectively monitor and report commercial mortgage-backed securities transactions as well as oversee primary servicers and provide data to market participants. The primary servicer rating reflects continued enhancements made to the primary servicing processes and technological improvements that contribute to improved work flows and data management. On May 24, 2005, Fitch downgraded General Motors' and GMAC's corporate ratings to 'BB+' from 'BBB-'. Also, it has been announced that the division that includes servicing, GMACCM Holdings, may be partially divested from GMAC. This notwithstanding, based on conversations with senior management of GMACCM, Fitch believes the recent ratings action on GMAC and the potential divesture should not affect GMACCM's day-to-day operations, including advancing obligations. The servicing divisions have sufficient liquidity and access to capital to fund their operations and maintain the quality of service that supports the rating affirmation. Fitch will continue to closely monitor any effect the downgrade or potential divestiture may have on the servicer ratings. As of April 30, 2005, GMACCM was either primary or master servicer on 304 CMBS transactions, totaling $102 Billion. As master servicer, GMACCM oversees 58 primary servicers with a balance of $16 Billion. For more information about Fitch's commercial mortgage servicer ratings or rating criteria, refer to the report titled 'Commercial Mortgage Servicer Rating Criteria,' dated April 11, 2002, and available on the Fitch Ratings web site at http://www.fitchratings.com/ GRUPPO COVARRA SA: Section 304 Petition Summary ----------------------------------------------- Petitioner: Lic. Miguel Arroyo Ramirez Liquidator and Foreign Representative Debtor: Gruppo Covarra S.A. de C.V. Kim 0,5 Caretera Cuernavaca-Cuautla Col. Flores Magon C.P. 62370 Cuernavaca, Morelos, Mexico Case No.: 05-13925 Type of Business: The Debtor designs, manufactures, sells, distributes, imports and exports men's clothing. Gruppo Covarra has four subsidiaries, namely, Fabrica de Casimires Rivetex S.A. de C.V., Confitalia, S.A. de C.V., Foderami Covarra S.A. de C.V., and Adoc S.A. de C.V. Rivetex produced fabric, Foderami produced lining material, Confitalia manufactured the products, and Adoc provided administrative services. Section 304 Petition Date: May 27, 2005 Court: Southern District of New York (Manhattan) Judge: Prudence Carter Beatty Petitioner's Counsel: Lynn P. Harrison, III, Esq. Curtis, Mallet-Prevost, Colt & Mosle, LLP 101 Park Avenue New York, New York 10178-0061 Tel: (212) 696-6028 Fax: (212) 697-1559 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million HEALTHGATE DATA: Deregisters Stock & Suspends SEC Reporting ----------------------------------------------------------- HealthGate Data Corp. filed a Form 15 with the Securities and Exchange Commission to deregister its common stock and suspend its reporting obligations under the Securities and Exchange Act of 1934. The Company expects that the deregistration will become effective within 90 days of its filing with the SEC. Upon filing of the Form 15, the Company's obligation to file with the SEC certain reports and forms, including Forms 10-K, 10-Q and 8-K, will immediately be suspended. In addition, the common stock of HealthGate Data Corp. will no longer be eligible for quotation on the OTC Bulletin Board. The Company anticipates that its common stock will be quoted on the Pink Sheets following the Form 15 filing and subsequent delisting from OTC Bulletin Board, to the extent market makers commit to make a market in its shares. However, the Company can provide no assurance that trading in its common stock will continue. "After careful consideration, the Company took this action because the disadvantages to our shareholders of continuing as a public Company far outnumber the advantages to them," Bill Reece, HealthGate's President and CEO said. Mr. Reece stated that the board of directors considered a number of factors in making this decision, including: (1) the dramatically increased costs, both direct and indirect, associated with the preparation and filing of the Company's periodic reports with the SEC; (2) the expected substantial increase in costs associated with being a public company in light of regulations promulgated as a result of the Sarbanes-Oxley Act of 2002; (3) the Company has fewer than 300 registered stockholders; and (4) the lack of analyst coverage and minimal liquidity for the Company's common stock. Mr. Reece said, "Given the Company's size, the cost of maintaining its public status is considerable, and involves substantial expenses and considerable management time. For a company our size, the additional costs cannot be justified. We believe the Company and its shareholders are better served in the long run if the Company's management focuses its attention and resources on implementing the Company's business plan and building long term value. The Company intends to update its shareholders with financial information on an annual basis." About the Company HealthGate Data Corp. is a provider of evidence-based support tools, applications, and healthcare content that helps healthcare providers and payors improve quality of care, reduce variability of care, reduce costs, and reduce risk and liability. HealthGate's evidence-based clinical guidelines are backed by rigorous and independent medical review supported through its affiliations with academic medical facilities including Duke University Medical Center, Vanderbilt University Medical Center, Emory University School of Medicine, and Oregon Health and Science University. More information on HealthGate can be found at http://www.healthgate.com/ At Mar. 31, 2005, HealthGate Data Corp.'s balance sheet showed a $481,123 stockholders' deficit, compared to a $213,529 positive equity at Dec. 31, 2004. HEALTHGATE DATA: Auditors Express Going Concern Doubt ----------------------------------------------------- At March 31, 2005, HealthGate Data Corp. had approximately $1,540,000 of cash and cash equivalents and approximately $838,000 of negative working capital, including approximately $2,159,000 of deferred revenue. The Company has incurred substantial losses and negative cash flows from operations in every fiscal year since inception. In the three months ended March 31, 2004 and 2005, the Company incurred net losses of approximately $161,000, and $704,000, respectively, and negative cash flows from operations of approximately $921,000, and $350,000, respectively. Additionally, as of March 31, 2005, the Company had an accumulated deficit of approximately $100,577,000. In connection with its audit for the year ended December 31, 2004, HealthGate received a report from PricewaterhouseCoopers LLP in Boston, Massachusetts -- its then independent registered public accounting firm -- containing an explanatory paragraph stating that the Company's historical losses and negative cash flows from operations raise substantial doubt about HealthGate's ability to continue as a going concern. About the Company HealthGate Data Corp. is a provider of evidence-based support tools, applications, and healthcare content that helps healthcare providers and payors improve quality of care, reduce variability of care, reduce costs, and reduce risk and liability. HealthGate's evidence-based clinical guidelines are backed by rigorous and independent medical review supported through its affiliations with academic medical facilities including Duke University Medical Center, Vanderbilt University Medical Center, Emory University School of Medicine, and Oregon Health and Science University. More information on HealthGate can be found at http://www.healthgate.com/ At Mar. 31, 2005, HealthGate Data Corp.'s balance sheet showed a $481,123 stockholders' deficit, compared to a $213,529 positive equity at Dec. 31, 2004. J/Z CBO: Fitch Upgrades $19.4 Mil. Class C Fixed-Rate Notes to B- ----------------------------------------------------------------- Fitch Ratings has upgraded three classes of notes issued by J/Z CBO (Delaware), LLC. These rating actions are effective immediately: -- $65,213,726 class A floating-rate notes upgraded to 'AAA' from 'AA'; -- $21,775,000 class B fixed-rate notes upgraded to 'BBB-' from 'BB' and removed from 'Rating Watch Negative'; -- $19,400,000 class C fixed-rate notes upgraded to 'B-' from 'CCC'; -- $19,400,000 class D fixed-rate notes remain at 'C'. J/Z CBO, which closed on May 16, 2000, is a collateralized bond obligation managed by Babson Capital Management LLC, which is currently rated 'CAM 2' by Fitch. J/Z CBO is composed primarily of high yield bonds with a small allocation of mezzanine debt. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates relative to the minimum cumulative default rates for the rated liabilities. Since the previous review on May 3, 2004, J/Z CBO has shown noticeable improvement. The class A notes have amortized to $65,213,726 from $105,213,726, representing 60.1% of the original note balance. In addition, several defaulted mezzanine debt securities received recoveries higher than anticipated at the time of the previous review. The class A amortization and strong recoveries are evident in the class A overcollateralization test, which has improved to 202.2% from 129.3%, versus a trigger of 183%, as of the April 11, 2005, trustee report. Since the previous review, defaulted assets have declined to 17.7% from 33.9% of the total collateral and eligible investments, and assets rated 'CCC+' or lower have declined to 20.9% from 49.6%, excluding defaults. Also, the market value OC test, which ensures market value collateral coverage to the class A notes, is passing at 206.8% versus a trigger of 145%. On the Nov. 30, 2003, payment date, J/Z CBO failed to pay its class B current interest, resulting in an event of default. Subsequent amendments to the legal documents allowed the forbearance of the event of default, and allowed for the deferral of class B notes interest without triggering a future event of default. Currently, class B deferred interest totals approximately $1.1 million. Fitch expects the class B investors to receive the ultimate payment of interest and principal under 'BBB-' stress scenarios by the legal final maturity date. The classes C and D notes have deferred interest totaling $5.4 million and $8.2 million, respectively, and it is expected that the classes C and class D notes will continue to defer interest at rates of 10.09% and 14.59%. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/ JACUZZI BRANDS: Unclear Strategy Prompts S&P to Watch Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Jacuzzi Brands Inc. including its 'B+' corporate credit rating, on CreditWatch with developing implications. The action followed the West Palm Beach, Florida-based bath and plumbing products company's announcements that it is selling its Eljer Plumbingware business and a 70% ownership interest in its Rexair subsidiary and retaining Lazard Freres & Co. LLC to evaluate alternative strategies to create additional shareholder value. "The CreditWatch placement reflects our uncertainty about which one of a range of strategies Jacuzzi's board may ultimately decide to pursue," said Standard & Poor's credit analyst Lisa Wright. "Jacuzzi's ratings could be lowered if it undertakes a large, debt-financed acquisition, although we do not believe that this is a likely strategy, or if the company is taken private in a leveraged buyout transaction. The corporate credit rating could be raised by one notch if its consumer end markets do not weaken further, manufacturing and foreign sourcing cost-reduction initiatives continue to be implemented successfully, and the company decides to hold excess transaction proceeds, after paying down its term loan and revolving credit facility, in order to buy back its bonds after the lock-out period ends in July 2007." The debt issue rating could be raised if a portion of transaction proceeds is used to repay all outstanding senior bank debt as planned (thus improving the standing of the remaining debt in the capital structure) or if the company is sold to a larger, better capitalized industry player. Standard & Poor's will resolve the CreditWatch once Jacuzzi's board has reviewed Lazard's proposals and has committed to a strategy, which is expected to occur during the next few months. JILLIAN'S ENT: Wants Until Sept. 30 to Remove Civil Actions ----------------------------------------------------------- Steven L. Victor, the Plan Administrator pursuant to Jillian's Entertainment Holdings Inc.'s First Amended Joint Liquidation Plan of Reorganization, asks the U.S. Bankruptcy Court for the Western District of Kentucky, to extend his deadline to remove civil actions to Sept. 30, 2005. Mr. Victor's counsel, Mark A. Robinson, Esq., at Valenti Hanley & Crooks, PLLC, in Louisville, Kentucky, informs the Court that the Administrator have been actively evaluating potential Avoidance Actions and objections to Claims. Based upon the Administrator's evaluation of potential Avoidance Actions, the Administrator is in the process of delivering letters to around 123 individuals and entities that are subject to being named as defendants in Avoidance Actions. The Demand Letters inform the Potential Defendants: (a) of the nature and amount of the claims against them; and (b) that the claims will be the subject of Avoidance Actions. The Demand Letters also encourage a dialogue with the Administrator whereby a consensual resolution can be reached in order to avoid the time, expense and risk of litigation. The Administrator believes that, if the Court will grant the extension of time requested, he will be able to refrain from filing many of the Avoidance Actions because the underlying claims will be resolved through the process of negotiation without the need for litigation. Headquartered in Louisville, Kentucky, Jillian's Entertainment Holdings, Inc. -- http://www.jillians.com/-- operates more than 40 restaurant and entertainment complexes in about 20 states. The Company filed for chapter 11 protection on May 23, 2004 (Bankr. W.D. Ky. Case No. 04-33192). Edward M. King, Esq., at Frost Brown Todd LLC and James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets of more than $100 million and estimated debts of over $100 million. Judge David T. Stosberg confirmed the Debtors' Amended Joint Liquidating Plan on Dec. 12, 2004. KB HOME: Fitch Rates $300 Million 6.25% Unsecured Notes at BB+ -------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to KB Home's (NYSE: KBH) $300 million, 6.25% senior unsecured notes due June 15, 2015. The Rating Outlook is Positive. Proceeds from the new debt issue will be largely used to pay down bank debt and for other corporate purposes. The current ratings and Outlook reflect KB Home's solid, consistent profit performance in recent years and the expectation that the company's credit profile will continue to improve as it executes its business model and embarks on a new period of growth. The ratings also take into account KB Home's primary focus on entry-level and first-step trade-up housing (the deepest segments o4f the market), its conservative building practices, and effective utilization of return on invested capital criteria as a key element of its operating model. Over recent years the company has improved its capital structure and increased its geographic diversity and has better positioned itself to withstand a meaningful housing downturn. Fitch also has taken note of KB Home's role as an active consolidator within the industry. Risk factors also include the cyclical nature of the homebuilding industry. Fitch expects leverage (excluding financial services) to remain comfortably within KB Home's stated debt to capital target of 45-55%. KB Home has expanded EBITDA margins over the past several years on steady price increases, volume improvements and reductions in SG&A expenses. Also, KB Home has produced record levels of home closings, orders and backlog as the housing cycle extended its upward momentum. KB Home realizes a significant portion of its revenue from California, a region that has proved volatile in past cycles. But KB Home has reduced this exposure as it has implemented its growth strategy and currently sources approximately 16% of its current deliveries from California, compared with 69% in fiscal 1995. Over recent years KB Home shifted toward a presale strategy, producing a higher backlog/delivery ratio and reducing the risk of excess inventory and debt accumulation in the event of a slowdown in new orders. The strategy has also served to enhance margins. The company maintains a 4.4 year supply of lots (based on deliveries management has projected for 2005), approximately 51% of which are owned and the balance controlled through options. Inventory turnover has been consistently at or above 1.4 times during the past nine years. Balance sheet liquidity has continued to improve as a result of efforts to reduce long-dated inventories, quicken inventory turns and improve returns on capital. Progress in these areas has allowed the company to accelerate deliveries without excessively burdening the balance sheet. As the housing cycle progresses, creditors should benefit from KB Home's solid financial flexibility supported by cash and equivalents of $113 million and $393.2 million available under its $1 billion domestic unsecured credit facility (net of $170.9 million of letters of credit) as of Feb. 28, 2005. In addition, liquid, primarily pre-sold work-in-process and finished inventory totaling $3.696 billion provides comfortable coverage for construction debt. Debt is well laddered and the current $1 billion revolving credit facility matures in October of 2007. Management's share repurchase strategy has been aggressive at times, but has not impaired the company's financial flexibility. KB Home repurchased $81.9 million of stock in fiscal 1999, $169.2 million in 2000, $190.8 million in 2002, $108.3 million in fiscal 2003 and $66.1 million (1 million shares) in fiscal 2004. No stock was repurchased in the first quarter of 2005. At the end of February 2005, one million shares remained under the Board of Directors' repurchase authorization. Notwithstanding these repurchases, book equity has increased $1,511.7 million since the end of 1999, while construction debt grew $1,385.9 million. KB Home has had a moderate dividend. In early December 2004 the board of directors sharply raised the annual dividend from $0.50 per share to $0.75 per share (adjusted for the recent 2 for 1 stock split) - a pay out of 9.5%, based on forecast earnings for fiscal 2005. However, the cash expenditures on dividends represent only about $60 million, based on the current share count. KBH has lessened its dependence on the state of California, but it is still the company's largest market in terms of investment. Operations are dispersed within multiple markets in the north and in the south. During the 1990s the company entered various major Western metropolitan markets, including Phoenix, Las Vegas, Denver, Dallas, Austin and San Antonio, and has risen to a top 5 ranking in each market except Dallas (number 10 ranking). In an effort to further broaden and enhance its growth prospects it has established operations (greenfield and by acquisition) in the southeastern U.S., including various markets in Florida, Atlanta, Georgia, North and South Carolina. In recent quarters, the company entered the Midwest (Chicago and Indianapolis) via acquisitions. Fitch recognizes the company as a consolidator in the industry, but expects future acquisitions will be moderate in size and largely funded through cash flow. LARRY BJURLIN: Wants Serena W. Bjurlin to Make Full Disclosure -------------------------------------------------------------- Larry A. Bjurlin asks the U.S. Bankruptcy Court for the District of Arizona for permission to conduct an examination of Serena W. Bjurlin, pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure, at the offices of: Hebert Schenk P.C. 4742 North 24th Street, Suite 100 Phoenix, Arizona 85016 at a date and time agreeable to the parties and to compel production of these documents: 1. a list of all household goods and furnishings, including audio, video, and computer equipment, including an identification of value; 2. a list of all books, pictures, and other art objects, antiques, stamp, coin, record, tape, compact disc, and other collections or collectibles, including an identification of value; 3. a list of all wearing apparel, including an identification of value; 4. a list of all furs and jewelry, including an identification of value; 5. a list of all firearms and sports, photographic, and other hobby equipment, including an identification of value; 6. a list of all interests in insurance policies. Name insurance company of each policy and itemize surrender or refund value of each; and 7. a list of all other personal property otherwise owned by you, whether owned as sole and separate property or community property, including an identification of value. The Debtor wants to question Ms. Bjurlin regarding the acts, conduct, property, liabilities, loans, and financial condition of the estate, and with regard to any other matter which may affect administration of the estate and more specifically, so that the Debtor can determine the status of the bankruptcy estate's assets in which he has an interest. Larry A. Bjurlin filed for chapter 11 protection on April 20, 2005 (Bankr. D. Ariz. Case No. 05-06793). D. Lamar Hawkins, Esq., at Hebert Schenk P.C., represents Mr. Bjurlin. Mr. Bjurlin estimated assets between $1 Million and $10 Million and liabilities between $10 million and $50 million in his bankruptcy petition. LEAP WIRELESS: Lenders Waive Credit Pact Defaults Until June 15 --------------------------------------------------------------- Leap Wireless International, Inc., is unable to file its Quarterly Report for the fiscal quarter ended March 31, 2005, in a timely manner due to a review in the Company's lease-related accounting practices, including its switch and cell-site retirement and remediation obligations. In light of a letter from the staff of the Office of the Chief Accountant of the Commission to the American Institute of Certified Public Accountants, dated Feb. 7, 2005. Although the Company worked diligently on such review, the review process took a considerable amount of time because the Company has more than 2,500 leases, many of which were amended during the course of the Company's now completed bankruptcy proceedings, further complicating and extending the review process. As a result of this review, and in connection with preparing for its annual audit, the Company identified accounting errors in its unaudited interim financial statements included in the Company's Quarterly Report for the three months ended September 30, 2004. The Company's management and Audit Committee concluded that the Company's unaudited interim financial statements for the one and seven month periods ended July 31, 2004, and the two month period ended September 30, 2004 included in the Third Quarter Report should be restated to correct these accounting errors. The Company finalized its financial statements for the period ending Dec. 31, 2004, and filed its 2004 Financial Report on May 16, 2005, and plans to file its amended Third Quarter Financial Report. Promptly following the filing of these two periodic reports, the Company's accounting and financial reporting staff will focus on finalizing the Company's financial statements to be included in the First Quarter Report. The Company currently estimates that the First Quarter Report will be filed no later than June 15, 2005. As previously reported, the Company received a waiver from its lenders pursuant to the Credit Agreement, dated Jan. 10, 2005, between the Company, Cricket Communications, Inc., Bank of America, N.A. as Administrative Agent, and the other lenders party thereto, which extended the deadline for providing the Company's financial statements and the related compliance certificate for the fiscal quarter ended March 31, 2005 to its lenders until June 15, 2005. Internal Control In connection with their evaluation of Leap Wireless' disclosure controls and procedures for the 2004 Financial Report, the Company's Chief Executive Officer and Acting Chief Financial Officer concluded that certain material weaknesses in the Company's internal control over financial reporting existed as of Dec. 31, 2004, with respect to turnover and staffing levels in the accounting and financial reporting departments (arising in part in connection with the Company's now completed bankruptcy proceedings), the application of lease-related accounting principles, fresh-start reporting oversight, and account reconciliation procedures. The Company expects that its First Quarter Financial Report will also report that these material weaknesses existed as of March 31, 2005, the end of the period covered by such report. In August 2004, the Company and Cricket Communications, Inc. satisfied the conditions to the Company's Fifth Amended Joint Plan of Reorganization and the Company emerged from Chapter 11 bankruptcy. The Plan of Reorganization implemented a comprehensive financial reorganization that, among other matters, significantly reduced the Company's outstanding indebtedness. On the effective date of the Plan of Reorganization, the Company's long-term debt was reduced from a book value of more than $2.4 billion to debt with an estimated fair value of approximately $412.8 million. In addition, in connection with the Company's emergence from bankruptcy, it adopted fresh-start reporting as of July 31, 2004, which resulted in material adjustments to the historical carrying values of many of the Company's assets and liabilities. Under fresh-start reporting, the Company is deemed to be a new entity for financial reporting purposes. As a result of the foregoing, the Company's financial statements at, and for, the period ended March 31, 2005, will not be comparable in many respects to the Company's financial statements at, and for, the period ended March 31, 2004. As of May 17, 2005, due to the delays in the filing of the Annual Report and the necessity of amending the Third Quarter Financial Report, the Company is still finalizing its operating results for the three month period ended March 31, 2005, and has not yet finalized its financial statements for the three month period ended March 31, 2005. However, the Company expects that its operating results for the three months ended March 31, 2005 and the three months ended March 31, 2004 will generally compare as follows: (1) total consolidated revenue in the first quarter of 2005 is expected to be in the range of $223 million to $228 million, compared to approximately $207 million in the first quarter of 2004, reflecting in part an increase in net customers, an increase in average revenues per customer, higher average net revenue per handset sold and higher handset sales volumes; (2) total operating expenses in the first quarter of 2005 will be lower than in the first quarter of 2004, reflecting primarily a decrease in depreciation and amortization expense in 2005 as a result of the revaluation of fixed assets at the implementation of fresh start reporting; and (3) interest expense in the first quarter of 2005 will be higher than interest expense in the first quarter of 2004 since the accrual of interest expense was stayed during the pendency of the bankruptcy in 2004. As a result, the Successor Company expects to report net income in the first quarter of 2005 whereas the Predecessor Company reported a net loss in the first quarter of 2004. The Company cautions that these financial results are preliminary, based on currently available information and are subject to the final quarterly closing process and the completion of customary quarterly review procedures by the Company. Default On April 15, 2005, the Company obtained a waiver of certain defaults and potential defaults under the Credit Agreement. The Company has not completed the preparation of its audited financial statements for the year ended December 31, 2004, by March 31, 2005, and, as a result, was not able to deliver such financial statements to the administrative agent under the Credit Agreement by such date. The failure to deliver such financial statements by March 31, 2005, was a default under the Credit Agreement. Accordingly, the Company requested and received from the required lenders under the Credit Agreement a waiver of the Company's obligations to provide such audited financial statements to the administrative agent until May 16, 2005. The waiver also extended the Company's obligation to provide its unaudited financial statements for the quarter ended March 31, 2005, to the administrative agent until June 15, 2005, and waived any default that may occur under the Credit Agreement if the Company amends its financial statements for the fiscal quarter ended Sept. 30, 2004, or for any earlier period, provided certain conditions are met. The Company expects that it will meet all of the requirements of the waiver in a timely manner. * * * As reported in the Troubled Company Reporter on May 20, 2005, Standard & Poor's Ratings Services kept its rating for San Diego, Calif.-based wireless carrier Leap Wireless International Inc. (B-/Watch Neg/--) on CreditWatch with negative implications, where they were placed on April 5, 2005, despite the company's recent filing of its 2004 10-K. The company has not yet filed its 10-Q for the first quarter of 2005, as required under terms of its bank loan. The waiver it previously received for the late filing of its financial statements provides an extension until June 15, 2005, to deliver results for the first quarter of 2005. Assuming the company files its 10-Q by June 15, the ratings are expected to be affirmed. However, a negative outlook may be assigned, to reflect the incremental financial and business risk associated with the funding and build-out of new licenses. The recovery rating of "3" on the $610 million secured bank loan at Cricket Communications Inc. is not on CreditWatch, because it is unlikely to be impaired by the factors that would drive a potential downgrade. "The company has not yet provided good clarity on its funding plans for build-out and launch of wireless markets covered by FCC spectrum licenses obtained in broadband PCS Auction No. 58 in early 2005," said Standard & Poor's credit analyst Catherine Cosentino. Headquartered in San Diego, California, Leap Wireless International Inc. -- http://www.leapwireless.com/-- is a customer-focused company providing innovative communications services for the mass market. Leap pioneered the Cricket Comfortable Wireless(R) service that lets customers make all of their local calls from within their local calling area and receive calls from anywhere for one low, flat rate. As of December 31, 2004, the company's consolidated assets show $2,090,482,000 and consolidated liabilities show $620,632,000. The Company filed for chapter 11 protection on April 13, 2003 (Bankr. S.D. Calif. Case No. 03-03470). The Honorable Louise DeCarl Adler entered an order confirming the Company's Fifth Amended Plan on October 22, 2003, and the plan became effective on Aug. 17, 2004. Robert A. Klyman, Esq., Michael S. Lurey, Esq., and Eric D. Brown, Esq., at Latham and Watkins LLP, represent the Debtors in their restructuring efforts. LEXINGTON RESOURCES: Losses & Deficits Spur Going Concern Doubt --------------------------------------------------------------- Dale Matheson Carr-Hilton Labonte expressed substantial doubt about Lexington Resources Inc.'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 auditors cite the Company's $1.9 million working capital deficit, $9.2 million losses since inception and further losses anticipated in the development of its oil and gas properties. The ability of the Company to continue as a going concern is dependent on raising additional capital to fund ongoing research and development and ultimately on generating future profitable operations. The Company says it will continue to fund operations with advances, other debt sources, further equity placements and the expected exercise of outstanding warrants. The Company reported a $2.7 million net loss for the quarter ended March 25, 2005, compared to a $3.1 million net loss for the same period in 2004. The Company's current liabilities exceed its current assets by $2 million. At March 31, 2005, the Company's $3.7 million total assets consisted of: (i) $63,007 in cash; (ii) $97,648 in accounts receivable; (iii) $1,447,212 carrying value of proved oil and gas properties (net of depreciation); (iv) $2,056,010 in carrying value of unproved oil and gas properties; and (v) $2,831 in other property and equipment (net of accumulated depreciation). At March 31, 2005, Lexington reported $2.4 million in total liabilities consisting of: (i) $1,086,609 in current and non-current drilling obligations; and (ii) $1,314,336 in accounts payable and accrued liabilities. Stockholders' equity decreased from $1.7 million for fiscal year ended Dec. 31, 2004, to $1.3 million for the three-month period ended March 31, 2005. Lexington Resources has not generated positive cash flows from its operating activities. For the three-month period ended March 31, 2005, net cash flows used in operating activities was $620,734 compared to net cash flows used in operating activities for the three-month period ended March 31, 2004 of $99,584. Net cash flows used in operating activities for the three-month period ended March 31, 2005 consisted primarily of a net loss of $1.7 million. Net cash flows used in operating activities was adjusted by $899,746 to reconcile net loss to net cash from operating activities primarily relating to the non-cash expense of the grant of stock options and non-cash compensation and oil and gas depletion. The Company's existing working capital, further advances and possible debt instruments, anticipated warrant exercises, further private placements, and anticipated cash flow are expected by management to be adequate to fund operations over the next six months. The Company has no lines of credit or other bank financing arrangements. Generally, Lexington has financed operations to date through the proceeds of the private placement of equity and debt securities. In connection with its business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) oil and gas operating properties; (ii) drilling initiatives; and (iii) property acquisitions. The Company intends to finance these expenses with further issuances of securities, debt and or advances, and revenues from operations. Thereafter, it expects it will need to raise additional capital and increase its revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to current shareholders. Further, such securities might have rights, preferences or privileges senior to the common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available, or are not available on acceptable terms, the Company may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict its business operations. Lexington Resources Inc. is an Oklahoma Limited Liability Corporation incorporated on Sept. 29, 2003 formed for the purposes of the acquisition and development of oil and natural gas properties in the United States, concentrating on coal bed methane gas acquisition and production initiatives. As planned, principal operations commenced in 2004 and the Company is no longer considered to be an exploration stage company. The Company expects to weight its future development initiatives towards gas production and stands committed to developing into a profitable independent oil and gas producer through the systematical expansion of operations and the acquisition of new drilling targets while organizing drilling and production initiatives on leased properties. LIBERTY GROUP: Moody's Raises $330M Sr. Sec. Loan Rating to B1 -------------------------------------------------------------- Moody's Investors Service has upgraded Liberty Group Operating, Inc.'s $330 million senior secured credit facility to B1 from B2. Full details of the ratings upgrade are: Ratings upgraded: Liberty Group Operating, Inc.'s: * $50 million senior secured revolving credit facility, due 2011 -- to B1 from B2 * $280 million senior secured term loan B, due 2012 -- to B1 from B2 * Senior implied rating -- to B1 from B2 * Issuer rating -- to B2 from B3 The outlook remains stable. The upgrade reflects an improvement in the company's financial profile which is expected to occur as a result of its proposed sale to Fortress Investment Group LLC by existing owners (Leonard Green funds) in a transaction which is targeted to close by the end of June 2005. The B1 rating reflects: * the high debt burden which will remain on Liberty Group's books post-closing; * the limited growth potential of the company's core operations; and * continuing competitive pressure in its suburban Chicago markets. Ratings are supported by: * the strength of Liberty Group's community newspaper business model; * an expectation of continued improvement in its advertising revenues; and * the expertise of Liberty Group's strong management team. In conjunction with the Fortress acquisition, Liberty Group will shed approximately $93 million in net debt and preferred stock obligations. Pro-forma for this effective recapitalization, the company will reduce the level of its consolidated debt obligations to 6.3 times from 12.7 times LTM EBITDA at the end of March 2005. Moody's estimates that free cash flow generation of $25 million for the balance of 2005 will result in a modest improvement of leverage to around 5.8 times by year end. Moody's does not anticipate further material drawings on Liberty Group's $50 million revolver beyond the initial $30 million which will be drawn at closing to fund the proposed acquisition. The stable outlook reflects a recovery in the company's revenues, driven largely by a rebound in newspaper advertising spending by Liberty Group's customers, the predictability of its business model, and the absence of any meaningful debt maturities before 2011. For the LTM period ending March 31 2005, Liberty Group recorded revenues of $202 million which represented a 6% improvement over the prior year and EBITDA of $49 million which represented an 8% improvement. EBITDA margins remained relatively flat at 24%. The lower margins of Liberty Group's suburban Chicago operations continue to reflect substantial competitive pressure. The outlook could be changed to positive if Liberty Group can bring leverage closer to 5.5 times debt to EBITDA. Conversely, ratings pressure could result if management is unable to sustain the recent improvements in operating performance or uses free cash flow to effect sponsor dividends or for other releveraging purposes. Fortress plans to fund the purchase of Liberty Group with the proceeds of $221 million in new cash equity and $30 million from drawings under its senior secured revolving credit facility. Proceeds will be used to redeem $88 million in existing unrated holdco discount notes and $116 million in unrated senior preferred stock with the balance used to acquire common stock and junior preferred stock at a discount to book value. The B1 rating on the bank facility is rated at parity with the senior implied rating in recognition of the totality of senior secured debt within Liberty Group's capital structure. The proposed acquisition ascribes a value to Liberty Group's business of $530 million. According to this valuation, senior secured debt holders should expect to receive full recovery in a distress scenario. Headquartered in Northbrook, Illinois, Liberty Group Publishing is a leading US publisher of local newspapers and related publications. In 2004, the company recorded sales of $200 million. LOCATEPLUS HOLDINGS: Auditors Express Going Concern Doubt in 10-K ----------------------------------------------------------------- LocatePLUS Holdings Corporation's auditors, Livingston & Haynes, P.C., of Wellesley, Massachusetts, expressed substantial doubt about its ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 31, 2004, due to the Company's accumulated deficit and substantial net losses in each of the last three years. LocatePLUS has incurred significant net losses since inception. It incurred net losses of approximately $4.4 million in 2003 and $7.3 million in 2004. Its accumulated deficit as December 31, 2004 was approximately $30 million. The Company raised approximately $3.8 million from sales of its equity during 2004 and approximately $4.0 million from the issuance of notes payable. The Company's ultimate success is still dependent upon its ability to secure additional financing to meet working capital and ongoing project development needs. Management anticipates that the Company will increase its sales and marketing, product development and general and administrative expenses during 2005 and for the foreseeable future. To achieve its business objectives, the Company must raise additional capital, which may consist of future debt or equity offerings. Any such financings may be dilutive to existing investors. From the incorporation of the Company in 1996 through Dec. 31, 2004, it raised approximately $31 million through a series of private placements and public offerings of equity and convertible debt to fund marketing and sales efforts and develop its products and services. As of Dec. 31, 2004, the Company's cash and cash equivalents totaled $1,186,939. During 2004, the Company used approximately $5.4 million in operating activities principally to fund its net losses. During 2002, LocatePLUS loaned $1.0 million to Andover Secure Resources, Inc., an unaffiliated third party leasing company, due to the favorable terms of this loan. As of December 31, 2004, approximately $454,000 on this loan remained outstanding. During 2003, the Company received $1.6 million, net of issuance costs, by issuing subordinated promissory notes bearing simple interest ranging from 10% and 12% per annum. In conjunction with the issuance of these notes, warrants to purchase 2,500,000 shares of Class B Non-Voting common stock with a weighted average exercise price of $0.14 were also issued. LocatePLUS raised approximately $3.8 million from sales of its equity during 2004 and approximately $4.0 million from the issuance of notes payable. The ultimate success of the Company is still dependent upon its ability to secure additional financing to meet its working capital and ongoing project development needs. Pursuant to a certain "put", the Company sold 11,309,478 shares for a total $3,962,926 in net proceeds from the investor through Dec. 31, 2004. The remaining amount available under the "put", at December 31, 2004 was $1,037,074. Subsequent to year-end, the Company has issued an additional 1,204,442 shares of the Company's Class A Voting common stock to this investor, resulting in net proceeds to the Company of approximately $256,191. Management's plans include increasing sales, expanding infrastructure, and hiring additional staff. To accomplish this, LocatePLUS intends to identify sources of additional capital and seek funding from such sources. On June 17, 2004, the Company entered into a Securities Purchase Agreement with Laurus Master Fund, Ltd., a Cayman Islands company, relating to the private placement of a convertible term note issued by LocatePLUS in the principal amount of $3,000,000, due June 17, 2007, and a common stock purchase warrant. On Nov. 30, 2004, this note was amended to increase the principal amount to $4,000,000 and add an additional warrant. The terms, as amended, allow for this note to convert into 6,666,667 shares of the Company's Class A Voting common stock at a fixed conversion rate of $0.30 per share and 5,000,000 shares of the Company's Class A Voting common stock at a fixed conversion rate of $0.40 per share. One Warrant provides for the purchase of up to 1,320,000 shares of Class A common stock at a price of $0.45 each, subject to customary adjustments, until June 17, 2009, and the additional Warrant provides for the purchase of up to 650,000 shares of Class A common stock at a price of $0.35 each, subject to customary adjustments, until November 30, 2009. LocatePLUS Holdings Corporation, through itself and its wholly owned subsidiaries LocatePLUS Corporation, Worldwide Information, Inc., Certifion Corporation, Dataphant, Inc., and Metrigenics, Inc., are business-to-business, business-to-government and business-to-consumer providers of public information via its proprietary data integration solutions. Since 1996, the Company has sold a CD-ROM-based product, which it refers to as Worldwide Information, which enables users to search certain motor vehicle records and driver's license information in multiple states. Since March 1, 2000, the Company has maintained a database that is accessible through the Internet, known as LocatePLUS. Its LocatePLUS product contains searchable and cross-referenced public information on individuals throughout the United States, including individuals' names, addresses, dates of birth, Social Security numbers, prior residences, and, in certain circumstances, real estate holdings, recorded bankruptcies, liens, judgments, drivers' license information and motor vehicle records. On Sept. 1, 2003, its newly formed wholly owned subsidiary, Certifion Corporation, acquired all of the assets of Project Entersect Corporation, a provider of data technology. Certifion provides self-screening for both resume and online dating services and has filed for patent protection for both of these services. In October 2003, LocatePLUS' newly formed wholly owned subsidiary, Dataphant, Inc. acquired Voice Power Technology through a merger. Through this merger, Dataphant now has information on virtually every land- based phone number in the United States and approximately 30% of the cell phone numbers in the United States. On Jan. 6, 2004, the Company formed a new wholly owned subsidiary, Metrigenics, Inc., with operations located in New York state. Metrigenics was formed to develop new ways to integrate biometrics with data. Metrigenics has finished first stage testing on matching DNA to facial characteristics and expects to have first stage products within twelve months. LONG BEACH: Fitch Lowers Seven Mortgage Issues to C --------------------------------------------------- Fitch Ratings has taken these rating actions on Long Beach residential mortgage-backed issues listed below: Asset-Backed Securities Corporation (Long Beach Home Equity Loan Trust), series 2000-LB1 Group 1 -- Class AF5 affirmed at 'AAA'; -- Class AF6 affirmed at 'AAA'; -- Class M1F downgraded to 'BBB+' from 'AA'; -- Class M2F downgraded to 'B' from 'BBB-'; -- Class BF remains at 'C'. Asset-Backed Securities Corporation, (Long Beach Home Equity Loan Trust), series 2000-LB1 Group 2 -- Class M2V affirmed at 'BBB'; -- Class BV downgraded to 'C' from 'BB-'. Long Beach Mortgage Loan Trust, series 2000-1 -- Class AF-3 affirmed at 'AAA'; -- Class AF-4 affirmed at 'AAA'; -- Class AV-1 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'BB-' from 'BBB-'; -- Class M-3 downgraded to 'C' from 'CCC'. Long Beach Mortgage Loan Trust, series 2001-1 -- Class A-1 affirmed at 'AAA'; -- Class M-1 downgraded to 'A' from 'AA'; -- Class M-2 downgraded to 'B+' from 'BBB'; -- Class M-3 downgraded to 'C' from 'BB'. Long Beach Mortgage Loan Trust, series 2001-2 -- Class A-1V affirmed at 'AAA'; -- Class M-1 downgraded to 'A' from 'AA'; -- Class M-2 downgraded to 'BB' from 'BBB'; -- Class M-3 downgraded to 'C' from 'B'. Long Beach Mortgage Loan Trust, series 2001-3 -- Class A-1 affirmed at 'AAA'; -- Class A-2 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'BBB-' from 'BBB+'; -- Class M-3 downgraded to 'C' from 'B'. Long Beach Mortgage Loan Trust, series 2001-4 Group 1 -- Class I-A affirmed at 'AAA'; -- Class I-M2 downgraded to 'BBB-' from 'A-'; -- Class I-M3 downgraded to 'C' from 'B+'. Long Beach Mortgage Loan Trust, series 2001-4 Group 2 -- Class II-A1 affirmed at 'AAA'; -- Class II-A3 affirmed at 'AAA'; -- Class II-M1 affirmed at 'AA'; -- Class II-M2 downgraded to 'BBB-' from 'A'; -- Class II-M3 downgraded to 'C' from 'BB-'. Long Beach Mortgage Loan Trust, series 2002-1 Group 1 -- Class I-A affirmed at 'AAA'; -- Class I-M2 affirmed at 'A'; -- Class I-M3 downgraded to 'BB' from 'BBB'. Long Beach Mortgage Loan Trust, series 2002-1 Group 2 -- Class II-M1 affirmed at 'AA'; -- Class II-M2 affirmed at 'A'; -- Class II-M3 downgraded to 'BB' from 'BBB'; -- Class II-M4 downgraded to 'B' from 'BB+'. Long Beach Mortgage Loan Trust, series 2002-2 Group 1 -- Class I-A affirmed at 'AAA'; -- Class I-S1 affirmed at 'AAA'; -- Class I-M2 affirmed at 'A'; -- Class I-M3 downgraded to 'BBB-' from 'BBB'; -- Class I-M4A downgraded to 'B' from 'BBB-'; -- Class I-M4B downgraded to 'B' from 'BBB-'. Long Beach Mortgage Loan Trust, series 2002-2 Group 2 -- Class II-A affirmed at 'AAA'; -- Class II-S1 affirmed at 'AAA'; -- Class II-M1 affirmed at 'AA'; -- Class II-M2 affirmed at 'A'; -- Class II-M3 downgraded to 'BBB-' from 'BBB'; -- Class II-M4A downgraded to 'B' from 'BBB-'; -- Class II-M4B downgraded to 'B' from 'BBB-'. Long Beach Mortgage Loan Trust, series 2002-3 Group 2 -- Class II-A affirmed at 'AAA'; -- Class II-S1 affirmed at 'AAA'. Long Beach Mortgage Loan Trust, series 2002-4 Group 2 -- Class II-A affirmed at 'AAA'; -- Class II-S1 affirmed at 'AAA'. Long Beach Mortgage Loan Trust, series 2002-5 -- Class A-1 affirmed at 'AAA'; -- Class S-1 affirmed at 'AAA'; -- Class A-2 affirmed at 'AAA'; -- Class S-2 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'; -- Class M-4A affirmed at 'BBB-'; -- Class M-4B affirmed at 'BBB-'. All of the mortgage loans in the aforementioned transactions were either originated or acquired by Long Beach Mortgage Company. The mortgage loans consist of fixed- and adjustable-rate subprime mortgage loans and are secured by first- and second-lien mortgages or deeds of trust on residential properties. As of the April 2005 distribution date, the transactions are seasoned from a range of 29 to 56 months, and the pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) range from approximately 10% (series 2000-LB1 Group 2) to 26% (series 2002-5). The affirmations reflect credit enhancement consistent with future loss expectations and affect approximately $1.49 billion of outstanding certificates detailed above. In addition, the affirmation on class A-1V in series 2001-2 reflects a guaranty provided by Freddie Mac (rated 'AAA' by Fitch). The affirmations on class A-1 in series 2001-3, class I-A in series 2001-4, class I-A in series 2002-1, classes I-A and I-S1 in series 2002-2, and classes A-1 and S-1 in series 2002-5 reflect a guaranty provided by Fannie Mae (rated 'AAA'). The affirmations on classes II-A and II-S1 in series 2002-3, and classes II-A and II-S1 in series 2002-4, reflect a guaranty provided by XL Capital Assurance Inc. (rated 'AAA'). The negative rating actions, which affect $526.8 million of outstanding certificates detailed above, are taken due to the continued deterioration in the performance of the underlying collateral. In the eight transactions that experience downgrade actions, the high level of losses incurred has led to substantial and rapid decline in credit enhancement, particularly in the form of overcollateralization. In the most severe examples (series 2000-LB1 Group 1 and series 2001-2), OC has been exhausted and the most subordinate certificates have suffered principal write-downs. Fitch will continue to closely monitor these transactions. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings website at http://www.fitchratings.com/ MERIDIAN AUTOMOTIVE: Proposes Reclamation Claim Procedures ---------------------------------------------------------- Meridian Automotive Systems, Inc., and its debtor-affiliates ordered a variety of goods from both domestic and international suppliers for use in the ordinary course of their business operations before they sought protection under chapter 11. Some of those goods were delivered to the Debtors' various facilities within the 20-day period prior to filing for bankruptcy. As of the Petition Date, the Debtors hadn't paid for those goods. Given the volume of inventory they receive on a daily basis, the Debtors anticipate that a substantial number of vendors may assert reclamation claims against them as a result of their bankruptcy filing. Edward L. Morton, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, tells the U.S. Bankruptcy Court for the District of Delaware that allowing the vendors to reclaim goods from the Debtors, without the benefit of established procedures to simplify the process of resolving Reclamation Claims and safeguard the rights Reclamation Claimants, will disrupt the Debtors' operations. "The Debtors' operations may suffer and management's attention will be diverted from important operational issues if the Debtors are required to respond to each Reclamation Claim on an ad hoc basis, as adversary proceedings and motions maybe filed or as other enforcement action is taken by a Reclamation Claimant," Mr. Morton says. To avoid piecemeal litigation that would interfere with the Debtors' reorganization efforts, the Debtors propose uniform procedures for the treatment and reconciliation of all Reclamation Claims: (a) Any vendor asserting a Reclamation Claim must satisfy all requirements entitling it to a right or reclamation under applicable state law and Section 546(c)(1) of the Bankruptcy Code; (b) The Debtors will file a notice with the Court listing those Reclamation Claims the Debtors deem to be valid and its amount. The Debtors will serve the Reclamation Notice on any official committee appointed in the Debtors' cases and on each Reclamation Claimant; (c) The Reclamation Notice will be filed by the Debtors no later than 60 days after the Court's entry of the Reclamation Order; (d) If the Debtors fail to file the Reclamation Notice prior to the expiration of the Notice Deadline, any Reclamation Claimant may ask the Court to determine the validity of its Reclamation Claim, provided that any request will not be filed prior to the expiration of the Notice Deadline; (e) All parties-in-interest will have 20 days from the date the Reclamation Notice is filed with the Court to object to the inclusion or exclusion in the Reclamation Notice of any Reclamation Claim or its amount. All Reclamation Claims in the Reclamation Notice that do not draw any objection will be fixed in the amount provided in the Reclamation Notice without further Court Order; (f) With respect to any Reclamation Claim on account of which a timely objection to the Reclamation Notice is filed, the amount of the Reclamation Claim will be fixed pursuant to an agreement of the relevant parties, or by Court Order; and (g) The Debtors reserve the right to further object to any Reclamation Claim fixed pursuant to these Reclamation Procedures or Court order on any other grounds, including that all Reclamation Claims are subject to a creditor's security interest in or lien on the goods subject to the Reclamation Claim. The fixing of a Reclamation Claim will not be deemed a final allowance of any Reclamation Claim. Because it may be beneficial in some circumstances for the Debtors to honor a reclamation demand, the Debtors seek the Court's authority to make any goods available for pickup by any Reclamation Claimant: -- before the time that the Reclamation Claim of any Reclamation Claimant is fixed, with the consent of: (i) the administrative agent for the postpetition lenders; (ii) the administrative agent for the prepetition lenders under the Second Lien Credit Agreement; and (iii) the collateral agent for the subordinated noteholders; and -- after the time the Reclamation Claim of any Reclamation Claimant is fixed; provided that: (x) any Reclamation Claimant timely demands in writing the reclamation of its goods pursuant to Section 546(c)(1) and Section 2-702 of the Uniform Commercial Code; (y) the Debtors have accepted the goods at issue for delivery; and (z) the Reclamation Claimant properly identifies the goods to be reclaimed. Unless the goods are returned to the applicable Reclamation Claimant, any Reclamation Claim fixed pursuant to the proposed Procedures will: * pursuant to Section 546(c)(2)(A), be treated as an administrative priority claim under Section 503(b)(1); or * pursuant to Section 546(c)(2)(B), be granted a lien to secure the claim. 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. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Hires Gavin Anderson as PR Consultant ---------------------------------------------------------- Meridian Automotive Systems, Inc., and its debtor-affiliates seek the authority of the U.S. Bankruptcy Court for the District of Delaware to employ Gavin Anderson & Company, Inc., as their corporate communications consultants, nunc pro tunc to the bankruptcy petition date, to provide corporate advisory, public relations, and strategic and crisis communications services throughout the Debtors' Chapter 11 cases. The Debtors believe that Gavin Anderson is particularly well- suited and well-qualified to serve as corporate communications consultants in a cost-effective, efficient and timely manner because the firm: -- has extensive experience in crisis communications involving matters like bankruptcies, financial restructurings and reorganizations, as well as other significant corporate matters like mergers and acquisitions, management transitions, proxy contests and government investigations; and -- has already worked with the Debtors' management team and other professionals during an April 7, 2005 engagement, wherein the firm provided corporate and crisis communications services to the Debtors. As the Debtors' corporate communications consultants, Gavin Anderson will: (a) provide general strategic relations advice related to the reorganization to the Debtors' management; (b) prepare, distribute and follow-up on press releases and responsive statements relevant to the Debtors' Chapter 11 cases and their progress; (c) assist in answering questions from the press on the Debtors' behalf and proactively contact and speak with the media as necessary to convey information; (d) provide monitoring services related to the media's coverage of the Debtors' reorganization and professional evaluation of its importance, quality and tone; (e) prepare various correspondence, memoranda, letters, Web sites and other communications related to the reorganization for the Debtors to use with their employees, customers, suppliers and other key business constituencies; (f) prepare and edit materials to anticipate the concerns of and likely questions from various constituencies affected by the reorganization and development of appropriate information for the Debtors to use in response; (g) develop guidelines and materials for the Debtors' employees to help them respond to questions and concerns from various external publics, like customers, suppliers, vendors, service providers and the general public; (h) attend meetings and participate in phone conferences with, among others, the Debtors' management and their attorneys, as required; (i) attend court hearings and developing information about the hearings for the benefit of internal or external constituencies; and (j) consult and review drafts of certain materials with appropriate company officials and attorneys. In exchange for its services, Gavin Anderson will be compensated at these customary hourly rates: Designation Hourly Rate ----------- ----------- President $500 Managing Director $350 Director $325 Associate Director $250 Senior Executive $185 Executive $150 Gavin Anderson intends to seek reimbursement for its reasonable out-of-pocket expenses. The firm has already received $65,000 in pre-paid fees in connection with preparing for the filings of the Debtors' cases. The firm's fees for prepetition work were applied against the Pre-Paid Fee. The firm has exhausted the $65,000 Pre-Paid Fee to date. Robert Mead, a member of Gavin Anderson, assures the Court that the firm: -- does not have any adverse connection with the Debtors, their creditors, or any other party-in-interest or their attorneys and accountants or the United States Trustee; -- does not hold or represent an interest adverse to the Debtors and their estates; and -- is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code. 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. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Can Pay Prepetition Shipping Claims -------------------------------------------------------- Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, tells the U.S. Bankruptcy Court for the District of Delaware that Meridian Automotive Systems, Inc., and its debtor-affiliates have a reputation for reliability and dependability among their original equipment manufacturers. This reputation depends in substantial part on the timely delivery of product to the Debtors' customers, which depends on a successful and efficient system for the delivery and receipt of raw materials, parts and components used in the Debtors' operations, as well as finished goods. The Debtors' supply and delivery system depends on the use of reputable domestic common carriers, shippers, truckers and customs agents as well as a network of third-party warehouses to store goods in transit. The Debtors also rely heavily on third party contractors and vendors to manufacture certain tooling equipment and products, as well as third party suppliers to manufacture parts necessary for the Debtors' product lines. Mr. Brady points out that it is essential for the Debtors' business operations and reorganization efforts that they maintain a reliable and efficient supply and distribution network. If the Debtors are unable to receive deliveries of raw materials or supplies on a timely and uninterrupted basis, their manufacturing operations will be impeded almost immediately -- in some cases in a matter of hours. Mr. Brady adds that if the Debtors are unable to provide finished goods to customers on a timely basis, the Debtors will likely suffer, at a minimum, a significant loss of credibility and customer goodwill as well as revenue. Accordingly, the Debtors sought and obtained authority from the Court to pay certain prepetition claims held by Shippers, Warehousemen, and other lien claimants in amounts necessary or appropriate to: (a) obtain releases of critical or valuable goods, tooling or equipment that may be subject to liens; (b) maintain a reliable, efficient and smooth distribution system; and (c) induce critical Shippers and other lien claimants to continue to carry goods, tooling and equipment and make timely deliveries. Shipping and Warehousing Claimants As a general rule, the Debtors operate a "just-in-time" inventory system, which means that the Debtors' ability to produce goods depends on the frequent and daily delivery of materials and components needed for their manufacturing operations. The Debtors employ hundreds of third parties, including Nolan & Cunnings, Inc., and Shippers and Warehousemen, to ensure that their supply and delivery network runs smoothly and their inventory and supplies arrive on time. The Debtors engage Shippers to transport, store and deliver raw materials, parts and components to the Debtors, as well as finished products to the Debtors' OEM customers. The Debtors also contract with independent Warehousemen to store raw materials and goods, which are in transit. Nolan is a third-party logistics coordinator for in-bound and inter-facility transport of goods. Nolan manages the logistics of the Debtors' supply and delivery system, including the Shippers and Warehousemen, by auditing the Shippers' invoices and then billing the Debtors for the Shippers' services. Generally, the Debtors pay Nolan, and Nolan subsequently pays the Shippers and Warehousemen for their services. Shippers and Warehousemen regularly have possession of raw materials and supplies purchased by the Debtors, as well as finished goods produced by the Debtors and intended for delivery to their OEM customers. Under some state laws, a Shipper or a Warehouseman may have a lien on the goods in its possession, which secures the charges or expenses incurred in connection with the transportation or storage of those goods. As a result, Mr. Brady notes, the Shippers and Warehousemen will likely argue that they are entitled to possessory liens for transportation and storage, as applicable, of the goods in their possession and may refuse to deliver or release those goods before their Shipping and Warehousing Claims have been satisfied and their liens redeemed. This is equally true, Mr. Brady says, with respect to any outstanding amounts that may be owed to Nolan because Nolan generally does not pay the Shippers or Warehousemen until its own invoices are paid by the Debtors. Therefore, as long as Nolan's invoices remain unpaid, the Shippers and Warehousemen will not be paid and will likely result in their withholding delivery of essential goods currently in transit as well as refusing to provide service to the Debtors in the future. The automotive supply industry is shipping intensive. The Debtors routinely ship goods between their numerous branches and distribution centers prior to shipping those goods to their OEM customers. The Debtors believe that the value of the goods in the possession of the Shippers and Warehousemen, and the potential injury to the Debtors if the goods are not released, is likely to greatly exceed the amount of Shipping and Warehousing Claims held by those parties. Even if the Shippers and Warehousemen did not have valid liens under applicable state law, their possession of the Debtors' goods and supplies would severely disrupt, and potentially cripple, the Debtors' operations because of the Debtors' "just-in-time" inventory policy. As of the Petition Date, the Debtors estimate that the aggregate amount of the Shipping and Warehousing Claims was $1.5 million. Mr. Brady relates that the Debtors will only pay the Shipping and Warehousing Claims where they believe that benefits to their estates and creditors from making payments would exceed the costs that the Debtors would incur by bringing actions to compel the turnover of the goods, and the delays associated with those actions. Mr. Brady points out that the total amount to paid to the Shippers and Warehousemen is minimal compared to the importance and necessity of the Shippers and Warehousemen to the Debtors' business operations and the losses that the Debtors would suffer if their manufacturing operations are disrupted. Moreover, the Debtors do not believe that there are viable and timely alternatives to the Shippers and Warehousemen. Lien Claimants In addition to the Shippers and Warehousemen, the Debtors also routinely transact business with a number of other third parties who have the potential to assert liens against the Debtors and their property, and in some cases their customers' property, if the Debtors fail to pay for goods or services rendered prior to the Petition Date. The Lien Claimants perform various services for the Debtors, including manufacturing, tooling, dies, molds, and other equipment and parts necessary of the Debtors' operations. Although the Debtors have generally made timely payments to the Lien Claimants, as of the Petition Date, some of the Lien Claimants may not have been paid in full for certain prepetition goods and services, Mr. Brady says. This may cause the Lien Claimants to assert mechanics' or artisans' liens against the Debtors' relevant plant locations or the Debtors' goods, notwithstanding the automatic stay under Section 362 of the Bankruptcy Code. Pursuant to Section 362(b)(3) of the Bankruptcy Code, the act of perfecting the Mechanics' Liens, to the extent consistent with Section 546(b) of the Bankruptcy Code, is expressly excluded from the reach of the automatic stay. As a result, certain Lien Claimants may refuse to perform their ongoing obligations to the Debtors, including installation, servicing and warranty obligations, unless their prepetition claims are paid in full. In addition, the existence and perfection of the Mechanics' Liens could possibly place the Debtors out of compliance under certain of their leases. According to Mr. Brady, the Debtors will only pay Lien Claimants that have perfected secured claims or are capable of having perfected secure claims. The Debtors assure the Court that paying Lien Claims will not affect the amount of distribution to creditors but only the timing of the distribution. Thus there will be no prejudice to other creditors of the Debtors' estates. 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. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000). MIRANT CORP: Asks Court to Approve Deerpark Settlement Agreement ---------------------------------------------------------------- In July 1999, Mirant Corporation and its debtor-affiliates purchased a power plant in Deerpark, along with certain other power plants in New York state. Since the power plant is located in Deerpark, it is subject to certain yearly ad valorem taxes. A dispute arose among the Debtors and certain Deerpark Tax Authorities. The dispute became the subject of a tax certiorari proceeding in New York state court. In the state proceeding, the Debtors assert, among others, that the Deerpark Tax Authorities owed them $311,984 in refunds for the years 2000-2002 based on alleged erroneous equalized assessed values for real property tax purposes ranging from $4,582,964 in 2000 to $5,610,857 in 2003. To resolve the real property tax disputes, the Debtors ask the Court to approve their settlement agreement with certain Deerpark Tax Authorities. The parties to the Settlement Agreement are: a. Mirant New York, Inc., on behalf of itself and Mirant NY-Gen, LLC; and b. the Deerpark Tax Authorities -- the Town of Deerpark, the Port Jervis Central School District, the Assessor for Deerpark, the Board of Assessment Review of Deerpark, and the County of Orange. Through the Settlement Agreement, the Debtors' refund claims will be resolved. The Deerpark Tax Authorities agreed to provide the Debtors $88,377 in gross refunds for 2000-2002, which will be offset by $43,724 in adjusted unpaid 2003 taxes, resulting in a $44,652 net refund. The most important aspect of the settlement concerns the present and future real property taxes on the Deerpark Power Plant. Under the Settlement Agreement, the Deerpark Power Plant's current equalized assessed value of $5,610,857 will be reduced by 75% to $1,402,714 for 2003-2006. The reduction will provide the Debtors with sufficient certainty that: -- the Deerpark Power Plant will be taxed fairly and equitably into the future; and -- the Debtors can make informed decisions about its future operating expenses in connection with any plan of reorganization. According to Michelle C. Campbell, Esq., at White & Case LLP, in Miami, Florida, the Deerpark Settlement Agreement relates to the Debtors' continued process of resolving one of the issues critical to Mirant NY's reorganization efforts. Ms. Campbell notes that to provide ongoing financial viability of their generation assets in New York, the Debtors asked the Court to determine their correct real property tax liabilities related to the New York Power Plants, including the Deerpark Power Plant. Ms. Campbell relates that the Debtors have resolved five of eight New York property tax disputes. If the Deerpark Settlement Agreement is granted, Ms. Campbell points out, only the two largest disputes will remain -- the disputes with the taxing authorities of the Towns of Haverstraw and Stony Point. 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. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Court Seals Estimation Motion on Gunderboom Claims --------------------------------------------------------------- As reported in the Troubled Company Reporter on May 20, 2005, Mirant Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas to estimate the proofs of claim asserted by Gunderboom, Inc., and the Gunderboom Shareholders: -- Francine Bailey, -- Campbell George & Strong, LLP, -- Alan Christopherson, -- Bruce Davison, -- Harold Dreyer, -- J.F. Gilman, -- William Gunderson, III, -- Mike Hartley, -- Interlink Management Corporation, -- Terry P. Irwin, -- Macworth Environmental Management, -- Jim Nelson, -- Dennis Nottingham, -- Todd Nottingham, -- David Pierce, and -- Topside Trust The Debtors contend that the Claims should be estimated at $0. Because the documents attached to the Estimation Motions are confidential, the Debtors filed the Estimation Motions directly with the Clerk of the Court. * * * The Court rules that the Estimation Motion is sealed indefinitely. 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. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Creditors Comm. Comments on Withdrawal of Reference ---------------------------------------------------------------- The Bankruptcy Court invited parties-in-interest to submit pleadings discussing whether the reference over the entirety of the Mirant Corporation and its debtor-affiliates' Chapter 11 cases should be withdrawn. The Official Committee of Unsecured Creditors of Mirant Corporation tells Judge Lynn that complete withdrawal of the reference over the Debtors' cases is neither warranted nor contemplated by the various decisions of the U.S. District Court for the Northern District of Texas on matters related to the Debtors' Back-to-Back Agreement and Asset Purchase and Sale Agreement with Potomac Electric Power Company. The Mirant Committee believes that the PEPCO decisions are, can and should be limited to their facts and circumstances. Withdrawal of the reference is also inappropriate under both the mandatory and discretionary withdrawal standards. Citing U.S. Gypsum Co. v. Nat'l Gypsum Co. (In re Nat'l Gypsum Co.), 145 B.R. 539, 540 (N.D. Tex. 1992), and Sibarium v. NCNB Tex. Nat'l Bank, 107 B.R. 108, 111 (N.D. Tex. 1989), the Mirant Committee notes that courts in this district have determined that a district court will withdraw the reference when: (i) the proceeding in the bankruptcy court involves a substantial and material question of both the Bankruptcy Code and non-Bankruptcy Code federal law; (ii) the non-Bankruptcy Code federal law has more than a de minimis effect on interstate commerce; and (iii) the motion for withdrawal was timely filed. Moreover, consideration of the non-bankruptcy federal issues must require "significant interpretation," not mere application, of federal law. Those requirements have not been met. The Mirant Committee explains that resolution of the PEPCO matters, although important, is only among the peripheral considerations to the Debtors' bankruptcy cases as a whole. The Committee points out that plan confirmation is a core proceeding, not requiring substantial and material consideration of non-bankruptcy federal law, and over which the Bankruptcy Court has exclusive jurisdiction. Whether the Debtors' proposed reorganization plan complies with and properly implements the various provisions of the Bankruptcy Code, including, but not limited to, whether the plan properly treats or otherwise deals with the APSA, the Back- to-Back Agreement or PEPCO's claims, is solely a matter for the Bankruptcy Court to decide pursuant to the Bankruptcy Code, without the need to interpret or so much as apply the Federal Power Act. The Mirant Committee also notes that the Bankruptcy Court has been handling the highly complex bankruptcy cases day in and day out for nearly two years. The Committee anticipates that sending the bankruptcy cases up to the District Court would significantly delay confirmation of a plan of reorganization, thereby prejudicing all parties-in-interest to the cases. 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. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) MERRILL LYNCH: Fitch Rates Class B-3 Mortgage Certificates at BB ---------------------------------------------------------------- Merrill Lynch Mortgage Investors, Inc., mortgage pass-through certificates, series MLMI 2005-A3, are rated by Fitch Ratings: -- $288.3 million classes A-1, A-2 and R (senior certificates) 'AAA'; -- $10.2 million class M-1 certificates 'AA'; -- $7.5 million class M-2 certificates 'A'; -- $5.2 million class B-1 certificates 'BBB'; -- $1.6 million class B-2 certificates 'BBB-'. The 'AAA' rating on the senior certificates reflects the 9.15% subordination provided by: * the 3.20% class M-1, * the 2.35% class M-2, * the 1.65% class B-1, * the 0.50% class B-2 and * the 1.05% privately offered class B-3. Classes rated based on their respective subordination: * M-1 'AA', * M-2 'A', * B-1 'BBB', * B-2 'BBB-' and * B-3 'BB'. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. Fitch believes the above credit enhancement will be adequate to cover credit losses. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Wells Fargo Bank, N.A., which is rated 'RMS1' by Fitch Ratings. As of the cut-off date, the assets of the trust fund consisted of 1,141 mortgage loans with a total principal balance of approximately $317,382,345. The mortgage loans consist of adjustable-rate, conventional, fully amortizing, first lien residential mortgage loans, all of which have an original term to stated maturity of 30 years. The mortgage interest rates of the mortgage loans adjust based on the six-month LIBOR index. The average unpaid principal balance as of the cut-off-date is $278,162. The weighted average original loan-to-value ratio is 79.06%. The weighted average credit score is 707. Cash-out refinance loans represent 16.86% of the loan pool. The three states that represent the largest portion of the mortgage loans are: * California (48.01%), * Washington (5.24%) and * Arizona (4.89%). MLMI, the depositor, will assign all its interest in the mortgage loans to the trustee for the benefit of certificate holders. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits. Wachovia Bank, National Association, will act as trustee. MORGAN STANLEY: Fitch Junks $40.3 Million Mortgage Certificates --------------------------------------------------------------- Fitch Ratings downgrades Morgan Stanley Capital I Inc. commercial mortgage-backed securities pass-through certificates, series 1997- RR: -- $22.1 million class G-1 to 'CC' from 'B-'; -- $18.2 million class G-2 to 'CCC' from 'B-'. In addition, this class was upgraded by Fitch: -- $85.6 million class D to 'AA+' from 'AA'. These classes are affirmed by Fitch: -- $32.0 million class B 'AAA'; -- $35.3 million class C 'AAA'; -- $30.2 million class E 'A'; -- $98.2 million class F 'BB-'. Fitch does not rate the $11.2 million class H-2 certificates. Downgrades to classes G-1 and G-2 are due to the expected losses on the specially serviced loans in the underlying transactions. The upgrade to class E is the result of increased credit enhancement. As of the April 2005 distribution date, total delinquencies calculated as a percentage of the underlying transactions' aggregate certificate balance were: * 0.08%, 60 days delinquent; * 1.5%, 90 days delinquent; * 0.24%, foreclosure; and * 0.4%, real estate owned. To date, the re-remic has experienced approximately $71.9 million in losses affecting the unrated class H-1 and H-2 certificates from the resolution of specially serviced loans in the underlying transactions since issuance. The certificates are secured by 40 subordinate commercial mortgage pass-through certificates from 21 separate commercial mortgage securitizations. The underlying transactions were securitized from 1994-1997 by various issuers and are secured by a variety of property types. The aggregate pool certificate balance of the underlying transactions as of the April 2005 distribution date was $5.8 billion, down 62% from $15.4 billion at issuance. The re- remic's overall certificate balance has decreased by approximately 34% to $332.8 million from $503.7 million at issuance. MTI TECHNOLOGY: April 2 Balance Sheet Upside-Down by $2 Million --------------------------------------------------------------- MTI Technology Corporation (Nasdaq:MTIC) reported its financial results for the fiscal year 2005 fourth quarter and year ended April 2, 2005. Revenue for the quarter improved 50% year-over-year to $35.6 million compared to $23.7 million for the fiscal 2004 fourth quarter, and declined 10% sequentially from $39.5 million in the third quarter. Full year fiscal 2005 revenue grew 59% to $132.6 million compared with $83.2 million in the prior year. Net loss for the fourth quarter was $8.9 million compared to a net loss of $2.6 million for the preceding quarter and a net loss of $700,000 for the same quarter of the prior fiscal year. Net loss for the full fiscal 2005 was $15.8 million compared to a net loss of $3.9 million for the prior fiscal year. Operating results for the fiscal year 2005 were negatively affected by non-cash inventory charges in both product and service cost of revenue, a restructuring charge related primarily to the closure of the Dublin, Ireland facility, and continued investment in sales and service - in line with the Company's growth strategy. Product revenue for the fourth quarter increased 70% to $24.9 million from $14.6 million in the prior year period, and decreased 15% quarter-over-quarter from $29.3 million in the third quarter. Full year product revenue grew by 102% to $93.7 million compared to $46.4 million in the prior year. Service revenue for the fourth quarter was $10.7 million, an 18% improvement year-over- year compared to $9.0 million in the comparable prior year quarter, and a 4% improvement sequentially. Full year service revenue was $38.9 million compared to $36.7 million for the full 2004 fiscal year, an increase of 6%. Gross margins for the fourth quarter were 12.6% compared to 25.3% in the prior year period and 19.7% in the third quarter. Gross margins for the full-year were 19.2% compared to 26.2% in fiscal year 2004. Fiscal 2005 fourth quarter gross margins were negatively impacted by non-cash charges totaling $1.8 million, primarily related to an inventory write-down. Gross margins for the full-year were further impacted by the integration of 35 new professional services personnel hired in the year. SG&A expenses of $10.7 million in the fourth quarter were up year- over-year from $7.5 million and down sequentially from $11.0 million. The increase in expenses year-over-year is due primarily to increased selling expense associated with the addition of new salespeople and higher commissions on increased sales. The Company recorded a restructuring charge of $2.0 million in the fourth quarter of fiscal 2005, principally related to the closing of the Dublin manufacturing and logistics facility. As of April 2, 2005, the Company had $12.2 million in cash and cash equivalents. Cash, net of the $1.8 million paid against the existing line of credit, was essentially unchanged from the prior quarter. "Fiscal 2005 represented an important milestone for the Company, as we added more than 325 new customers and established a base from which to continue building the pre-eminent total solutions provider in the mid-enterprise storage infrastructure space," said Tom Raimondi, Chairman, President and CEO of MTI. "We now have a proven track record of year-over-year top-line growth." Raimondi added, "We believe fiscal 2006 to be an inflection point for the Company as we target a transition from a pure growth to a profitable growth model. We believe we have reached a certain critical mass in product sales at which the productivity of our existing sales force offsets the majority of continued investment. We believe our maintenance business has stabilized, and with our bolstered professional services infrastructure, we plan to grow service revenues and corresponding margins. We expect bottom-line results will follow." About the Company MTI Technology Corporation is a leading multi-national provider of professional services and comprehensive data storage solutions for mid to large-size organizations. With more than 20 years of expertise as a storage technology innovator, MTI is uniquely qualified to assess, design, implement and support whole-office data storage and backup initiatives. As a strategic partner of EMC (NYSE:EMC), MTI offers the best data storage, protection and management solutions available today. By employing a strategic, consultative approach, MTI provides customers with a single point of contact that eliminates complexities while delivering operational efficiencies and competitive advantages. MTI currently serves more than 3,000 customers throughout North America and Europe. Visit http://www.mti.com/for more information. At Apr. 2, 2005, MTI Technology Corporation's balance sheet showed a $2,369,000 stockholders' deficit, compared to a $7,141,000 positive equity at Apr. 3, 2004. NANOMAT INC.: Trustee Wants Until Sept. 30 to Decide on Leases -------------------------------------------------------------- Joseph L. Cosetti, the chapter 11 Trustee in Nanomat, Inc.'s chapter 11 case, asks the U.S. Bankruptcy Court for the Western District of Pennsylvania, to extend his time to assume, assume and assign, or reject leases and executory contracts to September 30, 2005. The chapter 11 Trustee also asks the court that he be authorized to withhold lease payments from these landlords and counterparties: * Allegheny Valley Bank, * American Express Business Finance, * American Enterprise Leasing, * Cal First/Cit, * Carlton Financial Corporation, * CFC Company, * CIT Group, * Citicapital, * Citicorp Vendor Finance, * Enterprise Funding Group, * Financial Pacific Leasing, * First Merit Corporation, * FirstMerit Bank, N.A., * First Personal Bank, * GE Capital, * GE Capital Colonial Pacific, * GE Leasing Solutions, * GMAC Commercial Mortgage Corporation, * Greater Bay, * HP Leasing, * Insight Global Finance, * Iron & Glass Bank, * Direct Capital Corp., * Key Equipment Finance, * M&T Credit Corp., * Marlin Leasing, Netbank * Business Finance, * Northside Bank/FNB, * Relational Funding, * S&T Bank, * Santa Barbara & Trust, * Stearling National, * Tetra Financial, * Thermo Electron, * Town & Country, * Trinity Capital Corp., * UPS Capital, * US Bancorp, * US Bank Equipment Finance, * US Express Leasing, * US Manifest Funding, * Wells Fargo Equipment Finance, * Vision Financial, * Wells Fargo Leasing, and * WesBanco The chapter 11 Trustee tells the Court that: (1) a Section 341 Meeting has not been held; (2) the Debtor has entered into numerous leases; (3) the Respondents are all the known lessors with whom debtor has entered into leases; (4) he has an interest in exploring matters further regarding the leases and executory contracts held by the debtor; (5) he is attempting to determine if there are sufficient funds to make all the monthly payments due to the Respondents; and (6) he is attempting to enter into a Cash Collateral Agreement with FirstMerit Bank, N.A.; Headquartered in North Huntingdon, Pennsylvania, Nanomat, Inc. -- http://www.nanomat.com/-- is a leading manufacturer of nanomaterials, powders, and technologies. Nanomat filed for chapter 11 protection on March 18, 2005 (Bankr. W.D. Pa. Case No. 05-23245). Donald R. Calaiaro, Esq., at Calaiaro, Corbett & Brungo, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its estimated assets and debts from $10 million to $50 million. NATIONAL GARAGE: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: National Garage Door Services Inc. dba Access Garage Door P.O. Box 47834 Tampa, Florida 33647 Bankruptcy Case No.: 05-10902 Chapter 11 Petition Date: May 27, 2005 Court: Middle District of Florida (Tampa) Debtor's Counsel: Ronald R. Bidwell, Esq. Law Office of Ronald R. Bidwell PA 1205 West Fletcher Avenue, Suite B Tampa, Florida 33612 Tel: (813) 908-7700 Fax: (813) 962-6156 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Verizon Directories Corp. $212,000 Berke & Associates 555 St. Charles Drive #100 Thousand Oaks, CA 91360 Donald Kay $115,000 C/o Joseph W. Kay 201 Hopkins Road Seneca, SC 29768 SunTrust Bank $73,808 P.O. Box 4418 MC 0039 Atlanta, GA 30302 NationsBank $69,769 American Express $50,235 Verizon Florida $49,548 BellSouth Advertising $40,263 Dorsey Yawn $37,604 AmComp Assurance Corp. $19,113 Transwestern Publishing $16,008 Peter Lawrence Commercial $16,000 St. Paul Travelers $15,641 BellSouth Advertising $14,548 Fisher, Rushmer, Weerenrath $9,527 Dickson Talley & Dunlap Nextel $6,388 American Express $3,888 The Huntington Value of security: $542 $4,500 Nextel Partners $365 EnCon Inc. $346 BellSouth $277 NATIONSLINK FUNDING: S&P Holds Ratings on Class E & F Certificates ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on eight classes of NationsLink Funding Corp.'s commercial loan pass-though certificates from series 1999-LTL-1. The affirmed ratings reflect: (1) adequate credit enhancement levels, (2) the strong financial performance of the non-credit tenant lease (non-CTL) mortgages within the pool, and (3) the stable 'BBB' weighted average credit rating for the CTL loans. As of the May 23, 2005, distribution date, the collateral pool consisted of 125 loans with an aggregate principal balance of $376.7 million, down 24% from $492.5 million and 128 loans at issuance. The pool contains 108 CTL loans ($290.5 million, 77%), which are all fully amortizing. The remaining 17 loans ($86.2 million, 23%) are traditional (non-CTL) mortgage loans, of which eight ($52.0 million, 14%) are fully amortizing and nine ($34.2 million, 9%) have balloon payments at maturity. The pool experienced one realized loss totaling $45,445, and no loans are delinquent or in special servicing. Midland Loan Services Inc., the master and special servicer, provided Dec. 31, 2003, net cash flow debt service coverage figures for 97% of the non-CTL loans. Based on this information, Standard & Poor's calculated a weighted average DSC of 1.85x, up significantly from 1.44x at issuance. Standard & Poor's reviewed recent property inspection reports for the 10 largest non-CTL loans, all of which rated the collateral as "excellent" or "good." Within the CTL portion of the pool, bondable CTLs support eight loans ($64 million), while 100 loans ($227.7 million) are backed by triple- and double-net CTLs with supplemental lease enhancement policies provided by Lexington Insurance Co. (AA+/Watch Neg/--). The weighted average credit rating for the CTL pool is 'BBB', which is the same as at the last review on Aug. 2, 2004, but down from 'A-' at issuance. The top five tenants, which compose 47% of the pool, are: (1) CVS Corp. (12%, A-/Stable/A-2), (2) Rite Aid Corp. (10%, B+/Stable/B-2), (3) Ahold Koninklijke N.V. (10%, BB/Positive/B), (4) Home Depot Inc. (8%, AA/Stable/A-1+), and (5) Walgreen Co. (7%, A+/Stable/A-1). Midland reported 26 loans ($55.9 million, 15%) on its watchlist, all of which are CTL loans. Twenty loans ($28.7 million, 8%) appear on the watchlist due to the financial condition of Rite Aid Corp. Three loans ($13.6 million, 4%) are on the watchlist because the collateral properties are vacant; however, each of these loans is current and subject to CTLs, which extend to or beyond the loan maturity. The remaining three loans ($13.6 million, 4%) on the watchlist suffer from exposure to financially weakened credit tenants/guarantors, exposure to a collateral property that suffered hurricane damage, or other issues. As the transaction is largely a CTL loan pool, the associated 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 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 Affirmed NationsLink Funding Corp. Commercial loan pass-through certs series 1999-LTL-1 Class Rating Credit enhancement(%) ----- ------ -------------------- A2 AAA 25.48 A3 AAA 25.48 B AA+ 18.62 C A 13.06 D BBB 4.89 E BB 1.95 F B 0.97 X AAA N.A. N.A. -- Not applicable. NAUTILUS RMBS: Fitch Puts Double B Rating on Classes CV & CF ------------------------------------------------------------ Fitch Ratings assigns these ratings to Nautilus RMBS CDO I, Ltd. and Nautilus RMBS CDO I LLC: -- $205,000,000 class A-1S floating-rate notes due 2040 'AAA'; -- $33,000,000 class A-1J floating-rate notes due 2040 'AAA'; -- $34,000,000 class A-2 floating-rate notes due 2040 'AA'; -- $67,000,000 class A-3 floating-rate deferrable interest notes due 2040 'A'; -- $22,000,000 class BV floating-rate deferrable interest notes due 2040 'BBB'; -- $24,000,000 class BF fixed-rate deferrable interest notes due 2040 'BBB'; -- $22,500,000 class CV floating-rate deferrable interest notes due 2040 'BB'; -- $5,500,000 class CF fixed-rate deferrable interest notes due 2040 'BB'. Nautilus is a balance sheet cash-flow collateralized debt obligation managed by RCG Helm, LLC. The ratings of the classes A-1S, A-1J, and A-2 notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the classes A-3, BV, BF, CV, and CF notes address the likelihood that investors will receive ultimate interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings are based upon the credit quality of the underlying assets, 100% of which will be purchased by the transaction's close, in addition to credit enhancement provided by support from subordinated notes, excess spread, and protections incorporated in the structure. Proceeds from the issuance will be invested in a static portfolio of residential mortgage-backed securities, consisting primarily of prime RMBS. The collateral supporting the structure will have a Fitch weighted average rating factor of 14.00 ('BB/BB-'). The collateral manager may sell defaulted, credit-improved, and credit-risk securities at any time. Nautilus is the first CDO managed by RCG, which is a wholly owned subsidiary of Ramius Capital Group, LLC, a privately owned investment management firm and a registered investment advisor. Ramius, through several subsidiaries, manages absolute return portfolios for clients that include U.S. and international institutions and private investors. Nautilus RMBS CDO I, Ltd., is a Cayman Islands exempted company. Nautilus RMBS CDO I LLC is a Delaware limited liability company. For more information, see the presale report 'Nautilus RMBS CDO I, Ltd.' dated April 25, 2005, and available on the Fitch Ratings web site at http://www.fitchratings.com/ NETWORK INSTALLATION: March 31 Balance Sheet Upside-Down by $2MM ---------------------------------------------------------------- Network Installation Corp. (OTC Bulletin Board: NWKI) reported its financial results for the quarter ended March 31, 2005. Network Installation recorded revenue of $750,716 for the quarter ended March 31, 2005 vs. $510,522 for the quarter ended March 31, 2005 an increase of 47%. Net loss for the quarter ended March 31, 2005 was (.31) per share vs. a net loss of (.04) for the quarter ended March 31, 2004 due to a one-time extraordinary non-cash charge of $6,476,085 expensed for warrants issued to the Company's new CEO and CFO pursuant to their employment agreements. "While we experienced solid growth in Q1 over last year, we believe this year we will grow at a considerably greater rate," Network Installation CEO Jeffrey R. Hultman said. "In addition to our internal growth plan we are currently exploring external growth opportunities which have been presented to us." In the first quarter of 2004, the Company utilized the 'Completed Contracts' Method as a revenue recognition policy. This approach was changed to the 'Percentage Of Completion' Method as reported in our Form 10-KSB/A filing, which we believe better represents business activity. However, when comparing first quarter numbers for 2005 to those for 2004, the comparison involves numbers calculated using differing methods. The Company's complete filing is available on its Form 10-QSB for the period ending March 31, 2005. Going Concern Doubt The Company has accumulated a $16.9 million deficit and is generating losses from operations. The continuing losses have adversely affected the liquidity of the Company. The Company faces continuing significant business risks, including its ability to maintain vendor and supplier relationships by making timely payments when due. Management has taken steps to revise its operating and financial requirements by devoting considerable effort toward obtaining additional equity financing through various private placements and evaluation of its distribution and marketing methods. Network Installation Corp. -- http://www.networkinstallationcorp.net/ -- provides communications solutions to the Fortune 1000, Government Agencies, Municipalities, K-12 and Universities and Multiple Property Owners. These solutions include the design, installation and deployment of data, voice and video networks as well as wireless networks including Wi-Fi and Wi-Max applications and integrated telecommunications solutions including Voice over Internet Protocol applications. At March 31, 2005, Network Installation's balance sheet showed a $2,027,436 stockholders' deficit, compared to a $1,877,631 deficit at Dec. 31, 2004. NEW HEIGHTS: Court Delays Entry of Final Decree to Sept. 21 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended the deadline by which New Heights Recovery & Power, LLC, must file a final report and delayed the entry of the automatic final decree until Sept. 21, 2005. Eric Lopez Schnabel, Esq., at Klett Rooney Lieber & Schorling, Esq., in Wilmington, Delaware, told the Court that the Debtor has devoted substantial time to implementing the Chapter 11 Plan and bringing the case to a close. The Debtor just recently closed the sale of substantially all of its assets. The Debtor has not had sufficient time to complete the post-closing matters. These matters would likely be concluded over the next several months. Headquartered in Ford Heights, Illinois, New Heights Recovery & Power, LLC -- http://www.tires2power.com/-- is the owner and operator of the Tire Combustion Facility and other tire rubber processing facilities. The Company filed for chapter 11 protection on April 29, 2004 (Bankr. Del. Case No. 04-11277). Eric Lopez Schnabel, Esq., at Klett Rooney Lieber & Schorling represents the Debtor. When the Company filed for chapter 11 protection, it listed both its estimated debts and assets of $50 million. The Debtor first filed for bankruptcy in March 26, 1996, as a result to the amendment of the Retail Rate Law, and emerged in 1998. NEXICON INC: Losses & Deficits Trigger Going Concern Doubt ---------------------------------------------------------- Stark, Winter, Schenkein & Co., LLP, expressed substantial doubt about Nexicon, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2004, and Dec. 31, 2003. The auditing firm points to the Company's recurring losses from operations and working capital and stockholder deficits. Nexicon expects to be able to continue operations for 12 months with the cash currently on hand, borrowings and sales of common stock through Cornell Capital and cash anticipated from operations. However, future losses are likely to occur. Accordingly, the Company may experience significant liquidity and cash flow problems because historically its operations have not been profitable. No assurances can be given that the Company will be successful in reaching or maintaining profitable operations. The Company has experienced losses from operations as a result of its investment in attempting to achieve its operating plan, which is long-range in nature. For the years ended December 31, 2004 and 2003 the Company incurred net losses of $5,488,455 and $4,902,363, respectively. At December 31, 2004, the Company had a working capital deficit of $1,048,067 and stockholders' deficit of $1,611,250. In addition the Company is subject to legal action. The Company's ability to continue as a going concern is contingent upon its ability to secure financing and attain profitable operations. In addition, the Company's ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets and the competitive environment in which the Company operates. The Company purchased two wholly owned subsidiaries, OSSI and Pluto, and through sales of their products hopes to attain profitable operations. Nexicon's primary need for cash during the next 12 months are to satisfy current liabilities of $1,260,650, as well as to support Nexicon's current operations. Nexicon's current operations are expected to be $170,000 per month, including payroll, rent, utilities and litigation costs. Nexicon in the next twelve months expects to receive the balance of $64,036 of the current receivable from ACC and hopes to attain profitable operations through its ComSecure Controller and Charon Billing System sales. However, Nexicon will need to raise additional capital to finance growth. Such capital is expected to come from the sale of securities, including the sale of common stock under the Standby Equity Distribution Agreement. Other than the Standby Equity Distribution Agreement, Nexicon does not have any commitments for financing. Nexicon, Inc., formerly Cyco.net, Inc. is the successor corporation to AVE, Inc. The Company was an e-commerce business until July 2003 when it sold the assets of its cigarette e-tail business. This decision was made after several states filed civil lawsuits against the New Mexico subsidiary involved in the sale of cigarettes over the internet. The Company's management felt that although the Company had a meritorious defense it would be much too costly to defend in a court of law. The Company chose to pursue other business opportunities and on November 19, 2003, Nexicon, Inc., purchased all of the outstanding common stock of Orion Security Services, Inc., a Wisconsin corporation, in a stock for stock purchase. On November 15, 2004, Nexicon, Inc., purchased all of the outstanding common stock of Pluto Communications International, AS, a Norwegian corporation, in a stock for stock purchase. On March 17, 2005, Nexicon, Inc. agreed to repurchase 15 million shares of the Company's common stock held by Robert Demson in exchange for all right, title, and interest that the Company has in agreements associated with the "SatSecure" technology and to the tradenames "Orion Security Services, Inc.", "OSSI","Ossi-Secure", "SatSecure", "SatWatch" and "RECON 9000" and all equipment, computers and furniture valued at approximately $15,213. OSSI has introduced a surveillance technology in a rugged transceiver board-level design that delivers bi-directional video, audio, alarm/sensor and data transfer between virtually any two locations on earth with exceptional quality in limited bandwidth environments from 9.6 to 384 KBPS. The SatSecure Surveillance System can use a variety of communication channels such as ISDN, IP, PSTN (Public Switched Telephone Networks), INMARSAT SatPhones (64 KBPS) and GSM phones (9.6 KBPS) to transfer and remotely control video, audio, alarm/sensor and data between two units at different locations. As of March 2005, Nexicon no longer sells SatSecure. At March 31, 2005, Nexicon's total liabilities exceed its total assets by $2,156,850. NHC COMMS: Apr. 29 Balance Sheet Upside-Down by C$3.5 Million ------------------------------------------------------------- NHC Communications Inc. (TSX: NHC) (NHCMF) reported results for the third quarter of fiscal 2005, ended April 29, 2005, prepared in accordance with Canadian generally accepted accounting principles. The Company recorded revenues of $5.17 million for its third quarter ended April 29, 2005, compared with $120,000 for the corresponding quarter of 2004. All revenues for the third quarter of 2005 are derived from revenue previously deferred in accordance with the Company's accounting policy on revenue recognition, as a result of the physical conversion of a significant number of central offices by its principal customer during this period. For the quarter, the Company reported a net loss of $395,000, a significant improvement over the net loss of $1.62 million recorded in the third quarter of 2004. The variance is mainly attributable to a $1.01 million contribution to gross profit associated with $5.17 million in previously deferred revenue, as well as the successful implementation of cost-cutting measures effective at the end of the second quarter of fiscal 2004. For the first nine months, the Company recorded a net loss of $1.16 million in 2005 compared with a net loss of $5.31 million in 2004. Revenues of the first nine months of 2005 reached $21.39 million compared with $2.15 million in the first nine months of 2004, primarily due to the recognition of $21.37 million in revenue previously deferred. "As we celebrate our twentieth anniversary, we are clearly heading in the right direction and are encouraged by our progress," noted Sylvain Abitbol, President and Chief Executive Officer. "In the months ahead we will be focusing on securing additional financing and actively pursuing our business development efforts. In addition, we are marshalling the resources needed for the expansion of our technology platform through innovation and research and development, in order to continue to generate value for our customers. The foundation is being put in place for our continued success." Funding and Restructuring Plan Update During the third quarter, the Company entered into two convertible debentures transactions with third parties and with the Company's management for total gross cash proceeds of C$1 million and C$106,000 respectively, under terms previously disclosed. During the same period, the Company completed a private placement of C$1.06 million, under terms previously disclosed. Also during the quarter, the Company collected its 2004 R&D tax credits of C$400,000. In addition, subsequent to the quarter, NHC reached an agreement in principle for the issuance of secured convertible debentures with a United States third-party investor for a financing of up to $2.5 million under terms previously disclosed. Gross cash proceeds of $1,500,000 are expected to be received at the closing of this financing transaction, and the balance of $1,000,000 is expected to be held in an escrow account, to be released upon the satisfaction of certain conditions, including receipt by the Company of a purchase order from one of its customers providing for at least US$5 million of equipment purchases. In order to meet its immediate cash requirements, certain members of management are considering exercising a portion of their vested options. Some or all of the common shares to be issued upon such exercise would be sold by those members of management on the stock market. The members of management who will exercise options for this purpose will be granted new options for the same number of options that were exercised at an exercise price equal to the greater of the market price on the date of grant and the exercise price of the options that were exercised. This transaction was approved by the Board of Directors of the Company. "We are currently engaged in discussions with a restricted number of potential investors", Mr. Abitbol stated. "In particular, we recently entered into a non-exclusive agency agreement with a US firm who will market, on a best efforts basis, a private placement of common shares of NHC. Although pleased by this development, I must point out that there can be no assurance that such a financing agreement can be reached." The Company's cash and cash equivalents on hand as of April 29, 2005 of C$210,000 million could be insufficient to meet its committed cash obligations and expected level of expenses incurred during the fourth quarter of fiscal 2005. Except for the $2.5 million financing transaction mentioned above, no agreements with potential lenders or investors have been reached yet. The Company's ability to continue as a going concern depends on the financial support of its shareholders or/and on obtaining financing from other sources and on its capacity to generate future profits and achieve profitable operations. During the third quarter of fiscal 2005, the Company initiated additional cost control measures, including a temporary decrease of its headcount. It also maintained salary reductions initially implemented in fiscal 2003 for executive officers and certain employees. Finally, the Company has continued its efforts to schedule or reschedule payments due to certain vendors. The Company has essentially completed its restructuring actions but continues to evaluate the remaining restructuring reserves at the end of each reporting period. There may be additional charges or reversals, since the restructuring program is requiring accounting estimates. Actual costs have differed from estimated amounts in the past. A net reversal of C$63,000 was recognized in the third quarter and first nine months of fiscal 2005 and is primarily related to negotiated settlements for lower amounts than originally planned on certain facilities. The number of issued and outstanding shares as at April 29, 2005 was 42,574,504. For the third quarter of fiscal 2005, cash and cash equivalents increased by C$210,000, mainly attributable to the cash provided by financing activities of C$1.13 million, net of the cash used by operating activities of C$890,000. As at April 29, 2005, the Company's working capital deficiency was C$3.05 million. About the Company NHC Communications Inc. is a leading provider of products and services enabling the management of voice and data communications for telecommunication service providers. NHC's ControlPoint(R) solutions utilize a high-performance software driven Element Management System (EMS) controlling an automated, true any-to-any copper cross-connect switch, to enable incumbent local exchange carriers (ILECs) and other service providers to remotely perform the four key tasks that historically have required manual on-site management. These four tasks fundamental to all operations are loop qualification, deployment and provisioning, fallback switching and service migration of Voice and Data services including DSL and T1/E1. Using ControlPoint(R), NHC's customers avoid the risk of human error and dramatically reduce labour and operating costs. NHC maintains offices in Montreal, Quebec and Paris, France, and with local representation in the United States. "ControlPoint(R)" is a registered trademark of NHC Communications Inc. NHC may be contacted through its web site at http://www.nhc.com/ At Apr. 29, 2005, NHC Communications Inc.'s balance sheet showed a C$3,457,000 stockholders' deficit, compared to a C$6,140,000 deficit at Jul. 30, 2004. NORVERGENCE: Michigan AG Settles Fraud Claims with Finance Cos. --------------------------------------------------------------- Attorney General Mike Cox and the Attorneys General from 19 other states and the District of Columbia have reached settlements with three financing companies in connection with a widespread telecommunications fraud involving NorVergence, Inc., a bankrupt New Jersey-based telephone equipment and service company. In the settlements, CIT Group/Equipment Financing, Inc., Lyon Financial Services d/b/a U.S. Bancorp Business Equipment Finance Group, and Wells Fargo Financial Leasing, Inc., will collectively refund or not collect more than $24 million in rental payments from consumers according to the following formula: * CIT: $8.83 million not collected, 496 contracts affected, 10 states. * USB: $7.9 million not collected, 366 contracts affected, 18 states. * WFFL: $7.3 million not collected, 261 contracts affected, 20 states. "Many Michigan small business owners were victimized by NorVergence's bogus promises, and then suffered again when financing companies tried to collect for services that were not being received," said Mr. Cox. "I am pleased that CIT, USB, and WFFL have agreed to forgive the bulk of the outstanding balances on their NorVergence contracts. These settlements will offer resolution to affected small businesses that were struggling to meet dead-end obligations, including some that were sued for payment in courts in Minnesota and Iowa." CIT, USB, and WFFL are three of approximately 40 financing companies involved with the financing of telecommunication services through the rental of data routers that NorVergence called the Matrix box. NorVergence enticed small business customers to enter into rental agreements for a Matrix box that purported to provide telecommunications services by false claims of dramatic savings. While the rental agreements were typically for three to five years with payments of $500 - $2,000 per month, the market price of the Matrix box was no more than $1,500. After securing contracts with businesses, NorVergence sold the rental agreements to different finance companies, including CIT, USB, and WFFL. When NorVergence was forced into bankruptcy in June 2004, its customers were left without service but the finance companies, including CIT, USB, and WFFL, maintained that customers were still responsible for the five-year rental agreement payments. Customers who did not pay faced being sued or threatened with suits by USB and WFFL in the states in which they have their corporate headquarters, in most cases, a distant and inconvenient forum for the NorVergence customers. All consumers who signed agreements with NorVergence that were bought by CIT, USB, or WFFL or signed NorVergence agreements directly with CIT, USB, or WFFL, will receive a notice in the mail regarding the opportunity to participate in the settlement. To accept the settlement offer, consumers must follow instructions contained in the notice. Also, any consumer that previously settled with the three companies regarding NorVergence service can opt to receive the same or substantially the same terms of this settlement, if they choose. During 2003 and 2004, the Consumer Protection Division collected more than $600 million on behalf of Michigan. In 2004, the Division stopped more than $400 million in utility rate increases and responded to more than 102,000 consumer complaints. A copy of the settlements with CIT, USB, and WFFL can be viewed at the Attorney General's Web site at http://tinyurl.com/b8fbb Headquartered in Newark, New Jersey, NorVergence, Inc., is a reseller of wireless telecommunications services. The Company filed a chapter 11 petition on June 30, 2004 (Bankr. D. N.J. 04-32079). The Court converted the Debtor's chapter 11 case to a chapter 7 proceeding at the behest of the Company's creditors. Popular Leasing USA, Inc., OFC Capital, a Division of ALFA Financial Corp., and Partners Equity Capital Company, LLC, asserted total claims amounting to $1.3 million. Inez M. Markovich, Esq., and Peter J. Deeb, Esq., at Frey, Petrakis, Deeb, Blum, Briggs et al., represents the Petitioners in their restructuring efforts. The Company closed its stores located at 550 and 570 Broad St. and laid off all of its employees. This followed 1,300 firings earlier in July 2004. ONE PRICE: Judge Blackshear Converts Case to Chap. 7 Liquidation ---------------------------------------------------------------- The Honorable Cornelius Blackshear of the U.S. Bankruptcy Court for the Southern District of New York converted the chapter 11 proceedings of One Price Clothing Stores, Inc., and its debtor- affiliates upon the request of the Debtors' chapter 11 Trustee, Kenneth Silverman, Esq., at Silverman Perlstein & Acampora, LLP. On August 13, 2004, Mr. Silverman was appointed as chapter 11 Trustee and took over the Debtors' businesses. Mr. Silverman related that the Debtors have ceased operations and sold substantially all of their assets. At this point, what remains of the estates are various potential lawsuits against insiders and third parties, avoidance actions and the collection of accounts receivable. Mr. Silverman told Judge Blackshear there is no remaining business to reorganize. Mr. Silverman pointed out that continuing the cases under chapter 11 will result in losses or diminution of the estates due to professional fees accruing and expenses arising from the drafting of a liquidating plan. Mr. Silverman disclosed that the current administrative burden on the estates exceeds $3 million. Mr. Silverman believes that it is more economical and efficient for the estates to be administered under chapter 7 of the bankruptcy code. Headquartered in Duncan, South Carolina, One Price Clothing Stores, Inc. -- http://www.oneprice.com/-- operates a chain of off price specialty retail stores. These stores offer a wide variety of contemporary, in-season apparel and accessories for the entire family. The Company, together with its two affiliates, filed for chapter 11 protection on February 9, 2004 (Bankr. S.D.N.Y. Case No. 04-40329). Neil E. Herman, Esq., at Morgan, Lewis & Bockius, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $110,103,157 in total assets and $112,774,600 in total debts. OPTION ONE: Moody's Reviews Class B Cert. Ba1 Rating & May Upgrade ------------------------------------------------------------------ Moody's Investors Service has placed on review for possible upgrade thirty certificates from twelve deals originated by Option One Mortgage Corporation. The transactions, issued in 2000-2002, are backed by first and second lien adjustable- and fixed-rate subprime mortgage loans. The certificates are being placed on review for upgrade based on the level of credit enhancement provided by: * the excess spread, * overcollateralization, and * subordination. The projected pipeline losses are not expected to significantly affect the credit support for these certificates. The seasoning of the loans and low pool factor reduces loss volatility. The most subordinate classes from two Option One Mortgage Loan Trust deals, Series 2000-3 and 2001-1, are placed on review for possible downgrade. The review was prompted by existing credit enhancement levels being low given the current projected losses on the underlying pool. The transaction has taken losses and pipeline loss could cause eventual erosion of the overcollateralization. Moody's complete rating actions are: Review for upgrade: Issuer: Option One Mortgage Loan Trust * Series 2000-3; Class M1, current rating Aa2, under review for possible upgrade * Series 2001-3; Class M1, current rating Aa2, under review for possible upgrade * Series 2001-3; Class M2, current rating A2, under review for possible upgrade * Series 2001-3; Class M3, current rating Baa2, under review for possible upgrade * Series 2002-1; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-1; Class M2, current rating A2, under review for possible upgrade * Series 2002-2; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-2; Class M2, current rating A2, under review for possible upgrade * Series 2002-3; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-4; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-4; Class M2, current rating A2, under review for possible upgrade * Series 2002-5; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-5; Class M2, current rating A2, under review for possible upgrade * Series 2002-6; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-6; Class M2, current rating A2, under review for possible upgrade * Series 2002-6; Class M4, current rating Baa3, under review for possible upgrade Issuer: MASTR Asset Backed Securities Trust * Series 2002-OPT1; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-OPT1; Class M2, current rating A2, under review for possible upgrade * Series 2002-OPT1; Class M3, current rating Baa1, under review for possible upgrade * Series 2002-OPT1; Class M4, current rating Baa2, under review for possible upgrade Issuer: ABFC 2002-OPT1 Trust * Series 2002-OPT1; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-OPT1; Class M2, current rating Aa3, under review for possible upgrade * Series 2002-OPT1; Class B, current rating Ba1, under review for possible upgrade Issuer: Merrill Lynch Mortgage Investors Trust * Series 2002-HE1; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-HE1; Class M2, current rating A2, under review for possible upgrade * Series 2002-HE1; Class B, current rating Baa2, under review for possible upgrade Issuer: Morgan Stanley Dean Witter Capital I Inc * Series 2002-OP1; Class M1, current rating Aa2, under review for possible upgrade * Series 2002-OP1; Class M2, current rating A2, under review for possible upgrade * Series 2002-OP1; Class B1, current rating Baa2, under review for possible upgrade * Series 2002-OP1; Class B2, current rating Baa3, under review for possible upgrade Review for downgrade: Issuer: Option One Mortgage Loan Trust * Series 2000-3; Class M3, current rating Baa2, under review for possible downgrade * Series 2001-1; Class M2, current rating A2, under review for possible downgrade OPTINREALBIG.COM: U.S. Trustee Unable to Form Creditors' Committee ------------------------------------------------------------------ Charles F. McVay, the United States Trustee for Region 19, told the U.S. Bankruptcy Court for the District of Colorado, that there were too few unsecured creditors willing to serve on an official Creditors' Committee in OptinRealBig.com, LLC's chapter 11 proceedings. Headquartered in Westminster, Colorado, OptinRealBig.com, LLC, is an e-mail marketing company. The Company filed for chapter 11 protection on March 25, 2005 (Bankr. D. Colo. Case No. 05-16304). When the Debtor filed for protection from its creditors, it listed estimated assets of $1 million to $10 million and estimated debts of $50 million to $100 million. PASADENA GATEWAY: Hires Millard Johnson as Special Counsel ---------------------------------------------------------- Pasadena Gateway Venture, Ltd., asks the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, for permission to employ Millard A. Johnson, Esq., and the law firm of Johnson DeLuca Kennedy & Kuriskey, P.C., as special counsel in its chapter 11 case, nunc pro tunc to April 3, 2005. The Debtor wants to hire Mr. Johnson because of his substantial knowledge of the claims in dispute or anticipated to be in dispute in the Debtor's bankruptcy case. As special counsel, Mr. Johnson will: a) assist in the preparation of memoranda and other pleadings to the Court for matters involving state law, real estate issues and participate in litigation brought to determine ownership and lien claims; and b) aid in pursuing litigation adversely affecting Debtor's ownership of its real property. The Firm's professionals will charge the Debtor based on these hourly rates: Designation Rate ----------- ---- Partners $340 Associates $220 Paraprofessionals $120 To the best of the Debtor's knowledge, Mr. Johnson is "disinterested" as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Houston, Texas, Pasadena Gateway Venture, Ltd., filed for chapter 11 protection on April 3, 2005 (Bankr. S.D. Tex. Case No. 05-34900). Marilee A Madan, Esq., at Russell & Madan, P.C., represents the Debtor. When the Debtor filed for protection from its creditors, it reported estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. PENTON MEDIA: Financial Report Filing Cues S&P to Remove Watch -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Penton Media Inc., including its 'CCC' corporate credit rating, and removed all of its ratings on the company from CreditWatch, where they were placed with negative implications on March 30, 2005. "These rating actions reflect restoration of Penton's borrowing access on its revolving credit facility following the filing of its year-end and first-quarter financial statements," said Standard & Poor's credit analyst Steve Wilkinson. The Cleveland, Ohio-based business-to-business media company had $327 million in debt and $69 million in debt-like preferred stock as of March 31, 2005. The outlook is negative. The very low speculative-grade rating on Penton reflects its uncertain ability to continue to meet its operating and financial obligations beyond the near term, given its limited liquidity and significant discretionary cash flow deficits. Penton's operating results have contracted dramatically since 2000 due to the collapse of certain technology end markets and difficult conditions in other important industry sectors that it serves. While Penton's profitability has rebounded somewhat over the past two years from severely depressed levels in 2002, the company's EBITDA (before certain nonrecurring costs) remains more than 60% below 2000's level. Penton's ability to grow its EBITDA to support its capital structure remains uncertain due to ongoing weak industry operating conditions, especially in publishing, which accounts for two-thirds of Penton's revenue. In addition, Penton's ability to meaningfully cut costs further is questionable, given the severe cost reductions already taken. Key credit measures remain very strained, despite a slight earnings improvement. For the 12 months ended March 31, 2005, debt to EBITDA was very high at 9.1x and higher still, at 11.1x, when its pay-in-kind preferred stock is included. While Penton's EBITDA coverage of interest expense has improved, it remains fractional, at 0.9x, and the company continues to incur large discretionary cash flow losses. PHH MORTGAGE: Fitch Rates $220,373 Private Class B-5 Certs. at B ---------------------------------------------------------------- PHH Mortgage Capital LLC (PHHMC) mortgage pass-through certificates are rated by Fitch: -- $109,966,267 series 2005-3 classes A-1 through A-7, R-I and R-II certificates (senior certificates) 'AAA' In addition, Fitch rates these: -- $7,547,785 privately offered class B-1 certificates 'AA'; -- $716,213 privately offered class B-2 certificates 'A'; -- $385,653 privately offered class B-3 certificates 'BBB'; -- $275,467 privately offered class B-4 certificates 'BB'; -- $220,373 privately offered class B-5 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 8.50% subordination provided by: * the 6.85% class B-1, * the 0.65% class B-2, * the 0.35% class B-3, * the 0.25% class B-4, * the 0.20% class B-5, and * the 0.20% privately offered class B-6 (not rated by Fitch). Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the servicing capabilities of PHH Mortgage Corporation, which is rated 'RPS1' by Fitch. The certificates represent ownership in a trust fund, which consists primarily of 199 one- to four-family conventional, 30- year and 15-year fixed-rate mortgage loans secured by first liens on residential mortgage properties. As of the cut-off date (May 1, 2005), the mortgage pool has an aggregate principal balance of approximately $110,186,640, a weighted average original loan-to- value ratio of 68.57%, a weighted average coupon of 5.782%, a weighted average remaining term of 336 months, and an average balance of $554,180. The loans are primarily located in California (20.81%), New Jersey (11.40%), and New York (7.67%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003, entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available on the Fitch Ratings web site at http://www.fitchratings.com/ All of the mortgage loans were either originated or acquired in accordance with the underwriting guidelines established by PHH Mortgage Corporation. Any mortgage loan with an OLTV in excess of 80% is required to have a primary mortgage insurance policy. Approximately 6.59% of the mortgage loans are pledged asset loans. These loans, also referred to as 'Additional Collateral Loans,' are secured by a security interest, normally in securities owned by the borrower, which generally does not exceed 30% of the loan amount. Ambac Assurance Corporation provides a limited purpose surety bond, which guarantees that the Trust receives certain shortfalls and proceeds realized from the liquidation of the additional collateral, up to 30% of the original principal amount of that Additional Collateral Loan. Citibank N.A. will serve as Trustee. For federal income tax purposes, an election will be made to treat the trust fund as two real estate mortgage investment conduits. POPE & TALBOT: Moody's Lowers $135M Bond Ratings to B1 from Ba3 --------------------------------------------------------------- Moody's Investors Service downgraded Pope & Talbot Inc.'s senior implied and senior unsecured debt ratings to Ba3 and B1 respectively while leaving the ratings on review for possible further downgrade. The rating action is prompted by the combination of three influences: 1) negative uncertainty concerning output prices; 2) elevated input costs; and 3) a recent debt-financed acquisition. As a consequence of these items, the magnitude of the company's profit margins is a source of significant uncertainty, and, in turn, so too is the cash flow stream as a proportion of debt. Subsequent to the downgrade to the Ba3 senior implied and B1 senior unsecured ratings' levels, there is still the potential of Pope & Talbot's average through the cycle credit protection measures being less than those appropriate for the ratings. Accordingly, Pope & Talbot's ratings remain under review for possible downgrade pending conclusion of Moody's assessment of this risk, which is anticipated within 90-to-120 days. Ratings downgraded and remaining under review for possible downgrade: * Senior Implied: to Ba3 from Ba2 * $75.0 million 8.375% senior unsecured debentures due June 1, 2013: to B1 from Ba3 * $60.0 million 8.375% senior unsecured notes due June 1, 2013: to B1 from Ba3 * Issuer: to B1 from Ba3 As noted above, the rating action is prompted by the combination of three influences. With the nearly three year commodity price trough, Pope & Talbot has not been able to consistently generate sufficient cash flow to cover all of its operating, capital and acquisition activities. The company experienced negative Free Cash Flow in each of 2001, 2002 and 2003 before recovering in 2004. At this juncture, it is unclear whether 2005 will be FCF positive. While softwood pulp and lumber prices have increased from cyclical lows, the pulp market is encountering softness and the lumber market may be vulnerable to a near term retreat from recent highs. There is therefore strong potential of near term revenues declining from levels observed in recent quarters. Secondly, ongoing input cost pressure has increased unit costs for all producers. It seems unlikely that costs for energy, fiber and chemicals will decrease substantially for the foreseeable future and it is therefore not clear that this pressure will abate, even as output prices potentially decline. Should input costs prove to be permanently elevated, pressure on margins will persist. Lastly, on April 25, 2005, Pope & Talbot announced the completion of its' acquisition of the Fort St. James, British Columbia, sawmill from Canfor Corporation for $37 million. With debt increasing by approximately 15% while annualized cash flow increases by a smaller proportion, leverage to cash flow increases somewhat as a consequence of the acquisition. When combined with the ongoing profit margin uncertainty, Moody's is of the view that an adjustment of the company's debt ratings is warranted. With Pope & Talbot's bank credit facility and certain capital lease obligations benefiting from security positions that create a prior claim on virtually all of the company's property, the rating on the company's senior unsecured notes is notched down from the Ba3 senior implied rating level to B1. However, even at the Ba3 senior implied and B1 senior unsecured ratings' levels, there is still the potential of Pope & Talbot's average through the cycle credit protection measures being less than those appropriate for the ratings. Accordingly, Pope & Talbot's ratings remain under review for possible downgrade pending conclusion of Moody's assessment of this risk. The assessment is expected to be completed within 90-to-120 days. Pope & Talbot's liquidity arrangements are adequate for its needs. Liquidity is provided from three sources: a) a C$150.0 million Canadian revolving bank line; b) a US$25.0 million revolving line of credit; and c) a US$35 million off-balance sheet evergreen Accounts Receivable securitization program. Moody's estimates the company had approximately US$87 million of available liquidity at March 31st. The C$150 million line of credit consists of two extendable revolving credit facilities. Drawings are convertible into term loans if the revolving periods (through July 31, 2005) are not extended. The line is secured by the Company's Canadian pulp mill land, equipment and certain inventory and accounts receivable. Financial covenants include a maximum leverage ratio, net worth test and minimum interest coverage ratio. In March 2004, the Company implemented a new three-year US$25 million agreement to support US-based operations. Security includes certain accounts receivable and inventories. At March 31, 2005, the company was in compliance with covenants for its respective credit facilities, and given expected financial performance over the near term, continued compliance is anticipated. Under the current circumstance, a ratings upgrade is unlikely. Should Moody's assessment of Pope & Talbot's cost structure indicate a permanent impairment of margins such that Moody's view of average through-the-cycle RCF/Debt is significantly less than 10% with the commensurate FCF/Debt being significantly less than 5%, a ratings downgrade is likely (note that Moody's adjusts for the impacts of unfunded pension obligations, estimated "permanent" operating leases, and off-Balance Sheet Accounts Receivable securitization programs when calculated debt and cash flow). A material deterioration in the company's liquidity arrangements would also result in a ratings' action. Pope & Talbot, Inc. is headquartered in Portland, Oregon, and produces pulp and wood products with manufacturing facilities in the northwestern United States and western Canada. RADNOR HOLDINGS: Poor Performance Prompts Moody's to Junk Ratings ----------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Radnor Holdings Corporation due to lingering concern regarding the prolonged depression of its financial and operating performance and the rating agencies' view of run rate financials, which are likely to remain weak relative to the company's sizable obligations. The ratings acknowledge management's commitment and ongoing efforts to improve liquidity (approximately $19 million recently received from the divestiture of an investment), to reduce costs, and to lower financial leverage. The ratings are supported by continued volume growth. The ratings reflect the cumulative effect of rapidly increasing resin and other operating costs on Radnor's financial profile, which has sustained material erosion and liquidity pressures. For the twelve months ended April 1, 2005, Radnor had deficit free cash flow, breakeven EBIT, very high financial leverage with debt accounting for roughly 65% of total revenue (approaching 10 times EBITDA), and EBIT is insufficient to cover interest expense. The downgrades reflect the immediacy for liquidity enhancement, which if achieved, should preclude further lowering of the ratings. While the recent abatement in raw material costs should result in improved performance for Radnor, concern remains about the sustainability of margins. The ratings outlook remains negative and could stabilize if there is: * meaningful and permanent reduction in financial leverage; * enhanced liquidity; and * sustained improvement in free cash flow. Moody's downgraded these ratings for Radnor: -- $70 million floating rate senior secured note, due 2009, lowered to Caa1 from B3 -- $135 million 11% senior unsecured note, due 2010, lowered to Caa3 from Caa1 -- Senior implied rating lowered to Caa1 from B3 -- Senior unsecured issuer rating (non-guaranteed exposure), lowered to Ca from Caa2 The ratings outlook remains negative. The Caa1 rating for the senior secured note reflects its priority position in Radnor's impaired capital structure. The rating also denotes the possibility of modest loss in recovery under a distress scenario giving consideration to outstandings under the existing $75 million asset based revolver (not rated by Moody's), as well as to other senior secured obligations (e.g. capital leases). Lowering the rating of the guaranteed senior unsecured notes to Caa3 from Caa1 reflects the effective subordination to a sizable amount of secured debt at Radnor and at foreign subsidiaries. Headquartered in Radnor, Pennsylvania, Radnor Holdings Corporation is a global manufacturer and distributor of specialty chemical, foam, and plastic packaging products for the foodservice, insulation, and packaging industries. For the twelve months ended April 1, 2005, revenue was approximately $460 million. RAMP CORP: Delays Form 10-Q Filing Following Auditor Resignation ---------------------------------------------------------------- Ramp Corporation (Amex: RCO) disclosed that on May 21, 2005, BDO Seidman informed the Company of its resignation as the Company's independent registered accounting firm, and advised the Company that its audit reports with respect to the years ended Dec. 31, 2004, and 2003, could not be relied upon. BDO Seidman did not specifically indicate reasons for its resignation. The Company's audit committee has not discussed with BDO Seidman the matters concerning their resignation. As a result, the Company notified the AMEX of its inability to timely file its Form 10-Q for the quarter ended March 31, 2005. AMEX rules require timely filing of all SEC periodic reports of a company's securities to remain listed. The Company is working to complete and file the March 31 10-Q as soon as possible in order to comply with AMEX rules. Default The Company's failure to file its 10-Q report constitutes an event of default under securities purchase agreements that it entered into in January and March 2005. As a result of such default, the holders of debentures issued under these agreements may declare the total amount issued to become due and payable. The Company's payment of such outstanding principal amount would have a material adverse effect upon the Company's financial condition. In addition, as a result of the Company's failure to timely file the March 31, 2005 10-Q, the Company will be ineligible for at least one year to register its securities with the SEC under Form S-3. This could potentially lead the Company to owe monthly liquidated damages based on outstanding principal amount provided under these securities purchase agreements from May 18, 2005, until such registration statement is filed, and for the period from Aug. 11, 2005, until such registration statement is declared effective. The Company's payment of such penalty would have a material adverse effect on the Company's financial condition. Management Changes On May 22, 2005, the Company's board of directors suspended the employment of Andrew Brown as President and Chief Executive Officer effective immediately. The Company's board of directors is conducting an investigation based upon information provided by Mr. Brown On May 16, 2005, that in December 2003, he received an unsolicited gift from an individual who has acted as an advisor to several of the Company's investors. Mr. Brown stated that he knew he should not keep the gift, and accordingly, he discarded it within several days after having received it. Mr. Brown further advised the board that the donor never asked him to do or refrain from doing anything and that the gift did not influence any actions that he has taken in any capacity as an officer or director of the Company. On May 22, 2005, Mr. Brown resigned as Chairman of the Company at the request of the Company's independent directors. To fill the vacancy left by Mr. Brown's departure as Chairman, the Company elected Anthony Soich, a director of the Company since June 2004, to serve as its new Chairman. The Company will continue to retain Mr. Brown as a consultant pending the conclusion of its investigation. Mr. Ronald Munkittrick, current Chief Financial Officer, was appointed as Acting CEO, and will continue to serve as the Company's CFO, a position he has held since October 12, 2004. On May 22, 2005, at a meeting held by the Company's board of directors, the board voted to explore the possibility of selling the Company or one or more of its lines of business or seeking a merger partner. The board is currently in the process of contacting suitable investment banking firms for assistance. Ramp Corporation -- http://www.Ramp.com/-- through its wholly owned HealthRamp subsidiary, develops and markets the CareGiver and CarePoint suite of technologies. CareGiver enables long term care facility staff to easily place orders for drugs, treatments and supplies from a wireless handheld PDA or desktop web browser. CarePoint enables electronic prescribing, lab orders and results, Internet-based communication, data integration, and transaction processing over a handheld device or browser, at the point-of- care. HealthRamp's products enable communication of value-added healthcare information among physician offices, pharmacies, hospitals, pharmacy benefit managers, health management organizations, pharmaceutical companies and health insurance companies. * * * As reported in the Troubled Company Reporter on Apr. 12, 2005, BDO Seidman, LLP, expressed substantial doubt about Ramp Corporation's ability to continue as a going concern after it completed an audit of the company's financial statements for the fiscal year ended Dec. 31, 2004. The Company's independent auditors issued the going concern qualification due to the Company's recurring operating losses. The Company has had a going concern opinion each year for the past 3 years. "The Company has incurred operating losses for the past several years, the majority of which are related to the development of the Company's healthcare connectivity technology and related marketing efforts," Ramp disclosed in its Annual Report. "These losses have produced operating cash flow deficiencies, and negative working capital." At Dec. 31, 2004, Ramp Corporation's balance sheet showed a $3,229,000 stockholders' deficit, compared to $5,997,000 of positive equity at Dec. 31, 2003. ROCK 2001-C1: Moody's Junks $4.54 Million Class N Certificate ------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes, downgraded the ratings of two classes and affirmed the ratings of nine classes of ROCK 2001-C1, Series 2001-C1 Commercial Mortgage Pass-Through Certificates as: -- Class A-1, $126,055,327, Fixed, affirmed at Aaa -- Class A-2, $536,065,000, Fixed, affirmed at Aaa -- Class X-1, Notional, Floating, affirmed at Aaa -- Class X-2, Notional, Floating, affirmed at Aaa -- Class B, $27,247,000, Fixed, upgraded to Aaa from Aa2 -- Class C, $38,600,000, Fixed, upgraded to A1 from A2 -- Class D, $9,083,000, Fixed, upgraded to A2 from A3 -- Class E, $11,353,000, WAC, upgraded to A3 from Baa1 -- Class F, $15,849,000, WAC, upgraded to Baa1 from Baa2 -- Class G, $13,624,000, WAC, affirmed at Baa3 -- Class H, $13,623,000, Fixed, affirmed at Ba1 -- Class J, $22,706,000, Fixed, affirmed at Ba2 -- Class K, $6,812,000, Fixed, affirmed at Ba3 -- Class L, $4,541,000, Fixed, affirmed at B1 -- Class M, $9,083,000, Fixed, downgraded to B3 from B2 -- Class N, $4,541,000, Fixed, downgraded to Caa2 from B3 As of the May 10, 2005 distribution date, the transaction's aggregate balance has decreased by approximately 6.8% to $846.8 million from $908.2 million at securitization. The Certificates are collateralized by 116 mortgage loans. The loans range in size from less than 1.0% to 10.7% of the pool, with the top ten loans representing 45.5% of the pool. The pool includes one investment grade shadow rated loan representing 10.7% of the outstanding loan balance. Six loans have defeased, including two of the top five loans -- Two Chase Manhattan Plaza ($67.2 million - 7.9%) and Ohana Waikiki Tower ($21.6 million - 2.5%). The defeased loans represent 14.6% of the pool. Two loans have been liquidated from the trust resulting in realized losses of approximately $3.8 million. Currently there are no loans in special servicing. Nineteen loans, representing 15.2% of the pool, are on the master servicer's watchlist. Moody's was provided with partial or full year 2004 operating results for 93.3% of the performing loans. Moody's loan to value ratio for the conduit component is 87.0%, compared to 84.9% at securitization. The upgrade of Classes B, C, D, E and F is due largely to increased subordination levels and a high percentage of defeased loans. The downgrade of Classes M and N is due to LTV dispersion and realized losses from the specially serviced loans. Based on Moody's analysis, 15.1% of the conduit pool has a LTV greater than 100.0%, compared to 0.0% at securitization. Eight loans, representing 9.5% of the pool, have debt service coverage of 0.9x or less based on the borrowers' reported operating performance and the actual loan constant. The largest loan in the pool is the RREEF Portfolio Loan ($91.0 million - 10.7%), an A Note secured by nine properties totaling 3.7 million square feet. The properties include: * multifamily (179 units), * retail (2), * office and industrial (5) and are located in six states. The portfolio's performance has been stable since securitization. The B Note amounts to approximately $64.4 million and is held outside of the trust. The loan is shadow rated Aaa, the same as at securitization. The three largest conduit exposures represent 10.5% of the pool. The largest conduit exposure is the Towerpoint/Good Life Loans ($39.0 million - 4.6%), which consists of two cross collateralized loans secured by two manufactured housing communities located in Mesa, Arizona. The two communities contain 2,292 pads. Each community has a full range of amenities, including a library, computer center, ballroom/auditorium and two swimming pools. Financial performance has been stable since securitization. Moody's LTV is 90.0%, compared to 92.1% at securitization. The second largest conduit loan is the IDT Building Loan ($28.4 million - 3.4%), which is secured by a 144,000 square foot office building located in downtown Newark, New Jersey. The property serves as the corporate headquarters of IDT Corporation and is 100.0% leased to IDT under a 20-year lease expiring in March 2020. The loan has a 20-year term and a 25-year amortization schedule. Moody's LTV is 88.9%, compared to 93.7% at securitization. The third largest conduit loan is the Gables Stonebridge Apartments Loan ($21.5 million - 2.5%), which is secured by a 500-unit Class A garden style multifamily property located in suburban Memphis, Tennessee. The improvements were constructed between 1994 and 1996 and contain a full range of amenities. Performance has declined since securitization due to weak market conditions and higher expenses. The property is 84.0% occupied, compared to 93.8% at securitization. Moody's LTV is in excess of 100.0%, compared to 90.0% at securitization. The pool's collateral is a mix of: * multifamily (28.1%), * office (21.1%), * retail (17.6%), * U.S. Government securities (14.6%), * industrial and self storage (13.8%) and * lodging (4.8%). The collateral properties are located in 29 states plus Washington, D.C. The highest state concentrations are: * California (14.0%), * Florida (9.3%), * Tennessee (6.4%), * Arizona (5.5%) and * Ohio (5.0%). All of the loans are fixed rate. ROYAL GROUP: Shareholders Approve Single Class of Voting Shares --------------------------------------------------------------- Royal Group Technologies Limited (RYG.SV - TSX; RYG - NYSE) obtained shareholder approval at its May 26, 2005, annual and special meeting of shareholders for amendments to its articles of incorporation which will, among other things, collapse the company's dual-class capital structure. Following the effective date of the amendments, the company will have only one class of voting common shares. Holders of all outstanding multiple voting shares, including the company's controlling shareholder, Mr. Vic De Zen, have agreed to convert all such shares to subordinate voting shares. Upon the filing of articles of amendment in accordance with the special resolution, all outstanding subordinate voting shares will be designated common shares. Delivery of subordinate voting share certificates will continue to be good delivery for settlement of trades of common shares of the TSX and NYSE. The company intends to file the articles of amendment on or about May 31, 2005. About the Company Royal Group Technologies Limited is a manufacturer of innovative, polymer-based home improvement, consumer and construction products. The company has extensive vertical integration, with operations dedicated to provision of materials, machinery, tooling, real estate and transportation services to its plants producing finished products. Royal Group's manufacturing facilities are primarily located throughout North America, with international operations in South America, Europe and Asia. Additional investment information is available on Royal Group's web site at www.royalgrouptech.com under the "Investor Relations" section. About the Company Royal Group Technologies Limited -- http://www.royalgrouptech.com/ -- is a manufacturer of innovative, polymer-based home improvement, consumer and construction products. The company has extensive vertical integration, with operations dedicated to provision of materials, machinery, tooling, real estate and transportation services to its plants producing finished products. Royal Group's manufacturing facilities are primarily located throughout North America, with international operations in South America, Europe and Asia. * * * As reported in the Troubled Company Reporter on May 11, 2005, Standard & Poor's Ratings Services lowered its long-term corporate credit and senior unsecured debt ratings on Royal Group Technologies Ltd. to 'BB' from 'BBB-'. At the same time, Standard & Poor's removed its ratings on Royal Group from CreditWatch, where they were placed with negative implications Oct. 15, 2004. The outlook is currently negative. The ratings reflect a transitioning management team, and short- term problems such as weak liquidity, weak internal controls, and near-term refinancing requirements. The ratings also reflect longer-term issues such as weakening profitability and a low return on capital. These risks are partially offset by the company's adequate annualized cash flow protection and moderate leverage. "Although the moderate debt leverage, steady free cash flow generation, and an underlying solid business profile have supported the ratings through a very difficult year, we now believe that the distractions caused by the criminal investigations and governance problems have resulted in (and exposed) both short- and long-term problems," said Standard & Poor's credit analyst Daniel Parker. "Accordingly, the overall business and financial profile do not currently support an investment-grade rating," added Mr. Parker. Despite significant improvement with regards to corporate governance, the company is still in transition as it seeks to hire a permanent chief executive officer and chief financial officer. The company has also proposed five new independent candidates to join the board following its annual general meeting. S&P believes it will take at least several quarters before new management and the board decide on any major strategic decisions, and before new management would be able to learn the business. The company has multiple business lines and requires a continued focus on efficiencies and operations to maintain its competitive position. In addition, the required initiatives to address the short-term issues could take at least several quarters. The outlook is negative. If the company does not address its weak liquidity and inefficient debt structure in the next eight months, the ratings could be lowered further. The current ratings can tolerate weak profitability and cash flow in the medium term, but only under the assumption that financial performance trends will not further deteriorate. Standard & Poor's believes profitability will be hampered by: (1) high resin prices, (2) a strong Canadian dollar, and (3) the potentially negative effects of rising interest rates on the housing and home renovation markets. SATELITES MEXICANOS: Evaluates Options After Involuntary Petition ----------------------------------------------------------------- Satelites Mexicanos, S.A. de C.V. (Satmex) received notification that certain of its creditors had filed a chapter 11 involuntary petition in the U.S. Bankruptcy Court for the Southern District of New York seeking a financial reorganization. A summary of that involuntary petition appeared in the Troubled Company Reporter on Friday, May 27, 2005. Satmex expected this filing as one of several likely scenarios. The company is currently evaluating its options and will respond appropriately in the near term. Satmex intends to maintain continuous communication with its counterparties during this process with the objective of working collaboratively toward an equitable and just solution to its financial situation. Satmex has explained the steps it has taken to its customer base, in anticipation of this possibility, ensuring the continuity of the company's world-class customer service and of day-to-day operations. Headquartered in Mexico, Satelites Mexicanos, S.A. de C.V., derives over 50% of its revenues from United States business, and all of the Company's over US$500 million in debt was issued in the United States and is governed by New York law. The Company's largest shareholder, Loral Space & Communications Ltd., is a United States public company also undergoing a Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York. The Company is forced into chapter 11 by three noteholders on May 25, 2005 (Bankr. S.D.N.Y. Case No. 05-13862). The noteholders are represented by Wilmer Cutler Pickering Hale and Dorr LLP and Akin Gump Strauss Hauer & Feld LLP. Under U.S. bankruptcy law, Satmex has 20 days to respond to the involuntary petition, during which time the Company is entitled to operate its business in the ordinary course. In the event that the Company or another party contests the involuntary petition, it will be up to the Bankruptcy Court to determine whether the Chapter 11 reorganization will proceed. SCIENTIFIC LEARNING: Mar. 31 Balance Sheet Upside-Down by $6.6M --------------------------------------------------------------- Scientific Learning (NASDAQ: SCILE) reported its revenue for the quarter ended March 31, 2005 was $10.2 million, compared to $7 million for the quarter ended March 31, 2004, an increase of 46%. Deferred revenue totaled $20.3 million at quarter-end, an increase of 20%, compared to $16.9 million on March 31, 2004. "As expected, first quarter revenue grew strongly due to a combination of customer demand for our products, as well as the strategic pricing change we implemented late in the fourth quarter," said Robert C. Bowen, Chairman and CEO of Scientific Learning. "As previously discussed, this change resulted in recognition of most of the product revenue from perpetual licenses at delivery. In addition, first quarter revenue benefited from sales made in previous years that are being recognized into revenue over time." "K-12 sales increased 6% in the quarter. This is consistent with our guidance for a tough first half comparison after 55% growth in the first half of 2004. We remain confident about our prospects for the year," said Mr. Bowen. "One of our strategic objectives is to increase the average size of our sales, and we continue to make progress on that goal. During the quarter, we made ten sales over $100,000, compared to four in the first quarter of 2004." Gross margins increased to 82% in the first quarter of 2005, compared to 78% in the same quarter of 2004. Gross margins improved due to an increase in service and support margins and to a higher proportion of product revenue. Operating expenses in the first quarter of 2005 increased 26% and totaled $7.2 million, compared to $5.7 million in the first quarter of 2004. The major factors were an increase in sales staff, increased marketing expense and additional accounting costs. Operating profit for the quarter was $1.2 million, compared to a loss of $246,000 in the first quarter of 2004. The net profit for the quarter was $1.3 million, compared to a net loss of $290,000. Cash and equivalents totaled $6.8 million on March 31, 2005, compared to $3.1 million on March 31, 2004. Accounts receivable totaled $3.7 million at quarter end, compared to $4.5 million on March 31, 2004. Balance Sheet Reclassification On May 26, 2005, the Company filed a Form 10-K/A for the year ended December 31, 2004 to restate its balance sheet at Dec. 31, 2004. During the first quarter review, the Company determined that it had misclassified some deferred revenue as long-term deferred revenue, which should have been classified as current deferred revenue. The misclassification relates primarily to a contract that was signed in June 2004. There was no change in total deferred revenue. Because of this restatement, investors should not rely upon the earlier filed balance sheets for the periods ended June 30, September 30 and December 31, 2004. At December 31, 2004, the amount reclassified was $4.9 million. Current deferred revenue at December 31, 2004 was $20.0 million, compared to $15.1 million as previously reported. As a result of this classification error, and the earlier error in the Company's revenue recognition practices that led to the restatement of the Company's financial statements for 2000 through June 30, 2004, the Company's management and Board have concluded that there is a material weakness in the Company's internal control. To correct this weakness, the Company has added accounting staff, has engaged a revenue recognition accounting expert on a consulting basis and is in the process of evaluating what additional changes should be made in its controls and procedures. Scientific Learning is committed to implementing changes in its procedures and controls that will correct this weakness. Business Outlook "We continue to expect an improvement in the education spending environment in 2005," said Mr. Bowen. "In addition, the growing acceptance of our Fast ForWord(TM) products, new product additions to our Fast ForWord to Reading line, and a growing sales force make us optimistic about our growth in 2005 and 2006. We expect booked sales will grow in the range of 15% to 25% in 2005 and in the range of 20% to 30% in 2006." "We expect 2005 revenue to be above sales in 2005, reflecting the impact of our strategic pricing change combined with the strong roll off of deferred revenue from previous years' sales," added Mr. Bowen. "In 2006, we expect this relationship to reverse, with booked sales higher than revenue." For the year ending December 31, 2005, the Company is increasing its guidance. Revenue is expected to be in the range of $48.0 to $51.0 million, an increase of approximately 55% to 65%. The revenue projections include both deferred revenue from previous sales and the revenue from sales of licenses recognized during the period of sale. The Company expects to report a net profit for 2005 between $7.9 million and $8.5 million and primary earnings per share of $.47 to $.50. Revenue and earnings growth rates in 2005 are not expected to continue in 2006. For the year ended December 31, 2006, the company expects revenue to increase in the range of 10% to 15% and to achieve an operating margin in the range of 15% to 17%. The above targets represent the Company's current revenue and earnings goals as of the date of this release and are based on information current as of May 26, 2005. Scientific Learning does not expect to update the business outlook until the release of its next quarterly earnings announcement. However, the Company may update the business outlook or any portion thereof at any time for any reason. Delisting Notice As reported in the Troubled Company Reporter on May 27, 2005, Scientific Learning received a Staff Determination notice from the Nasdaq Stock Market on May 24, 2005, stating that the Company is not in compliance with Nasdaq's Marketplace Rule 4310(c)(14) because the Company has not yet filed its Report on Form 10-Q for the quarter ended March 31, 2005. Therefore, the Company's securities are subject to delisting. However, the Company intends to request a hearing to review this determination, and the Company's stock will continue to be listed on the Nasdaq National Market pending the outcome of the hearing. At the opening of business on May 26, 2005, the trading symbol for the Company's securities was changed from SCIL to SCILE. The delay in filing the Form 10-Q resulted from a previously announced error in certain 2004 balance sheets relating to the classification of deferred revenue. In preparing the first quarter 2005 financial statements, the Company's management determined that the balance sheets at June 30, September 30, and December 31, 2004 incorrectly classified certain deferred revenue as long term deferred revenue, when it should have been classified as current deferred revenue. About the Company Scientific Learning produces the patented Fast ForWord(TM) family of products, a series of computer-delivered reading intervention products that complement reading instruction. Based on more than 30 years of neuroscience and cognitive research, Fast ForWord products help children, adolescents, and adults build the cognitive skills critical for improving reading and language skills. For more information about Scientific Learning and its products, visit our Web sites at http://www.scientificlearning.com/and httP://www.brainconnection.com/ At Mar. 31, 2005, Scientific Learning's balance sheet showed a $6,652,000 stockholders' deficit, compared to a $8,111,000 deficit at Dec. 31, 2004. SMC HOLDINGS: Emerges From Chapter 11 Bankruptcy ------------------------------------------------ SMC Holdings Corporation (Smarte Carte) emerged from chapter 11 on May 26, 2005. The company's confirmed prepackaged Joint Plan of Reorganization effectively lowered its debt from $172 million to $14 million. Review of the Plan The Plan only impaired two classes of creditors and two classes of equity holders, namely: -- the secured bank claimholders owed $123.7 million; -- the senior note claimholders owed $66.9 million; -- the SMC Holdings Stockholders; and -- the EFA stockholders. Pursuant to the Plan: (i) each secured bank claimholder received a full satisfaction of its allowed secured bank claims, and its ratable portion of the secured bank allocation of the reorganized SC Corp. common stock; (ii) each secured bank claim holders, who also holds secured bank priming loan claims, were paid in cash the amount equal to the claim; (iii) each senior noteholder received, in full satisfaction of its allowed claim, and its ratable portion of the senior note allocation of the reorganized company common stock; and (iv) equity interest holders in SMC Holdings and EFA didn't receive any distributions or retain any of such equity interests. Headquartered in St. Paul, Minnesota, SMC Holdings and its subsidiaries provide baggage cart, locker and stroller services at airports, train stations, bus terminals, shopping centers, ski resorts and entertainment facilities across the world. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 10, 2005 (Bankr. D. Del. Case No. 05-10395). Jason M. Madron, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., and Douglas P. Bartner, Esq., and Michael H. Torkin, Esq., at Shearman & Sterling, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they estimated more than $100 million in assets and debts. Judge Mary F. Walrath confirmed the Debtors First Amended Joint Plan of Reorganization on April 26, 2005. SOFTBRANDS INC: May Get $12M Distribution from AremisSoft Trust --------------------------------------------------------------- SoftBrands, Inc., a global supplier of enterprise application software, has been informed by counsel to the AremisSoft Corporation Liquidating Trust that it will likely receive a distribution from the Trust within the next two months. SoftBrands is entitled to 10 percent of the net collections by the Trust, which was established following the AremisSoft bankruptcy. The Trust has recently reached settlement in one of the actions it is pursuing and the distribution would be out of the proceeds from collection of that settlement. SoftBrands has been advised that it may receive in excess of $12 million from this distribution. "This distribution will help propel our strategic product initiatives in our manufacturing and hospitality businesses, support our stockholders' equity and place us in a better position to meet the listing requirements of a national exchange," said George Ellis, SoftBrands Chairman and Chief Executive officer. About SoftBrands SoftBrands Inc. -- http://www.softbrands.com/-- supplies enterprise-wide applications software to clients located worldwide. The company creates software products that streamline and enhance an organization's ability to manage and execute mission-critical functions such as accounting, purchasing, manufacturing, and customer service. SoftBrands also offers software for the hospitality and leisure management industries, including applications used by spas, hotels, and clubs for handling reservations, scheduling, and inventory. The company's services include consulting, maintenance, and support. Formed as a subsidiary of software provider AremisSoft, SoftBrands was spun off as an independent company after AremisSoft filed for bankruptcy and transferred the bulk of its operations to SoftBrands. SOUTHAVEN POWER: Gets Interim OK on DIP Loan & Cash Collateral Use ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of North Carolina gave Southaven Power, LLC, interim authority: a) to obtain post-petition financing from Calyon New York Branch acting as Administrative Agent for itself and the DIP Lenders; b) to use Cash Collateral securing repayment of pre-petition obligations to the Pre-Petition Senior Lenders; and b) to grant adequate protection to the Pre-Petition Senior Lenders and the DIP Lenders pursuant to Sections 361, 362, 363 and 364 of the Bankruptcy Code. Pre-Petition Debt, Use of Cash Collateral & DIP Loan Under the Existing Senior Agreements, the Debtor owes $305,320,137 including interests, fees, expenses, charges and other obligations to the Pre-Petition Senior Lenders. The Debtor will use the Pre-Petition Senior Lenders' Cash Collateral and the DIP Lenders' DIP Loan for the orderly continuation of its business, to maintain business relationships with its customers, suppliers and vendors, and to satisfy working capital and operational needs. DIP Loan & Cash Collateral The Bankruptcy Court authorizes the Debtor to obtain up to $5,000,000, plus interests, fees and other expenses under the DIP Revolving Facility and the DIP Swingline Facility. The DIP Revolving Facility and DIP Swingline Facility is governed by the terms of the Court-approved DIP Credit Agreement between the Debtor, Calyon New York and the DIP Lenders. To adequately protect their interests, Calyon New York and the DIP Lenders are granted valid, binding, continuing, enforceable, fully-perfected first priority senior security interest and lien on all of the Debtor's pre-petition and post-petition property. To adequately protect their interests, the Pre-Petition Senior Lenders are granted a replacement security interest and lien on all of the Debtor's Collateral subject and subordinate only to the security interests and liens granted to Calyon New York and the DIP Lenders. The Court will convene a hearing at 2:00 p.m., on June 9, 2005, to consider the Debtor's request for a final order approving the DIP Loan and allowing permanent use of the Cash Collateral. Headquartered in Charlotte, North Carolina, Southaven Power, LLC, operates an 810-megawatt, natural gas-fired electric power plant located in Southaven, Mississippi. The Company filed for chapter 11 protection on May 20, 2005 (Bankr. W.D.N.C. Case No. 05-32141). Hillary B. Crabtree, Esq., at Moore & Van Allen, PLLC, and Mark A. Broude, Esq., at Latham & Watkins LLP represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. SOUTHAVEN POWER: Can Continue Hiring Ordinary Course Professionals ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of North Carolina gave Southaven Power, LLC, authority to continue to retain, employ and pay professionals it turns to in the ordinary course of its business without bringing formal employment applications to the Court. In the ordinary course of its business, the Debtor regularly calls on certain professionals, including attorneys and consultants, to render a variety of services that are directly related to the preservation of the value of the Debtor's estate. The uninterrupted services of the Ordinary Course Professionals are necessary for the Debtor's continuing operations and its ability to reorganize. The Debtor explains that its business operations would be hindered if the Ordinary Course Professionals were delayed in performing their work while the Debtor has to submit formal compensation and employment applications to the Court. The costs of preparing and prosecuting those Professionals' retention applications would be significant and be borne by the Debtor's estate. The Debtor assures the Court that: a) each of the Ordinary Course Professional will be paid no more than $10,000 per month and the Ordinary Course Professionals' aggregate payment will not exceed $100,000 per month; b) each Ordinary Course Professional will submit with the Court detailed billing statements indicating the nature of the services rendered and the billing rates for the services rendered; and c) in the event an Ordinary Course Professional's fees and expenses exceed $10,000 per month, that Professional will be required to submit a formal compensation application with the Court. Headquartered in Charlotte, North Carolina, Southaven Power, LLC, operates an 810-megawatt, natural gas-fired electric power plant located in Southaven, Mississippi. The Company filed for chapter 11 protection on May 20, 2005 (Bankr. W.D.N.C. Case No. 05-32141). Hillary B. Crabtree, Esq., at Moore & Van Allen, PLLC, and Mark A. Broude, Esq., at Latham & Watkins LLP represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. STELCO INC: Mediator Agrees Not to Force Union Participation ------------------------------------------------------------ United Steelworkers' Local and District leaders applauded Mediator Hon. George Adams's decision on May 25 not to force one local union in the Stelco chain to participate in the mediation process now underway in the effort to financially restructure the company. Ontario/Atlantic Director Wayne Fraser said Mr. Adams made the right decision in upholding the principle that mediation is only successful if the parties participate on a voluntary basis. Mr. Fraser re-stated the position that the union "remains committed to ensuring that Stelco emerges from the Companies' Creditors Arrangement Act (CCAA) with a properly-funded pension plan and a financial restructuring based on principles that will create a strong foundation for the future of the company, its employees and the community." Bill Ferguson, president of the Steelworkers' Local 8782 said, "This decision by Judge Adams is a good start to the process and means that those who do join in the process are there for the right reasons. "Although we would welcome Local 1005 coming to the table with us, we respect the decision made by the leadership of the local," he said. 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 Jan. 29, 2004, Stelco Inc. and certain related entities filed for protection under the Companies' Creditors Arrangement Act. STRUCTURED ASSET: Fitch Rates $4.7 Million Class B1 at BB+ ---------------------------------------------------------- Fitch has rated the Structured Asset Securities Corporation Trust 2005-WF2 mortgage pass-through certificates: -- $555.2 million classes A1, A2 and A3 'AAA'; -- $29.2 million class M1 'AA+'; -- $18.1 million class M2 'AA'; -- $11.1 million class M3 'AA-'; -- $9.4 million class M4 'A+'; -- $9.7 million class M5 'A'; -- $7.4 million class M6 'A-'; -- $6.7 million class M7 'BBB+'; -- $4 million class M8 'BBB'; -- $4 million class M9 'BBB-'; -- $4.7 million class B1 'BB+'. The 'AAA' rating on the senior certificates reflects the 17.25% total credit enhancement provided by: * the 4.35% class M1, * the 2.70% class M2, * the 1.65% class M3, * the 1.40% class M4, * the 1.45% class M5, * the 1.10% class M6, * the 1.00% class M7, * the 0.60% class M8, * the 0.60% class M9, * the 0.70% class B1, * the unrated 1.20% class B2 and * the 0.50% initial over-collateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans, the integrity of the transaction's legal structure as well as the capabilities of Wells Fargo Bank, N.A., as servicer, rated 'RMS1' by Fitch. U.S. Bank National Association is the trustee. The certificates are supported by one collateral group. The mortgage loans consist of first lien adjustable-rate and fixed- rate mortgage loans with principal balances that conform to Freddie Mac guidelines. The mortgage balance as of the cut-off date was $670,998,178. Approximately 17.4% of the mortgage loans are fixed-rate mortgage loans and 82.6% are adjustable-rate mortgage loans. The weighted average loan rate is approximately 6.661%. The weighted average remaining term to maturity is 348 months. The average principal balance of the loans is approximately $158,404. The weighted average original loan-to-value ratio is 79.92%. The properties are primarily located in California (13.68%), Maryland (8.62%), and New Jersey (8.22%). Wells Fargo Home Mortgage, Inc., assigned to the trust fund loan- level primary mortgage insurance policies provided by Mortgage Guaranty Insurance Corporation Radian Guaranty Inc., PMI Mortgage Insurance Co., Republic Mortgage Insurance Corp., Triad Guaranty and United Guaranty Residential Insurance Company. Approximately 99.50% of the mortgage loans with OLTVs greater than 80% are covered. All of the mortgage loans were purchased by Structured Asset Securities Corporation, acting as the depositor, from Wells Fargo Home Mortgage, Inc. The trust fund will make elections to treat some of its assets as one or more real estate mortgage investment conduits for federal income tax purposes. TELENETICS CORP: Executive Changes Delay Financial Report Filing ---------------------------------------------------------------- Telenetics Corporation is unable to file its current financial report with the Securities and Exchange Commission in a timely manner because the Company recently terminated several members of its management, including the Company's Chief Financial Officer. Telenetics intends to file its financial report as soon as practicable. For this reason the Company also has been unable to file its Annual Report for the year ended December 31, 2004. A reasonable estimate of financial results cannot be made at this time due to the reason set forth above. Executive Changes Telenetics terminated David L. Stone from his positions as the Company's Chief Executive Officer, President and Chief Financial Officer, effective March 11, 2005. At the time of his termination, Mr. Stone was employed on an at will basis. Also, the Company eliminated its Chief Operating Officer position and terminated John McLean from the position, effective March 11, 2005. At the same time, the Company appointed Albert J. Moyer as interim President and Chief Executive Officer. Mr. Moyer resigned from his positions upon the hiring of Michael J. Burdiek as President and Chief Executive Officer, effective Apr. 18, 2005. On May 11, 2005, the Company disclosed the appointment of William "Lee" Stalcup as interim Vice President of Operations. Mr. Stalcup has held senior Vice President positions in Operations for Companies with products ranging from commercial electronics, computers, as well as data communications. About the Company Headquartered in Lake Forest, Telenetics Corp. -- http://www.telenetics.com/-- designs, manufactures and distributes wired and wireless data communications products for customers worldwide. Telenetics offers a wide range of industrial grade modems and wireless products, systems and services for connecting its customers to end-point devices such as meters, remote terminal units, traffic and industrial controllers and remote sensors. Telenetics also provides high-speed communications products for complex data networks used by financial institutions, air trafficcontrol systems and public and private wireless network operators. At Sept. 30, 2004, Telenetics Corp.'s total liabilities exceed its total assets by $457,051. THE MARKET: Committee Taps Winstead Sechrest as Bankruptcy Counsel ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of The Market - Antiques and Home Furnishings, Inc., and its debtor-affiliate asks the U.S. Bankruptcy Court for the Northern District of Texas for permission to employ Winstead Sechrest & Minick, P.C., as its legal cousel, nunc pro tunc May 2, 2005. Winstead Sechrest is expected to: (a) advise the Committee of its powers, duties and responsibilities to the creditors; (b) advise the Committee concerning the proposed sale of the Debtors' business and assets; (c) consult with legal counsel and other representatives of the Debtors concerning the chapter 11 cases and the administration of the estate; (d) interact and assist other professionals that the Committee may employ; (e) prepare for and attend the first meeting of creditors; (f) review the Debtors' loan documents and advise the Committee regarding the validity and enforceability of liens asserted against property of the estate; (g) advise the Committee concerning the actions that it might collect and recover property for the benefit of the Debtors' creditors; (h) prepare and present, on behalf of the Committee, all necessary and appropriate applications, motions, pleadings, court orders, notices, and other documents, and reviewing all financial and other reports to be filed in the Debtors' cases; (i) advise the Committee concerning, and preparing responses to, applications, motions, pleadings, notices and other papers that may be filed and served in the Debtors' cases; (j) appear on behalf of the Committee at all hearings in the Debtors' cases; (k) advise the Committee in connection with any suggested or proposed plan of reorganization; (l) advise the Committee in connection with the formulation, negotiation and promulgation of alternative plans of reorganization if necessary or appropriate; and (m) perform all other legal services for and behalf of the Committee that may be necessary or appropriate. David W. Elmquist, Esq., a shareholder of Winstead Sechrest, disclosed that his firm's professionals bill: Designation Hourly Rate ----------- ----------- David W. Elmquist, Esq., Shareholder $375 Jeff Carruth, Esq., Associate $260 Linda Kaye Paquette, Paralegal $140 To the best of the Committee's knowledge, Winstead Sechrest and its professionals who will work in these cases: (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 Dallas, Texas, The Market - Antiques and Home Furnishings, Inc. -- http://www.themarketonline.com/-- sells antique furniture and accessories from many different periods. The Company, along with Market Line Wholesale Company, Inc., filed for chapter 11 protection on April 4, 2005 (Bankr. N.D. Tex. Case No. 05-33774). Mark Edward Andrews, Esq., and Omar J. Alaniz, Esq., at Neligan Tarpley Andrews & Foley LLP represent the Debtors in its restructuring. When the Debtors filed for protection from their creditors, they estimated assets and debts from $1 million to $10 million. THE WATCH LTD: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: The Watch, Ltd. 12900 Preston Road, Suite 100 Dallas, Texas 75230 Bankruptcy Case No.: 05-35874 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- DFW Radio License 05-35892 Type of Business: DFW Radio License operates the talk station KFCD-AM (990). KFCD, which is licensed in Farmersville, has a weak signal in Dallas. Chapter 11 Petition Date: May 26, 2005 Court: Northern District of Texas (Dallas) Judge: Barbara J. Houser Debtors' Counsel: Amanda C. Ellis, Esq. Edwin Paul Keiffer, Esq. Hance Scarborough Wright Ginsberg & Brusilow, LLP 1401 Elm Street, Suite 4750 Dallas, Texas 75202 Tel: (214) 651-6520 Fax: (214) 744-2615 Total Assets: Unstated Total Debts: Unstated The Watch, Ltd.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Frank D. Timmons Personal Loan, $761,613 3801 Keystone Subordinated Bonds & Garland, TX 75041 Interest Tel: (972) 271-6756 Internal Revenue Service Payroll Taxes, $316,368 Ogden, UT 84201-0005 Penalties & Interest c/o Nancy Smith MC 5508 NWSAT 4050 Alpha Road Dallas, TX 75244 Tel: (972) 308-7849 Brian M. Brown Personal Loan $240,000 517 Westward Drive Royse City, TX 75189 Tel: (972) 636-3905 J Michael Lloyd Profit Subordinated Bonds $81,560 Sharing Plan & Interest Pillsbury Winthrop Shaw Legal Services $76,656 Pittman LLP Robert E. Howard Personal Loan $75,000 Bluffview Capital, LP Broker/Consulting $40,000 Services John W. Saunders Subordinated Bond & $38,928 Interest Century 21 Patterson Agency Broker fees $30,000 Gardere Wynne Sewell LLP Legal Services $22,989 North Dallas Bank Tower Rent & Utilities $22,315 Independent Broadcast Engineering Services $19,031 Consultants, Inc Charles H. Smith Engineering Services $16,491 GBS - Giesler Broadcasting Equipment Purchases $12,216 Covad Communications Telephone Services $10,787 United Healthcare Medical premiums $10,468 Dept CH 10151 Jerry E. Overton Salary $9,700 SBC Telephone Services $8,210 Texas Workforce Commission Unemployment Taxes, $6,140 Penalties & Interest David K. Marcum Salary $7,500 TOWER PARK: Unsatisfactory Cash Flow Spurs Going Concern Doubt -------------------------------------------------------------- Tower Park Marina Investors' marina is not generating satisfactory levels of cash flows and cash flow projections do not indicate significant improvement in the near term. These matters raise substantial doubt about the Partnership's ability to recover the carrying value of its assets, (not withstanding the write-down of the marina facility to its net realizable value) and to continue as a going concern. The Partnership's ability to continue to operate through 2005 and beyond is contingent on, among other factors, the improvement in Tower Park Marina operations and continued advances from the General Partners. Management's plans include expenditures in excess of $300,000 in additional repairs and capital improvements during 2005, which management believes will continue to improve the operations of the property. The revenues and expenses of the Partnership for the three months ended March 31, 2005, are generated from the operations of Tower Park Marina and its majority owned subsidiary, Little Potato Slough Mutual Water Company. For the three months ended March 31, 2005, revenues for Tower Park declined $17,000 to $470,000. The decrease was the net result of declines in RV parking of $16,000, retail sales of $9,000, fuel service of $1,000, water & sewer $1,000 and other $7,000, offset by increases in slip rentals of $11,000 and lease income of $6,000. The Partnership's net loss of $209,000 for the three months ended March 31, 2005 is $80,000 more than the loss incurred in the same period a year ago. The increase in loss reflects a decline in activity at the property from the previous year, and an increase in maintenance, administrative, and utility costs. Included in the Partnership's net loss of $209,000 is $73,000 of depreciation and amortization. Excluding these non-cash items, the Partnership incurred a cash flow deficit of $136,000. This deficit was covered by additional advances from the General Partner and by the deferral of interest and management fee payments due to the General Partner and/or its affiliates. The Partnership's ability to continue to operate through 2005 and beyond is contingent on, among other factors, the improvement in Tower Park Marina operations and continued advances (or deferrals) by the General Partners and/or its affiliates. Not included in management's plans for maintenance and improvement during 2005 is the feasibility of building a larger dry storage building, a project which continues to be evaluated. Tower Park Marina is located in the Sacramento - San Joaquin Delta near Sacramento, California. Tower Park Marina Investors, or The Partnership, has been aggregated into four reportable business segments, (Slip rental, RV parking, Retail sales, and Fuel services): Slip rental comprise the wet boat slip rentals and dry boat storage operations at the marina. RV parking represents both long term and transient recreational vehicle parking at the campgrounds adjacent to the marina. Retail sales segment consists of the operations of the retail boat supply and sundries store at the marina. The Fuel service segment reports the operations of the fuel dock at the marina. TRIMAS CORP: Poor Performance Prompts Moody's to Review Ratings --------------------------------------------------------------- Moody's Investors Service placed the ratings of TriMas Corporation on review for possible downgrade. In addition, Moody's affirmed the company's SGL-3 speculative grade liquidity rating. The review for possible downgrade reflects: * the deterioration in TriMas' operating profit; * persistently high leverage; and * weak balance sheet. Moody's review will focus on the company's various initiatives to help increase profitability, improve its balance sheet, and strengthen liquidity. Affirmation of the SGL-3 speculative grade liquidity rating indicates Moody's view that over the next twelve months TriMas will possess adequate liquidity, although the cushion under its financial covenants will be extremely modest. Moreover, Moody's believes an inability to renew its account receivable securitization program or improve access to its revolving credit facility over the near term would likely result in a deterioration in liquidity to the point were the SGL-3 rating would not be appropriate. Ratings placed on review are: * Senior implied rated B1 * Senior unsecured issuer rating rated B2 * $150 million senior secured revolving credit facility, due November 15, 2007, rated B1 * $290 million term loan B, due November 15, 2009, rated B1 * $438 million 9.875% senior subordinated notes, due 2012, rated B3 Rating affirmed: * Speculative Grade Liquidity rating rated SGL-3 TriMas has a diverse range of businesses that are organized into four operating groups: * Cequent Transportation Accessories Group (towing and hitch systems, trailer components, and electrical, brake and rack systems); * Rieke Packaging Systems Group (closures and dispensers); * Fastening Systems Group (fasteners); and * Industrial Specialties Group (cylinders, specialty fasteners, gaskets and precision tools, etc.). Each operating segment represented approximately 48%, 12%, 15%, and 25% of total sales for the first quarter 2005, respectively. For the twelve month period ending March 31, 2005, TriMas' gross margins declined to approximately 23.5% from 25.7% in the prior year period, available liquidity was about $11 million ($7.2 million of revolver availability and $3.9 million of cash on hand), and after incorporating intangible assets in excess of $900 million, tangible book equity is significantly negative. In addition, leverage on an adjusted basis, after incorporating the A/R securitization debt and rent expense, remained high at over 6.9x, while EBIT coverage of interest was weak at just over 1.0x. However, as calculated under the company's bank credit agreement leverage was 5.45x and interest coverage was 2.25x, while respective covenants were 5.5x and 2.0x. TriMas has encountered significant margin pressures across most of its product segments resulting from un-recovered steel costs, in addition to higher resin, energy, and freight costs. Management has initiated pricing programs to pass through higher costs to customers, although there remains a considerable time lag before the benefits are realized and an inability to fully recover all costs. Over the following twelve months, Moody's believes that TriMas will generate breakeven to slightly positive free cash flow and will require external financing to fund seasonal working capital needs. However, we view the cushion under the company's bank covenants as marginal and as a result may require some modification to maintain orderly access its revolving credit facility. As of March 31, 2005, TriMas had a $150 million bank revolver (with approximately $12.8 million of borrowings and $27 million in letters of credit outstanding) and a $125 million A/R securitization facility ($59.5 million outstanding). Although the A/R securitization facility expires in June 2005, Moody's views the renewel of the facility as likely. Failure to renew the facility will stress liquidity, and would likely result in lowering of the SGL-3 liquidity rating to SGL-4. Moody's believes TriMas has limited alternate sources of liquidity. All of the company's assets are encumbered, with receivables backing an A/R securitization facility and bank lenders having a first priority security interest in all remaining tangible and intangible assets. TriMas Corporation, based in Bloomfield Hills, Michigan, is a multi-industry US manufacturer. TRUMP HOTELS: CNA Insurance Objects to $0 Cure Amounts ------------------------------------------------------ Pursuant to the Assumption Schedule attached to the Plan of Reorganization, the Debtors intend to assume five executory contracts with Transportation Insurance Company, Continental Casualty Company, American Casualty Company of Reading, Pennsylvania, CNA ClaimPlus, Inc., as successor-in-interest to RSKCo Services, Inc., and their American affiliates and subsidiaries -- CNA. Trump Hotels & Casino Resorts, Inc. nka Trump Entertainment Resorts, Inc., and its debtor-affiliates list the cure amount for each of the CNA contracts as $0. Jeffrey Bernstein, Esq., at McElroy Deutsch Mulvaney & Carpenter LLP, in Newark, New Jersey, tells the U.S. Bankruptcy Court for the District of New Jersey that the Debtors owe a cure amount to CNA for their assumption of the executory contracts. Based on CNA's reconciliation of the amounts under insurance policies it issued for the Debtors, CNA estimates that the Debtors owe CNA between $337,391 and $676,032 in billings. Mr. Bernstein informs Judge Wizmur that the Debtors also owe CNA around $750,000 on account of collateral obligations. However, because of negotiations between the Debtors and CNA concerning a program of insurance for the Debtors, the parties agreed that CNA would accept $500,000 and a wrap agreement in lieu of the $750,000. A wrap agreement, Mr. Bernstein explains, cross collateralizes insurance policies from different years with the same collateral and allows draws on that security on account of amounts due and owing on any of the policies. Accordingly, Mr. Bernstein concludes, the Debtors owe CNA, as cure payment between $837,391 and $1,176,032, plus the execution of a wrap agreement. Before the Debtors can assume the Policies, they must make timely cure to CNA, Mr. Bernstock argues. "If they fail to do so, they are unable to assume the contracts." Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc. nka Trump Entertainment 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 successful chapter 11 restructuring. 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, and the plan took effect on May 20, 2005. TRUMP HOTELS: CNA Insurance Wants Admin. Priority Claim Status -------------------------------------------------------------- Transportation Insurance Company, Continental Casualty Company, American Casualty Company of Reading, Pennsylvania, CNA ClaimPlus, Inc., as successor-in-interest to RSKCo Services, Inc., and their American affiliates and subsidiaries in the insurance business -- CNA -- have underwritten a program of insurance for the Debtors. Under the terms of the Insurance Program, CNA issued various insurance policies for the benefit of the Debtors and their additional insureds. In connection with the Policies, CNA and Trump Hotels & Casino Resorts, Inc. nka Trump Entertainment Resorts, Inc., and its debtor-affiliates executed various agreements setting forth the parties' obligations with respect to the Insurance Program. The parties have executed only some of the Agreements. However, CNA believes that the terms of the Agreements are sufficient to establish the rights and obligations of the parties even if they are unexecuted. Pursuant to the Policies and Agreements, CNA agreed to provide insurance and related services. The Debtors agreed to pay specified premium, loss reimbursement expenses, deposits and other specified charges. The amount of premium payable by the Debtors under the Insurance Program may still be revised because certain of the Policies are auditable and others are loss sensitive. CNA timely filed its proofs of claim on January 15, 2005. Because the amounts owing under the Policies and Agreements are still subject to revision, CNA filed the claims as unliquidated. CNA also reserved the right to amend the claims, or pursue a judicial estimation of the claims. CNA asserts that its claims against the Debtors are secured to the extent of any credits owing to the Debtors under the Insurance Program, Policies or Agreements, with the credits serving as CNA's collateral. CNA also required the Debtors to establish letters of credit to secure their obligations to CNA under the Insurance Program. CNA reserved all rights of setoff or recoupment to the fullest extent possible, and asserted first and fourth level priorities, to the extent applicable. For the amounts of the CNA Claims allocable to the postpetition period, CNA asks the U.S. Bankruptcy Court for the District of New Jersey to allow it as an administrative claim in an unliquidated amount. CNA reserves the right to seek payment of additional administrative expenses as they arise. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc. nka Trump Entertainment 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 successful chapter 11 restructuring. 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, and the plan took effect on May 20, 2005. TUCSON ELECTRICAL: Fitch Upgrades Senior Unsecured Debt to BB ------------------------------------------------------------- Fitch Ratings has raised Tucson Electric Power Company's senior unsecured pollution control and industrial development bond ratings to 'BB' from 'BB-'. At the same time, Fitch has affirmed TEP's 'BB+' first- and second-mortgage bond credit ratings and has assigned a 'BB+' rating to the utility's new $401 million credit facility, which is secured by second-mortgage bonds. Fitch expects to withdraw its first-mortgage bond ratings upon the anticipated completion in the next few weeks of recently triggered first-mortgage lien fall-away provisions. The Rating Outlook is Stable. The ratings and Stable Rating Outlook reflect TEP's improving debt ratios, cash flow-to-interest coverage ratios that are strong relative to the higher rating category, consistent deployment of operating free cash flow to reduce debt, and regulatory provisions that limit the amount of dividends that may be upstreamed to UniSource Energy. As a result of ongoing debt reduction efforts, TEP's key leverage ratios have improved on a 12-month trailing basis with debt-to-cash flow reduced to 5.8 times at March 31, 2005, from 6.8x at the end of 2003 while the proportion of debt to total capital declined to 78% from 81% over the same time period. The ratings also consider the utility's competitive, primarily coal-fired generating capacity and stable operations. Furthermore, Fitch assumes that management will continue to use projected free cash flow (i.e. operating cash flow after capital expenditures and dividends) to reduce debt. On a pro forma basis, Fitch estimates that the recent equity infusion by TEP's corporate parent, UNS, improved TEP's debt-to-cash flow to 5.1x and debt-to-total capital to 71% for the 12 months ended March 31, 2005. The primary concerns for TEP fixed-income investors is the potential for a rate reduction in TEP's pending rate review by the Arizona Corporation Commission, uncertainty with regard to TEP's industry restructuring settlement, and the absence of a power cost adjustment mechanism. While regulatory uncertainty in Arizona is a concern, favorable resolution of the company's pending tariff review and greater clarity regarding state restructuring issues could result in further positive rating actions. On May 4, 2005, TEP filed a request with the ACC for clarification of rate treatment of the utility's generation service following the conclusion of the utility's competition transition period at year-end 2008. A final order in TEP's pending rate check is expected during the fourth quarter 2005, with ACC staff and intervener testimony anticipated in June 2005. Meanwhile, concern regarding the absence of a fuel and power cost adjustment clause is mitigated, in part, by the utility's ample coal-fired generating capacity relative to its off-peak load requirements. Nonetheless, TEP remains exposed to the potential negative effects of significant unscheduled outages during periods of high demand. Earlier this year, UNS issued approximately $240 million of securities, using most of the proceeds to repay a $95 million intercompany TEP loan and infuse $110 million of capital into the utility. TEP used the cash proceeds to redeem approximately $225 million of relatively high cost, tax-exempt utility debt. In addition, TEP repaid approximately $53 million of first-mortgage debt in the first quarter of 2005, triggering the fall-away provisions of the first collateral trust indenture. As a result, TEP's second-mortgage debt will become the utility's senior most debt securities once the debt substitution process triggered by the first lien's fall-away provisions has been completed. Importantly, the capital infusion from UNS to TEP and associated utility debt reduction during the second quarter of 2005 meaningfully accelerates the anticipated strengthening of the utility's regulatory equity ratio (excluding capital lease obligations), which is estimated to improve to 40% at the end of the second quarter 2005 from 30% at the end of the first quarter. This is constructive from a regulatory accounting point-of-view because it removes the need for continued ACC authorization of a hypothetical capital structure ahead of the utility's pending rate check. UAL CORP: Flight Attendants Want Pension Plan Termination Halted ---------------------------------------------------------------- The Association of Flight Attendants-CWA, AFL-CIO, asks the United States District Court for the District of Columbia to issue an injunction against the Pension Benefit Guaranty Corporation to halt the involuntary termination of the United Air Lines Flight Attendant Defined Benefit Pension Plan. The AFA also seeks damages for losses suffered by Plan participants if the Plan is terminated in violation of ERISA. Robert S. Clayman, Esq., at Guerrieri, Edmond, Clayman & Bartos, in Washington, D.C., argues that under the Employee Retirement Income Security Act, the PBGC must make a cause determination prior to seeking either court enforcement or voluntary settlement with the administrator/employer of a pension plan to be involuntarily terminated. In this case, the PBGC did not make a cause determination before entering the PBGC Agreement with the Debtors. In addition, Section 4041 of ERISA requires the PBGC to initiate termination proceedings, not another party. The PBGC is pursuing involuntary termination of the AFA Plan, but the Debtors initiated termination. Pursuant to Section 4041 of ERISA, the PBGC cannot terminate the Plan under these circumstances. Mr. Clayman informs the District Court that the AFA membership stands to lose a significant portion of their retirement benefits. The AFA membership will suffer irreparable injury if the District Court fails to issue an injunction because flight attendants will make long-term decisions on matters such as employment, residence and other important future plans. These effects will not be easy to reverse after a judgment on the merits. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No.87; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNITED HOME: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: United Home Health Care, Inc. 2021 Apperson Drive Salem, Virginia 24153 Bankruptcy Case No.: 05-72094 Chapter 11 Petition Date: May 26, 2005 Court: Western District of Virginia (Roanoke) Judge: William F. Stone Jr. Debtor's Counsel: A. Carter Magee, Esq. Magee Foster Goldstein & Sayers P.O. Box 404 Roanoke, Virginia 24003 Tel: (540) 343-9800 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Care Centric Lease $105,499 2625 Cumberland Parkway, Suite 310 Atlanta, GA 30339 Heritage Spradlin SPE LLC Lease $105,000 Lockbox #643245 500 First Avenue Pittsburgh, PA 15219 Pride Mobility Products PMSI-deficiency $100,000 Corporation Value of security: 182 Susquehanna Avenue $24,406 Exeter, PA 18643-2694 Rick Murphy Former employee $75,000 3730 Surface Road Riner, VA 24149 Sunrise Medical, Inc. Lease/purchase/PMSI $31,844 7477 East Dry Creek Parkway Value of security: Longmont, CO 80503 $15,000 Wilson Palmer Properties, Commercial lease $30,000 LLC 2025 Apperson Drive Salem, VA 24153 Sunmed Finance, Inc. PMSI-deficiency $28,893 P.O. Box 3125 Value of security: Thousand Oaks, CA 91359 $15,000 Thyssen Access Corp. Trade debt $25,115 4001 East 138th Street Grandview, MO 64030-2837 RGH Enterprises, Inc. Trade debt $24,180 aka Independence Medical 1810 Summit Commerce Park Twinsburg, OH 44087 Steel case Financial Furniture-PMSI $17,999 Services, Inc. P.O. Box 91200 Chicago, IL 60693-1200 Bruno Independent Living Trade debt $16,498 Aids, Inc. 1780 Executive Drive P.O. Box 84 Oconomowoc, WI 53066 De Lage Landen Financial PMSI-deficiency $15,247 Services, Inc. Value of security: 1111 Old Eagle School Road $18,000 Wayne, PA 19087 Respironics, Inc. PMSI-deficiency $13,960 330 Plum Industrial Court Pittsburgh, PA 15239-0000 NCRIC MSO, Inc. Employee benefits $9,807 Employee Benefit Services 424 Graves Mill Road, Suite 300 Lynchburg, VA 24502 Medi USA, LP Trade debt $9,434 P.O. Box 3000 Whitsett, NC 27377-3000 Bio-Medic Health Services, Trade debt $9,166 Inc. 5041-A Benois Road, Building B Roanoke, VA 24014 US Bancorp PMSI-deficiency $8,510 1310 Madrid Street, Suite 101 Marshall, MN 56258-4002 Bank of America Leasing Lease $8,321 (PRIDE) Value of security: Lease Adm. Center $10,000 P.O. Box 371982 Pittsburgh, PA 15250-7992 Dell Marketing L.P. Computer deficiency $7,232 P.O. Box 643561 c/o Dell USA L.P. Pittsburgh, PA 15264 Snug Seat, Inc. Trade debt $7,229 P.O. Box 1739 Matthews, NC 28106 UNIVERSAL AUTOMOTIVE: Files Chapter 11 Petition in New Jersey ------------------------------------------------------------- Universal Automotive Industries, Inc. (OTC: UVSL) filed for chapter 11 protection in the U.S. Bankruptcy Court for the District of New Jersey, together with its wholly owned subsidiaries -- Universal Automotive, Inc., Universal Automotive of Virginia, Inc. and The Automotive Commodity Connection, Inc. Universal and its subsidiaries will be petitioning for debtor in possession financing to be provided by its principal secured lender, Wachovia Capital Finance Corporation (formerly known as Congress Financial Corporation). The financing will be sought to enable Universal to wind down its operations through either a sale of its operating assets or possibly a liquidation. According to David Cesar, Chief Restructuring Officer of the Company, "It was necessary for the Company to seek bankruptcy protection to continue its operations and seek to maximize value for its creditors and shareholders. All our facilities are currently open for business, and our employees are continuing to assist our customers and ship inventory. We are in discussion with a prospective buyer who, if they purchase the Company's business, could continue to serve customers and preserve jobs. We will know more about the course of the Company's operations in the next several weeks. We would particularly like to thank our valued employees for their dedication during these times." Forbearance Agreement On April 14, 2005, Universal Automotive entered into a Forbearance and Amendment Agreement with its principal lender Wachovia Capital Finance Corporation (Central) f/k/a Congress Financial Corporation (Central). Pursuant to the Forbearance Agreement, among other things, the Company was obligated to deliver to the Lender, in a form satisfactory to Lender on or before May 6, 2005, a letter of intent for: (1) a purchaser of equity in the Company; (2) a merger of the Company with a third-party; or (3) the purchase of all or substantially all of the assets of the Company. On May 12, 2005, the Company and the Lender entered into an amendment to the Forbearance Agreement which extends the date for delivery of such letter of intent from May 6, 2005 to May 23, 2005. Provided no additional events of default occur (as defined in the Forbearance Agreement), during the extended period, the Lender agrees to continue to make loans to the Company in an amount equal to up to $15,000,000 in aggregate principal amount. The Company also agrees to continue to retain the Parkland Group as its financial advisor. Headquartered in Alsip, Illinois, Universal Automotive, Inc., manufactures, markets, and distributes brake and undercar parts, including brake rotors, brake drums, disc brake pads, remanufactured brake shoes, remanufactured calipers, new clutch kits, and suspension and hydraulic parts for the North American aftermarket. The Company and its debtor-affiliates filed for chapter 11 protection on May 26, 2005 (Bankr. D. N.J. Case No. 05-27782). Sharon L. Levine, Esq., at Lowenstein Sandler PC, and attorneys at Baker & Hostler LLP represent the Debtor in its chapter 11 proceeding. When the Debtors filed for protection from their creditors, they listed $46.5 million in total assets and $68.9 million in total debts. UNIVERSAL AUTOMOTIVE: Case Summary & 55 Largest Unsec. Creditors ---------------------------------------------------------------- Lead Debtor: Universal Automotive, Inc. 11859 South Central Avenue Alsip, Illinois 60803 Bankruptcy Case No.: 05-27782 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Universal Automotive Industries, Inc. 05-27778 Universal Automotive of Virginia, Inc. 05-27783 The Automotive Commodity Connection, Inc. 05-27784 Type of Business: The Debtors manufacture, market, and distribute brake and undercar parts, including brake rotors, brake drums, disc brake pads, remanufactured brake shoes, remanufactured calipers, new clutch kits, and suspension and hydraulic parts for the North American aftermarket. See http://www.universalbrake.com/ Chapter 11 Petition Date: May 26, 2005 Court: District of New Jersey (Newark) Judge: Morris Stern Debtors' Counsel: Sharon L. Levine, Esq. Lowenstein Sandler PC 65 Livingston Avenue Roseland, New Jersey 07068 Tel: (973) 597-2500 -- and -- Baker & Hostler LLP Debtors' Claims & Noticing Agent: Trumbull Group Debtors' Financial and Business Advisor: The Parkland Group Consolidated Financial Condition as of April 30, 2005: Total Assets: $46,500,000 Total Debts: $68,900,000 A. Universal Automotive, Inc.'s 17 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ CAI, Inc. Sanli $3,674,860 99 South Bedford Street, Suite 211 Burlington, VT 01803 Wanxiang America $3,397,433 88 Airport Road Elgin, IL 60123 Lonfkou Haimeng $1,132,717 Economy Developing Area Longkou City, China Beijing Zi Xin $743,919 11-83-10 China Watson Land Company $516,962 File No. 61129 Los Angeles, CA 90074-1129 Longkou TLC Machinery Company $384,772 East of Loungkou Development Zone Longkou City, China Sinda Corporation $362,975 600 West Main Street, Suite 209 Alhambra, CA 91801 Chicagoland Commercial $319,488 1699 Wall Street, Suite 407 Mount Prospect, IL 60056 Brake Parts, Inc. $299,673 4400 Prime Parkway Department 73071 McHenry, IL 60050 Tower Walsh Association $269,520 c/o Colliers Houston & Company The Atrium 400 Glenpointe Centre West Teaneck, NJ 07666-6800 Con-Way Western $244,724 P.O. Box 7419 Pasadena, CA 91109-7419 Brembo North America $228,443 c/o G.D.M. Bourne, Inc. 1903 South Congress Avenue Boynton Beach, FL 33426 Federal-Mogul, Inc. $216,510 Department # 216801 P.O. Box 67000 Detroit, MI 48267-2168 Shandong Gold Phoenix $198,466 84 Zaocheng North Street Leiling, PR 00025-3600 CAI, Inc. $150,524 Overnight Transportation $134,705 Sino Canada Zheji $121,304 B. Universal Automotive Industries, Inc.'s 15 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Blackman, Kallick Bartelstein $166,273 [No address provided] Shefsky & Froelich $126,511 444 North Michigan Chicago, IL 60611 Arthur J. Gallagher $54,090 [No address provided] Control Solutions $51,058 811 Ogden Avenue Lisle, IL 60532 Ernst & Young $25,680 The NASDAQ Stock Market $21,000 McGuire Woods $15,114 Pondel Wilkinson $14,592 Rintalia, Smoot, Jaenicke $12,357 Bowne of Chicago $11,831 Donnelly, Conroy & Gelhaars $7,255 Elite Financial $6,000 LaSalle Bank $2,391 PR News Wire $1,615 The Texas State Securities Board $500 C. Universal Automotive of Virginia, Inc.'s 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Westlake Clutch $73,637 6512 South Lavergne Avenue Bedford Park, IL 60638 Util Automotive $73,432 1571-C Highway 138 Northeast Conyers, GA 30013 Automation Solution Company $18,916 Sunny Metals $17,440 American Metal Fibers $17,100 Cardolite $14,851 Scotland Container $13,408 Noblett Appliance $11,861 Exel Transportation Services $9,818 Jewett Machine Manufacturing Company $8,917 Anstro Manufacturing $8,791 Graphite Technology Group $8,400 Asbury Graphite Mills $7,303 Schenectady International $7,260 FDP Virginia $6,850 Link Testing $6,632 Lintech International $6,510 KISH/Polar Minerals $5,334 The M.F. Cachat Company $4,600 XPEDX $2,909 D. The Automotive Commodity Connection, Inc.'s 3 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Advance Auto Parts $626,088 Attn: Sharon Presley P.O. Box 2710 Roanoke, VA 24001 ADI Marketing $9,856 471 Blair Road Avenel, NJ 07001 ABH Dicv of CH Robinson $1,883 P.O. Box 9121 Minneapolis, MN 55480 US AIRWAYS: Court Allows Sabre's $7,131,989 Administrative Claim ---------------------------------------------------------------- Sabre is granted a $7,131,989 administrative claim, which will be paid on the effective date of a plan of reorganization for US Airways, Inc., and its debtor-affiliates. As reported in the Troubled Company Reporter on May 13, 2005, pursuant to a Global Distribution (Reservations) System and a Participating Carrier Agreement, the Debtors provide Sabre, Inc., with schedules, inventory, fares, fare rules, and seat availability. The Debtors pay Sabre to distribute this information to its subscribers, who in turn sell air travel on the Debtors' flights. The Debtors pay Sabre through the Airlines Clearing House system. Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, says that the Debtors have outstanding prepetition obligations to Sabre. On September 14, 2004, the Court issued the Interline Order, which authorized the Debtors to assume executory contracts relating to the Airline Clearinghouse Agreement, Interline Agreements and other Agreements. The Interline Order authorized the Debtors to assume the ACH Contract, which facilitated the settlement of interline accounts though the ACH system. After the Petition Date, the Debtors decided not to pay the Prepetition Obligations owed to Sabre under the PCA. As a result, the Debtors' Prepetition Obligations to Sabre remain outstanding. In response to the Debtors' nonpayment of the Prepetition Obligations, Sabre filed a request for mediation under ACH rules with the Secretary-Treasurer of the ACH. Sabre asserts it is entitled to payment of the Prepetition Obligations, plus interest and attorney's fees. To avoid the costs of mediation of the dispute and the associated uncertainties, the parties negotiated a Settlement Agreement. Pursuant to Section 503(b)(1)(A) of the Bankruptcy Code, the Debtors asked the Court to allow Sabre an administrative claim for $7,131,989, to be paid on the effective date of a plan of reorganization. This amount excludes interest and attorney's fees. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Asks Court to Allow Amadeus' $1,565,533 Admin. Claim ---------------------------------------------------------------- US Airways, Inc., and its debtor-affiliates ask Judge Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia to allow an administrative claim in favor of Amadeus Global Travel Distribution, S.A. Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, explains that the Debtors participate in the Amadeus Global Distribution (Reservations) System through the Amadeus Participating Carrier Agreement. The Debtors provide schedules, inventory, fares, fare rules, and seat availability to Amadeus GDS. The Debtors pay Amadeus to distribute this information to subscribers who then sell seats on the Debtors' planes. Before the Petition Date, the Debtors owed Amadeus $3,131,065. The Debtors pay Amadeus through the International Air Transport Association Clearing House system, which is operated by the International Air Transport Association. The Debtors have 42 days after the end of the month to pay Amadeus. On September 14, 2004, the Bankruptcy Court entered the Interline Agreements Order, which allowed the Debtors to assume their multilateral contracts. The Interline Order did not provide for the assumption of the Amadeus PCA or any other bilateral GDS agreement. Under the Interline Agreements Order, the Debtors decided not to pay their prepetition obligations under the GDS agreements, including the $3,131,065 owed to Amadeus. According to Mr. Leitch, Amadeus disputed the Debtors' use of the IATA rules and procedures to avoid paying the $3,131,065. Amadeus asked the ICH to establish an adjudication panel to resolve the dispute. The adjudication panel has not yet been established as the parties have been in negotiating the dispute. In the interim, IATA placed $3,131,065 into escrow. Amadeus asserts that it is entitled to immediate payment of these funds. To avoid the costs and uncertainties of arbitration, the parties have negotiated a settlement. The Debtors agree to allow Amadeus an administrative claim for $1,565,533, equal to 50% of the amount held in escrow by IATA. The claim will be paid upon the effective date of a plan of reorganization. The IATA will refund the Debtors the other half of the funds in the escrow account. Mr. Leitch assures the Court that the settlement is fair, reasonable and in the best interest of the Debtors, and their estates and creditors. The settlement allows the Debtors to avoid the costs, expenses and uncertainties associated with an adjudication panel. The Debtors will get 50% of the funds held in escrow by IATA. The Debtors will avoid payment of the other 50% until the effective date of a plan of reorganization. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 92; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Gets Court Nod to Reject Lease for Tail No. N586US -------------------------------------------------------------- US Airways, Inc., and its debtor-affiliates need to maximize their fleet utility at the lowest possible cost, Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, relates. Accordingly, the Debtors analyzed several aircraft financings and considered the financing structure and related equipment in light of the projected demand for air travel, flight schedules, maintenance requirements, labor costs and other business factors. After careful review, the Debtors determined that the lease for one Boeing 737-301 bearing Tail No. N586US and related engines, is burdensome to the estates. Mr. Leitch relates that the rate under the lease exceeds the current market value and the payment obligations far outweigh the benefits that the Debtors receive from using the aircraft. Wachovia Bank is Owner Trustee for the aircraft. The Debtors sought and obtained the Court's authority to reject the lease for the aircraft, effective June 10, 2005. The Court should require claim holders to file a proof of claim within 30 days of the Rejection Date, Mr. Leitch says. This will remove the Debtors' exposure to unwarranted postpetition administrative expenses, Mr. Leitch explains. The Debtors will provide the Lessor with a written Rejection Notice. The Debtors will provide the Lessor's technical advisor with access to all records for the aircraft as of the date of the Rejection Notice. The Debtors will maintain insurance coverage and provide storage for the aircraft for 30 days after the Rejection Date. By the Rejection Date, the aircraft will be taken out of service and delivered to the Lessor at a mutually agreed to location in the continental United States. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue Nos. 91 & 93; Bankruptcy Creditors' Service, Inc., 215/945-7000) USG CORP: Equity Committee Wants to Continue Securities Trading --------------------------------------------------------------- Certain of the present members of the Statutory Committee of Equity Security Holders in the chapter 11 cases of USG Corporation and its debtor-affiliates are direct investment advisors or managers that provide investment advisory services to institutional, pension, mutual fund and high net-worth clients and affiliated funds and accounts. Daniel B. Butz, Esq., at Morris, Nichols, Arsht & Tunnel, in Wilmington, Delaware, tells Judge Fitzgerald that as providers of those services, the Members have the duty to maximize returns for their clients or shareholders through the buying and selling of securities and other financial assets. Other Members may also regularly buy and sell securities and other financial assets for their own portfolios. Mr. Butz relates that if the Members are barred from trading securities during the pendency of the Debtors' Chapter 11 cases because of their services on the Equity Committee, they risk the loss of potential beneficial investment opportunities for their clients. Alternatively, if the Members resign from the Equity Committee, their interests and those of their clients' may be compromised by virtue of their taking a less active role in the reorganization process. According to Mr. Butz, in the last several years, many institutions have faced the same dilemma with respect to committee memberships in other Chapter 11 cases. To resolve the issue, bankruptcy courts, with increasing regularity, permit members of statutory committees to trade securities of debtors conditioned on the establishment of Ethical Walls. The Equity Committee asks the U.S. Bankruptcy Court for the District of Delaware to enter an order determining that Members will not violate their duties as Equity Committee members and will not subject their holdings to possible disallowance or other adverse treatment by trading during the pendency of the Debtors' bankruptcy cases: (i) the stock, notes, bonds, or debentures issued by any of the Debtors or their non-debtor affiliates; (ii) participation in any debt obligations; or (iii) any other claims against or interests in any one or more members of the USG Group that constitute "securities" within the meaning of applicable state or federal securities law or both, as long as any Member that engages in any of the transactions establishes and effectively implements an Ethical Wall to prevent the misuse of any material non-public information obtained through its activities as a member. Mr. Butz explains that precluding the Members from trading securities subject to proper precautions would be detrimental to all holders of USG Corporation's equity securities because it could render certain members unable or unwilling to serve on the Equity Committee. The members have resources and experience, including a considerable level of knowledge of the USG Group's business, industry and capital structure, that render the Members' services particularly valuable to the Equity Committee, Mr. Butz notes. In addition, because they hold among the largest amounts of USG's equity securities, the Members have a great incentive to pursue the Equity Committee's goal of confirming a Chapter 11 plan that provides the best recoveries possible for all constituencies. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at Jones Day represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG Bankruptcy News, Issue No. 88; Bankruptcy Creditors' Service, Inc., 215/945-7000) US WIRELESS: Plan Agent Wants Until Nov. 11 to Object to Claims --------------------------------------------------------------- Executive Sounding Board Associates, Inc., the Liquidating Agent appointed under the confirmed Second Amended Liquidating Plan of Reorganization of U.S. Wireless Corporation and its debtor- affiliates asks the U.S. Bankruptcy Court for the District of Delaware to further extend the deadline by which it can file objections to all claims. Executive Sounding wants until Nov. 11, 2005, to object to all proofs of claim filed against the Debtors' estates. Executive Sounding is the Liquidating Agent for the Liquidating Trust formed pursuant to the Debtors' confirmed Plan. The Court confirmed the Debtors' Amended Plan on June 10, 2003, and the Plan took effect on June 25, 2003. Executive Sounding explains that since the last claims objection deadline expired on May 16, 2005, it has determined that there will still be available funds for distributions under the confirmed Plan to the Debtors' unsecured creditors. Executive Sounding is still diligently pursuing extensive litigation on behalf of the Debtors' estates, including actions against the IRS, the Debtors' accounting professionals and numerous defendants. Pending the final outcome of those remaining actions, only then will Executive Sounding determine the specific amount of available funds remaining for distribution to the Debtors' creditors. The Court will convene a hearing at 3:30 p.m., on June 16, 2005, to consider Executive Sounding's request to extend the claims objection deadline. Headquartered in San Ramon, California, U.S. Wireless Corporation is involved in research and development of wireless location technologies, designs and implements wireless location networks using proprietary "location pattern matching" technology. The Company and its debtor-affiliates filed for chapter 11 protection on Aug. 29, 2001 (Bankr. Del. Case No. 01-10262). David M. Fournier, Esq., at Pepper Hamilton LLP represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $17,688,708 in assets and $22,239,832 in liabilities. The Court confirmed the Debtors' chapter 11 Plan on June 10, 2003 VIRTRA SYSTEMS: Auditors Express Going Concern Doubt in Form 10-K ----------------------------------------------------------------- Virtra Systems, Inc.'s auditors raised substantial doubt about its 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 it will need substantial additional capital or new lucrative custom application projects to become profitable. Debt Restructuring Plans The management of Virtra has developed specific current and long- term plans to address its viability as a going concern: -- The Company's anticipated entry into the training/simulation market was advanced by the aftermath of Sept. 11, 2001. The Company is currently in advanced discussions with representatives of various government authorities regarding use of the Company's technology in detecting and mitigating the risk of similar problems in the future. -- The Company is also attempting to raise funds through debt and/or equity offerings. If successful, these additional funds would be used to pay down debt and for working capital purposes. -- In the long-term, the Company believes that cash flows from continued growth in its operations will provide the resources for continued operations. There can be no assurance that the Company's debt reduction plans will be successful or that the Company will have the ability to implement its business plan and ultimately attain profitability. The Company's long-term viability as a going concern is dependent upon three key factors: -- The Company's ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations in the near term. -- The ability of the Company to control costs and expand revenues from existing or new businesses. -- The ability of the Company to ultimately achieve adequate profitability and cash flows from operations to sustain its operations. Virtra Systems principal business began in 1993 with the organization of Ferris Productions, Inc. Ferris designed, developed, distributed, and operated virtual reality products for the entertainment, simulation, promotion, and education markets. "Virtual reality" is a generic term associated with computer systems that create a real-time visual/audio/haptic (touch and feel) experience. Virtual reality immerses participants into a three-dimensional real-time synthetic environment generated or controlled by one (or several) computer(s). In September of 2001, Ferris merged into GameCom, Inc., a publicly-held Texas company whose principal business at the time was the development and marketing of an Internet-enabled video game system. Virtra's historic areas of application have included the entertainment/amusement, advertising/promotion, and training/simulation markets. The entertainment/amusement market was the original market for its products. The Company entered the advertising/promotion market, its second, with its 2000 "Drive With Confidence Tour" for Buick, featuring a virtual reality "test-drive" of a Buick LeSabre with PGA professional Ben Crenshaw accompanying the participant. In 2004, Virtra unveiled its IVR line of projection-based training simulators for judgmental use-of-force, situational awareness, combat-readiness, and tactical judgment objectives. These product lines provide the law enforcement, military, and security markets with 360-degree immersive training environments. As of May 10, 2005, the Company had sold 29 systems, to the United States Air Force, the United States Army, a classified Department of Defense customer, domestic law enforcement agencies, and state police and security organizations in Mexico and India. Virtra faces all the risks, expenses, and difficulties frequently encountered in connection with the expansion and development of a business, difficulties in maintaining delivery schedules if and when volume increases, the need to develop support arrangements for systems at widely dispersed physical locations, and the need to control operating and general and administrative expenses. On November 9, 2004, the Company attempted to forward to all the 151 holders of the old Ferris equipment leasing arrangements, the 16 holders of old Ferris debentures, and the 11 holders of the old GameCom promissory notes, an exchange offer, under which these leaseholders and noteholders could convert their leases and notes to shares of Virtra Systems' common stock. The proposal was accepted by approximately 88 percent, in principal amount, of these leaseholders and noteholders, eliminating approximately $6,924,308 of liability from the Company's balance sheet as of December 31, 2004, saving it approximately $225,000 in accrued interest per quarter. However, Virtra was unable to contact approximately four percent of such leaseholders/noteholders, and approximately nine percent of those contacted have thus far not accepted the proposal. The Company's operations may require the continued forbearance of those leaseholders and noteholders who have not yet accepted the conversion proposal. Default As of March 31, 2005, Virtra's liquidity position was extremely precarious. It had current liabilities of $5,018,098, including $841,780 in unconverted obligations under the lease financing for the old Ferris Productions virtual reality systems, $906,788 in accounts payable, and short-term notes payable of $1,482,897, some of which were either demand indebtedness, or were payable at an earlier date and were in default. Of this amount, $1,188,397 is with a bank with whom the Company expects to shortly negotiate a renewal and a new amortization period. As of March 31, 2005, there was only $216,100 in current assets available to meet those liabilities. To date Virtra has met its capital requirements by acquiring needed equipment under the Ferris non-cancelable leasing arrangements, through capital contributions, loans from principal shareholders and officers, certain private placement offerings, through its previous equity line financing with Dutchess Private Equities Fund, L.P., and through its current convertible debenture with Dutchess Private Equities Fund, L.P. and Dutchess Private Equities Fund II, L.P. For the three months ended March 31, 2005, the Company's net loss was $800,506. After taking into account the non-cash items included in that loss, its cash requirements for operations were $625,685. In addition, Virtra made capital expenditures of $1,774 and repaid notes in the amount of $161,303. To cover these cash requirements, the Company used existing cash, borrowed $500,000 on a convertible debenture, and issued 246,352 shares of its common stock under the old Dutchess equity line, for net cash proceeds of $76,142. In February 2005, the Company entered into a financial contract with Dutchess Private Equities Fund, L.P., and Dutchess Private Equities Fund II, L.P. Under this arrangement, the Dutchess funds were to purchase up to $6 million of Company common stock over the next three years under an equity line. The number of shares the Company might have sold to the Dutchess funds was to be based upon the trading volume of the Company's stock. Under the February 2005 arrangement, the Dutchess funds also participated in a private placement of $750,000 in convertible debentures, which are presently being registered under Virtra's SB-2 filing, as amended on April 25, 2005. Virtra recently terminated the new equity line agreement with the Dutchess funds. Based on non-binding purchase commitments, management projects that purchase order financing and revenue from those anticipated sales will allow it to continue operations for at least the next 12 months. About the Company VirTra Systems, Inc. (OTCBB:VTSI) applies patented technology to produce the world's most advanced virtual reality systems and 3-D experiences. With proprietary 360-degree, interactive photorealistic technology, VirTra Systems constructs marksmanship, judgmental use-of-force, and situational awareness firearms training simulators for military branches such as the U.S. Army and U.S. Air Force, and for domestic and international law enforcement agencies. VirTra Systems also produces custom advertising and promotional mobile marketing and experiential marketing systems utilizing the sensations of motion, touch, sound, and smell for clients such as General Motors, Pennzoil, Red Baron Pizza, and the U.S. Army. At March 31, 2005, VirTra Systems' balance sheet showed a $3,611,620 stockholders' deficit, compared to a $3,241,230 at Dec. 31, 2004. VISTEON CORPORATION: Moody's Confirms Senior Implied Rating at B3 ----------------------------------------------------------------- Moody's Investors Service has confirmed the long-term debt ratings of Visteon Corporation, senior implied at B3 and affirmed the company's Speculative Grade Liquidity rating at SGL-4. The rating outlook is developing. The rating actions consider the Memorandum of Understanding which was entered into between Visteon and Ford Motor Company, which should facilitate a significant revision to the structure and cost competitiveness of Visteon's North American manufacturing operations and provide incremental liquidity support for the company as it restructures. The rating confirmation reflects Moody's belief that the agreement with Ford provides a framework and timetable for implementing a restructuring that should help to stabilize the Visteon credit. Nevertheless, it is noted that successful implementation of the agreement is subject to several conditions, including approval by the United Auto Workers union, whose leadership has announced its support with a subsequent vote scheduled for early June. In addition Visteon is in the process of renegotiation of the bank facilities and is expected to require the granting of a security interest in the company's assets, which would change the relative priority of claim for existing unsecured bondholders in the company's capital structure. The developing rating outlook considers that the senior implied, prospective bank credit facility, and unsecured bond ratings of Visteon could be affected in various ways depending on the company's success or failure in implementing the proposed restructuring and refinancing. Although failure to execute the restructuring in a timely fashion could lead to further rating downgrades, successful execution could be reflected in an improved senior implied and prospective bank credit facility rating, while the ratings of the company's unsecured bonds could remain at the B3 level reflecting their effective subordination to bank debt. The successful renegotiation of the company's bank facilities could also favorably affect the company's existing SGL-4 Speculative Grade Liquidity Rating. Existing ratings confirmed are: Visteon Corporation: * Senior Implied, Senior Unsecured Issuer Rating, and senior unsecured debt ratings at B3 * Shelf ratings for senior unsecured, subordinated and preferred at (P)B3, (P)Caa2 and (P)Caa3 respectively * Speculative Grade Liquidity Rating, SGL-4 Visteon Capital Trust I: * Shelf rating for trust preferred, (P)Caa2 The Not Prime short term rating of Visteon is unaffected by the rating action. The MOU is expected to result in a more definitive agreement being structured and executed with Ford by the end of July, with the ultimate transfer of certain unprofitable North American manufacturing plants to Ford or a new legal entity controlled by Ford by the end of September. After the agreement Visteon will no longer be leasing any UAW Ford Master Agreement employees, whose higher compensation costs have negatively affected the company's financial performance and liability structure. Going forward Visteon will concentrate on its identified core businesses of interiors, climate control, electronics & lighting. In becoming more focused, the company will end up with lower revenues (roughly $11.4 billion); but will move closer to a break- even performance on a global basis; and will have a more balanced customer and geographic profile as well as a more cost competitive labor force in the U.S. In addition, under the proposed arrangement, Visteon will have access to additional resources provided by Ford to facilitate further restructuring actions. The successful execution of the announced strategy could lead to enhanced profitability and improved credit metrics at Visteon over time. The agreement will result in a non-cash charge of some $1.3 billion to the value of fixed assets being transferred, but also will relieve Visteon of reimbursing Ford for some $2 billion of OPEB related liabilities associated with its UAW Ford Master Agreement employees, resulting in a net gain of $450-$650 million after certain other adjustments. In addition Visteon will receive close to $300 million for inventory in the transitioned plants, and Ford will also accelerate certain payment terms on its trade payables to Visteon which is expected to provide Visteon with an additional $200-$250 million of cash. Upon signing a definitive agreement, which is expected to occur by the end of July, Ford will also provide a secured $250 million short term loan to Visteon. This will fund Visteon's maturing notes on August 1 for the same amount. Ford will be given warrants to purchase 25 million Visteon shares. The valuation placed on these warrants will be expensed and would reduce the net gain otherwise arising from the liability relief and asset write-down. Visteon has also announced the opening of discussions with its bank group to address its liquidity needs and its need for financial covenant relief. The company currently has a $775 million term revolving credit facility which was partly utilized for letters of credit, and a $234 million delayed draw term loan (both of which have maturity dates in June 2007). Visteon's 364 day bank facility will expire in mid-June 2005. The company is expected to seek additional revolving credit availability as well as amendments to existing covenants. The bank refinancing will likely involve provision of a collateral package over substantial amounts of the company's domestic assets. The total amount and composition of the assets to be pledged is anticipated to fall short of any lien limitation under the indentures for Visteon's unsecured notes, precluding a triggering of the negative pledge provisions. The collateral package would be shared with Ford whose $250 million loan would mature at the time of the asset transfer and inventory sale targeted for the end of September. Consequently, Moody's believes that the granting of security on the bank facilities and the Ford facility will effectively subordinate the existing unsecured bonds, and could warrant a rating distinction relative to the senior implied rating. In addition to documenting and closing a more definitive agreement with Ford by the end of July, the UAW membership will also need to ratify the terms of the labor aspects of the agreement. UAW leadership has affirmed their support, however an actual majority vote of members employed at Visteon plants will be required. Visteon must also conclude its accounting investigation and deliver financial statements to the SEC and its lenders. The banks had earlier extended their deadline for such from early June to the end of July and are expected to be asked for a further extension. Subject to satisfying these conditions and closing under the respective agreements, prospects for Visteon's future performance and ability to satisfy near term obligations would improve from earlier assumptions. In the near term the company continues to benefit from an interim funding agreement provided by Ford during March. During the interim period, the developing rating outlook expresses Moody's view that subject to the successful execution of the restructuring and refinancing plans, Visteon's senior implied and prospective bank credit facility ratings could be favorably affected, while failure to implement the plans could result in negative rating actions Factors that could lead to higher ratings or a stable or positive outlook would include: * successful implementation of the agreements and respective funding which would restore Visteon's operating profitability towards 2%; * EBIT/Interest coverage at or above 1.5 times; * sustained adjusted leverage below five times; and * achieving as well as maintaining positive free cash flow. Factors that could lead to a negative outlook or lower ratings would include: * failure to complete the proposed restructuring and refinancing plan in a timely fashion; * any further adverse developments on accounting or internal control matters that further extend the company's ability to publish its financial statements; or * a perceived inability to be on a course to achieve sustained profitability and free cash generation as well as EBIT/Interest coverage of at least 1 time. Visteon Corporation is a leading full-service supplier of worldwide automotive manufacturers and the global automotive aftermarket. The company has about 70,000 employees and a global delivery system of more than 200 technical, manufacturing, sales and service facilities located in 24 countries. W.R. GRACE: Court Approves Hatco Settlement & Remediation Deals --------------------------------------------------------------- From 1959 through 1978, W.R. Grace & Co.-Conn. owned and operated a specialty chemicals manufacturing facility located at 1020 King Georges Post Road in Fords, New Jersey, then known as the Hatco Chemical Division of Grace. Hatco Corporation purchased the real property and operations of the Hatco Chemical Division on August 21, 1978. Hatco continues to own and operate the Hatco Facility. Site Remediation and the 1996 Settlement On July 22, 1992, the State of New Jersey, through the New Jersey Department of Environmental Protection, issued a Directive and Notice to the Insurers of Grace and Hatco asserting that the parties are responsible for the discharge of hazardous substances at the Hatco Facility pursuant to the Spill Compensation and Control Act, and demanding that Grace and Hatco conduct a remedial investigation and remedial action of hazardous substances. Hatco entered into an administrative consent order with the NJDEP in September 1992 for the investigation and remediation of hazardous substances on or emanating from the Hatco Facility. Hatco then initiated litigation against Grace. After extensive litigation in the federal and state courts, Grace and Hatco entered into a settlement agreement dated July 1, 1996. The 1996 Settlement Agreement provided for Grace and Hatco to remediate the Site cooperatively and to participate jointly in the resolution of future costs and expenses in connection with the remediation. Grace and Hatco have worked cooperatively to address contamination at the Site since entering into the 1996 Settlement, and, until the Debtors' Petition Date, resolved remediation costs and expenses. Grace has not sought to reject the 1996 Settlement under the Bankruptcy Code. By letter dated September 12, 2001, Grace, W.R. Grace & Co., and Remedium Group, Inc., advised the State of New Jersey and Hatco of their bankruptcy filing and informed that they would be unable to further participate in the environmental remedial activities at the Site due to their Chapter 11 cases. By letter dated September 21, 2001, Hatco disputed the position of the Settling Debtors and asserted that Grace has a continuing obligation to perform the remediation of the Site pursuant to the 1996 Settlement. The State believes that it has a non-dischargeable claim against Grace for the remediation of the Site. On March 28, 2003, Hatco filed Claim No. 9569 against Grace, which claim asserts $34 million relating to Grace's obligations and liabilities that arose from environmental contamination at the Site. The Liability Transfer Program Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., in Wilmington, Delaware, informs Judge Fitzgerald that to avoid protracted litigation and resolve their liability in connection with the Site, the Settling Debtors and Hatco have developed a liability transfer program to achieve remediation of the Site at minimum risk and cost to the Settling Debtors. The transfer is structured so that, in exchange for a one-time payment, a third-party environmental contractor will assume, in perpetuity, the Settling Debtors' and Hatco's environmental remediation and environmental legal liability in connection with the Site. In short, under agreements with the State and with the Settling Debtors and Hatco, the third-party will be responsible in completing the environmental remediation of the Site and maintain the remedy in perpetuity, and will defend and pay other claims related to environmental conditions at the Site. The third-party's obligations will be backed by an environmental insurance policy providing remediation cost cap insurance in addition to pollution legal liability insurance. To develop and implement the liability transfer structure, the Settling Debtors entered into a professional services agreement with Marsh USA Inc. for advice and assistance with regard to the structure and details of the liability buy-out. According to Ms. Jones, Marsh has specialized knowledge with respect to environmental insurance programs and risk transfer. Among other things, Marsh evaluated the environmental clean-up risks at the Site, structured a program to address the risks, identified potential liability buy-out candidates and insurance providers, assisted to interview and negotiate with the candidates and providers, and supported the evaluation of bids received. With Marsh's assistance, the Settling Debtors and Hatco solicited competitive bids from experienced environmental contractors. After a rigorous selection process, the Settling Debtors and Hatco selected Weston Solutions, Inc., as third party liability buy-out contractor. Weston has chosen ACE American Insurance Company as its insurer. ACE will issue a Remediation Expense Containment and Premises Pollution Liability Insurance Policy to insure Weston's obligations under the liability transfer. The Liability Transfer Documents To formalize the liability transfer, a set of five documents have been developed: (a) a Settlement Agreement among the Settling Debtors, NJDEP, Hatco, Weston and ACE; (b) a Remediation Agreement among the Settling Debtors, Hatco and Weston; (c) a Policy to be issued by ACE; (d) an Administrative Consent Order agreed to among NJDEP, Weston and ACE; and (e) a Natural Resource Damages Settlement Agreement agreed among the Settling Debtors, NJDEP, Hatco and Weston. The Settlement Agreement Grace, Remedium, NJDEP, Hatco, Weston and ACE have executed a Settlement Agreement, under which: 1. Grace and Remedium will pay $21,353,794 in settlement of all liabilities with respect to the environmental conditions at the Site; 2. Hatco will pay $3,768,316 in settlement of all liabilities with respect to the environmental conditions at the Site related to releases from the Site commencing prior to November 4, 2002; 3. Grace and Remedium will exchange mutual releases of claims and covenants not to sue with Hatco; 4. NJDEP will grant Grace and Remedium a covenant not to sue relating to environmental contamination resulting from discharges from the Site; 5. NJDEP will grant Hatco a conditional promise not to sue relating to environmental contamination resulting from discharges from the Site commencing prior to November 4, 2002; 6. Hatco and NJDEP will be precluded from seeking other relief against Grace and Remedium related to the Site; 7. Hatco's Claim and claims under the 1996 Settlement will be extinguished; and 8. Weston will be responsible for its commitments under the Settlement Agreement, Remediation Agreement, the Policy, and the Administrative Consent Order, and ACE will be required to issue the Policy and provide financial assurance on Weston's behalf for the remediation to the limits of, and for so long as, the Policy is effective. The Remediation Agreement Grace, Remedium, Hatco and Weston have executed a Remediation Agreement, under which Weston will accept responsibility for historical environmental liabilities in connection with the Site and the Debtors and Hatco will fund the remediation of the Site and the purchase of insurance and annuity, for a total of $25,122,110. In particular, Weston will become responsible: * for all activities necessary to investigate and remediate pollution conditions caused by operations or conditions existing prior to November 4, 2002, whether at, under, or migrated or migrating from the Site; * to sign as the generator for all remediation waste disposed from the Site; and * for the legal obligations of Grace, Remedium, or Hatco for risks resulting from the pollution conditions, including third-party bodily injury, property damage and natural resource damage claims. Weston's activities will be funded and insured through the Policy for the first 30 years. Any long-term operation and maintenance of the remedy after that will be financed through a pre-funded annuity. The ACE Policy The Policy has been negotiated among Grace, Remedium, Hatco, Weston and ACE. The Policy will fund the remedial action, cover any cost overruns associated with implementing the remedial plan or resulting from unknown pre-existing conditions or regulatory re-openers, satisfy natural resource damages claims to a maximum of $5 million, and provide defense and coverage of third-party claims for clean-up costs, property damage, and bodily injury associated with conditions related to the Site whether on-site, off-site, associated with transportation of Site-related waste, or disposal of wastes at non-owned disposal sites. The New Administrative Consent Order Under the Settlement Agreement and the Remediation Agreement, Weston will become liable to the State for cleanup pursuant to a new Administrative Consent Order that has been fully negotiated, executed by Weston and ACE, and, pursuant to the terms of the Settlement Agreement, will be executed by NJDEP within 14 days of receipt of the Court's order approving the Settlement and Remediation Agreements. ACE has executed the Administrative Consent Order for the limited purpose of providing financial assurance of the remedy through a self-guarantee to the State. The Natural Resource Damages Settlement Agreement Under the Settlement Agreement and Remediation Agreement, natural resource damage claims related to environmental conditions at the Site existing as of the date of the Natural Resource Damages Settlement Agreement will be fully settled. The Natural Resource Damages Settlement Agreement has been executed by the Settling Debtors, NJDEP, Hatco and Weston. The actions required by the Natural Resource Damages Settlement Agreement will be funded through the Policy. The Settling Debtors will receive a full release and covenant not to sue and contribution protection for natural resource damages existing prior to the date of the Natural Resource Damages Settlement Agreement. Settlement & Remediation Pacts Should be Approved The Settling Debtors sought and obtained U.S. Bankruptcy Court for the District of Delaware 's authority to: -- execute and consummate the transactions contemplated under the Settlement Agreement; -- execute and consummate the transactions contemplated under the Remediation Agreement; -- execute the Letter Agreement with Marsh; and -- remit to Marsh a $330,000 Success Fee as required by the Letter Agreement. Ms. Jones believes that through the Settlement Agreement and Remediation Agreement, the Settling Debtors will: -- avoid certain, protracted and expensive litigation, -- cost-effectively resolve a considerable environmental liability, -- receive covenants not to sue from NJDEP and Hatco concerning the Site, -- receive a covenant not to sue from Hatco for obligations and liabilities under the 1996 Settlement, and -- be indemnified from all potential future liability. Furthermore, Ms. Jones says, significant environmental contamination will be promptly remediated. Moreover, Ms. Jones relates, the approval of the Settlement Agreement will extinguish Hatco's contract and environmental contribution claims without forcing litigation. "Allowing the settlement to proceed will eliminate Hatco's claims for approximately $34 million against the Settling Debtors' estates for the payment of only $21,353,794." Furthermore, Ms. Jones continues, the Settlement Agreement allows the Settling Debtors to avoid additional obligations arising from the 1996 Settlement, like payment for costs associated with facility expansion projects and certain aspects of Hatco's wastewater discharge. The Settlement Agreement requires Grace to pay costs for facility expansion projects up to $3 million and for wastewater discharge projects with no limit, Ms. Jones notes. Therefore, Ms. Jones says, allowing the settlement to proceed will eliminate assured transaction costs, address risk of increased costs, and expedite resolution of significant liability. In addition, Ms. Jones remarks, approval of the Settlement will result in the remediation of the Site and satisfaction of the State's environmental statutes and regulations. Ms. Jones contends that while the State has not filed a proof of claim against the Settling Debtors, NJDEP may still assert that an order to conduct remediation issued pursuant to federal or state environmental law is not a claim dischargeable in bankruptcy, but rather is the State's exercise of its regulatory and police powers. Ms. Jones tells Judge Fitzgerald that if the settlement is not approved, the Settling Debtors may face repercussions from the United States Environmental Protection Agency in connection with its regulatory and enforcement role pursuant to the Toxic Substances Control Act. Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service, Inc., 215/945-7000) WCI STEEL: Noteholders File Competing Plan of Reorganization ------------------------------------------------------------ Wilmington Trust Company and the Secured Noteholders of WCI Steel, Inc., delivered a competing Plan of Reorganization to the U.S. Bankruptcy Court for the Northern District of Ohio. Wilmington Trust is the indenture trustee successor for $300 million senior notes secured by substantially all real property, plant and equipment owned by WCI Steel. Plan Structure The Plan proposes that WCI Steel and its subsidiaries to continue to own and operate their businesses without selling their assets and without changing the pension and labor agreements. The existing collective bargaining agreement with the United Steelworkers Association will be assumed by the Reorganized company. The Secured Noteholders will own Reorganized WCI and new officers and directors will be appointed. Treatment of Claims Allowed secured lender claims will be fully paid in cash on the Effective Date. Allowed secured notes holders will receive a new $1 million note and 4 million shares of the New Common Stock. Also, secured noteholders will have the option to buy, on the Effective Date, their pro rata shares of $50 million par value of New Preferred Rights. Unsecured creditors may receive either their pro rata share of $10,000,000 cash or their share of litigation proceeds and New Common Stock to be distributed to Secured Noteholders in respect of their unsecured deficiency claims. Claims less than $5,000 will be fully paid in cash plus interest determined by the Bankruptcy Court. Vendor claims are eliminated from the Plan after the Noteholders determined that no vendor met an established criteria. Equity interest holders will receive no distributions. * * * As previously reported, WCI filed its own plan of reorganization sponsored by its parent company, The Renco Group, Inc. The Plan would have enabled WCI to retain ownership of the company with a new labor contract in place. Judge Marilyn Shea-Stonum didn't confirm that plan after determining that it failed to meet one or more of the 13 standards for confirmation stated in 11 U.S.C. Section 1129(a). WCI is an integrated steelmaker producing more than 185 grades of custom and commodity flat-rolled steel at its Warren, Ohio facility. WCI products are used by steel service centers, convertors and the automotive and construction markets. WCI Steel filed for chapter 11 protection on Sept. 16, 2003 (Bankr. N.D. Ohio Case No. 03-44662). Christine M Pierpont, Esq., and G. Christopher Meyer, Esq., at Squire, Sanders & Dempsey, L.L.P., represent the Company. When WCI Steel filed for chapter 11 protection it reported $356,286,000 in total assets and liabilities totaling $620,610,000. WELLSFORD REAL: Waits for Shareholders to Okay Liquidation Plan --------------------------------------------------------------- Wellsford Real Properties, Inc.'s (AMEX:WRP) Board of Directors approved a Plan of Liquidation and a 1 for 100 Reverse Stock Split and 100 for 1 Forward Stock split of its common shares. This is subject to the separate approval of the Company's stockholders at an annual meeting, to be announced, which will be held subsequent to the mailing of a proxy statement. The purpose of the Stock Split is for the Company to reduce the number of its shareholders to less than 300 which will entitle it to terminate its reporting obligations under the Securities Exchange Act of 1934 and the AMEX listing of its common shares and continue operations as a non- public company thereby relieving the Company of the substantial costs, administrative burdens and compliance obligations associated with operating as a listed public company. In order for the Company to realize substantial cost savings from becoming a non-public company, the Board considered limiting the amount of funds it would expend in connection with cashing-out holders of less than 100 common shares. After the announcement of the Plan and Stock Split, the Company became aware of abnormally high trading of its common shares in lots of less than 100 shares. This could result in substantial aggregate payments being made by the Company to holders of less than 100 common shares in connection with the Stock Split, which would reduce the initial distributions to holders of 100 or more shares in connection with the Plan. Accordingly, the Board has reserved the right not to effectuate the Stock Split if the aggregate amount to be paid to cash-out fractional shares exceeds $1 million. Whether or not the Stock Split is effectuated, the Company will proceed with implementing the Plan if it is approved by stockholders. Jeffrey Lynford, Chairman and Chief Executive Officer of the Company commented that "The Company's Board of Directors and management believed, in recommending the Plan and Stock Split, that the Stock Split was in the best interests of shareholders because the added costs of public company compliance in the context of a liquidation would reduce liquidating distributions to shareholders. If the costs associated with effectuating the Stock Split become too high, there would be less benefit to effectuating it." About the Company Wellsford Real Properties, Inc. is a real estate merchant banking firm headquartered in New York City which acquires, develops, finances and operates real properties, constructs for-sale single family home and condominium developments and organizes and invests in private and public real estate companies. WINN-DIXIE: Has Until August 15 to File Notices of Removal ---------------------------------------------------------- Rule 9027(a) of the Federal Rules of Bankruptcy Procedure places time restrictions on the Debtors' ability to remove pending actions. Specifically, that Rule provides: Time for Filing; Civil Action Initiated Before Commencement of the Case Under the Code. If the claim or cause of action in a civil action is pending when a case under the Code is commenced, a notice of removal may be filed only within the longest of (A) 90 days after the order for relief in the case under the Code, (B) 30 days after entry of an order terminating a stay, if the claim or cause of action in a civil action has been stayed under Section 362 of the Code, or (C) 30 days after a trustee qualifies in a chapter 11 reorganization case but not later than 180 days after the order for relief. When Winn-Dixie Stores, Inc., and its debtor-affiliates filed for chapter 11 protection, they were plaintiffs in approximately 12 actions pending in state and federal courts throughout the country. The Actions cover a broad spectrum of legal issues including breach of contract, pharmacy litigation, real estate and others. Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, relates that because the Debtors have been focused primarily on stabilizing and maximizing the value of their businesses, the Debtors have not yet reviewed all the Actions to determine whether any Actions should be removed under Bankruptcy Rule 9027(a). Accordingly, the Debtors sought and obtained from the U.S. Bankruptcy Court for the Middle District of Florida an extension of the period within which they may file notices of removal with respect to pending actions through August 15, 2005. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn-Dixie and its debtor- affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Objects to Old Dixie & Dole PACA Claims --------------------------------------------------- As previously reported on the Troubled Company Reporter on May 20, 2005, on March 22, 2005, the U.S. Bankruptcy Court for the Southern District of New York granted Winn-Dixie Stores, Inc., and its debtor-affiliates authority to pay prepetition claims arising under the Perishable Agricultural Commodities Act and the Packers and Stockyard Act. The procedures established by the PACA Order require the Debtors to file a Report with the Court setting forth the status and information on the PACA Claims. * * * Responses (1) Old Dixie On March 30, 2005, Old Dixie Produce & Packaging, Inc., formerly known as Dixie Products & Packaging, Inc., filed a claim for $240,101 against the Debtors pursuant to the Perishable Agricultural Commodities Act. However, Old Dixie was informed that only $14,162 of its claim qualified as a valid PACA Claim. Mark G. Duncan, Esq., at Dwyer & Cambre, in Metairie, Louisiana, relates that the Debtors' consultants advised Old Dixie that the remaining balance of $165,535 does not qualify for treatment under the PACA Trust and would be treated as a general unsecured claim. The Debtors point out that most of Old Dixie's invoices provide for 45-day payment terms, with very few exceptions. The Debtors believe that any agreement by the parties, whether orally or in writing, extending the payment terms beyond 30 days extinguishes the vendor's PACA Trust right. Mr. Duncan contends that the Debtors' objection to Old Dixie's claim is unacceptable and contrary to law. For a produce supplier to extend payment terms beyond those prescribed in PACA regulations, Mr. Duncan states, the agreement must be: -- written; -- entered prior to the transaction; -- maintained in the files of each party; and -- specifically referred to in the invoices setting forth the extended payment terms. Mr. Duncan asserts that Old Dixie's search of its records does not reveal any prior written agreement that extended the parties' payment terms in a way that would extinguish Old Dixie's PACA rights. Furthermore, Old Dixie requested proof of that agreement from the Debtors, if it did exist. However, no agreement has been produced, Mr. Duncan says. Accordingly, Old Dixie asks the Court to allow its PACA Claim for at least $186,179, which is the entire sum of its prepetition invoices. (2) Dole, et al. The Debtors' Report regarding claims under PACA confirms that the PACA claims of four claimants is subject to further reconciliation and resolution: -- Dole Fresh Fruit Co., -- Dole Fresh Vegetables, Inc., -- Incredible Fresh Produce & Dairy, and -- W.P. Produce Corp. According to Allan C. Watkins, Esq., in Tampa, Florida, the Debtors paid the reconciled portions of each of the PACA claims and the parties are diligently cooperating with one another in reconciling and resolving the balance of each claim. Out of an abundance of caution, Dole Fresh Fruit, Dole Fresh Vegetables, Incredible Fresh Produce and W.P. Produce object to the Debtors' Report to the extent there is any implication that any portion of their claims remaining to be reconciled is not a valid PACA trust claim. In addition, Mr. Watkins reports that the PACA claim filed by Imports Unlimited, Inc., is subject to further review and reconciliation. However, Imports Unlimited's claim is not listed in the Debtors' Report. Accordingly, Imports Unlimited objects to the Debtors' Report to the extent that its claim was not listed and that there is an implication that the unreconciled portion of its claim is not a valid PACA trust claim. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn-Dixie and its debtor- affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Thrivent Wants to Foreclose Interest In Property ------------------------------------------------------------ Thrivent Financial for Lutherans, formerly known as Lutheran Brotherhood and as assignee of Sun Bank N.A., asks the U.S. Bankruptcy Court for the Middle District of Florida to lift the automatic stay with respect to certain real estate property of Winn-Dixie Stores, Inc., and its debtor-affiliates. Pursuant to a Note, Loan Agreement, Leasehold Mortgage, Security Agreement, Financing Statement and Assignment of Subleases dated December 29, 1994, Gooding's Super Market, Inc., granted Sun Bank National Association a mortgagee's interest in certain real property located in Osceola, Florida. According to Jeffrey de Carlo, Esq., at Foley & Mansfield, PLLP, in Miami, Florida, Sun Bank was the holder for value of the Note made by Gooding's for $2,280,000. The Note was secured by a Leasehold Mortgage, Security Agreement, Financing Statement and Assignment of Subleases. The Mortgage covers and encumbers the leasehold interest in the real property. The Note was further secured, among other things, by an Assignment of Subleases dated December 29, 1994, from Gooding's to Sun Bank. On May 4, 1995, the Loan Agreement, the Note, the Mortgage, and the Assignment were assigned to Thrivent. In 2000, the Debtors assumed Gooding's obligations pursuant to an Assumption Agreement. Mr. de Carlo tells the Court that, as of the bankruptcy petition date, there was a delinquency under the terms of the Note secured by the Mortgage. The outstanding balance due on the Note is currently $656,580 exclusive of interest, late fees, attorney's fees and costs. Interest rate is 9.4% and late charge is 4% of the principal. As of May 13, 2005, the Debtors owe Thrivent $661,051. Accordingly, Thrivent wants to foreclose its interest in the Property. In the alternative, Thrivent asks the Court to compel the Debtors to provide adequate protection of its interest in the Property. Mr. de Carlo reports that the assessed value of the Property is $1,527,200. Thrivent is not aware of any other liens on the Property. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn-Dixie and its debtor- affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000). XSTREAM BEVERAGE: Auditors Raise Going Concern Doubt ---------------------------------------------------- Xstream Beverage Network Inc. reported a $9.2 million net loss for the year ended Dec. 31, 2004, compared to a $6.4 million net loss for the same period in 2003. In addition, at Dec. 31, 2004, the Company had an accumulated deficit of $26,958,397. Going Concern Doubt While approximately 41% and 52% of net losses for the years ended Dec. 31, 2004 and 2003 are non-cash, stock-based expenses, the report of the Company's independent registered public accounting firm on Xstream's financial statements for the fiscal years ended Dec. 31, 2004 and 2003 contained a qualification expressing substantial doubt as to the Company's ability to continue as a going concern. Xstream's operating results for future periods will include significant expenses, including product development expenses, sales and marketing costs, programming and administrative expenses, and will be subject to numerous uncertainties. As a result, management is unable to predict whether Xstream will achieve profitability in the future. The failure to achieve profitable operations in future periods will adversely effect the Company's available working capital which would in turn limit its ability to grow the company and increase revenues. In this event, one could lose all of their investment in the Company. The Company's assets serve as collateral under an outstanding secured convertible term note. If the Company were to default on the obligations under this note, Laurus Master Fund, L.P. could foreclose on Company assets, which would prevent Xstream from conducting its business in the future and would cause the Company to cease operations. As noted, the Company has a history of losses and at December 31, 2004 had an accumulated deficit of $26,958,397 and a working capital deficit of $2,345,022. Xstream will require funds to satisfy its current obligations, increase its product inventory, move its subsidiary to a new facility in Maui and equip that facility with additional manufacturing equipment, and for receivable financing. The Company will also need funds to satisfy the balance of the closing consideration due to Morris Stoddard of $412,000 related to the acquisition of Master Distributors. Mr. Stoddard has agreed to defer this amount and approximately $112,500 in payments due under the 2004 salary agreement with him until April 14, 2005. The Company does not presently have the funds available to pay Mr. Stoddard, nor does it have any commitments for additional working capital and there are no assurances that such capital will be available to it when needed, or upon terms and conditions which are acceptable to it. If unable to secure additional working capital through the sale of equity securities, the ownership interests of current stockholders will be diluted. If Xstream raises additional working capital through the issuance of debt or additional dividend paying securities, the Company's future interest and dividend expenses will increase. If unable to secure additional working capital as needed, the Company's ability to grow sales, meet operating and financing obligations as they become due, and continue Company business and operations could be in jeopardy. Xstream Beverage Network Inc. develops, markets, sells and distributes new age beverage category natural sodas, fruit juices and energy drinks. Following its acquisition in April 2003 of Total Beverage Network, its focus has been to build a network of small to medium sized beverage distribution businesses, with an emphasis on the East Coast of the United States. The Company 's goal is to become a leading distributor of beverage products through multiple distribution channels. Since its acquisition of Total Beverage Network, the Company has acquired additional beverage distribution companies together with a natural juice company and certain intellectual property rights related to other beverage names. At March 31, 2005, Xstream Beverage's balance sheet showed a $2 million stockholders' deficit. * Alvarez & Marsal Hires Patrick McCormick as Managing Director --------------------------------------------------------------- Alvarez & Marsal, a global professional services firm, announced that Patrick McCormick has joined Alvarez & Marsal Business Consulting as a managing director. Based in Philadelphia, he is leading development activities in the Mid-Atlantic market and will serve clients throughout the Northeast region. With over 25 years of consulting and business management experience across a variety of industry sectors, Mr. McCormick has significant expertise in business planning, customer and market strategy, business intelligence, finance strategy development, financial engineering, performance management, financial process and systems improvements. Over the course of his career he also has advised clients on mergers, acquisitions and divestitures, service and manufacturing operations design, organization development and structuring and negotiating venture partnerships and debt and equity agreements. Prior to joining A&M, Mr. McCormick served as COO and CFO of a large multifamily and office real estate development firm. He previously served as the co-managing partner responsible for Andersen's Business Consulting Finance Business Solutions practice in the North America and Europe. Before that, he was the managing partner of Andersen's Philadelphia and Southeast Region Business Consulting Practice. A frequent guest speaker and contributing writer, Mr. McCormick holds a dual bachelor's degree in management/marketing and accounting from St. Joseph's University. Alvarez & Marsal Business Consulting, LLC (A&M BC) works with corporate clients to deliver exceptional improvements in performance. A&M BC is composed of dedicated teams of senior consulting specialists with backgrounds in general management, strategy, functional skills, technology and business processes. Building on the heritage of A&M's turnaround and crisis management capability, A&M BC serves clients with strong competitive and financial positions and also works with the firm's restructuring professionals to assist under-performing companies. About Alvarez & Marsal Alvarez & Marsal is a leading global professional services firm with expertise in guiding companies and public sector entities through complex financial, operational and organizational challenges. Employing a unique hands-on approach, the firm works closely with clients to improve performance, identify and resolve problems and unlock value for stakeholders. Founded in 1983, Alvarez & Marsal draws on a strong operational heritage in providing services including turnaround management consulting, crisis and interim management, performance improvement, creditor advisory, financial advisory, dispute analysis and forensics, tax advisory, real estate advisory and business consulting. A network of nearly 400 seasoned professionals in locations across the US, Europe, Asia and Latin America, enables the firm to deliver on its proven reputation for leadership, problem solving and value creation. For more information, visit http://www.alvarezandmarsal.com * Alvarez & Marsal Hires Kevin Redmon as Atlanta Senior Director ---------------------------------------------------------------- Alvarez & Marsal, a global professional services firm, announced that Kevin Redmon has joined Alvarez & Marsal Business Consulting as a senior director in the Atlanta office. Mr. Redmon will lead the group's strategy practice in the southeast region. With more than 17 years of industry and consulting experience, Mr. Redmon specializes in, strategic planning, growth strategies and business process improvement. He also brings significant experience with technology strategy and implementations. Prior to joining A&M, Mr. Redmon was a director at Radiant Systems, a manufacturer of touch-screen point-of-sale systems, where he served in a variety of executive roles, with responsibility for major account P&Ls and delivery of products and services to petroleum and convenience store clients. Before that he served as a senior manager at global strategy consulting firm Bain & Company. Over the course of his consulting career, Mr. Redmon's advisory assignments have spanned a wide variety of industries and geographies, including: developing a highly successful core business growth strategy for a global professional services firm, leading the start-up of a new business unit for a multi-billion dollar parcel delivery company, and developing a 200-store retail expansion strategy for a U.S. furniture company. A graduate of Clemson University with B.S. and M.S. degrees in computer engineering, Mr. Redmon earned an MBA from Harvard Business School. "As Alvarez & Marsal Business Consulting continues to grow and expand, we are attracting a team of high-caliber professionals who have extensive consulting experience as well as valuable executive level corporate experience," said Tom Elsenbrook, an A&M managing director and head of Alvarez & Marsal Business Consulting. "We're looking forward to Kevin's presence and leadership as we expand in Atlanta and throughout the Southeast." Serving businesses with good market positions and solid financials, Alvarez & Marsal Business Consulting partners with management to identify opportunity, enhance efficiency and maintain competitive advantage. Its five focused offerings include: Finance and Accounting Solutions, Information Technology Strategy and Integration Solutions, Human Resources and Human Capital Growth Solutions, Strategy and Corporate Solutions, and Supply Chain Solutions. Specific Strategy and Corporate Solutions include: Corporate and Business Unit Strategy, including strategic assessment, portfolio optimization and strategic due diligence; Marketing Effectiveness, including pricing strategy, customer/channel/product profitability and sales force effectiveness; Growth Initiatives, including mergers and acquisitions strategy and market assessment; Operational Efficiency, including cost reduction, outsourcing strategy and merger integration; and Contract Center Solutions and Optimization. About Alvarez & Marsal Alvarez & Marsal is a leading global professional services firm with expertise in guiding companies and public sector entities through complex financial, operational and organizational challenges. Employing a unique hands-on approach, the firm works closely with clients to improve performance, identify and resolve problems and unlock value for stakeholders. Founded in 1983, Alvarez & Marsal draws on a strong operational heritage in providing services including turnaround management consulting, crisis and interim management, performance improvement, creditor advisory, financial advisory, dispute analysis and forensics, tax advisory, real estate advisory and business consulting. A network of nearly 400 seasoned professionals in locations across the US, Europe, Asia and Latin America, enables the firm to deliver on its proven reputation for leadership, problem solving and value creation. For more information, visit http://www.alvarezandmarsal.com * BOND PRICING: For the week of May 23 - May 27, 2005 ----------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- AAIPharma Inc. 11.000% 04/01/10 46 ABC Rail Product 10.500% 01/15/04 0 ABC Rail Product 10.500% 12/31/04 0 Adaptec Inc. 0.750% 12/22/23 74 Adelphia Comm. 3.250% 05/01/21 6 Adelphia Comm. 6.000% 02/15/06 5 Advanced Access 10.750% 06/15/11 72 Aetna Industries 11.875% 10/01/06 7 Allegiance Tel. 11.750% 02/15/08 26 Allegiance Tel. 12.875% 05/15/08 1 Allied Holdings 8.625% 10/01/07 48 Amer. & Foreign Power 5.000% 03/01/30 74 Amer. Color Graph. 10.000% 06/15/10 65 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 66 American Airline 8.839% 01/02/17 73 American Airline 8.800% 09/16/15 74 American Airline 10.180% 01/02/13 69 American Airline 10.600% 03/04/09 66 American Airline 10.680% 03/04/13 65 Amkor Tech Inc. 5.000% 03/15/07 73 Amkor Tech Inc. 10.500% 05/01/09 73 AMR Corp. 4.500% 02/15/24 75 AMR Corp. 9.200% 01/30/12 70 AMR Corp. 9.750% 08/15/21 62 AMR Corp. 9.800% 10/01/21 64 AMR Corp. 9.880% 06/15/20 63 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 63 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 Archibald Candy 10.000% 11/01/07 2 AT Home Corp. 0.525% 12/28/18 24 AT Home Corp. 4.750% 12/15/06 30 ATA Holdings 12.125% 06/15/10 43 ATA Holdings 13.000% 02/01/09 42 Atlantic Coast 6.000% 02/15/34 15 Atlas Air Inc. 8.770% 01/02/11 29 Atlas Air Inc. 9.702% 01/02/08 51 Autocam Corp. 10.875% 06/15/14 73 Bank New England 8.750% 04/01/99 9 Bank New England 9.500% 02/15/96 8 BBN Corp. 6.000% 04/01/12 0 Broadband Tech. 5.000% 05/15/01 0 Burlington Northern 3.200% 01/01/45 61 Burlington Inds. 7.250% 08/01/27 4 Calpine Corp. 4.000% 12/26/06 73 Calpine Corp. 4.750% 11/15/23 54 Calpine Corp. 7.750% 04/15/09 50 Calpine Corp. 7.875% 04/01/08 56 Calpine Corp. 8.500% 07/15/10 69 Calpine Corp. 8.500% 02/15/11 56 Calpine Corp. 8.625% 08/15/10 53 Calpine Corp. 8.750% 07/15/07 59 Calpine Corp. 8.750% 07/15/13 70 Calpine Corp. 9.875% 12/01/11 69 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 71 Charter Comm Hld. 10.750% 10/01/09 74 Charter Comm Hld. 11.125% 01/15/11 71 Charter Comm Inc. 5.875% 11/16/09 60 Chic East ILL RR 5.000% 01/01/54 55 Coeur D'Alene 1.250% 01/15/24 67 Collins & Aikman 10.750% 12/31/11 41 Comcast Corp. 2.000% 10/15/29 43 Comdisco Inc. 7.230% 08/16/01 0 Comprehens Care 7.500% 04/15/10 0 Continental Airlines 7.461% 04/01/13 73 Continental Airlines 8.499% 05/01/11 74 Corecomm Limited 6.000% 10/01/06 5 Covad Communication 3.000% 03/15/24 73 Cray Research 6.125% 02/01/11 37 Curagen Corp. 4.000% 02/15/11 64 Curative Health 10.750% 05/01/11 74 Delta Air Lines 2.875% 02/18/24 31 Delta Air Lines 7.299% 09/18/06 45 Delta Air Lines 7.711% 09/18/11 47 Delta Air Lines 7.779% 01/02/12 50 Delta Air Lines 7.900% 12/15/09 35 Delta Air Lines 7.920% 11/18/10 45 Delta Air Lines 8.000% 06/03/23 36 Delta Air Lines 8.300% 12/15/29 26 Delta Air Lines 8.540% 01/02/07 33 Delta Air Lines 8.540% 01/02/07 45 Delta Air Lines 9.000% 05/15/16 26 Delta Air Lines 9.200% 09/23/14 40 Delta Air Lines 9.250% 03/15/22 25 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 26 Delta Air Lines 10.000% 08/15/08 39 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 30 Delta Air Lines 10.140% 08/26/12 47 Delta Air Lines 10.375% 02/01/11 35 Delta Air Lines 10.375% 12/15/22 26 Delta Air Lines 10.430% 01/02/11 53 Delta Air Lines 10.500% 04/30/16 45 Delta Air Lines 10.790% 09/26/13 37 Delta Air Lines 10.790% 03/26/14 37 Delta Air Lines 10.790% 03/26/14 30 Delphi Auto System 7.125% 05/01/29 68 Delphi Corp. 6.500% 08/15/13 73 Delphi Trust II 6.197% 11/15/33 41 Diva Systems 12.625% 03/01/08 0 Dura Operating 9.000% 05/01/09 70 Dura Operating 9.000% 05/01/09 69 Duty Free Int'l 7.000% 01/15/04 25 DVI Inc. 9.875% 02/01/04 9 Dyersburg Corp. 9.750% 09/01/07 0 Eagle-Picher Inc. 9.750% 09/01/13 65 Eagle Food Center 11.000% 04/15/05 0 Edison Brothers 11.000% 09/26/07 0 Emergent Group 10.750% 09/15/04 0 Epic Resorts LLC 13.000% 06/15/05 2 Evergreen Intl. Avi. 12.000% 05/15/10 70 Exodus Comm. Inc. 5.250% 02/15/08 0 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 56 Federal-Mogul Co. 7.375% 01/15/06 25 Federal-Mogul Co. 7.500% 01/15/09 25 Federal-Mogul Co. 8.120% 03/06/03 28 Federal-Mogul Co. 8.160% 03/06/03 20 Federal-Mogul Co. 8.250% 03/03/05 28 Federal-Mogul Co. 8.370% 11/15/01 20 Federal-Mogul Co. 8.370% 11/15/01 28 Federal-Mogul Co. 8.460% 10/27/02 28 Federal-Mogul Co. 8.800% 04/15/07 25 Fibermark Inc. 10.750% 04/15/11 65 Finisar Corp. 2.500% 10/15/10 74 Finova Group 7.500% 11/15/09 43 Firstworld Comm 13.000% 04/15/08 1 Foamex L.P. 9.875% 06/15/07 52 Ford Motor Co 6.625% 02/15/28 75 Ford Motor Co 7.125% 11/15/25 75 Ford Motor Co 7.400% 11/01/46 74 Ford Motor Co 7.700% 05/15/97 73 Ford Motor Co 7.750% 06/15/43 75 Ford Motor Credit 5.550% 08/22/11 72 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 70 General Motors 8.250% 07/15/23 73 General Motors 8.375% 07/15/33 74 GMAC 5.250% 01/15/14 72 GMAC 5.350% 01/15/14 72 GMAC 5.700% 06/15/13 75 GMAC 5.750% 01/15/14 73 GMAC 5.850% 05/15/13 74 GMAC 5.850% 06/15/13 71 GMAC 5.850% 06/15/13 75 GMAC 5.850% 06/15/13 74 GMAC 5.900% 12/15/13 74 GMAC 5.900% 01/15/19 66 GMAC 5.900% 01/15/19 73 GMAC 5.900% 02/15/19 71 GMAC 5.900% 10/15/19 64 GMAC 6.000% 07/15/13 75 GMAC 6.000% 02/15/19 70 GMAC 6.000% 02/15/19 67 GMAC 6.000% 02/15/19 66 GMAC 6.000% 03/15/19 72 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 71 GMAC 6.000% 03/15/19 71 GMAC 6.000% 03/15/19 70 GMAC 6.000% 04/15/19 66 GMAC 6.000% 09/15/19 72 GMAC 6.000% 09/15/19 65 GMAC 6.050% 08/15/19 68 GMAC 6.050% 08/15/19 68 GMAC 6.050% 10/15/19 69 GMAC 6.100% 11/15/13 75 GMAC 6.100% 09/15/19 70 GMAC 6.125% 10/15/19 67 GMAC 6.150% 08/15/19 68 GMAC 6.150% 09/15/19 70 GMAC 6.150% 10/15/19 66 GMAC 6.200% 04/15/19 71 GMAC 6.250% 12/15/18 68 GMAC 6.250% 01/15/19 72 GMAC 6.250% 04/15/19 70 GMAC 6.250% 05/15/19 72 GMAC 6.250% 07/15/19 74 GMAC 6.300% 08/15/19 73 GMAC 6.300% 08/15/19 70 GMAC 6.350% 04/15/19 72 GMAC 6.350% 07/15/19 72 GMAC 6.400% 12/15/18 70 GMAC 6.400% 11/15/19 68 GMAC 6.400% 11/15/19 68 GMAC 6.500% 11/15/18 71 GMAC 6.500% 12/15/18 69 GMAC 6.500% 12/15/18 74 GMAC 6.500% 05/15/19 75 GMAC 6.500% 01/15/20 72 GMAC 6.500% 02/15/20 72 GMAC 6.600% 05/15/18 75 GMAC 6.600% 06/15/19 71 GMAC 6.600% 06/15/19 74 GMAC 6.650% 06/15/18 72 GMAC 6.650% 10/15/18 74 GMAC 6.650% 02/15/20 74 GMAC 6.700% 11/15/18 72 GMAC 6.700% 12/15/19 74 GMAC 6.750% 03/15/18 75 GMAC 6.750% 10/15/18 75 GMAC 6.750% 06/15/19 74 GMAC 6.750% 06/15/19 71 GMAC 6.800% 09/15/18 73 GMAC 6.800% 10/15/18 73 GMAC 6.850% 05/15/18 74 GMAC 6.875% 08/15/16 74 GMAC 6.875% 07/15/18 73 GMAC 6.900% 06/15/17 75 GMAC 6.900% 07/15/18 73 GMAC 6.900% 08/15/18 74 GMAC 7.000% 02/15/18 74 GMAC 7.000% 03/15/18 74 GMAC 7.000% 05/15/18 75 GMAC 7.000% 08/15/18 75 GMAC 7.000% 09/15/18 75 GMAC 7.000% 09/15/21 71 GMAC 7.000% 09/15/21 75 GMAC 7.000% 11/15/23 70 GMAC 7.000% 11/15/24 74 GMAC 7.150% 09/15/18 75 GMAC 7.150% 01/15/25 75 GMAC 7.150% 03/15/25 70 GMAC 7.250% 03/15/25 73 GMAC 7.500% 03/15/25 70 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 61 GST Network Funding 10.500% 05/01/08 0 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 71 Idine Rewards 3.250% 10/15/23 75 Imperial Credit 9.875% 01/15/07 0 Impsat Fiber 6.000% 03/15/11 60 Inland Fiber 9.625% 11/15/07 48 Intermet Corp. 9.750% 06/15/09 47 Intermune Inc. 0.250% 03/01/11 71 Iridium LLC/CAP 10.875% 07/15/05 15 Iridium LLC/CAP 11.250% 07/15/05 15 Iridium LLC/CAP 13.000% 07/15/05 14 Iridium LLC/CAP 14.000% 07/15/05 14 Jordan Industries 10.375% 08/01/07 50 Kaiser Aluminum & Chem. 12.750% 02/01/03 10 Kellstorm Inds 5.750% 10/15/02 0 Key Plastics 10.250% 03/15/07 1 Kmart Corp. 6.000% 01/01/08 12 Kmart Corp. 8.990% 07/05/10 73 Kmart Corp. 9.350% 01/02/20 26 Kmart Funding 8.800% 07/01/10 75 Kmart Funding 9.440% 07/01/18 28 Kulicke & Soffa 0.500% 11/30/08 68 Lehman Bros. Holding 6.000% 05/25/05 66 Lehman Bros. Holding 7.500% 09/03/05 44 Level 3 Comm. Inc. 2.875% 07/15/10 51 Level 3 Comm. Inc. 6.000% 09/15/09 50 Level 3 Comm. Inc. 6.000% 03/15/10 48 Liberty Media 3.750% 02/15/30 56 Liberty Media 4.000% 11/15/29 60 Loral Cyberstar 10.000% 07/15/06 74 Lukens Inc. 7.625% 08/01/04 0 LTV Corp. 8.200% 09/15/07 0 Metaldyne Corp. 11.000% 06/15/12 70 Metamor Worldwide 2.940% 08/15/04 1 Mirant Corp. 2.500% 06/15/21 73 Mirant Corp. 5.750% 07/15/07 73 Mississippi Chem. 7.250% 11/15/17 4 Molten Metal Tec 5.500% 05/01/06 0 Motels of Amer. 12.000% 04/15/04 35 Muzak LLC 9.875% 03/15/09 43 MSX Intl. Inc. 11.375% 01/15/08 52 Natl Steel Corp. 8.375% 08/01/06 0 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 62 Northwest Airlines 7.626% 04/01/10 69 Northwest Airlines 7.875% 03/15/08 50 Northwest Airlines 8.070% 01/02/15 53 Northwest Airlines 8.130% 02/01/14 53 Northwest Airlines 8.700% 03/15/07 59 Northwest Airlines 8.875% 06/01/06 74 Northwest Airlines 8.970% 01/02/15 62 Northwest Airlines 9.875% 03/15/07 61 Northwest Airlines 10.000% 02/01/09 51 Northwest Airlines 10.500% 04/01/09 67 Northwest Steel & Wir. 9.500% 06/15/01 0 Nutritional Src. 10.125% 08/01/09 74 NWA Trust 9.360% 03/10/06 75 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 39 Orion Network 11.250% 01/15/07 50 Orion Network 12.500% 01/15/07 54 Outboard Marine 9.125% 04/15/17 0 Pegasus Satellite 9.625% 10/15/05 58 Pegasus Satellite 12.375% 08/01/06 58 Pegasus Satellite 12.500% 08/01/07 57 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings Inc. 9.875% 06/15/08 61 Penn Traffic Co. 11.000% 06/29/09 46 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 68 Polaroid Corp. 6.750% 01/15/02 1 Polaroid Corp. 7.250% 01/15/07 1 Polaroid Corp. 11.500% 02/15/06 0 Portola Packaging 8.250% 02/01/12 62 Primedex Health 11.500% 06/30/08 50 Primus Telecom 3.750% 09/15/10 22 Primus Telecom 5.750% 02/15/07 33 Primus Telecom 8.000% 01/15/14 48 Primus Telecom 12.750% 10/15/09 45 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 65 RDM Sports Group 8.000% 08/15/03 0 Read-Rite Corp. 6.500% 09/01/04 56 Reliance Group Holdings 9.000% 11/15/00 18 Reliance Group Holdings 9.750% 11/15/03 4 Rite Aid Corp. 6.875% 12/15/28 70 Rite Aid Corp. 7.700% 02/15/27 74 RJ Tower Corp. 12.000% 06/01/13 56 Salton Inc. 10.750% 12/15/05 42 Salton Inc. 12.250% 04/15/08 38 Scotia Pac Co. 6.550% 01/20/07 72 Scotia Pac Co. 7.110% 01/20/14 68 Scotia Pac Co. 7.710% 01/20/14 72 Silicon Graphics 6.500% 06/01/09 71 Solectron Corp. 0.500% 02/15/34 65 Specialty Paperb. 9.375% 10/15/06 69 Startec Global 12.000% 05/15/08 0 Syratech Corp. 11.000% 04/15/07 30 Tekni-Plex Inc. 12.750% 06/15/10 67 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 65 Triton PCS Inc. 9.375% 02/01/11 66 Tropical SportsW 11.000% 06/15/08 35 Twin Labs Inc. 10.250% 05/15/06 14 United Air Lines 6.831% 09/01/08 16 United Air Lines 6.932% 09/01/11 53 United Air Lines 7.270% 01/30/13 41 United Air Lines 7.762% 10/01/05 10 United Air Lines 7.811% 10/01/09 41 United Air Lines 8.030% 07/01/11 23 United Air Lines 8.250% 04/26/08 20 United Air Lines 8.390% 01/21/11 54 United Air Lines 8.700% 10/07/08 45 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 45 United Air Lines 9.125% 01/15/12 8 United Air Lines 9.200% 03/22/08 45 United Air Lines 9.210% 01/21/17 53 United Air Lines 9.300% 03/22/08 38 United Air Lines 9.350% 04/07/16 48 United Air Lines 9.560% 10/19/18 38 United Air Lines 9.750% 08/15/21 8 United Air Lines 10.110% 01/05/06 42 United Air Lines 10.110% 02/19/06 42 United Air Lines 10.125% 03/22/15 45 United Air Lines 10.250% 07/15/21 7 United Air Lines 10.360% 11/13/12 54 United Air Lines 10.670% 05/01/04 8 United Air Lines 11.210% 05/01/14 5 Univ. Health Services 0.426% 06/23/20 63 United Homes Inc. 11.000% 03/15/05 0 Uromed Corp. 6.000% 10/15/03 0 US Air Inc. 10.250% 01/15/07 5 US Air Inc. 10.610% 06/27/07 0 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 74 Utstarcom 0.875% 03/01/08 64 Venture Hldgs 9.500% 07/01/05 1 WCI Steel Inc. 10.000% 12/01/04 69 Werner Holdings 10.000% 11/15/07 73 Westpoint Stevens 7.875% 06/15/05 0 Westpoint Stevens 7.875% 06/15/08 0 Wheeling-Pitt St. 6.000% 08/01/10 71 Winn-Dixie Store 8.875% 04/01/08 51 Winstar Comm 14.000% 10/15/05 1 Winstar Comm Inc. 10.000% 03/15/08 0 World Access Inc. 4.500% 10/01/02 7 World Access Inc. 13.250% 01/15/08 6 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 ***