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/raid1/www/Hosts/bankrupt/TCR_Public/050613.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, June 13, 2005, Vol. 9, No. 138 Headlines ADELPHIA COMMS: Rigases Want $600,000 More for Defense Costs ALDERWOODS GROUP: Enters into Amended Agreement with Aaron Shipper AMERICAN WATER: Accumulated Deficit Spurs Going Concern Doubt AMES DEPARTMENT: Selling Charleston Property to Simpson for $550K ANDROSCOGGIN ENERGY: Has Until August 31 to Make Lease Decisions APPLETON PAPERS: Weak Credit Measures Cue S&P's Negative Outlook AR UTILITY: Voluntary Chapter 11 Case Summary ARECIBO RESURGE: Voluntary Chapter 11 Case Summary ARMSTRONG WORLD: Wants to Expand Scope of Dickstein's Engagement ASIA GLOBAL: 360networks Moves for Summary Judgment on Claim ASSET BACKED: Fitch Assigns Low-B Ratings on $7MM Class B Certs. BERTUCCI'S CORP: S&P Withdraws Junk Ratings at Company's Request BOOKER T. WASHINGTON: A.M. Best Says Financial Strength is Weak BROCKWAY PRESSED: Case Summary & 20 Largest Unsecured Creditors BUEHLER FOODS: Wants to Hire Bingham McHale as Special Counsel C & A, S.E.: Case Summary & 20 Largest Unsecured Creditors CALPINE CORP: Discloses SEC Request as Sale Process Commences CALPINE CORP: Buying Back 9-5/8% Senior Secured Notes for Cash CALPINE CORP: Names Paul Posoli as Calpine Energy President CERTIFIED HR: Parent Company Clarifies Unit's Chapter 11 Filing CITICORP MORTGAGE: Fitch Affirms Low-B Ratings on 8 Class B Certs. COSINE COMMS: Nasdaq to Halt Common Stock Trading on Wednesday D & K STORES: Wants More Time to Assume or Reject Leases DELPHI CORP: Finance Execs Resign Over Accounting Irregularities DELPHI CORP: Bank Lenders Continue Support After Audit Review DIRECTV HOLDINGS: Moody's Rates New $1 Bil. Senior Notes at Ba2 DIRECTV HOLDINGS: Fitch Assigns BB Rating on Prop. $1B Note Offer DM WHITE: Case Summary & 20 Largest Unsecured Creditors DOCTORS HOSPITAL: Hires Navigant Consulting as Financial Advisor ENRON CORP: Inks Separate Pacts Resolving Claims by Five Entities ENRON CORP: Judge Werlein Sentences Ex-Enron Officer & 2 Bankers ENRON: Citigroup Agrees to Settle Class Action Suit for $2 Billion EXIDE TECH: Lead Claimants Want Allocation Procedure Streamlined FASTENTECH INC: S&P Rates Amended $175MM Credit Facility at BB- FEDERAL-MOGUL: Wants Cost Consultant to Follow-Up on 12 Facilities FOUR DIPS: Case Summary & 6 Largest Unsecured Creditors GARDEN STATE: Case Summary & 20 Largest Unsecured Creditors HAYES LEMMERZ: SEC to File Civil Enforcement Action HAYES LEMMERZ: Sued by Ex-Directors to Recover Class Action Costs HERCULES OFFSHORE: Moody's Rates Proposed $130M Term Loan at B2 HOLLINGER INC: Ontario Court Removes Peter G. White as a Director INDUSTRIAL ENTERPRISES: Buys 100% Interest in Unifide for $3.75MM INGLE'S NOOK: Case Summary & 20 Largest Unsecured Creditors INTERSTATE BAKERIES: Stay Modified to Allow $1.2M Claim Settlement IPSCO INC: Moody's Upgrades Senior Implied Rating to Ba1 from Ba2 J.CREW GROUP: April 30 Balance Sheet Upside-Down by $580 Million JAZZ PHOTO: Sells Assets to Ribi Tech for $887,750 JOSEPH DOMAL: Case Summary & 18 Largest Unsecured Creditors LORAL SPACE: Wants Excl. Solicitation Period Extended Until Aug. 1 MEDICAL NUTRITION: April 30 Balance Sheet Upside-Down by $913,300 MERRILL LYNCH: Fitch Rates 2 Private Class Certs. at Low-B METALLURG INC: Moody's Lifts Sr. Implied Rating to Caa1 from Caa3 MGM MIRAGE: Moody's Puts Ba2 Rating on $500M Sr. Unsec. Notes MIRANT CORP: Asks Court to Approve Inter-Debtor Tolling Agreement MIRANT CORP: Wants to Enter into Third Party Tolling Agreements MORGAN STANLEY: Fitch Affirms Low-B Rating on 5 Cert. Classes NAPIER ENVIRONMENTAL: Inks Pact to Sell Significant Assets to SICO NATIONAL CENTURY: Long-Term Care Companies Can't Prosecute Suit NBTY INC: Inks $5.7 Million SISU Inc. Acquisition Pact NEP INC: Weak Operating Results Prompt S&P's Negative Outlook NEIGHBORCARE INC: Moody's Reviewing Ratings for Possible Downgrade NRG ENERGY: Declares Preferred Stock Dividend of $10 Per Share NUCENTRIX BROADBAND: Distributes $0.435 Per Share to Stockholders OPTINREALBIG.COM: Creditors Must File Proofs of Claim by July 29 OWENS CORNING: VPs Dana, Dietzel & Krull Sell 3,090 Shares PAGSTA INTERNATIONAL: Case Summary & 20 Largest Creditors PARMALAT GROUP: Releases Financial Results as of April 30, 2005 PATHMARK STORES: Shareholders Accept Yucaipa's $150 Million Offer PEGASUS SATELLITE: Trustee Modifies Recovery Analysis POLYMER RESEARCH: Ch. 7 Trustee Gets $250K Loan for Clean-Up Work POLYONE CORP: Reduces Income Outlook for Second-Quarter of 2005 PONDEROSA PINE: Wants to Hire Nixon Peabody as Litigation Counsel POPE & TALBOT: High Debt Prompts S&P to Lower Ratings to BB- PRICELINE.COM: Names Tim Gordon & Mark Koehler as Senior VPs PRIME TECHNOLOGY: Case Summary & 21 Largest Unsecured Creditors PROXIM CORP: Files Chapter 11 Petition in Delaware to Effect Sale PROXIM CORPORATION: Case Summary & 20 Largest Unsecured Creditors RHODES INC: Names Joel Dugan President & Chief Executive Officer ROTECH HEALTHCARE: Restating Financials to Correct Acctg. Errors SALTON INC.: Recalls 100,000 Coffee Makers from Sears Stores SONICBLUE INC: Wants Exclusive Filing Period Extended to July 18 TOYS 'R' US: Posts $41 Million Net Loss for First Quarter 2005 TRANSTECH INDUSTRIES: Settles Claims with Insurance Carriers UAL CORP: Wants Exclusive Right to File Plan Until Sept. 1 UAL CORP: Court Okays Pact Resolving CIT Financial's $1.2M Claim UAL CORP: PBGC Says Pension Funding Data Reported is Inaccurate UNIHEALTH SERVICES: Voluntary Chapter 11 Case Summary UNITED PRODUCERS: Wants Bartlett Benner as Real Estate Brokers UNOVA INC: Good Revenue Growth Prompts S&P's Positive Outlook WATTSHEALTH FOUNDATION: Look for Bankruptcy Schedules on Aug. 1 WINN-DIXIE: Hires Blackstone Group as Restructuring Consultant WINN-DIXIE: Court OKs Panel's Retention of A&M as Advisor WINN-DIXIE: Court OKs Panel's Retention of Houlihan as Advisor WSNET HOLDINGS: Court Approves Disclosure Statement * BOND PRICING: For the week of June 6 - June 10, 2005 ********* ADELPHIA COMMS: Rigases Want $600,000 More for Defense Costs ------------------------------------------------------------ As previously reported, John J. Rigas, Timothy J. Rigas, James P. Rigas and Michael J. Rigas asked the Court to allow advancement of $900,000 in additional defense costs from certain directors' and officers' insurance policies purchased by Adelphia Communications Corporation and its debtor-affiliates. A D&O Liability Insurance Policy issued by Associated Electric & Gas Insurance Services Limited provides primary layer of coverage for the Debtors' D&O Policies for $25 million. Two other insurance companies provide coverage totaling $25 million in excess of that covered by AEGIS. At the hearing held on February 22, 2005, the Court granted the Rigases' request. Judge Gerber allotted an additional $300,000 to James Rigas and an additional $600,000 to Michael Rigas. Rigases Want to Further Advance $600,000 Lawrence G. McMichael, Esq., at Dilworth Paxon LLP, in Philadelphia, Pennsylvania, informs the Court that current invoices submitted to AEGIS for covered defense costs now exceed the allotted $900,000. Thus, the Rigases ask the Court to allow AEGIS to advance an additional $300,000 for James Rigas and $300,000 for Michael Rigas. The criminal trial against Michael Rigas, Mr. McMichael relates, is scheduled for October 24, 2005. James Rigas has never been indicted for any criminal offense. The additional $300,000 each to Michael and James Rigas reflects the need for substantial defense costs in the next few months and should eliminate the need for the Rigases to burden the Court with numerous repetitive requests, Mr. McMichael adds. The Rigases believe that their request for additional payment is modest in size, and thus will not be a threat to the Debtors' reorganization efforts. "[T]he D&O Policies would be virtually unaffected by draw down of the size contemplated by the [Rigases' Request], Mr. McMichael says. The requested amount, Mr. McMichael points out, represents only 1.2% of the coverage available under the D&O Policies. Therefore, the Rigases assert that there is no "material risk of depletion." 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. 95; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALDERWOODS GROUP: Enters into Amended Agreement with Aaron Shipper ------------------------------------------------------------------ Ellen Neeman, a senior vice president of Alderwoods Group, Inc., discloses in a regulatory filing with the Securities and Exchange Commission that on May 10, 2005, the Company entered into an amended and restated letter agreement with Aaron Shipper that replaces all other employment letters and contracts with the Company, to be effective as of May 1, 2005. Mr. Shipper is reaffirmed as the Senior Vice President, Advance Planning of Alderwoods Group and President of Mayflower National Life Insurance Company, a subsidiary of Alderwoods. The amendments contained in the Shipper Agreement include these terms: Base Pay: $220,000 gross per annum Annual Incentive: Entitled to participate at the annual executive level of 40% target and 80% maximum Stock Options: Entitled to participate in the Stock Option Program Benefits: Continue to be eligible to participate in the Alderwoods benefits program. Will be eligible for a $3,000 medical spending account Annual Medical: Entitled to take a company paid annual medical 401K: Continue to be eligible to participate in the Alderwoods 401K program Vacation: Eligible for four weeks vacation per year Employment Entitled to receive 12 months severance Termination: consisting of base salary and standard health and dental benefits, if terminated for any reason other than just cause. All other benefits would cease on the last day of active employment. The health and dental benefits would cease if Mr. Shipper obtains alternative coverage during the 12-month period. Change of If there is a change of control, as defined Control: under the Alderwoods 2005 Equity Incentive Plan, and as a result of employment being terminated, Mr. Shipper will receive 24 months severance. Alderwoods Group is the second largest operator of funeral homes and cemeteries in North America, based upon total revenue and number of locations. As of June 19, 2004, the Company operated 716 funeral homes, 130 cemeteries and 61 combination funeral home and cemetery locations throughout North America. Of the Company's total locations, 59 funeral homes, 53 cemeteries and four combination funeral home and cemetery locations were held for sales as of June 19, 2004. The Company provides funeral and cemetery services and products on both an at-need and pre-need basis. In support of the pre-need business, the Company operates insurance subsidiaries that provide customers with a funding mechanism for the pre-arrangement of funerals. * * * As previously reported in the Troubled Company Reporter on July 27, 2004, Standard & Poor's Ratings Services it affirmed its 'B+' corporate credit rating on the funeral home and cemetery operator Alderwoods Group, Inc., and assigned its 'B' debt rating to the company's proposed $200 million senior unsecured notes due in 2012. At the same time, Standard & Poor's also assigned its 'BB-' senior secured bank loan rating and its '1' recovery rating to Alderwoods' proposed $75 million revolving credit facility, which matures in 2008, and to its proposed term loan B, which matures in 2009. The existing term loan had $242 million outstanding at March 27, 2004, but will be increased in size. The bank loan ratings indicate that Standard & Poor's expects a full recovery of principal in the event of a default, based on an assessment of the loan collateral package and estimated asset values in a distressed default scenario. The company is expected to use the proceeds from the new financings to redeem $320 million of 12.25% senior unsecured notes, repay a $25 million subordinated loan, and fund transaction costs. As of March 27, 2004, the company had $614 million of debt outstanding. (Loewen Bankruptcy News, Issue Nos. 98; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMERICAN WATER: Accumulated Deficit Spurs Going Concern Doubt ------------------------------------------------------------- Weaver & Martin, LLC, expressed substantial doubt about American Water Star Inc.'s (AMEX: AMW) ability to continue as a going concern after it audited the Company's financial statements for the fiscal year 2004 ended Dec. 31, 2004. The auditors point to the Company's accumulated deficit at the need to obtain additional financing to fund payment obligations and to provide working capital for operations. AMW management is seeking additional financing, which if successful, should mitigate the factors that have raised doubt about AMW's ability to continue as a going concern. AMEX Listing The Company said it is not in compliance with the continued listing standards of the American Stock Exchange, but its listing is being continued pursuant to an extension granted upon the acceptance of its plan (rectifying its deficiency in reporting obligations) by AMEX on May 26, 2005. As stated in previous press releases, AMW still plans to file, as soon as practicable, amended reports on Forms 10-QSB for the quarterly periods ended March 31, 2004, June 30, 2004 and Sept. 30, 2004, to include restatements of the financial statements as concluded by AMW's audit committee and its independent registered public accounting firm. Additionally, AMW has triggered another deficiency under AMEX's Company Guide Section 1003(d), 134, 1101 due to AMW not filing its quarterly report on Form 10-QSB for the period ended March 31, 2005. AMEX has notified AMW about this deficiency. AMW submitted a plan to AMEX on June 8, 2005 advising AMEX of AMW's actions it has taken or will take to bring AMW into compliance with Sections 134, 1101 and 1003(d). About the Company American Water Star Inc. is a publicly traded company and is engaged in the beverage bottling industry. Its product brands are licensed and developed in-house, and bottled in strategic locations throughout the United States. AMW's beverage products are sold by the truckload, principally to distributors, who sell to retail stores, corner grocery stores, convenience stores, schools and other outlets. At AMW, we believe our great-tasting, new zero sugar, zero calorie flavored water beverages have positioned us to capture a large share of the market for healthy flavored waters. Our product line consists of four branded beverages: Geyser Sport; Geyser Fruit; Geyser Fruta; and Hawaiian Tropic. Geyser Sport is a sugar-free, calorie-free, carb-free fruit flavored beverage fortified with vitamins and calcium, offered in eight different fruit flavors. Geyser Fruit is a non-carbonated water with a low sugar content, also offered in eight different flavors. Geyser Fruta is targeted to the Hispanic market and includes authentic Latin flavored beverages. Our Hawaiian Tropic products feature sugar-free, no carbohydrate, caffeine-free, sodium-free tropical drinks offered in four flavors. AMES DEPARTMENT: Selling Charleston Property to Simpson for $550K ----------------------------------------------------------------- Ames Realty II, Inc., owns a real property located at the Kahawha Mall on MacCorkle Avenue in Charleston, West Virginia. The Property consists of about 5.5 acres of land with 81,800 square feet of rentable space in a former Ames store premises. Ames Department Stores and its debtor-affiliates have actively sought a purchaser for the Property, Neil Berger, Esq., at Togut, Segal & Segal LLP, in New York, relates. On April 5, 2005, the Debtors and Simpson Properties, Inc., executed an Agreement for the Purchase and Sale of the Property. The Debtors believe that Simpson has made the best offer to date. Accordingly, the Debtors ask the U.S. Bankruptcy Court for the Southern District of New York to approve the sale of the Property to Simpson pursuant to the Asset Purchase Agreement, subject to higher and better offers, free and clear of all liens. The salient terms of the Asset Purchase Agreement are: A. Assets to Be Purchased Simpson will purchase: * The land, the improvements, and all its easements, tenements, hereditaments, rights, licenses, privileges and appurtenances; * All equipment and furnishings and all other tangible personal property owned by Ames Realty and located on the premises on the Closing; and * Assignable rights and licenses: -- certificates, permits and licenses belonging or relating to the premises or the personal property and running to or in favor of Ames Realty; -- operating, maintenance, building service or management agreements relating to the ownership or operation of the premises running to or in favor of Ames Realty or the premises; and -- right, title and interest of the Debtor in and to all drawings, plans and specifications covering the Property. B. Purchase Price Simpson will pay $550,000 for the property: * Simpson will deposit $27,500 to Stein, Simpson & Rosen, P.A., as escrowee, to be drawn in accordance with the terms of the Purchase Agreement; * The $522,500 balance will be paid by wire transfer at the Closing, subject to prorations and adjustments as may be provided under the Purchase Agreement. C. Closing Closing on the sale will occur on the 15th day after the Court approves the sale. D. No Representations or Warranties The Property is being sold on an "as is, where is" basis, subject to representations that are customary in real estate transactions. Mr. Berger tells the Court that the only recorded lien against the Property is a mortgage in favor of Kimco Funding, LLC. Kimco, Mr. Berger says, consented to the proposed sale to Simpson or to another entity, and agreed to release its lien against the Property. Kimco's liens will transfer to the net proceeds of the Sale. The Debtors also ask Judge Gerber to exempt the Sale from stamp or similar taxes under Section 1146(c) of the Bankruptcy Code. Mr. Berger attests that the Purchase Agreement is the product of significant arm's-length negotiations between the parties. The transfer of the Property to Simpson or to another successful bidder that submits a higher or better offer will provide the greatest return to the Debtors' estates and their creditors, and eliminate further administrative costs to maintain the Property. A full-text copy of the Purchase Agreement is available for free at: http://bankrupt.com/misc/CharlestonPropertyAPA.pdf The Court will conduct a sale hearing on June 15, 2005, at 9:45 a.m. Ames Department Stores filed for chapter 11 protection on August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANDROSCOGGIN ENERGY: Has Until August 31 to Make Lease Decisions ---------------------------------------------------------------- The Honorable Louis H. Kornreich of the U.S. Bankruptcy Court for the District of Maine granted Androscoggin Energy LLC's second request more time to decide to assume, assume and assign, or reject its unexpired nonresidential real property leases. The extension gives the Debtor until August 31, 2005, to make its decision on an unexpired nonresidential lease property located onj Riley Road in Jay, Maine. International Paper Company is the lessor of that property. The Debtor explains that the extension will give it sufficient time to settle a dispute with International Paper concerning obligations under an Energy Services Agreement that was executed in connection with the unexpired lease. The Debtor further adds that it has not decided whether to assume or reject the lease because it is still focused on monetizing certain of its assets as part of its reorganization. The Debtor will explore its options with respect to maintaining the cogeneration facility as a going concern when the sales are completed. The Debtor assures Judge Kornreich that the extension will not prejudice International Paper and that it is current on all postpetition rent obligations. Headquartered in Boston, Massachusetts, Androscoggin Energy LLC, owns, operates, and maintains an approximately 150-megawatt, natural gas-fired cogeneration facility in Jay, Maine. The Company filed for chapter 11 protection on November 26, 2004 (Bankr. D. Me. Case No. 04-12221). Michael A. Fagone, Esq., at Bernstein, Shur, Sawyer & Nelson represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $207,000,000 and total debts of $157,000,000. APPLETON PAPERS: Weak Credit Measures Cue S&P's Negative Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on specialty paper producer Appleton Papers Inc. to negative from stable. At the same time, it affirmed all ratings, including the 'BB' corporate credit rating. "The rating action reflects credit measures that remain somewhat weaker than we had been expecting Appleton to achieve," said Standard & Poor's credit analyst Pamela Rice. "Although we had expected that Appleton would need to pursue growth opportunities to replace shrinking carbonless paper volumes, we had anticipated a greater portion to be generated internally. However, revenue growth of thermal products has been less robust than originally projected. In addition, the operating margins of acquired businesses are below expectations." The Appleton, Wisconsin-based company is the world's largest manufacturer of carbonless paper, which is used in multipart forms such as invoices, credit-card receipts, and packing slips. Appleton is expected to remain aggressively leveraged because of its acquisition strategy to replace declining carbonless paper revenues. "Appleton needs to make progress in strengthening its credit measures over the next year or so in order to maintain its ratings," Ms Rice said. "We expect the company to remain acquisitive and, therefore, do not expect meaningful permanent debt reduction over the next 12-18 months. Appleton's earnings, therefore, will need to improve in order to generate stronger credit measures. If the company reduces debt more than we currently expect and earnings do not deteriorate, the outlook could be revised to stable." AR UTILITY: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: AR Utility Specialists, Inc. aka Arusi, Inc. aka EDM Group aka Tierra Technologies 2840 South 36 Street Phoenix, Arizona 85034 Bankruptcy Case No.: 05-10489 Type of Business: The Debtor is an engineering and design firm for utilities serving the metropolitan Phoenix area. See http://www.arusi.net/ Chapter 11 Petition Date: June 10, 2005 Court: District of Arizona (Phoenix) Judge: George B. Nielsen Jr. Debtor's Counsel: J. Henk Taylor, Esq. Lewis And Roca Llp 40 North Central Avenue Phoenix, Arizona 85004-4429 Tel: (602) 262-0254 Fax: (602) 262-5747 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. ARECIBO RESURGE: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Arecibo Resurge, Inc. P.O. Box 143773 Arecibo, Puerto Rico 00614 Bankruptcy Case No.: 05-05328 Chapter 11 Petition Date: June 10, 2005 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Ivan Diaz Lopez, Esq. Ivan Diaz Lopez Law Offices 951 Fernandez Juncos Avenue, Suite 201 San Juan, Puerto Rico 00907 Tel: (787) 721-4929 Estimated Assets: $1 Million to $10 Million Estimated Debts: $100,000 to $500,000 The Debtor does not have unsecured creditors who are not insiders. ARMSTRONG WORLD: Wants to Expand Scope of Dickstein's Engagement ---------------------------------------------------------------- On January 5, 2001, Armstrong World Industries, Inc., sought to employ Dickstein Shapiro Morin & Oshinsky, LLP, to, among other things, assist, advise and represent the Debtors in connection with insurance coverage matters and provide strategic advice and assistance to them with respect to asbestos-related and other product liability and mass tort claims, liabilities and litigation. The Retention Application did note, however, that Dickstein Shapiro's attorneys who represent the Debtors intended to leave the firm effective January 1, 2001, and form a new law firm named Gilbert Heintz & Randolph, LLP. The Debtors also informed the Court that following Gilbert Heintz's establishment, they would then file an application retaining the new firm to provide certain asbestos-related services. On March 30, 2001, the Court authorized AWI to employ Dickstein Shapiro as its special counsel for insurance and asbestos-related matters. In addition, the Debtors also proposed to hire The Feinberg Group, LLP, as their special counsel for the analysis, evaluation and treatment of personal injury asbestos claims. Kenneth L. Jacobs, Esq., AWI's Deputy General Counsel in Litigation, informs the Court that recently Deborah Greenspan of Feinberg Group and Diane Y. Smoyer of Gilbert Heintz left their firms and joined Dickstein Shapiro. While employed at Feinberg Group, Ms. Greenspan was principally involved in the analysis, evaluation and treatment of asbestos personal injury claims over the course of the Debtors' Chapter 11 case. Ms. Smoyer, while with Gilbert Heintz, represented and advised the Debtors with respect to matters relating to insurance coverage for alleged PCB-related liabilities, certain non-asbestos related plan and emergence insurance issues, and director & officer insurance issues. Mr. Jacobs notes that Ms. Greenspan and Ms. Smoyer have special knowledge of the Debtors' asbestos personal injury claims and particular insurance-related matters. Because the two lawyers are presently practicing at Dickstein Shapiro, the Debtors believe that the firm is both well qualified and uniquely able to represent AWI as special counsel in a most efficient and timely manner. In light of this, the Debtors seek to expand the scope of Dickstein Shapiro's retention to clarify that Ms. Greenspan and Ms. Smoyer can continue to perform the services they had performed for AWI during their tenure at their prior firms. Specifically, as AWI's special counsel, Dickstein Shapiro will provide: (1) analysis and valuation of personal injury asbestos claims; (2) strategic advice regarding evaluation and treatment of personal injury asbestos claims; and (3) advice and representation of AWI with respect to matters relating to insurance coverage for alleged PCB-related liabilities, certain non-asbestos related plan and emergence insurance issues, and director and officer insurance issues. "Considering that Ms. Greenspan was chiefly responsible for providing the supplemental services while a partner in Feinberg, the Supplemental Services will not be duplicative in any manner of the services to be performed by any other professional retained by AWI in the Chapter 11 case," Mr. Jacobs assures Judge Fitzgerald. Mr. Jacobs also determines that the insurance services that Dickstein Shapiro currently provides to AWI are in no way duplicative of Gilbert Heintz's insurance services. Dickstein Shapiro, through Ms. Smoyer, agreed to continue to advise and represent AWI with respect to those services following Ms. Smoyer's departure. Mr. Jacobs says that Gilbert Heintz no longer provides insurance coverage services, however, the firm continues to work with AWI on other insurance-related matters, including environmental insurance recovery, asbestos property damage insurance recovery, and other asbestos issuance recovery matters against various insurers. Gilbert Heintz also continues to serve as AWI's counsel of record on a currently inactive PCB-related litigation insurance recovery matter. The insurance services provided by Gilbert Heintz and Dickstein Shapiro are not duplicative, Mr. Jacobs confirms. Ms. Greenspan attests that Dickstein Shapiro does not have any connection with AWI, its creditors, or any other party-in- interest, and does not represent or hold any interest adverse to AWI in the matters for which the firm is to be employed. Dickstein Shapiro intends to apply for compensation for professional services rendered at its standard hourly rates and for reimbursement of expenses, subject to change from time to time. AWI will pay Ms. Greenspan a standard $550 per hour and Ms. Smoyer $425 per hour. Given the small amount of fees relating to Ms. Smoyer's insurance- related work, and the fact that those services were not directly related to AWI's case, AWI has treated Dickstein Shapiro as an "ordinary course professional" and paid the firm $62,889 in fees and expenses over an eight-month period. Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. As of March 31, 2005, the Debtors' balance sheet reflected a $1.42 billion stockholders' deficit. (Armstrong Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASIA GLOBAL: 360networks Moves for Summary Judgment on Claim ------------------------------------------------------------ During a telephone conference held by the U.S. Bankruptcy Court for the Southern District of New York on May 11, 2005, the Hon. Stuart M. Bernstein asked 360networks Corporation why Asia Global Crossing, Ltd., would remain liable under the AGX Guaranty for Global Crossing Bandwidth's failure to perform under the Master Agreement during the period after the effectiveness of GC Bandwidth and 360networks' settlement agreement. In response, 360networks' attorney, Alan J. Lipkin, Esq., at Willkie Farr & Gallagher, LLP, in New York, told Judge Bernstein that 360networks' release of GC Bandwidth in the Settlement Agreement did not result in any release from its obligations under the AGX Guaranty. Mr. Lipkin states that AGX's guaranty of performance obligation which would not be released under the Settlement Agreement is reinforced by the express provision that AGX's obligation was excluded from the scope of the release granted by 360networks in the Settlement Agreement of claims against GC Bandwidth and its other affiliates. AGX Trustee Responds Robert L. Geltzer, the AGX Chapter 7 Trustee, relates that, as a general principle, an obligee can release the primary obligor without releasing the guarantor -- so long as the guaranty document specifically so provides. The AGX Trustee avers that 360networks is in reality asking the Court to unilaterally amend the AGX Guaranty on its behalf to add a provision which simply isn't there, something to the effect that says: "should 360networks release GC Bandwidth from the Asia Commitment, all of the requirements regarding the methods of demanding capacity will be deemed eliminated from the Master Agreement, and AGX will be required to deliver the $100,000,000 of capacity contemplated by the Asia Commitment immediately without any demand or notice whatsoever." The AGX Trustee notes that 360networks' arguments are premised on a thorough misunderstanding of the Master Agreement, the AGX Guaranty and the applicable law. "In fact, the AGX Guaranty does not even contain language rendering AGX a primary obligor," the AGX Trustee says. "Rather, AGX's role is strictly that of a secondarily liable guarantor." Furthermore, the AGX Trustee argues that 360networks' proposed rewriting of the Master Agreement and the AGX Guaranty are directly contrary to certain applicable laws citing that option contracts must be exercised in the manner prescribed in a contract, and will be construed strictly against an optionee. Moreover, Jonathan L. Flaxer, Esq., at Golenbock Eiseman Assor Bell & Peskoe, LLP, in New York, relates that the AGX Guaranty explicitly provides that if the Asia Commitment has either been performed or is not currently due, AGX has a complete defense to any claims for performance. Mr. Flaxer asserts that 360networks' decision not to order capacity during the option period, and the resulting expiration of GC Bandwidth's obligation to provide that capacity, is uncontroverted. The Master Agreement provides for no refund or any other rights on that expiration. Mr. Flaxer maintains that 360networks has failed to come up with any facts demonstrating a "repudiation," or showing that they are genuine issues of material fact for trial. According to 360networks, by virtue of breach, it is entitled "to the maximum claim under the AGX Guaranty," notwithstanding its decision not to request capacity under the Asia Commitment. Mr. Flaxer argues that this theory fails because it misconstrues the nature of the Asia Commitment, ignores the AGX guaranty's terms, and turns the doctrine of anticipatory breach on its head. It is abundantly clear, Mr. Flaxer asserts, that 360networks' conduct is antithetical to any invocation of the doctrine of anticipatory breach. Mr. Flaxer further insists that: (1) The party seeking to invoke the doctrine must show that the other party to the contract unequivocally evinced the intent not to perform. That indication must be clear, definite and final. (2) 360networks, as the optionee under a unilateral option contract, had no obligations under the Asia Commitment, and thus no concern that it would render its own performance only to later discover that GC Bandwidth or AGX might breach. Mr. Flaxer states that had 360networks ordered capacity, it might then have had a concern that the circuit might not be "lit" and available by the time it was needed by 360networks to carry customer traffic -- and at that point might have considered seeking assurances. (3) Even if the doctrine of anticipatory breach could have applied to the Asia Commitment, 360networks never sought any assurances nor took any steps regarding any possible future breach. It is thus deemed to have opted to treat the Asia Commitment as valid. (4) 360networks is estopped from asserting the doctrine of anticipatory breach due to its failure, during the entire 24-month period of its option, to notify either GC Bandwidth or AGX of any concern regarding a possible "anticipatory beach." 360networks Insists AGX Trustee is Wrong Mr. Lipkin vehemently argues that the AGX Trustee was only able to reach those flawed conclusions by distorting, misrepresenting, or disregarding the relevant facts and applicable law. Mr. Lipkin explains that just as the AGX Trustee misses the big picture by exclusively focusing on the mechanical steps 360networks would have to take to order capacity under the Master Agreement -- and ignoring GC Bandwidth's and AGX's ability to perform -- the AGX Trustee misconstrues his burden in a summary judgment motion by focusing entirely on what burden 360networks ultimately might have. Mr. Lipkin determines that there are three separate undisputed sets of fact that mandate summary judgment for 360networks because each independently demonstrates "affirmative acts" that repudiated the Asia Commitment. These facts concern: (a) the AGX Trustee's admissions regarding GC Bandwidth's rejection and material breach of the Master Agreement; (b) the end of the integrated network between the Global Crossing Debtors and AGX; and (c) AGX's sale of all of its telecommunications assets. Accordingly, Mr. Lipkin says, it is only just and proper that the Court grants a summary judgment favoring 360networks in its entirety and overthrowing the AGX Trustee's contentions. Asia Global Crossing Ltd., through its direct and indirect subsidiaries, as well as through a number of in-country joint ventures and commercial arrangements with Asian partners, provides the Asia Pacific region with a broad range of integrated telecommunications and IP services. The Company filed for chapter 11 protection on Nov. 17, 2002 (Bankr. S.D.N.Y. Case No. 02-15749). When the Debtor filed for protection from its creditors, it listed $2,279,771,000 in total assets and $2,616,316,000 in total debts. David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP, represents the Debtor in its restructuring efforts. The Court converted the Debtor's chapter 11 case to a chapter 7 proceeding on June 11, 2003. The Court appointed Robert L. Geltzer as the Debtor's chapter 7 trustee. Attorneys at Golenbock Eiseman Assor Bell & Peskoe LLP represent Mr. Geltzer. ASSET BACKED: Fitch Assigns Low-B Ratings on $7MM Class B Certs. --------------------------------------------------------------- Fitch has rated the Asset-Backed Funding Corporation asset-backed certificates, series 2005-AQ1 mortgage pass-through certificates: -- $103.638 million class A-1A 'AAA'; -- $100.0 million class A-1B 'AAA'; -- $206.699 million class A-2 'AAA'; -- $42.406 million class A-3 'AAA'; -- $165.805 million class A-4 'AAA'; -- $52.291 million class A-5 'AAA'; -- $74.534 million classes A-6 'AAA'; -- $36.818 million class M-1 'AA'; -- $13.499 million class M-2 'A'; -- $3.273 million class M-3 'A-'; -- $2.863 million class M-4 'BBB+'; -- $2.864 million class M-5 'BBB'; -- $3.273 million class M-6 'BBB-'; -- $3.272 million class B-1 'BB+'; -- $3.682 million class B-2 'BB'. The 'AAA' rating on the senior certificates reflects the 8.90% total credit enhancement provided by the 4.50% class M-1, the 1.65% class M-2, the 0.40% class M-3, the 0.35% class M-4, the 0.35% class M-5, the 0.40% class M-6, the 0.40% privately offered B-1, the 0.45% privately offered B-2, and the 0.40% 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 Ameriquest Mortgage Company as servicer, rated 'RMS2' by Fitch. Deutsche Bank National Trust Company is the trustee. Trust collateral consists of 4,813 closed-end, first lien, fixed- rate, fully amortizing mortgage loans that carried an original term to maturity of not greater than 360 months. The aggregate mortgage principal balance as of the June 1, 2005 cut-off date was of $818,160,165. The weighted average loan rate is approximately 6.906% and the weighted average FICO score on the total pool is approximately 683. The average outstanding principal balance of the loans is approximately $169,990. The mortgage pool's weighted average original loan-to-value ratio is 75.86%. The properties are primarily located in California (21.66%), Florida (11.42%) and New York (8.46%). While all the mortgage loans in the trust were originated or acquired by Ameriquest Mortgage Company, they were subsequently purchased at closing by the depositor, Asset Backed Funding Corporation. 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. BERTUCCI'S CORP: S&P Withdraws Junk Ratings at Company's Request ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'CCC+' corporate credit and senior unsecured ratings on Bertucci's Corp. at the request of the company. As reported in the Troubled Company Reporter on Dec. 23, 2004, S&P assigned its junk rating in Dec. 2004, pointing to the restaurant operator's poor liquidity. As reported in the Troubled Company Reporter on May 25, 2005, Moody's Investors Service downgraded its ratings on Bertucci's 10.75% senior unsecured notes (due 2008) to Caa1, and said the outlook is negative. "The downgrade was prompted by Moody's belief that sales, margins and debt protection measures will remain weak over the medium-term," the rating agency said. Bertucci's Corporation, headquartered in Northborough, Massachusetts, operates 92 Bertucci's casual dining pizza restaurants principally located in New England. Revenue for the twelve months ending March 30, 2005, was about $201 million. BOOKER T. WASHINGTON: A.M. Best Says Financial Strength is Weak --------------------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating to C- (Weak) from C+ (Marginal) of Booker T. Washington Insurance Company, Inc. and its subsidiary, Universal Life Insurance Company (both of Birmingham, Alabama). The rating outlook is revised to negative from stable. This rating action reflects BTW's significantly weakened capital position. With a mark to market adjustment to reflect the proper value of ULIC, the capital level of BTW was severely diminished. Asset write-downs and consistent operating losses over the last several years had already eroded capital to a modest level. This additional reduction will significantly hamper BTW's financial flexibility. In recognition of these issues, BTW is currently exploring methods of raising capital and A.M. Best will monitor its progress in reaching its goal of improving its capital position to appropriate levels. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. BROCKWAY PRESSED: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Brockway Pressed Metals, Inc. 921 Clark Street Brockway, Pennsylvania 15824 Bankruptcy Case No.: 05-11891 Type of Business: The Debtor manufactures a wide range of highly engineered metal parts and sub-assemblies. Brockway Pressed Metals specializes in automotive applications, including engine and transmission components, electronic actuators, steering components, cruise control devices, assembled camshafts, and gas springs. Major non-automotive applications include power tools, agricultural equipment, business machines, and many industrial and recreational products. See http://www.brockwaypm.com/ Chapter 11 Petition Date: June 8, 2005 Court: Western District of Pennsylvania (Erie) Debtor's Counsel: Robert S. Bernstein, Esq. Bernstein Law Firm, P.C. 2200 Gulf Tower Pittsburgh, Pennsylvania 15219 Tel: (412) 456-8101 Fax: (412) 456-8251 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ North American Hoganas $1,603,644 111 Hoganas Way Hollsopple, PA 15935 Steelworkers Pension Trust Fund $1,566,000 P.O. Box 660 Trevose, PA 19053 Highmark Blue Shield $517,421 Suite - 2316 120 Fifth Avenue Pittsburgh, PA 15222 PA Unemployment Compensation - Bureau of $254,728 Employer Tax Operation P.O. Box 99727 Pittsburgh, PA 15233 Glacier Garlock Bearings, Inc. $217,511 Principal Life Insurance Company $208,687 Pennsylvania Industrial Heat Treaters, I $200,923 J.I.T. Tool & Die, Inc. $173,460 National Fuel Gas Company $161,511 Rebco, Inc. $159,979 Principal Life Insurance Company $151,896 Internal Revenue Service $143,507 Central Tax Bureau of PA, Inc. $117,596 Commonwealth of Pennsylvania - Department $116,317 of Revenue Federal Express Corporation $101,776 Tropp & Company Inc. $101,161 Oakdene Group, Inc. $83,118 Open Flow Gas Supply Corporation $80,017 Acupowder International, LLC $78,933 BOC Gases $76,918 BUEHLER FOODS: Wants to Hire Bingham McHale as Special Counsel -------------------------------------------------------------- Buehler Foods, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Indiana for permission employ Bingham McHale LLP as their special counsel. The Debtors explain that they hired Bingham McHale as their special counsel because the Firm represented them in a wide array of pre-petition corporate, financial, securities, tax, real estate, employment, litigation, intellectual property and other matters. The Firm is therefore knowledgeable and conversant in the Debtors' legal and business affairs. The Debtors relates that Bingham McHale's will render legal services relating to the many matters and issues that may arise out of the operation of the Debtors' businesses under chapter 11. Those matters include general corporate matters, corporate finance, securities, tax, employment, real estate, intellectual property and commercial matters. Thomas C. Scherer, Esq., a Partner at Bingham McHale, is the lead attorney from the Firm performing services to the Debtors. Mr. Scherer discloses that the Firm received a $30,000 retainer. Mr. Scherer reports that Bingham McHale's professionals' fees and expenses and other service charges will be billed to the Debtors on a monthly basis. Buehler Foods has not yet received Bingham McHale's hourly billing rates for its professionals performing services for the Debtors. To the best of the Debtors' knowledge, Bingham McHale is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Jasper, Indiana, Buehler Foods, Inc., owns and operates grocery stores under the BUY LOW and Save-A-Lot banners in Illinois, Indiana, and Kentucky, North Carolina, and Virginia. The company also sells gas at about a dozen locations. In 2004 Buehler Foods acquired 16 Winn-Dixie stores in Louisville, Kentucky, and renamed them Buehler's Markets. Founded in 1940, the company is still run by the Buehler family. The Company filed for chapter 11 protection on May 5, 2005 (Bankr. S.D. Ind. Case No. 05-70961). Jerald I. Ancel, Esq., at Sommer Barnard Attorneys, PC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets of $10 million to $50 million and debts of $50 million to $100 million. C & A, S.E.: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: C & A, S.E. P.O. Box 11427 San Juan, Puerto Rico 00910 Bankruptcy Case No.: 05-05297 Chapter 11 Petition Date: June 9, 2005 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Alexis Fuentes-Hernandez Charles A. Cuprill, PSC Law Offices 356 Fortaleza Street, Second Floor San Juan, Puerto Rico 00901 Total Assets: $8,210,979 Total Debts: $4,526,214 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Eurobank Credit line $1,450,000 Ave De Diego # 85 Villas de San Francisco III Guaynabo, PR Grumatech Work and ratainage as $284,361 P.O. Box 3359 due for San Juan, PR 00919 Betteroads Work and retainage $265,715 P.O. Box 21420 San Juan, PR 00928 Sachs Electric Company Work and retainage $253,000 of PR P.O. Box 958890 St. Louis, MO 63195 Unipro-Architectural & Work and retainage $249,356 Engineering P.O. Box 10914 Caparra Station San Juan, PR 00922 E W Concrete Work Work and retainage $221,869 Construction Hato Rey, S.E. Retainage claimed as $182,861 due for Corporacion Fondo del Premiums claimed $163,915 Seguro as due Juan F. Garcia Inc. Retainage claimed $142,455 as due for Multi-Alarm Security Work and retainage $121,303 Accoutec Contractors Retainage claimed $80,246 as for Master Products Supply of material $70,000 Euro-American Steel Work and retainage $65,000 Company, Inc. Constructora Melendez Retainage claimed $63,800 as due for Morales Rivera Angel Work and retainage $62,763 National Painting Work and retainage $45,776 Corporation Vent-Alarm Corporation Retainage claimed $45,025 as due for Rafael J. Nido Inc. Retainage claimed $40,201 as due for Daya Elevators Work and retainage $39,928 as due for Tile Kingdon Corporation Work and retainage $36,025 CALPINE CORP: Discloses SEC Request as Sale Process Commences ------------------------------------------------------------- Calpine Corporation disclosed that, in April 2005, the Division of Enforcement of the Securities and Exchange Commission asked it to provide documents and information related to: (a) the Company's downward revision of its proved oil and gas reserve estimates at year-end 2004 as compared to estimates at year-end 2003, and a corresponding impairment of the value of certain assets, all previously disclosed by the Company, (b) certain statements made to various regulatory agencies by a terminated former employee, Michael Portis, on determination of state sales and use taxes in California, Nevada and Georgia, and (c) Calpine's upward restatement in April 2005 of its previously disclosed net income for the third quarter, and the first three quarters, of 2004. Calpine disclosed the information on June 9, 2005, as part of the company's on-going discussions with potential buyers of its remaining U.S. natural gas assets. Charles B. Clark, Jr., the Company's Senior Vice President, Controller, and Chief Accounting Officer, says the Company is fully cooperating with the SEC's requests for documents and information. Whistleblower Michael Portis filed a claim with the U.S Department of Labor alleging that his termination violated the employee protection or "whistleblower" provisions of Title VIII of the Sarbanes-Oxley Act of 2002. Following an investigation of this claim by the Occupational Safety and Health Administration division of the Department of Labor, the Secretary of Labor found that there was no reasonable cause to believe that the Company violated SOX, and dismissed the former employee's SOX claim. Calpine understands that the terminated employee's right to appeal this decision has not yet expired. Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states, three Canadian provinces and the United Kingdom. Its customized products and services include wholesale and retail electricity, natural gas, gas turbine components and services, energy management, and a wide range of power plant engineering, construction and operations services. Calpine was founded in 1984. It is included in the S&P 500 Index and is publicly traded on the New York Stock Exchange under the symbol CPN. * * * As reported in the Troubled Company Reporter on May 16, 2005, Moody's Investors Service downgraded the debt ratings of Calpine Corporation (Calpine: Senior Implied to B3 from B2) and its subsidiaries, including Calpine Generating Company (CalGen: first priority credit facilities to B2 from B1). Ratings downgraded for which the rating outlook has been changed to negative: * Calpine's Senior Implied Rating to B3 from B2; * Calpine's Senior Unsecured Notes, Issuer Rating, and Senior Unsecured Convertible Notes to Caa3 from Caa1; * Calpine Canada Energy Finance Senior Unsecured Notes (guaranteed by Calpine) to Caa3 from Caa1; * Calpine Generating Company, LLC first priority senior secured revolving credit and term loan facilities to B2 from B1; * CalGen second priority term loans and floating rate notes to B3 from B2; * CalGen third priority notes to Caa1 from B3; * South Point Energy Center, LLC, Broad River Energy LLC and RockGen Energy LLC Pass Through Certificates to B3 from B2; * Tiverton Power Associates Ltd. Partnership and Rumford Power Associates Ltd Partnership Pass Through Certificates to Caa2 from B3; * Calpine Capital Trust Preferred Securities to Ca from Caa3; * Shelf registration for the issuance of various senior unsecured debt, trust preferred, and preferred securities to (P)Caa3, (P)Ca, and (P)C from (P)Caa1, (P)Caa3, and (P)Ca, respectively. As reported in the Troubled Company Reporter on May 11, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Calpine Corp. and its subsidiaries to 'B-' from 'B'. The outlook is negative. In addition, Standard & Poor's lowered its ratings on debt that Calpine guarantees. The ratings for the following debt issues remain unchanged: (1) the 'BBB-' SPUR rating on Gilroy Energy Center LLC's bonds, (2) the 'BB-' rating on the Rocky Mountain Energy Center LLC and the Riverside Energy Center LLC loans, (3) the 'CCC+' rating on the third lien Calpine Generating Co. LLC debt, and (4) the 'BBB' rating on Power Contract Financing LLC's bonds. CALPINE CORP: Buying Back 9-5/8% Senior Secured Notes for Cash -------------------------------------------------------------- Calpine Corporation (NYSE: CPN) commenced a tender offer to purchase for cash any and all of the outstanding 9-5/8% First Priority Senior Secured Notes due 2014. The aggregate principal amount of the outstanding Notes is currently $785,000,000. The Offer is being made pursuant to the terms of the Indenture, dated as of Sept. 30, 2004, between the Company and Wilmington Trust Company, as Trustee, pursuant to which the Notes were issued. Subject to the terms and conditions of the Offer, the consideration for the Notes validly tendered pursuant to the Offer on or prior to 12:00 midnight, New York City time, on the Expiration Date shall be $1,000 per $1,000 principal amount of Notes validly tendered and not validly withdrawn, plus accrued and unpaid interest up to, and including, the Purchase Date. The "Purchase Date" is the date, not later than the third business day following the Expiration Date, on which Calpine accepts for purchase, pursuant to the terms and conditions of the Offer, Notes validly tendered (and not validly withdrawn) in the Offer. The Offer is scheduled to expire at 12:00 midnight, New York City Time, on July 8, 2005, unless extended or earlier terminated. Tendered Notes may be withdrawn at any time prior to 12:00 midnight, New York City Time, on the Expiration Date. The Company has recently commenced a process with potential buyers to dispose of its remaining U.S. gas assets. The consummation of the Gas Divestiture would qualify as an "Asset Sale" under the Indenture and would require the Company to make an offer to purchase the Notes pursuant to the Indenture with the net proceeds of the Gas Divestiture not applied in accordance with the other permitted uses under the Indenture. Calpine is making the Offer to comply with its obligations under the Indenture and in order to avail itself of the opportunity to reduce its indebtedness by applying the proceeds of the Gas Divestiture to the purchase of the Notes. Accordingly the Offer is being made in compliance with the Indenture's requirements applicable to repurchases and repayment of the Notes using the proceeds of "Asset Sales" such as the contemplated Gas Divestiture. Although the Company expects to consummate the Gas Divestiture on or prior to the Purchase Date, the Company has not yet entered into definitive documentation related to the Gas Divestiture and there can be no assurance that the Company: (i) will be able to do so by such date, or at all, or be able to do so on terms acceptable to the Company or (ii) will not make a determination to abandon the Gas Divestiture. In such event, Calpine may, among other things, extend or otherwise amend or terminate the Offer. Following the completion of the Offer, the Company currently anticipates using any net proceeds arising from the proposed Gas Divestiture remaining after consummation of the Offer (regardless of the aggregate principal amount of Notes purchased in the Offer, if any) to acquire new "Designated Assets" permitted to be acquired under the Indenture. The Company is not required to acquire new Designated Assets under the Indenture and there can be no assurance that the Company will be successful in identifying new Designated Assets or acquiring such new Designated Assets on acceptable terms, or at all. If the Company does not, within 180 days of receipt of the net proceeds from the proposed Gas Divestiture, acquire such new Designated Assets, or does not, at the Company's option, use all of the net proceeds arising from the proposed Gas Divestiture remaining after consummation of the Offer in the purchase, redemption or prepayment of Notes remaining outstanding after consummation of the Offer, then the Company will, to the extent that the remaining net proceeds exceed $50,000,000, be required under the terms of its second lien secured financing documents to use all remaining net proceeds to make an offer to purchase the outstanding second lien secured indebtedness of the Company. As of March 31, 2005, the aggregate principal amount of the outstanding second lien secured indebtedness of the Company was approximately $3,681,250,000. This press release is not an offer to purchase or a solicitation of an offer to sell any securities, which is being made only pursuant to the Offer to Purchase, dated June 9, 2005. Calpine has retained Merrill Lynch & Co. to serve as Dealer Manager, The Bank of New York to serve as the Tender Agent and MacKenzie Partners, Inc. to serve as Information Agent for the Tender Offer. The means to tender Notes may be obtained by requesting the Offer to Purchase, the Letter of Transmittal and other documents from MacKenzie Partners, Inc. at (800) 322-2885 or by calling (212) 929-5500 collect or in writing at 105 Madison Avenue, New York, New York 10016. Questions regarding the Offer may be directed to Merrill Lynch & Co., Attn: Liability Management Group, at (888) 654-8637 or by calling (212) 449-4914 collect. None of Calpine, the Dealer Manager, the Tender Agent or the Information Agent makes any recommendation as to whether or not holders of Notes should tender their Notes pursuant to the Offer. Holders must make their own decision as to whether to tender their Notes, and if tendering, the principal amount of Notes to tender. In any jurisdiction where the laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed made on behalf of Calpine by Merrill Lynch & Co., or one or more registered brokers or dealers under the laws of such jurisdiction. Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states, three Canadian provinces and the United Kingdom. Its customized products and services include wholesale and retail electricity, natural gas, gas turbine components and services, energy management, and a wide range of power plant engineering, construction and operations services. Calpine was founded in 1984. It is included in the S&P 500 Index and is publicly traded on the New York Stock Exchange under the symbol CPN. * * * As reported in the Troubled Company Reporter on May 16, 2005, Moody's Investors Service downgraded the debt ratings of Calpine Corporation (Calpine: Senior Implied to B3 from B2) and its subsidiaries, including Calpine Generating Company (CalGen: first priority credit facilities to B2 from B1). Ratings downgraded for which the rating outlook has been changed to negative: * Calpine's Senior Implied Rating to B3 from B2; * Calpine's Senior Unsecured Notes, Issuer Rating, and Senior Unsecured Convertible Notes to Caa3 from Caa1; * Calpine Canada Energy Finance Senior Unsecured Notes (guaranteed by Calpine) to Caa3 from Caa1; * Calpine Generating Company, LLC first priority senior secured revolving credit and term loan facilities to B2 from B1; * CalGen second priority term loans and floating rate notes to B3 from B2; * CalGen third priority notes to Caa1 from B3; * South Point Energy Center, LLC, Broad River Energy LLC and RockGen Energy LLC Pass Through Certificates to B3 from B2; * Tiverton Power Associates Ltd. Partnership and Rumford Power Associates Ltd Partnership Pass Through Certificates to Caa2 from B3; * Calpine Capital Trust Preferred Securities to Ca from Caa3; * Shelf registration for the issuance of various senior unsecured debt, trust preferred, and preferred securities to (P)Caa3, (P)Ca, and (P)C from (P)Caa1, (P)Caa3, and (P)Ca, respectively. As reported in the Troubled Company Reporter on May 11, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Calpine Corp. and its subsidiaries to 'B-' from 'B'. The outlook is negative. In addition, Standard & Poor's lowered its ratings on debt that Calpine guarantees. The ratings for the following debt issues remain unchanged: (1) the 'BBB-' SPUR rating on Gilroy Energy Center LLC's bonds, (2) the 'BB-' rating on the Rocky Mountain Energy Center LLC and the Riverside Energy Center LLC loans, (3) the 'CCC+' rating on the third lien Calpine Generating Co. LLC debt, and (4) the 'BBB' rating on Power Contract Financing LLC's bonds. CALPINE CORP: Names Paul Posoli as Calpine Energy President ----------------------------------------------------------- Calpine Corporation (NYSE: CPN) has promoted Paul J. Posoli to Executive Vice President of Calpine Corporation and President of Calpine Energy Services, L.P. (CES). CES is a Calpine subsidiary dedicated to managing Calpine's trading, risk management, fuel procurement, energy logistics and structured products. "Paul has been instrumental in building Calpine Energy Services into what we believe to be the premier risk management and energy trading group in the industry," said Calpine President and Chief Executive Officer Pete Cartwright. "Over the past several years, Paul and his team have built an organization with unparalleled capabilities. They trade natural gas and electricity in every major North American market and actively manage assets and customer business at every level of the energy value chain -- from gas at the wellhead to electricity at the meter." In 1999, Mr. Posoli joined Calpine as Vice President of Corporate Risk Management and launched CES. After building a scalable infrastructure of systems, processes and people to manage Calpine's growing fleet of generation assets, Mr. Posoli was promoted to Senior Vice President of CES in 2001. Since that time, CES has grown from managing 8,000 megawatts to 27,000 megawatts and developed a unique business model focused on physical assets and nonstandard customer business. Today, CES serves more than 250 wholesale customers throughout North America. Mr. Posoli earned his Master of Business Administration Degree with majors in Finance and Strategic Management from Northwestern University Kellogg Business School. He received his Bachelor of Science Degree with a major in Accounting from the University of Miami. About Calpine Energy Services, L.P. CES manages power and gas assets for a wide range of customers which, when combined, represent one of the largest unregulated energy portfolios in North America. CES professionals are experienced in energy portfolio management, gas and power trading, origination, structuring, energy logistics, research and quantitative analysis as well as the middle and back offices to support these functions. In addition, with the physical flexibility from Calpine's system of power assets and the financial products required to manage market risk, CES can provide one-stop shopping for a full range of energy services, such as fuel management, power marketing and gas supply, daily energy and gas management (such as bidding, scheduling and ancillary services), transmission analysis, and risk management and reporting. Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states, three Canadian provinces and the United Kingdom. Its customized products and services include wholesale and retail electricity, natural gas, gas turbine components and services, energy management, and a wide range of power plant engineering, construction and operations services. Calpine was founded in 1984. It is included in the S&P 500 Index and is publicly traded on the New York Stock Exchange under the symbol CPN. * * * As reported in the Troubled Company Reporter on May 16, 2005, Moody's Investors Service downgraded the debt ratings of Calpine Corporation (Calpine: Senior Implied to B3 from B2) and its subsidiaries, including Calpine Generating Company (CalGen: first priority credit facilities to B2 from B1). Ratings downgraded for which the rating outlook has been changed to negative: * Calpine's Senior Implied Rating to B3 from B2; * Calpine's Senior Unsecured Notes, Issuer Rating, and Senior Unsecured Convertible Notes to Caa3 from Caa1; * Calpine Canada Energy Finance Senior Unsecured Notes (guaranteed by Calpine) to Caa3 from Caa1; * Calpine Generating Company, LLC first priority senior secured revolving credit and term loan facilities to B2 from B1; * CalGen second priority term loans and floating rate notes to B3 from B2; * CalGen third priority notes to Caa1 from B3; * South Point Energy Center, LLC, Broad River Energy LLC and RockGen Energy LLC Pass Through Certificates to B3 from B2; * Tiverton Power Associates Ltd. Partnership and Rumford Power Associates Ltd Partnership Pass Through Certificates to Caa2 from B3; * Calpine Capital Trust Preferred Securities to Ca from Caa3; * Shelf registration for the issuance of various senior unsecured debt, trust preferred, and preferred securities to (P)Caa3, (P)Ca, and (P)C from (P)Caa1, (P)Caa3, and (P)Ca, respectively. As reported in the Troubled Company Reporter on May 11, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Calpine Corp. and its subsidiaries to 'B-' from 'B'. The outlook is negative. In addition, Standard & Poor's lowered its ratings on debt that Calpine guarantees. The ratings for the following debt issues remain unchanged: (1) the 'BBB-' SPUR rating on Gilroy Energy Center LLC's bonds, (2) the 'BB-' rating on the Rocky Mountain Energy Center LLC and the Riverside Energy Center LLC loans, (3) the 'CCC+' rating on the third lien Calpine Generating Co. LLC debt, and (4) the 'BBB' rating on Power Contract Financing LLC's bonds. CERTIFIED HR: Parent Company Clarifies Unit's Chapter 11 Filing --------------------------------------------------------------- Certified Services, Inc. (PINK SHEETS: CSRV) responded to various articles published by the Sun-Sentinel, Herald Tribune, The Business Journal and the Miami Herald about the facts surrounding the bankruptcy of the company's smallest operating subsidiary (Certified HR Services Company f/k/a The Cura Group, Inc.), the company's worker's compensation coverage status, and an alleged seizure of the company's assets. "Many of the statements reported are incorrect and deserve a more factual presentation," stated Danny L. Pixler, Certified Services, Inc., Chief Executive Officer. First, Certified HR Services Company f/k/a The Cura Group, Inc., is one of many operating subsidiaries of Certified Services, Inc., its publicly traded parent company. While many of those subsidiaries use the name "Certified HR Services" as a trade name, Certified HR Services Company f/k/a The Cura Group, Inc., is the only business in Chapter 11 reorganization. The bankrupt entity services fewer than 20 of Certified Services' approximately 1,510 loyal clients, which represents less than 4% of its gross revenue. For instance, the reorganization does not include Certified HR Services Cura II, which handles most of Certified Services' Florida client base. Second, the bankruptcy petition was filed to protect Certified HR Service and its client base from what the company believes to be an unwarranted $2.7 million judgment. Until Dec. 1, 2004, Certified HR's worker's compensation carrier in Florida was Union American Insurance Company. During November of 2004 Union American Insurance Company advised Certified HR Services that it was not going to re-new its Florida coverage at year end 2004 due in part to the failed purchase of Union American Insurance Company by a third party that had worked closely with the Florida Department of Insurance for approximately 18 months, not for non- payment of premium. Certified HR Services was fully current on all premium payments under the policy. In fact Certified HR Services had notified Union American Insurance of possible over payments of premium. Certified HR Services was Union's sole worker's compensation customer. Union's choice to non-renew effectively put themselves out of business. Union's actions, not Certified HR Services caused Union to be placed in rehabilitation under the auspices of the Florida Department of Financial Services and a receiver was appointed. Consequently, Certified Services, Inc., took the necessary steps to seek and obtain coverage under an existing policy that was in full force with Providence Property & Casualty Insurance for its Florida client base. The policy does not expire until December 1, 2005 and is fully funded to the requirements established by the insurance carrier. Certified HR Services went so far as to seek a regulated insurance carrier's co-operation in a resolution that would have assumed Union's potential liabilities in a matter of weeks, even though Union, if exposed to a shortfall of collateral, would not be at risk for years. Even that resolution met with deaf ears. While the Department of Financial Services continues to seek additional collateral, Certified Services, Inc., is seeking the return of over payment of premium and the return of approximately $4.3 million of surplus tendered to Union American's parent company AIB Insurance Group, Inc. In addition, and as part of the judgment one of Certified's operating bank accounts, which was collateralized by more than $5 million of cash or cash equivalents, was frozen, disrupting paycheck for thousands of the company's clients. The company replaced every check within days. None of the company's hard assets have been seized. The decision to file a Chapter 11 bankruptcy petition on behalf of one of Certified Services, Inc., subsidiaries (Certified HR Service Company f/k/a The Cura Group, Inc.) was made to protect its clients, their employees, shareholders and Certified HR's internal employees (mostly in Florida) and to ensure an evenhanded and orderly process in resolving these matters. Certified Services, Inc., through its operating subsidiaries manages approximately $525,000,000 million of gross revenue, services approximately 1, 510 clients in more than 25 states, and ranks in the top tier of the PEO industry. Headquartered in Ft. Lauderdale, Florida, Certified HR Services Company filed a voluntary petition for relief under Chapter 11 of title 11 of the United States Code on May 12, 2005 (Bankr. S.D. Fla. Case No. 05-22912). Thomas R. Lehman, Esq., at Miami Florida, represents the Debtor in its restructuring efforts. CITICORP MORTGAGE: Fitch Affirms Low-B Ratings on 8 Class B Certs. ------------------------------------------------------------------ Fitch Ratings has taken rating actions on these Citicorp Mortgage Securities, Inc. issues: Series 2003-8 -- Class 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'. Series 2004-1 -- Class 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'. Series 2004-2 -- Class 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'. Series 2004-3 -- Class 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'. The affirmations, affecting $1.2 billion of outstanding certificates, are being taken as a result pool performance and credit enhancement consistent with expectations. The current CE for all classes from series 2003-8, 2004-1, 2004-2, 2004-3 have increased modestly from their original levels. As of the May distribution, the pool factors (current balance as a percentage of original balance) range from 68% to 86%. There have been no losses in any of the transactions. The collateral for series 2003-8, 2004-2, and 2004-3 consists of 30-yer fixed-rate mortgages on one- to four-family residential properties. The collateral for series 2004-1 consists of 20-to 30-year, 10- to 15-year, and 30-year fixed rate mortgages on one- to four-family residential properties. At closing, approximately 12% of the loans from series 2004-1 were loans issued in association with relocation programs. COSINE COMMS: Nasdaq to Halt Common Stock Trading on Wednesday -------------------------------------------------------------- CoSine Communications, Inc. (Nasdaq: COSN) received notice from the staff of The Nasdaq National Market, dated June 6, 2005, that the Company's common stock will be delisted from the Nasdaq National Market effective as of the opening of business on June 15, 2005 pursuant to Nasdaq Marketplace Rules 4300 and 4330(a)(3). 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. Going Concern Doubt At March 31, 2005, the Company has an accumulated deficit of $516,637,000 and has sustained a net loss during the three months ended March 31, 2005 of $878,000. As of Dec. 31, 2004, and March 31, 2005, the Company's business consisted primarily of a customer service capability operated under contract by a third party. The Company's actions in September 2004, in connection with its ongoing evaluation of strategic alternatives, to terminate most of its employees and discontinue production activities in an effort to conserve cash, raise substantial doubt about its ability to continue as a going concern. D & K STORES: Wants More Time to Assume or Reject Leases -------------------------------------------------------- D & K Stores, Inc. asks the U.S. Bankruptcy Court for the District of New Jersey for more time to decide whether to assume or reject certain leases of nonresidential real property. Moreover, the Debtor also asks the Court to approve a Designation Rights Agreement between the Debtor and Hilco Real Estate, LLC. The papers filed with the bankruptcy court don't disclose how much more time the debtor wants to make its lease-related decisions, nor any details about the Designation Rights Agreement. Headquartered in Eatontown, New Jersey, D & K Stores, Inc., filed for chapter 11 protection on April 8, 2005 (Bankr. D.N.J. Case No. 05-21445). Timothy P. Neumann, Esq., at Broege, Neumann, Fischer & Shaver, LLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts from $10 million to $50 million. DELPHI CORP: Finance Execs Resign Over Accounting Irregularities ---------------------------------------------------------------- The recent findings by the audit committee of Delphi Corp.'s (NYSE:DPH) Board of Directors concluded that the Company did not accurately disclose to credit ratings agencies, analysts or the Board of Directors the amount of sales of European accounts receivable or factoring arrangements from the date of its separation from General Motors until year-end 2004. Following its review, the audit committee accepted the resignations of the Company's current Treasurer, Pam Geller and John Blahnik, its former Vice President of Treasury, Mergers & Acquisitions. John Arle, 57, has been named vice president and treasurer, effective immediately, and will report to John Sheehan, Delphi's acting chief financial officer. Mr. Arle remains a member of the Delphi Strategy Board. He was previously vice president of Delphi's corporate audit services. Derek Kolano, 33, will serve as acting director of Delphi's corporate audit services until Mr. Arle's successor is named. "John's leadership of the treasury staff will be essential going forward, and with his extensive financial background, he is an excellent choice to manage Delphi's treasury operations," Mr. Sheehan said. Mr. Arle began his automotive career with General Motors in 1975 at the Treasurer's Office in New York. He has held a series of financial assignments for GM including director of finance for GM de Venezuela, vice president and chief financial officer at GM Hughes Electronics, vice president and finance manager for GM of Canada, and vice president and chief financial officer for Saab Automobile AB. In 1998, he was named a Delphi vice president, in charge of mergers, acquisitions and planning and was named to his previous position on March 1, 2002. Mr. Arle earned a bachelor's degree at Colgate University in 1969 and a master's degree in business administration from Harvard University in 1975. About the Company Delphi Corp. -- http://www.delphi.com/-- is the world's largest automotive component supplier with annual revenues topping $25 billion. Delphi is a world leader in mobile electronics and transportation components and systems technology. Multi-national Delphi conducts its business operations through various subsidiaries and has headquarters in Troy, Michigan, USA, Paris, Tokyo and Sao Paulo, Brazil. Delphi's two business sectors -- Dynamics, Propulsion, Thermal & Interior Sector and Electrical, Electronics & Safety Sector -- provide comprehensive product solutions to complex customer needs. Delphi has approximately 186,500 employees and operates 171 wholly owned manufacturing sites, 42 joint ventures, 53 customer centers and sales offices and 34 technical centers in 41 countries. * * * As reported in the Troubled Company Reporter on May 24, 2005, Fitch Ratings has taken the following actions regarding Delphi Corporation's ratings: --Indicative senior secured bank facility assigned 'BB-'; --Senior unsecured rating downgraded to 'B' from 'BB-'; --Trust preferred rating downgraded to 'CCC+' from 'B'; --Rating Watch Remains Negative. Fitch's rating actions reflect: (1) the pending $2.75 billion senior secured bank facility, (2) the subordination of the unsecured and trust preferred debtholders, (3) declining General Motors' production volume, and the resulting losses from Delphi's high fixed-cost structure, (4) incremental raw material costs, and (5) significant cash requirements arising from restructuring, pension, and health care. As reported in the Troubled Company Reporter on May 23, 2005, Moody's Investors Service has downgraded the ratings of Delphi Corporation, senior implied to B2 from Ba2, and has assigned a B1 rating to the company's proposed new term loan B. The rating actions reflect the outlook for further operating losses and negative free cash flow generation at Delphi as a result of: * lowered expectations of auto production volumes in North America, particularly from its largest customer, General Motors; * an uncompetitive cost structure in its North American operations; and * substantial funding requirements for its domestic pension plans and ongoing restructuring programs. As reported in the Troubled Company Reporter on May 19, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on automotive supplier Delphi Corp. to 'B+' from 'BB' and its senior unsecured rating on the company to 'B-' from 'BB'. All ratings were removed from CreditWatch with negative implications, where they were placed March 4, 2005. The outlook is negative. DELPHI CORP: Bank Lenders Continue Support After Audit Review ------------------------------------------------------------- The audit committee of Delphi Corp.'s (NYSE: DPH) Board of Directors confirmed that it remains on track to issue its restated financial statements by June 30, 2005. As previously reported, Delphi's audit committee initiated an internal investigation in response to an inquiry by the Securities and Exchange Commission regarding the accounting for certain transactions with suppliers of information technology services in 2001. The recent findings by the audit committee concluded that Delphi did not accurately disclose to credit ratings agencies, analysts or the Board of Directors the amount of sales of European accounts receivable or factoring arrangements from the date of its separation from General Motors until year-end 2004. The Company believes these sales were properly accounted for under U.S. GAAP and therefore these findings should not impact amounts set forth in the Company's consolidated financial statements. Deloitte & Touche LLP is in the process of auditing the accounting for these factoring arrangements. There were, however, inaccuracies in previously disclosed non-GAAP measures of Delphi's net liquidity. A quarterly schedule showing Delphi's Net Liquidity (Non-GAAP measure) for the years 1999 through 2004 is available at no charge at http://ResearchArchives.com/t/s?18 Delphi Net Liquidity Since its inception, the Company has had factoring facilities in Europe and uses these facilities as a source of short-term liquidity. However, in presentations of supplemental non-GAAP measures of net liquidity prepared for the Board of Directors, credit rating agencies and analysts through the third quarter of 2004, the Company did not accurately disclose the extent of its use of these sources of financing. This inaccuracy was known to Company personnel. Over the course of 2004, the Company began disclosing in its non- GAAP net liquidity presentations increasing portions of its sales of accounts receivable in Europe. However the amounts disclosed were much smaller than the actual amount of sales of accounts receivable in Europe, and the full amounts were not disclosed until year-end 2004. The non-GAAP measure of net liquidity the Company discusses with credit rating agencies and other financial constituents is provided as supplementary information to its audited consolidated financial statements. The Audit Committee's investigation has not identified inaccurate disclosures of net liquidity at year-end 2004 or thereafter. The Company has reviewed this matter with JP Morgan and Citigroup, as lead arrangers, involved in its current financing transaction. After consideration of the matter, the banks expressed their continued full support of Delphi. The refinancing is currently over-subscribed with a total facility size of $2.8 billion, which is within the previously expected $2.5 billion to $3.0 billion range. The refinancing plan remains on schedule with the expected closing by June 15, 2005. "We are pleased with the support we continue to receive from our financial institutions and will be completing a financing plan [this] week that we believe will provide us the flexibility to continue to proactively manage our business and transformation activities," John Sheehan, Delphi's acting chief financial officer, said. The SEC and the Federal Bureau of Investigation is also investigating Delphi for other accounting inaccuracies that surfaced earlier this year that prompted the resignation of its chief financial officer and controller, Neal E. Boudette and Joann S. Lublin of The Wall Street Journal reports. Delphi has said it is cooperating. About the Company Delphi Corp. -- http://www.delphi.com/-- is the world's largest automotive component supplier with annual revenues topping $25 billion. Delphi is a world leader in mobile electronics and transportation components and systems technology. Multi-national Delphi conducts its business operations through various subsidiaries and has headquarters in Troy, Michigan, USA, Paris, Tokyo and Sao Paulo, Brazil. Delphi's two business sectors -- Dynamics, Propulsion, Thermal & Interior Sector and Electrical, Electronics & Safety Sector -- provide comprehensive product solutions to complex customer needs. Delphi has approximately 186,500 employees and operates 171 wholly owned manufacturing sites, 42 joint ventures, 53 customer centers and sales offices and 34 technical centers in 41 countries. * * * As reported in the Troubled Company Reporter on May 24, 2005, Fitch Ratings has taken the following actions regarding Delphi Corporation's ratings: --Indicative senior secured bank facility assigned 'BB-'; --Senior unsecured rating downgraded to 'B' from 'BB-'; --Trust preferred rating downgraded to 'CCC+' from 'B'; --Rating Watch Remains Negative. Fitch's rating actions reflect: (1) the pending $2.75 billion senior secured bank facility, (2) the subordination of the unsecured and trust preferred debtholders, (3) declining General Motors' production volume, and the resulting losses from Delphi's high fixed-cost structure, (4) incremental raw material costs, and (5) significant cash requirements arising from restructuring, pension, and health care. As reported in the Troubled Company Reporter on May 23, 2005, Moody's Investors Service has downgraded the ratings of Delphi Corporation, senior implied to B2 from Ba2, and has assigned a B1 rating to the company's proposed new term loan B. The rating actions reflect the outlook for further operating losses and negative free cash flow generation at Delphi as a result of: * lowered expectations of auto production volumes in North America, particularly from its largest customer, General Motors; * an uncompetitive cost structure in its North American operations; and * substantial funding requirements for its domestic pension plans and ongoing restructuring programs. As reported in the Troubled Company Reporter on May 19, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on automotive supplier Delphi Corp. to 'B+' from 'BB' and its senior unsecured rating on the company to 'B-' from 'BB'. All ratings were removed from CreditWatch with negative implications, where they were placed March 4, 2005. The outlook is negative. DIRECTV HOLDINGS: Moody's Rates New $1 Bil. Senior Notes at Ba2 --------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to the new $1.0 billion senior unsecured notes for DIRECTV Holdings LLC and DIRECTV Financing Company, 100% owned subsidiaries of The DIRECTV Group, Inc. The outlook remains stable. DIRECTV announced a new issue of $1.0 billion senior unsecured notes due 2015. The company plans to use the net proceeds from this offering to repay $500 million of borrowings under its current senior secured credit facility with the remainder of the proceeds to be retained by DIRECTV for general corporate purposes. The new bond issue will help balance the company's floating to fixed interest rate debt ratio. However, the $500 million net increase in debt and cash was not factored into our expectations when the company's ratings were upgraded in January of 2005. Moody's believes that any decision for how the $500 million of cash will be used will probably come after year-end, and we anticipate that the cash will be used to further reduce floating rate debt or to repurchase stock. Use of the residual $500 million cash for a stock buyback would increase debt and leverage levels at DIRECTV and would position the company more weakly at its current rating level. Larger share repurchases could put downward pressure on the company's ratings. The ten year notes will be unsecured indebtedness and will rank pari passu with the company's other unsecured debt. The notes will also be guaranteed on a senior basis by all of DIRECTV's domestic subsidiaries. The notes will be sold to qualified institutional buyers in reliance on Rule 144A and outside the United States in compliance with Regulation S under the Securities Act. Moody's understands that the notes are being offered and sold privately without registration under the Securities Act of 1933, under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. Moody's also understand that the notes have been structured to permit resale under Rule 144A. The DIRECTV Group, Inc. formerly Hughes Electronics Corporation, headquartered in El Segundo, California, is a world-leading provider of multi-channel television entertainment. The DIRECTV Group, Inc. with sales in 2004 of approximately $11.4 billion is 34% owned by Fox Entertainment Group, Inc., which is wholly owned by News Corporation. DIRECTV HOLDINGS: Fitch Assigns BB Rating on Prop. $1B Note Offer ----------------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to a proposed offering of 10-year $1.0 billion senior unsecured notes jointly issued by DIRECTV Holdings, LLC and DIRECTV Financing Co, Inc. in accordance with Rule 144A. Fitch currently rates DIRECTV's senior secured credit facility 'BB+' and the company's senior unsecured debt 'BB'. The Rating Outlook for each of the ratings remains Stable. Fitch believes that the proceeds from the offering will be used to repay up to $500 million of borrowings from the company's senior secured credit facility and for general corporate purposes. Fitch expects the remaining proceeds will stay at DIRECTV and will not be paid as a dividend to DIRECTV Group, Inc. From Fitch's perspective, the issuance increases DIRECTV's overall leverage and weakens the company's position within its current ratings. The proposed transaction will reduce the amount of secured debt claims above the senior unsecured debtholders, but this benefit is mitigated by a larger overall debt balance. Pro forma for the new debt issue, as well as the bank debt financing and equity contribution by DTVG, completed in April as if they were completed on March 31, 2005, Fitch believes that total debt will increase by $500 million to approximately $3.4 billion. Based on LTM EBITDA for the period ending March 31, 2005 of approximately $653.5 million, Fitch estimates DIRECTV's pro forma leverage would be 5.2 times (x). Overall, Fitch's ratings reflect DIRECTV's strong market position, positive subscriber metrics including robust subscriber growth and growing average revenue per unit, and the support and liquidity position of DTVG. Also incorporated into the ratings is DIRECTV's high cost to acquire and retain subscribers. Fitch expects these costs (on a per subscriber basis) to increase as subscribers migrate to more advanced set top boxes and DIRECTV controls subscriber churn. Fitch believes that reducing subscriber churn and controlling the growth of subscriber acquisition and retention costs will be key to growing EBITDA and expanding margin. Fitch's ratings also reflect DIRECTV's lack of revenue diversity and narrow product offering relative to the cable MSOs and Fitch's perception that DIRECTV's competitive position relative to the cable operators may diminish as the cable MSOs introduce telephony service to their product bundle. Fitch expects the company's total leverage metric to improve during 2005 and targets a year-end leverage metric ranging between 3.8x and 4.0x. The company's liquidity position is supported by a combination of cash on hand, which Fitch estimates to be approximately $646 million on a pro forma basis as of the end of the first quarter, and available borrowing capacity under the company's $500 million revolver contained within the company's $2.5 billion senior secured credit facility. Fitch's Stable Rating Outlook incorporates Fitch's expectation for subscriber growth to continue during 2005 albeit at a moderately slower pace relative to 2004. Fitch expects the company to balance subscriber growth with subscriber acquisition and retention costs while reducing subscriber churn to drive increasing EBITDA and operating margins. DM WHITE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: DM White Construction Company, Inc. 2800 South Market Street Chattanooga, Tennessee 37410 Bankruptcy Case No.: 05-13575 Type of Business: Construction company. Chapter 11 Petition Date: June 8, 2005 Court: Eastern District of Tennessee (Chattanooga) Judge: John C. Cook Debtor's Counsel: Gary R. Patrick, Esq. Patrick, Beard, Schulman & Jacoway Suite 202, Market Court 537 Market Street Chattanooga, Tennessee 37402 Tel: (423)756-7117 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ APAC-Carolina, Inc. $72,552 P.O. Box 6939 Asheville, NC 28816 Robertson Drywall & Acoustical, Inc. $67,435 1080 County Road 783 Cullman, AL 35055 Steve Williams Construction, LLC $63,812 1410 Weeks Drive Northeast Cleveland, TN 37312 Chisholm Service $63,640 Fugate Construction LLC $48,846 Tri State Truss Company $44,242 Overcash Electric Inc. $32,087 Fort Payne Steel, Inc. $28,676 Junior's Building Materials $26,906 JTJ Commercial Interiors, Inc. $26,106 Foam Crete, Inc. $25,462 Adams Masonry, Inc. $24,188 Phaltless, Inc. $23,365 Nabco Electric Company $22,860 KLM Mechanical Contractors $22,339 Summit USA Land Development $21,367 Multi-Tech Plumbing & HVAC $19,921 Jenkins Masonry $17,123 Kline Building Group, Inc. $16,994 MY Masonry $16,700 DOCTORS HOSPITAL: Hires Navigant Consulting as Financial Advisor ---------------------------------------------------------------- Doctors Hospital 1997, LP, asks the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, for permission to employ Navigant Consulting, Inc., as its financial advisor, nunc pro tunc to April 6, 2005. Navigant Consulting will: a) advise and offer direction to the Debtor's senior management with respect to the management of the Debtor's operations; b) evaluate the Debtor's cash flow and liquidity and make recommendations to implement improvements; c) assist senior management in determining and implementing appropriate staffing levels; d) assist the Debtor in evaluating current management, reporting and governance procedures and develop recommendations for appropriate alterations; e) assist the Debtor in developing and executing negotiating strategies for dealing with senior debt holders, trade debt and any other parties-in-interest; f) advise and consult the Debtor in connection with its operations and financings as a debtor in possession and in connection with the preparation, approval and confirmation of any plan of reorganization that may be filed in this bankruptcy proceeding; and g) assist in such other matters as may be mutually agreed upon with the Debtor that are not duplicative of services provided by other professionals to the Debtor's case. Navigant Consulting is a specialized independent consulting firm providing litigation, financial, healthcare, energy and operational consulting services to government agencies and large companies facing the challenges of uncertainty, risk, distress and significant change. Arnold Kimmel and Phil Norris of Navigant Consulting will serve as lead consultants on the Debtor's chapter 11 case. The Debtor discloses that Navigant Consulting will charge: a) a flat monthly fee of $90,000 for the months of April and May 2005; b) the greater of (i) Navigant's actual billed hourly time up to a maximum amount of $90,000 or (ii) a flat monthly fee of $50,000 for the months of June and July 2005; c) the greater of (i) Navigant's actual billed hourly time up to a maximum amount of $90,000 or (ii) a flat monthly fee of $25,000 for the months of August and September 2005; The Debtor did not report the hourly rates Navigant Consulting will charge for this engagement. Navigant Consulting received a $75,000 retainer prior to the Debtor's bankruptcy filing on April 6, 2005; $52,198 of the retainer was used to cover fees and expenses incurred from March 29, 2005, up to the petition date. To the best of the Debtor's knowledge, Navigant Consulting is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Headquartered in Houston, Texas, Doctors Hospital 1997 LP, dba Doctors Hospital Parkway-Tidwell, operates a 101-bed hospital located in Tidwell, Houston, and a 152-bed hospital located in West Parker Road, Houston. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. S.D. Tex. Case No. 05-35291). James M. Vaughn, Esq., at Porter & Hedges, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $41,643,252 and total debts of $66,306,939. ENRON CORP: Inks Separate Pacts Resolving Claims by Five Entities ----------------------------------------------------------------- Enron Corporation and its debtor-affiliates entered into separate stipulations resolving claims filed by five entities. Agder Energi In October 2002, Agder Energi Produksjon AS filed Claim No. 8129 for mistakenly-transferred NOK4,705,056 to Enron Capital & Trade Resources International Corp. in connection with their electricity swap transactions. Agder alleges that the Transactions were terminated by mutual agreement and, due to the postpetition timing of the transfer, that the funds should be returned to Agder in full. In March 2004, Agder filed Claim No. 24691 for NOK4,746,571, or $687,928, amending Claim No. 8129. The Debtors and Agder stipulate that: a. Claim No. 24691 will be allowed against ECTRIC: -- as an administrative expense claim for $526,087, and -- as a Class 42 General Unsecured Claim for $4,304; and b. Claim No. 8129 will be disallowed. HoustonStreet HoustonStreet Exchange, Inc., and Enron Net Works, LLC, entered into a Price Posting Agreement dated December 4, 2000. HSE filed Claim No. 7221 on account of ENW's termination of the Agreement. Pursuant to a Court-approved stipulation, the parties agree that the claim will be allowed for $600,000, in full and final satisfaction of all claims related to the Agreement. Citation Oil Citation Oil & Gas Corp. filed three proofs of claim for over $150,000 against either Enron Corp. or Enron North America. In a stipulation, the Debtors and Citation agree that Claim No. 2459 will be allowed for $50,000 as a Convenience Class claim against ENA. The remaining claims are expunged. Entergy Services Entergy Services, Inc., was a party to separate Interconnection Study Letter agreements with two wholly owned indirect subsidiaries of Enron Corp.: -- Calcasieu Development Company, LLC, and -- St. Charles Development Company, LLC. The Agreements, which required Entergy to perform and prepare various studies in exchange for various payments, were entered into prior to the Subsidiaries' May 16, 2003 Petition Date. On September 17, 2002, Entergy sued the Subsidiaries in the Civil District Court for the Parish of Orleans in the State of Louisiana, for their failure to pay $141,894 and $132,354, under the Letter Agreements. Entergy also filed Claim No. 23252 against Calcasieu and Claim No. 24638 against St. Charles for the same amounts alleged in the lawsuit. In a Stipulation approved by Judge Gonzalez, the parties agree that the Claims will be allowed as general unsecured claims, contingent on the release of all claims that Entergy may have in connection with the Letter Agreements and the dismissal of the lawsuits. State of Texas On October 11, 2002, the Employees Retirement System of Texas filed Claim No. 12242 for $23,249,520 and Claim No. 12243 for $4,546,834, each asserting a general unsecured classification. On October 15, 2002, the Teachers Retirement System of Texas filed Claim No. 15450 for $23,359,960 and Claim No. 15451 for $15,182,794. The Debtors objected to the Claims. In a Court-approved stipulation, the Debtors, the Texas Employees Retirement and the Teachers Retirement agree that: a. the Claims were filed to quantify alleged damages arising from the purchase of sale of securities; and b. the Claims will be reclassified and subordinated under Section 510(b) of the Bankruptcy Code. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 143; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Judge Werlein Sentences Ex-Enron Officer & 2 Bankers ---------------------------------------------------------------- The Hon. Ewing Werlein, Jr., of the U.S. District Court for the Southern District of Texas sentenced former Enron Corp. executive Dan O. Boyle, along with two other former officers of Merrill Lynch & Co., Inc., for their participation in a bogus sale to Merrill Lynch of Enron's power barges moored on the coast of Nigeria. That transaction enabled Enron to disguise a loan as a sale on its books. Mr. Boyle, the lead Enron employee then assigned to effectuate the Nigerian Barge transaction, is sentenced to three years and 10 months in prison. Ex-Merrill Lynch bankers Robert Furst and William Fuhs each got three years and one month jail time. Judge Werlein also orders Mr. Boyle to pay $320,00 in fines and restitution. Messrs. Furst and Fuhs are directed to pay $665,000 each. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 143; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON: Citigroup Agrees to Settle Class Action Suit for $2 Billion ------------------------------------------------------------------ Citigroup agreed to a settlement in the Enron class action litigation Newby, et al. v. Enron Corp., et al., currently pending in the United States District Court for the Southern District of Texas, Houston Division. Under the terms of the settlement, Citigroup will make a pre-tax payment of $2.0 billion to the settlement class, which consists of all purchasers of all publicly traded equity and debt securities issued by Enron and Enron-related entities between September 9, 1997 and December 2, 2001. The settlement is fully covered by Citigroup's existing litigation reserves. The company does not plan to adjust its remaining reserves, which it considers adequate to meet all of the company's remaining exposure to the additional pending Enron and research-related cases. The company continues to evaluate its reserves on an ongoing basis. "We have an ambitious agenda for Citigroup's future growth as we continue toward our goal to be the most respected global financial services company," Charles Prince, Chief Executive Officer of Citigroup, said. "It is a key priority for Citigroup to resolve major cases like this one and to put a difficult chapter in our history behind us. By doing so, we will be better positioned to realize our goals. We acknowledge and appreciate the determined and professional efforts of the Regents of the University of California and its advisors in working with us to achieve a settlement that meets the goals of all parties." The class action settlement must be approved by the Board of Regents of the University of California, the lead plaintiff in the case, and the Board of Directors of Citigroup. It is also subject to the approval of the United States District Court for the Southern District of Texas. The settlement amount includes plaintiffs' attorneys' fees, which will be determined by the Court at a later date. The settlement provides that Citigroup denies committing any violation of law and has agreed to the settlement solely to eliminate the uncertainties, burden and expense of further protracted litigation. Citigroup's payment is the largest settlement so far in the Enron case, more than four times the combined $491.5 million already received from settlements with Lehman Brothers Holdings Inc., Bank of America Corp., Andersen Worldwide, and former Enron officials, The Wall Street Journal relates. Remaining defendants in the investors' lawsuit include the financial institutions of: -- J.P. Morgan Chase, -- Merrill Lynch, -- Credit Suisse First Boston, -- Canadian Imperial Bank of Commerce, -- Barclays Bank, -- Deutsche Bank, -- Toronto-Dominion Bank, -- Royal Bank of Canada, and the -- Royal Bank of Scotland, all alleged to be key players in a series of fraudulent transactions that ultimately cost Enron investors tens of billions of dollars, and Goldman Sachs, which is named because of its role as an underwriter of Enron securities. Certain of these banks allegedly set up false investments in clandestinely controlled Enron partnerships, used offshore companies to disguise loans and facilitated phony sales of phantom Enron assets. As a result, Enron executives were able to deceive investors by reporting increased cash flow from operations and by moving billions of dollars of debt off Enron's balance sheet, thereby artificially inflating securities prices. Other remaining defendants include former officers of Enron, its accountants, Arthur Andersen, and certain law firms. About Citigroup Citigroup -- http://www.citigroup.com/-- the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, insurance, securities brokerage, and asset management. Major brand names under Citigroup's trademark red umbrella include Citibank, CitiFinancial, Primerica, Smith Barney, Banamex, and Travelers Life and Annuity. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. EXIDE TECH: Lead Claimants Want Allocation Procedure Streamlined ---------------------------------------------------------------- As previously reported, the U.S. Bankruptcy Court for the District of Delaware approved procedures for allocating funds under a trust established pursuant to the global settlement between Exide Technologies and its debtor-affiliates and Antoine Dodd and 108 other lead claimants. The Court also appointed James Watson as Special Referee and A.G. Edwards & Company as Trustee for the Dodd Claimants Trust. The Allocation Procedures require the Special Referee, upon conclusion of an investigation, to: a. submit a preliminary written report which would include his plan and reasoning for the proposed individual distributions of Fund assets; b. mail the Preliminary Report to each of the Lead Claimants and their attorneys, who would have 30 days to file any written objections to the proposed distribution; and c. respond in writing to all written objections within 15 days of the close of the 30-day objection period. The Special Referee has full authority to contract all objectors to make all reasonable attempts to resolve any objections. The Special Referee's completion of work to the point of submitting a Final Report was scheduled to occur no later than October 18, 2004. However, due to an objection and other delays, the Court entered the order approving the Allocation Procedures not until December 12, 2004, making the deadline obsolete. Notwithstanding, the Allocation Procedures allow for the deadline to file a Final Report to be extended upon Court approval. In this regard, the Lead Claimants ask the Court to extend the deadline for the filing of the Final Report by the Special Referee. Steven K. Kortanek, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, in Wilmington, Delaware, assures the Court that the Special Referee has acted diligently in carrying out his duties. However, the Special Referee and related parties need additional time to complete the Allocation Procedures. The Lead Claimants also ask the Court to modify the compensation procedures for the Special Referee, to streamline the process by implementing a "negative notice" procedure. Mr. Kortanek relates that the Lead Claimants want to streamline the process by dispensing with the requirement of Court approval, unless an objection is filed to the Special Referee's filed fee statements. The Lead Claimants propose to implement these procedures: a. No sooner than the 20th day of each month, the Special Referee will file with the Court a notice attaching a billing statement for fees and expenses incurred during the preceding months, the date those services were performed and the amount of time spent for each service, as well as the expenses incurred and the date on which they were incurred; b. The Special Referee will serve the Fee Notice on the United Sates Trustee; and c. Parties will have 10 days from the date of filing of the Fee Notice in which to file an objection with the Court. If an objection is filed, the Special Referee will seek a hearing date at which the Court will hear the objections. If no objections are filed within the 10-day period then the Referee will file a certificate of no objection, whereupon the Trustee of the Lead Claimants Trust will be authorized and directed to pay the Referee's fees and expenses. The Lead Claimants believe that the proposed procedure will be more efficient than filing formal fee applications, and is more in keeping with the structure of the allocation procedures. Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on May 23, 2005, Moody's Investors Service placed the ratings for Exide Technologies, Inc. and its foreign subsidiary Exide Global Holdings Netherlands CV on review for possible downgrade. Management announced that a preliminary evaluation of Exide's results for the fourth quarter ended March 2005 strongly indicates that the company will be in violation of its consolidated adjusted EBITDA and leverage ratios as of fiscal year end. Moody's considers this is a significant event, given that these covenants were all very recently reset during February 2005 in connection with Exide's partial refinancing of its balance sheet. The company has initiated amendment negotiations with its lenders, but will not have access to any portion of the $69 million of unused availability under its revolving credit facility until the amendment process is completed. Exide had approximately $76.7 million of cash on hand as of the March 31, 2005 fiscal year end reporting date. However, this amount had declined to about $42 million as of May 17, 2005 due to the company's use of cash to fund seasonally high first quarter working capital needs, as well as approximately $8 million in pension contributions and a required $12 million payment related to a hedge Exide has in effect. These ratings were placed on review for possible downgrade: -- Caa1 rating for Exide Technologies' $290 million of proposed unguaranteed senior unsecured notes due March 2013; -- B1 ratings for approximately $265 million of remaining guaranteed senior secured credit facilities for Exide Technologies and Exide Global Holdings Netherlands CV, consisting of: * $100 million multi-currency Exide Technologies, Inc. shared US and foreign bank revolving credit facility due May 2009; * $89.5 million remaining term loan due May 2010 at Exide Technologies, Inc.; * $89.5 million remaining term loan due May 2010 at Exide Global Holdings Netherlands CV.; * Euro 67.5 million remaining term loan due May 2010 at Exide Global Holdings Netherlands CV.; -- B2 senior implied rating for Exide Technologies, Inc.; -- Caa1 senior unsecured issuer rating for Exide Technologies, Inc. As reported in the Troubled Company Reporter on May 19, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'B-' from 'B+', and placed the rating on CreditWatch with negative implications. The rating action follows Exide's announcement that it likely violated bank financial covenants for the fiscal year ended March 31, 2005. Lawrenceville, New Jersey-based Exide, a manufacturer of automotive and industrial batteries, has total debt of about $750 million. The covenant violations would be a result of lower-than-expected earnings. Exide estimates that its adjusted EBITDA for the fiscal year ended March 31, 2005, will be only $100 million to $107 million, which is substantially below the company's forecast and 40% below the previous year. The EBITDA shortfall stemmed from high lead costs, low overhead absorption due to an inventory reduction initiative, other inventory valuation adjustments, and costs associated with accounting compliance under the Sarbanes- Oxley Act. Exide is working with its bank lenders to secure amendments to its covenants. "The company continues to be challenged by the dramatic rise in the cost of lead, a key component in battery production that now makes up about one-third of Exide's cost of sales," said Standard & Poor's credit analyst Martin King. FASTENTECH INC: S&P Rates Amended $175MM Credit Facility at BB- --------------------------------------------------------------- Standard & Poor's Ratings Services revised its ratings outlook on FastenTech Inc., a global manufacturer and marketer of highly engineered specialty fasteners, to negative from stable. The outlook revision reflects FastenTech's more aggressive financial policy, specifically the significant increase in its number of debt-financed acquisitions. All the other ratings on FastenTech are affirmed. Standard & Poor's also assigned its 'BB-' senior secured bank loan rating to FastenTech's amended and restated $175 million credit facility due May 2010 and assigned a recovery rating of '1', indicating high expectation of full recovery of principal in the event of a payment default. "The ratings on Minneapolis Minnesota.-based FastenTech reflect its weak business position serving competitive and cyclical industrial markets and its aggressive financial profile," said Standard & Poor's credit analyst John R. Sico. The company holds leading market positions in the niche segment of specialty fasteners and it has a diverse array of customers and end markets, though there is some concentration within these. The company is closely held by Citigroup Venture Capital and company management. It carries established brands in various end markets with No. 1 or No. 2 positions and holds about 250 U.S. and foreign patents. The company's products account for only a small portion of customers' total cost, yet fasteners are a critical component of the end users' product quality. The company operates in highly cyclical and competitive markets, supplying components for automobiles; light, medium, and heavy- duty trucks; industrial applications; power generation equipment; construction equipment; and military applications. Because of FastenTech's customer concentration, its top eight customers account for about 57% of sales, while the largest accounts for 14%. The company expects to achieve growth through new product innovation and marketing. FastenTech's operating margins are good at about 17%, though this figure is down from about 20% because of lower margins on acquired businesses and higher sales of lower margined products. Although the recent upturn in industrial markets has contributed to improved sales and operating income, higher raw material and labor costs have eroded margins. Steel prices have stabilized somewhat, and the company expects to pass through most additional costs, if any, to customers. As for labor costs, FastenTech has agreements with unions that cover half of its workforce. Some of these are due to expire in 2005, but the company does not currently expect labor negotiations to be a problem. FEDERAL-MOGUL: Wants Cost Consultant to Follow-Up on 12 Facilities ------------------------------------------------------------------ A.T. Kearney, Inc., has provided Federal-Mogul Corporation and its debtor-affiliates with consulting services in two phases. Phase I was performed in 2003 at the Court's direction and free of charge to the Debtors. In Phase II, the Debtors sought and obtained permission from the Bankruptcy Court to employ A.T. Kearney to provide cost-saving initiatives to the Debtors' other manufacturing facilities through Waves I, II, III and IV. A.T. Kearney's services in Phase II were no longer for free. Specifically, A.T. Kearney introduced cost savings initiatives at 52 plants through Waves I, II and III. In Wave IV, A.T. Kearney implemented follow-up procedures to some of the plants in Waves I, II and III. The Debtors and the Official Committee of Unsecured Creditors ask the Court to allow A.T. Kearney to implement follow-up procedures at 12 of the Debtors' facilities, in which an Operating Asset Effectiveness initiative has already been implemented. Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., in Wilmington, Delaware, relates that A.T. Kearney will provide services that are identical to the follow-up services it performed in Wave IV. Of the 70 plants in Waves I, II, III and IV, nine will require additional follow-up support. The remaining three are plants in Wave V that the Debtors expect will need additional follow-up support. The Debtors will also be implementing Wave V of the OAE rollouts and instituting OAE at a number of additional plants, Ms. MacFarland says. Operating Asset Effectiveness Methodology The OAE methodology involves identifying inefficiencies, determining the root cause of the problems resulting in inefficiencies, and identifying solutions to resolve those problems. The "achieve and sustain" follow-up for 12 identified plants in Waves I, II, III, IV and V is designed to maximize the likelihood that the plants will realize the identified savings opportunities and sustain the improved processes without the need for further outside support. The 12 plants represent 15% of the plants that have undergone or will undergo OAE implementation in Waves I, II, III, IV and V. Ms. McFarland says there are three main causes for the risk that the plants will not realize the complete cost savings possible: (1) Implementation of the rollouts was very rapid, with only a 12-week learning cycle; (2) Many of the processes introduced were completely new to the Plants; and (3) Because the Debtors' management has experienced some natural turnover, many of the personnel at the facilities have changed roles or been replaced since the start of the rollout. A.T. Kearney estimated that the "achieve and sustain" follow-up for the targeted plants will last 12 weeks. A.T. Kearney has classified the necessary support level of each plant as either highest or high. The four highest-risk plants will have two full-time external resource teams, each consisting of two A.T. Kearney employees, dedicated to the four plants. The eight high-risk plants will have two full-time external resource teams, consisting of either two or three A.T. Kearney employees, dedicated to the eight plants. The achieve and sustain support follow-up will address three main areas: (1) The follow-up will focus on process compliance by visiting the plants' steering committee meetings and ensuring through process checklists that the critical elements of the process improvement are followed; (2) The extent to which the plant improvement plans have been successful will be evaluated and the plant improvement plans will be modified to address any gaps in performance; and (3) Potential for new savings will be identified. The ultimate goal of the risk reduction follow-up is to ensure that the process is sustained without the need for ongoing external resources. Fees and Expenses A.T. Kearney's fees will be calculated on an hourly basis using actual hours worked and a specified rate structure for A.T. Kearney personnel having varying levels of experience. A.T. Kearney's consulting fees and expenses will be capped at $2,500,000 for the period of "achieve and sustain" follow-up. The first two invoices will be paid $1,000,000 at $500,000 each, to be paid within 60 days from the date of invoice. The last invoice will be adjusted from $500,000 to reconcile for the actual hours billed as well as expenses. The plants contemplated in the "achieve and sustain" follow-ups are those owned by the U.S. Debtors, Non-Debtor Affiliates and by the English Debtors. Each of the applicable U.S. Debtors, English Debtors and Non-Debtor Affiliates will reimburse Federal-Mogul Corporation for the pro-rata costs of any A.T. Kearney services rendered at their plants to the extent Federal- Mogul directly pays A.T. Kearney's fees and expenses. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a US$2.048 billion stockholders' deficit, compared to a US$1.926 billion deficit at Dec. 31, 2004. (Federal-Mogul Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOUR DIPS: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Four Dips, Inc. 2190 Oil Well Road Glasgow, Kentucky 42141 Bankruptcy Case No.: 05-11135 Chapter 11 Petition Date: June 10, 2005 Court: Western District of Kentucky (Bowling Green) Debtor's Counsel: Scott A. Bachert, Esq. 324 East 10th Street P.O. Box 1270 Bowling Green, Kentucky 42102 Tel: (270) 782-3938 Estimated Assets: Unknown Estimated Debts: $500,000 to $1 Million Debtor's 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Purity Dairies, Inc. $10,155 MSC # 410600 P.O. Box 415000 Nashville, TN 37241-5000 Trauth Dairy $7,842 P.O. Box 714809 Columbus, OH 43271-4809 CIT Technology Financial Services, Inc. $3,816 P.O. Box 550599 Jacksonville, FL 32255-0599 Hillcrest Credit Agency $448 P.O. Box 2220 Bowling Green, KY 42102-2220 AllTex Refrigeration & Coffee, Ltd $331 1918 Taft Street Houston, TX 77006 Superior Uniform Group, Inc. $162 Fashion Seal Uniforms P.O. Box 932058 Atlanta, GA 31193-2058 GARDEN STATE: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Garden State MRI Corporation dba Eastlantic Diagnostic Institute 1470 South Main Road Twin Plaza, Building 2 Vineland, New Jersey 08360 Bankruptcy Case No.: 05-29214 Type of Business: The Debtor operates an out-patient imaging and radiology facility in New Jersey. Garden State MRI Corporation offers anthrography, dexa scan, mammogram, CT scan, intravenous pyelogram, magnetic resonance imaging, nuclear medicine, pediatric voiding cystourethrogram, radiography, ultrasound, and X-ray services. See http://www.eastlanticdiagnostic.com/ Chapter 11 Petition Date: June 9, 2005 Court: District of New Jersey (Camden) Judge: Gloria M. Burns Debtor's Counsel: Arthur J. Abramowitz, Esq. Cozen O'Connor Libertyview Building, Suite 300 457 Haddonfield Road Cherry Hill, New Jersey 08002 Tel: (856) 910-5000 Estimated Assets: $0 to $50,000 Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Toshiba $191,816 P.O. Box 91605 Chicago, IL 60693 Miller Alfano & Raspanti, PC $138,177 1818 Market Street, Suite 3402 Philadelphia, PA 19103 Siemens Medical Solutions $41,950 P.O. Box 7777 W3580 Philadelphia, PA 19175 Verizon Superpages Super Pages/ $29,465 P.O. Box 64809 Advertising Baltimore, MD 21264-4809 Jefferson Medical & $25,263 Imaging, Inc. 5470 Berskhire Valley Road P.O. Box 254 Oak Ridge, NJ 07438 AETNA $24,796 P.O. Box 88874 Chicago, IL 60695-1874 Lindgren RF Enclosures, Inc. $18,916 400 High Grove Boulevard Glendale Heights, IL 60139 Instar Systems $16,924 128 South Tejon Street, Suite 300 Colorado Springs, CO 80903 Oni Medical Systems, Inc. $15,008 301 Ballardvale Street, Suite 4 Wilmington, MA 01887-4405 MXR-Baldwin $11,738 P.O. Box 489 Hatboro, PA 19040-0489 Hospira Worldwide $11,600 75 Remittance, Suite 6136 Chicago, IL 60675-6136 GE Healthcare $11,150 P.O. Box 640200 Pittsburgh, PA 15264-0200 Verizon Telephone/Fax Service $11,087 P.O. Box 4833 Acct #s: 856 459 Trenton, NJ 08650-4833 3828 005 41Y; 856 690 0300 400 94Y; 856 691 0560 954 91Y; Yellow Book-NJ $11,015 398 EAB Plaza Uniondale, NY 11556-0398 Cashan & Company $9,602 One White Horse Center P.O. Box 436 Hammonton, NJ 08037-0436 Rosenberg, Mincer, Gold & $8,220 Benvenuti 2330 New Road Northfield, NJ 08225 Sourceone Healthcare $8,157 Technologies P.O. Box 403209 Atlanta, GA 30384-3209 Kulzer & Dipadova $6,922 76 East Euclid Avenue Haddonfield, NJ 08033 The Daily Journal $6,423 P.O. Box 5100 Cherry Hill, NJ 08034 Atlantic Telecom $5,654 215 Sherwood Drive Egg Harbor Township, NJ 08234 HAYES LEMMERZ: SEC to File Civil Enforcement Action --------------------------------------------------- On February 19, 2002, Hayes Lemmerz International Inc., restated its consolidated financial statements for: a. the fiscal years ended January 31, 2001 and 2000, and related quarterly periods; and b. the fiscal quarter ended April 30, 2001. The restatement was the result of Hayes' failure to properly apply certain accounting standards generally accepted in the United States, and because certain accounting errors and irregularities in the Hayes' financial statements were identified. The SEC has been conducting an investigation into the facts and circumstances giving rise to the restatements. Hayes has been cooperating with the SEC in connection with the investigation. On June 8, 2005, Hayes received a "Wells Notice" from the staff of the SEC in connection with the investigation. Under the SEC's procedures, a Wells Notice indicates that the SEC staff has made a preliminary decision to recommend that the regulatory commission bring a civil enforcement action against the recipient of the notice. The Wells Notice received by Hayes indicates that the staff intends to recommend that the Commission bring an enforcement action against the Company alleging certain violations, including violations of: -- Section 17(a) of the Securities Act of 1933; and -- Sections 10(b), 13(a) and 13(b)(2)(A) and (B) of the Securities Exchange Act of 1934 and related rules thereunder. Section 10(b) and Rule 10b-5 contain the basic antifraud provisions of the federal securities laws. Sections 13(a) and 13(b)(2)(A) and (B) and Rules 12b-20 contain certain of the obligations of public companies to file periodic and other reports with the SEC and, in connection therewith, to maintain accurate financial books and records and appropriate internal accounting controls. The SEC staff advised Hayes that the Commission currently does not intend to recommend the imposition of any monetary penalties or fines in connection with any civil enforcement action related to the restatements. James A. Yost, Hayes' vice president for finance and chief financial officer, relates that Hayes had the opportunity to respond to the SEC staff before the staff makes its formal recommendation on whether the SEC should bring any action. Hayes held discussions with the SEC staff regarding the Wells Notice and is continuing to cooperate fully with the staff to bring the matter to an appropriate and timely resolution, Mr. Yost says. Mr. Yost notes that notwithstanding the advise from SEC, there can be no assurance that the Commission will not ultimately seek to impose monetary penalties or fines or take other corrective actions against the Company that could have a significant negative impact on the Company's financial condition. Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Del. Case No. 01-11490) and emerged in June 2003. Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meager & Flom represent the Debtors. (Hayes Lemmerz Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on April 11, 2005, Moody's Investors Service assigned a B2 rating for HLI Operating Company, Inc.'s proposed $150 million guaranteed senior secured second-lien term loan facility. HLI Opco is an indirect subsidiary of Hayes Lemmerz International, Inc. The rating outlook remains stable. While the company has reaffirmed its earning guidance and the senior implied and guaranteed senior secured first-lien facility ratings remain unchanged at B1, Moody's determined that widening of the downward notching of HLI Opco's guaranteed senior unsecured notes was necessary to reflect additional layering of the company's debt. The senior unsecured notes are effectively subordinated to the proposed new senior secured second-lien term facility, and approximately $75 million of higher-priority debt will be added to the capital structure. These specific rating actions were taken by Moody's: * Assignment of a B2 rating for HLI Operating Company, Inc.'s proposed $150 million guaranteed senior secured second-lien credit term loan C due June 2010; * Downgrade to B3, from B2, of the rating for HLI Operating Company, Inc.'s $162.5 million remaining balance of 10.5% guaranteed senior unsecured notes maturing June 2010 (the original issue amount of $250 million was reduced as a result of an equity clawback executed in conjunction with Hayes Lemmerz's February 2004 initial public equity offering); * Affirmation of the B1 ratings for HLI Operating Company, Inc.'s approximately $527 million of remaining guaranteed senior secured first-lien credit facilities, consisting of: * $100 million revolving credit facility due June 2008; * $450 million ($427.3 million remaining) bank term loan B facility due June 2009 (which term loan is still expected to be partially prepaid through application of about half of the net proceeds of the proposed incremental debt issuance); * Affirmation of the B1 senior implied rating; * Downgrade to Caa1, from B3, of the senior unsecured issuer rating (which rating does not presume the existence of subsidiary guarantees). HAYES LEMMERZ: Sued by Ex-Directors to Recover Class Action Costs ----------------------------------------------------------------- Pursuant to its Plan of Reorganization, Hayes Lemmerz International, Inc., purchased directors and officers liability insurance to cover then-current and former directors and officers. The Company also agreed to indemnify certain of its former directors against certain liabilities, up to an aggregate of $10 million in excess of the D&O liability insurance coverage to or for the benefit of the indemnitees. In a recent 10-Q filing with the Securities and Exchange Commission, Hayes reports that on June 3, 2005, certain former directors filed a lawsuit before the Court of Chancery in Delaware against the Company. The Directors seek to recover the $7.2 million the directors agreed to pay to settle a class action. Hayes' vice president for finance and chief financial officer, James A. Yost, explains that a group of purported purchasers of certain Senior Notes and Senior Subordinated Notes issued by the Company commenced a putative class action lawsuit in 2002 against 13 former directors and officers and KPMG LLP, Hayes' independent registered public accounting firm, in the U.S. District Court for the Eastern District of Michigan. The Complaint, captioned Pacholder High Yield Fund, Inc., et al. v. Ranko Cucuz, et al., seeks damages for an alleged class of persons who purchased Hayes bonds between June 3, 1999, and September 5, 2001, and claim to have been injured because they relied on the Company's allegedly materially false and misleading financial statements. The Class Action was amended on June 27, 2002, to add CIBC World Markets Corp. and Credit Suisse First Boston Corporation, underwriters for certain bonds issued by the Company, as defendants. CIBC World Markets and CSFB were subsequently dismissed from the action. Mr. Yost says the claims in the Class Action were not discharged upon the effectiveness of Hayes' Plan of Reorganization because they were not against the Company. Hayes' directors include: Ranko Cucuz, William Shovers, D.N. Vermilya, David Ying, Anthony Grillo, Paul Levy, Jeffrey Lightcap, Cleveland Christophe, Andrew Heyer, Horst Kukwa- Lemmerz, Wienand Meilicke, John Rodewig, and Ray Witt. Mr. Yost relates that the Michigan court preliminarily approved the settlement on May 10, 2005. The Michigan Court has scheduled a fairness hearing on the proposed settlement for July 20, 2005. Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Del. Case No. 01-11490) and emerged in June 2003. Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meager & Flom represent the Debtors. (Hayes Lemmerz Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on April 11, 2005, Moody's Investors Service assigned a B2 rating for HLI Operating Company, Inc.'s proposed $150 million guaranteed senior secured second-lien term loan facility. HLI Opco is an indirect subsidiary of Hayes Lemmerz International, Inc. The rating outlook remains stable. While the company has reaffirmed its earning guidance and the senior implied and guaranteed senior secured first-lien facility ratings remain unchanged at B1, Moody's determined that widening of the downward notching of HLI Opco's guaranteed senior unsecured notes was necessary to reflect additional layering of the company's debt. The senior unsecured notes are effectively subordinated to the proposed new senior secured second-lien term facility, and approximately $75 million of higher-priority debt will be added to the capital structure. These specific rating actions were taken by Moody's: * Assignment of a B2 rating for HLI Operating Company, Inc.'s proposed $150 million guaranteed senior secured second-lien credit term loan C due June 2010; * Downgrade to B3, from B2, of the rating for HLI Operating Company, Inc.'s $162.5 million remaining balance of 10.5% guaranteed senior unsecured notes maturing June 2010 (the original issue amount of $250 million was reduced as a result of an equity clawback executed in conjunction with Hayes Lemmerz's February 2004 initial public equity offering); * Affirmation of the B1 ratings for HLI Operating Company, Inc.'s approximately $527 million of remaining guaranteed senior secured first-lien credit facilities, consisting of: * $100 million revolving credit facility due June 2008; * $450 million ($427.3 million remaining) bank term loan B facility due June 2009 (which term loan is still expected to be partially prepaid through application of about half of the net proceeds of the proposed incremental debt issuance); * Affirmation of the B1 senior implied rating; * Downgrade to Caa1, from B3, of the senior unsecured issuer rating (which rating does not presume the existence of subsidiary guarantees). HERCULES OFFSHORE: Moody's Rates Proposed $130M Term Loan at B2 --------------------------------------------------------------- Moody's Investors Service assigned a B2 senior implied rating to Hercules Offshore, LLC and a B2 rating to its proposed $130 million, 5-year senior secured Term Loan B. Moody's also assigned a B2 rating to Hercules' proposed $25 million, 3-year senior secured revolving credit facility. The outlook is stable. Proceeds from the transaction will be used to: * refinance existing debt financing ($101 million); * fund the acquisition of the Transocean Jupiter ($20 million); * provide cash for general corporate purposes ($4 million); and * to pay transaction fees and expenses ($5 million). Hercules, formed in July 2004, currently owns and operates a fleet of seven jack-up rigs and 39 liftboats (including one held for sale) in the shallow-water Gulf of Mexico. In August 2004, Hercules acquired five jack-up rigs from Parker Drilling Company for $39.3 million. This was followed by the acquisition of two additional jack-ups in January 2005 for $41.5 million. In October 2004, Hercules acquired a fleet of 22 liftboats from Global Industries for $53.5 million and, in June 2005, it acquired an additional 17 liftboats from Superior Energy Services for $20 million. Also, Hercules recently agreed to acquire the Transocean Jupiter jack-up rig for $20 million (not including an estimated $7 million expected to be spent on refurbishment) and is expected to close on the transaction in June or July 2005. Hercules' strategy is to fill a niche role in the shallow-water GOM markets that combines rigs with liftboats. The liftboat business, because it provides production and plugging and abandonment work, is generally more stable than the contract drilling business which is highly sensitive to changes in exploration and development budgets which, in turn, are driven by changes in and the outlook for oil and gas prices. For 2005, Hercules' jack-up business should generate about 75% of total EBITDA with liftboats accounting for the remaining 25%. The ratings are supported by: * strong current financial performance driven by strong up- cycle demand for its jack-up rigs and liftboats; * the relative stability of and diversification benefits provided by its liftboat business; * a seasoned management team, nearly all of which have many years of experience in the contract drilling and/or liftboat business; * strong market position and concentration in the shallow end of the GOM liftboat market which could provide Hercules with some pricing power; * unique features of certain of its jack-up rigs which should help keep them in demand during a downturn (e.g., one of its jack-up rigs can operate in only 9' of water); and * long-term relationships with key customers on several of its jack-up rigs. The ratings are constrained by: * lack of a proven track record as Hercules has only been in business less than one year; * volatility and cyclicality of the offshore contract drilling business generally and with respect to shallow-water jack-up rigs specifically; * the company's very small size and lack of geographic diversity; * the overall quality of its jack-up rig fleet is relatively low (e.g., 5 of its 7 jack-up rigs are mat-supported as opposed to the more versatile and consequently more valuable, independent-leg design jack-up rigs) which would negatively impact the value received in a potential sale should that become necessary; * only two of its jack-up rigs are capable of operating in international markets, limiting the possibility to diversify geographically in the future; and * the need to grow which will likely result in further acquisitions that could result in the company paying top-of- the-cycle prices. The secured facilities are not notched up from the senior implied rating because substantially all of Hercules' debt outstanding will consist of the Term Loan B and any borrowings under the revolver. All of the company's subsidiaries guarantee the facilities and they are secured by a first priority lien on substantially all of the assets of the company, including the jack-up rigs and liftboat fleets. In terms of collateral coverage, third-party appraisals indicate that the fair market value of the company's jack-ups and liftboats is approximately $266 million, which provides significant cover for the Term Loan B and the fully drawn revolver combined ($155 million total). Using the cost of the assets acquired, coverage is approximately 113%. Moody's believes that using Hercules' acquisition prices to compute collateral coverage is a reasonable approach considering that all of the transactions have taken place within the last year. Not included in either of these collateral estimates are accounts receivable and other net assets which approximate $25-$30 million. The credit agreement will require mandatory prepayments from proceeds of: * asset sales, * debt issuances, * 50% of excess cash flow (provided that leverage is in excess of certain amounts), and * 25% of equity issuances. Distributions, except income tax-related distributions to equity holders, are prohibited under the credit agreement. Hercules is considering making an initial public offering later this year and may seek to raise $75-100 million. If the IPO occurs and financial performance continues to be strong, Moody's estimates that the equity and excess cash flow sweeps could reduce the amount outstanding under the Term Loan B by $20-$30 mllion over the next 12 months. Hercules will be subject to two financial covenants including maximum Debt/EBITDA of 3.75x and minimum EBITDA/Interest coverage of 3.5x. Moody's estimates that Hercules should easily meet these covenants under current market conditions, but that they will tighten in a mid-cycle market. In event of a downturn, however, Hercules will likely be constrained by covenant levels, potentially limiting access to revolver liquidity absent a bank waiver. In the event of a downturn, during which Hercules will likely receive dayrates for its rigs that are significantly lower than current dayrates, Moody's estimates that Hercules would breakeven or produce a modest loss at the EBITDA level (after interest and depreciation charges, Hercules would post a significant loss). Even in mid-cycle operating conditions, the negative impact on EBITDA could result in a violation of its financial covenants, depending on debt levels at the time. The last severe downturn in the market for similar rigs occurred in 1999 and lasted for approximately a year or so, and dayrates for mat-supported jack-up rigs dropped to less than $15,000/day. The previous peak conditions for similar assets occurred in mid-2001 where dayrates averaged $40,000-$45,000/day. That period was followed by a period of softness lasting from early 2002 through summer 2004 in which market dayrates for similar assets hovered in the $20,000- $25,000 range. Beginning in the second half of last year, dayrates rose sharply in response to strongly increased demand and have been rising since then, currently averaging $40,000-$45,000/day and even higher for certain jack-up rigs. The near-term outlook for shallow-water jack-up rigs is strong, but visibility drops off after about six months. Hercules Offshore, LLC is headquartered in Houston, Texas. HOLLINGER INC: Ontario Court Removes Peter G. White as a Director ----------------------------------------------------------------- Mr. Justice Colin Campbell of the Ontario Superior Court of Justice ordered, on June 8, 2005, that Peter G. White be removed as a Director of Hollinger Inc. (TSX:HLG.C)(TSX:HLG.PR.B) effective immediately. The removal had been requested by the independent Directors of Hollinger. Hollinger's principal asset is its interest in Hollinger International Inc., which is a newspaper publisher, the assets of which include the Chicago Sun-Times, a large number of community newspapers in the Chicago area and a portfolio of news media investments. Hollinger also owns a portfolio of revenue-producing and other commercial real estate in Canada, including its head office building located at 10 Toronto Street, Toronto, Ontario. * * * Litigation Risks Hollinger, Inc., faces various court cases and investigations: (1) consolidated class action complaint filed in Chicago, Illinois; (2) class action lawsuit that was filed in the Saskatchewan Court of Queen's Bench on September 7, 2004; (3) US$425,000,000 fraud and damage suit filed in the State of Illinois by International; (4) lawsuit seeking enforcement of a November 15, 2003, restructuring proposal to uphold a Shareholders' Rights Plan, a declaration that corporate by-laws were invalid and to prevent the closing of a certain transaction. (5) lawsuit filed by International seeking injunctive relief for the return of documents of which it claims ownership; (6) US$5,000,000 damage action commenced by a lessor of an aircraft lease, in which Hollinger was the guarantor. (7) action commenced by the United States Securities and Exchange Commission on November 15, 2004, seeking injunctive, monetary and other equitable relief. (8) investigation by the enforcement division of the OSC. Court-Ordered Inspection On September 3, 2004, Mr. Justice Colin Campbell of the Ontario Superior Court of Justice ordered the appointment of an Inspector of the affairs of Hollinger pursuant to section 229 of the CBCA upon the application of Catalyst Fund General Partner I Inc. The Order broadly requires an investigation into the affairs of Hollinger and, specifically, into related party transaction and non-competition payments for the period January 1, 1997 to the present. It is estimated that the Inspector's future costs will average $1,000,000 per month. The remaining duration of the Inspection is uncertain though it is presently anticipated to continue for at least an additional 4 months. Litigation Costs Hollinger has incurred legal expense in the defense of various actions brought against it and others in both the United States and Canada. Hollinger has in turn advanced a claim against its directors' and officers' liability insurers asserting that, under the terms and conditions of the policy of insurance, these insurers are required to indemnify Hollinger in respect of this legal expense incurred in connection with some of the actions brought against Hollinger. The claims made total approximately $3,700,000. However, the actual amount of recovery is not determinable at the present time. Default As reported in the Troubled Company Reporter on Apr. 25, 2005, Hollinger is in default under the terms of the indentures governing Hollinger's US$78 million principal amount of 11.875% Senior Secured Notes due 2011 and US$15 million 11.875% Second Priority Secured Notes due 2011 due to Ontario Superior Court of Justice's appointment of RSM Richter Inc. as receiver of all of The Ravelston Corporation Limited's and Ravelston Management Inc.'s assets (except for certain shares held directly or indirectly by them, including shares of Hollinger Inc. and RMI). INDUSTRIAL ENTERPRISES: Buys 100% Interest in Unifide for $3.75MM ----------------------------------------------------------------- Industrial Enterprises of America, Inc. (Pink Sheets: ILNP) -- fka Advanced Bio/Chem, Inc. -- acquired 100% ownership of Unifide Industries LLC, a leading marketer and seller of automotive chemicals and additives, for a total compensation of approximately $3.75 million in a combination of cash, notes and stock. As a result of the acquisition, Unifide Industries will become a wholly owned subsidiary of Industrial Enterprises of America. Unifide Industries, a historically profitable company, has been in operations for over six years and generates revenue that will triple the size of ILNP's existing operations. Unifide Industries markets and manufactures specialty automotive products under proprietary trade names such as TMP (Taylor Made Products), Nu- Energy and Tradco/Phoenix, as well as private labels. The acquisition of Unifide Industries brings an experienced marketing and sales force to ILNP's core packaging business and is expected to provide cross-selling opportunities between the Company's proprietary brands. Crawford Shaw, Chief Executive Officer of ILNP, stated, "With the acquisition of Unifide Industries, ILNP is establishing a strong presence in the increasingly lucrative automotive aftermarket sector. We plan to begin manufacturing select product lines that are currently being outsourced by Unifide, that include large volumes of R134a and R152a - 'The Other Gas', thus greatly increasing product margins and the efficiency of our current Lakewood facilities. Additionally, we believe that this acquisition puts us on pace to generate well over $35 million in annual revenues. We will continue to pursue strategic acquisitions that will contribute to our long term profitability and success." About the Company Industrial Enterprises of America, Inc., is a leading converter of a manageable multifunctional gas commodity that is applied to a number of refrigerant and propellant products that are used throughout various industries including: automotive, computer electronics, and medical applications. ILNP refers to the ticker symbol of Industrial Enterprises of America, Inc. on the Pink Sheets. ILNP is a Nevada corporation, headquartered in Houston, Texas. ILNP packages, markets and sells refrigerants through its wholly owned subsidiary. Following its latest acquisition, the Company will be a leading supplier of automotive chemicals. Its products serve a variety of industries and its current clients include a number of Fortune 500 companies. Going Concern Doubt In its Form 10-Q for the quarterly period ended March 31, 2005, the Company has suffered recurring losses from operations and its total liabilities exceed its total assets. This raises substantial doubt about the Company's ability to continue as a going concern. At March 31, 2005, Industrial Enterprises' total liabilities exceed its total assets by $1,681,900. INGLE'S NOOK: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Ingle's Nook, Inc. 12300 Jefferson Avenue, # 423 Newport News, Virginia 23602 Bankruptcy Case No.: 05-51515 Type of Business: The Debtor operates a gift shop selling collectible items. See http://www.inglesnook.com/ The Debtor previously filed for chapter 11 protection on May 16, 2005 (Bankr. E.D. Va. Case No. 05-51339). Chapter 11 Petition Date: June 9, 2005 Court: Eastern District of Virginia (Newport News) Judge: Stephen C. St. John Debtor's Counsel: Joseph T. Liberatore, Esq. Marcus, Santoro & Kozak, P. C. 1435 Crossways Boulevard, Suite 300 Chesapeake, Virginia 23320 Tel: (757) 222-2224 Fax: (757) 333-3390 Estimated Assets: $1 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ John I. Martin Loan to corporation $500,000 P.O. Box 1765 Yorktown, VA 23692 Dulles Center, LLC Rent Disputed $233,617 c/o Lerner Corporation 11501 Huff Court Kensington, MD 208951094 Macerich SCG Ltd. Rent $220,628 Partnership 401 Wiltshire Boulevard, Suite 700 Santa Monica, CA 90401 Simon Property Group Rent $ 124,478 9888 Chesapeake Mall, LLC 115 West Washington Street Indianapolis, IN 46204 Department 56 Merchandise $115,876 6436 City West Parkway Eden Prairie, MN 55344 Janoff & Olshan, Inc. $103,197 654 Madison Avenue New York, NY 10021 Willitts Designs Int'l Merchandise $70,438 3818 Payshpere Circle Chicago, IL 60674 Internal Revenue Service Form 941, etc. $41,375 Insolvency Unit P.O. Box 10025 Richmond, VA 23240 Commonwealth of Virginia $40,766 Department of Taxation, Legal Unit P.O. Box 2156 Richmond, VA 23240 Lynnhaven Mall LLC Rent $32,740 701 Lynnhaven Parkway, Suite 1068 Virginia Beach, VA 23452 Ty, Inc. Merchandise $19,621 280 Chestnut Avenue Westmont, IL 60559 PR Financing LTD Rent $17,698 12300 Jefferson Avenue, #777 Newport News, VA 23602 Colonial Candle of Cape Cod Merchandise $5,957 1000 Dillard Avenue Forest, VA 24551 Spotsylvania Mall Rent $5,632 2445 Belmont Avenue Youngstown, OH 445040186 Comptroller of Maryland Taxes, interest & $4,244 Compliance Division penalties 301 West Preston Street, Room 401 Baltimore, MD 21201-2383 Credit Clearing House, Inc. $3,564 200 Business Park Drive Armonk, NY 105041712 Manual Woodworkers Merchandise $2,297 3737 Howard Gap Road Hendersonville, NC 28792 The Hartford Insurance $1,883 4401 Middle Statement Road New Hartford, NY 13413 The Local Book Merchandise $1,827 119 Naylor Mill Road, Suite 5 Salisbury, MD 21801 BFI Nat'l Account Merchandise $682 757 N Eldridge Parkway Houston, TX 770794527 INTERSTATE BAKERIES: Stay Modified to Allow $1.2M Claim Settlement ------------------------------------------------------------------ For several years, Lumbermens Mutual Casualty Company issued automobile liability coverage in favor of Interstate Brands Corporation. Lumbermens issued one of these policies for the term July 2002 to July 2003. In addition, Lumbermens and the Debtors entered into certain additional agreements, including but not limited to premium payment, deductible reimbursement, and collateral agreements. Broadspire Services, Inc., administered the claims made under the Policy. According to Neil L. Johnson, Esq., at Berkowitz Oliver Williams Shaw & Eisenbrandt, LLP, in Kansas City, Missouri, the Policy contained a Deductible Liability Endorsement in the amount of $1.5 million per claim. The endorsement requires Interstate to reimburse the insurer for the first $1.5 million of any claim made on the Policy. "The deductible was secured by letters of credit issued in favor of Lumbermens," Mr. Johnson says. "In the event that Lumbermens was required to make payment on account of claims against the Policy, which were settled within the $1.5 million deductible layer and for which Interstate did not reimburse Lumbermens, Lumbermens was entitled to draw down the letters of credit." Wetzel Personal Injury Litigation On February 8, 2003, Rose Wetzel was allegedly struck by an automobile driven by Steven Hauser, an employee of Interstate Brands. The accident occurred during the coverage period of the Policy. Soon after the accident, Ms. Wetzel sued Mr. Hauser and Interstate to recover for the injuries she suffered in the accident. The original amount demanded on Ms. Wetzel's behalf was $3,600,000. However, as a direct result of a mediation session to resolve Ms. Wetzel's personal injury claim, the parties settled the matter for $1.225 million. Before the Settlement could be consummated, the Debtors filed for bankruptcy. As a result, Interstate Brands never transferred the settlement funds to Broadspire for transmittal to Ms. Wetzel. Insurer Litigation On October 7, 2004, Ms. Wetzel filed a complaint against Lumbermens; Platinum Equity, LLC; Broadspire; National Loss Control Services Corporation; Robert Hurr, an employee of Broadspire; and Stewart & Irwin, counsel to Interstate with respect to the Personal Injury Litigation, in the Superior Court of Marion County, Indiana. Ms. Wetzel sought to recover the amounts due under the Wetzel Personal Injury Litigation settlement. The Insurer Litigation defendants, however, removed the action to the U.S. District Court for the Southern District of Indiana. The removal, Mr. Johnson says, was predicated on the arguments that (i) the insurance policy at issue was an asset of the bankruptcy estate, and within the Bankruptcy Court's exclusive jurisdiction and (ii) the prosecution of the Insurer Litigation implicated estate property, and was therefore violative of the automatic stay. On January 28, 2005, the District Court, at Ms. Wetzel's behest, remanded the Insurer Litigation back to the Indiana State Court, holding that there was no basis for the exercise of bankruptcy. Court-Approved Settlement In a stipulation approved by the Court, the Debtors, Lumbermens Mutual Casualty Company and Broadspire Services, Inc., agree that: (1) to the extent applicable, the automatic stay is modified to allow a $1.225 million settlement payment for Rose Wetzel's benefit; (2) the settlement payment is authorized, but not directed, to be made for Ms. Wetzel's benefit; (3) Lumbermens and Broadspire will be entitled to reimbursement from the applicable letters of credit or other collateral that they hold as security for their obligations as the Debtors' insurer; (4) the Debtors consent to Lumbermens and Broadspire's presentation of a sight draft against the L/Cs or other security for the $1.225 million draw; (5) in regard to any costs and fees related to the Wetzel Personal Injury Litigation, Lumbermens and Broadspire will not seek to recover those fees from any applicable security, including but not limited to those certain L/Cs, on or before June 24, 2005; and (6) Lumbermens and Broadspire will provide the Debtors, the Official Committee of Unsecured Creditors, the Official Committee of Equity Holders, and the Debtors' lenders or their agents with 14 days' notice of their intent to seek reimbursement for their fees from any applicable security. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) IPSCO INC: Moody's Upgrades Senior Implied Rating to Ba1 from Ba2 ----------------------------------------------------------------- Moody's Investors Service upgraded its senior implied rating for IPSCO Inc. to Ba1 from Ba2. The upgrade reflects IPSCO's strong financial performance, a cash balance greater than gross debt, and a favorable near-term outlook for its primary products, steel plate and energy tubulars. The rating outlook remains positive. These ratings were upgraded: * $200 million of 8.75% guaranteed senior unsecured notes due 2013 -- to Ba1 from Ba2; * senior implied rating -- to Ba1 from Ba2; and * senior unsecured issuer rating -- to Ba2 from Ba3. At March 31, 2005, IPSCO had debt of $407 million and a cash balance of $482 million. The book value of its shareholders' equity was $1.5 billion (Canadian GAAP) at March 31. Indicative of the strength of steel markets and its own operations, IPSCO's cash balance rose by $350 million over the previous 15 months, even as it spent over $240 million to retire debt and preferred stock and funded an approximately $168 million increase in working capital. While a large share repurchase program, by way of a normal course issuer bid, may consume some of its cash (up to $210 million at the current stock price), and another $72 million of debt was redeemed in the second quarter, Moody's does not expect the company to make significant acquisitions or undertake any large capital projects, and the cash balance may remain sizable. Given its reduced leverage, low cost operations, and favorable product mix, Moody's believes that IPSCO's higher ratings can be sustained even if overall steel prices and demand were to materially weaken. The North American plate market is fundamentally stronger than it was two years' ago and energy tubulars should continue to benefit from high energy prices and energy investments. Raw material surcharges had been helping offset the rising costs of steel scrap, but IPSCO's base prices have also increased. While scrap prices have declined in 2005, plate and energy tubular prices have thus far held up, unlike many other steel products. IPSCO's cost structure benefits from its: * modern steelmaking facilities, * production flexibility, * productive work force, and * modest legacy costs. It subscribes to a "steel short" strategy, meaning that it can produce more tons of finished steel than it can melt, which enables it to maintain efficient operating rates when demand is weak. When demand is strong, it purchases steel from third parties. IPSCO's Regina, Saskatchewan steel mill generally operates at a high capacity utilization rate, aided by its location and the pipe mills and downstream processing operations that use Regina's coil and discrete plate. By adjusting product mix to market opportunities, IPSCO is able to maintain high utilization rates and maximize profitability. Its two US mills are both operating well and at rated capacity. For these reasons, we believe IPSCO will be profitable throughout all but the most severe steel cycle. Significantly, IPSCO's lowest 12-month operating income over 2001-2003 was $32 million reported between July 2001 and June 2002. This was at a time when its new mill at Mobile, Alabama was ramping up and operating at a loss. Moody's positive outlook for IPSCO is supported by favorable market dynamics for plate and energy tubulars, the company's new and cost-efficient facilities, anticipated growth in cash, and its flexibility to further reduce debt and capitalized leases in 2006- 2007. Factors that could result in a further upgrade to IPSCO's ratings include: * investment restraint; * a demonstrated ability to generate cash under more typical market conditions; and * debt reduction. Moody's does not expect, nor is an upgrade contingent upon, IPSCO's earnings continuing at its recent pace. As long as market fundamentals are healthy for its key products, financial and acquisition strategies remain prudent, and cash flow to debt measures remain solid, then an upgrade could occur even were operating income to contract to a more normalized run-rate of $150-180 million. IPSCO's rating outlook could be adversely affected by large and risky investments or acquisitions, cost increases in the midst of sharply lower selling prices, or a reversal of the company's commitment to a conservative capital structure in line with its desire to attain an investment grade rating. IPSCO, headquartered in Lisle, Illinois, produces discrete plate and coil and tubular products at 12 sites throughout Canada and the US. J.CREW GROUP: April 30 Balance Sheet Upside-Down by $580 Million ---------------------------------------------------------------- J.Crew Group, Inc., reported that its operating income for the thirteen weeks ended April 30, 2005 was $23 million compared to an operating loss of $3 million last year, as the Company continues to benefit from the revitalization of the J.Crew brand. Millard Drexler, Chairman and CEO, said, "We are pleased with our firstquarter results with a comp store sales increase of 37% and significant growth in our Direct business. Our continuing focus on quality, style and design, along with endless attention to our customers' needs, is reflected in J.Crew's performance. I might add that the scarcity of our merchandise in last year's first quarter also helped contribute to this quarter's strong comp performance." Consolidated revenues for the first quarter increased 45% to $211 million from $146 million in the comparable period last year. Retail net sales (including Factory) increased by 40% to $146 million from $104 million last year due primarily to a comparable store sales increase of 37%. Net sales of the Direct business (Internet and catalog) increased by 59% to $59 million as compared to $37 million. The operating results for the quarter reflect a gross margin increase to 46% in 2005 from 42% in 2004 due to higher full price selling and leverage on fixed buying and occupancy costs. Selling, general and administrative expenses during the quarter were $74 million, or 35% of revenues, compared to $64 million, or 44% of revenues in the prior year. The decrease as a percentage of revenues was driven primarily by leverage on fixed operating expenses due to the significant increase in revenues. Net income for the first quarter was $5 million compared to a net loss of $24 million in the prior year. Inventory at April 30, 2005 was $105 million, up 24% from the comparable period last year. The increase in inventories is consistent with our strong sales performance and a conservative inventory strategy in last year's first quarter. There were no outstanding borrowings under the Company's working capital facility during the quarter. About the Company J.Crew Group, Inc. is a leading retailer of men's and women's apparel, shoes and accessories. The Company operates 157 retail stores, the J.Crew catalog business, http://jcrew.com/and 43 factory outlet stores. At Apr. 30, 2005, J.Crew Group, Inc.'s balance sheet showed a $580,000,000 stockholders' deficit, compared to a $495,000,000 deficit at Mar. 31, 2004. JAZZ PHOTO: Sells Assets to Ribi Tech for $887,750 -------------------------------------------------- Jazz Photo Corp. sought and obtained permission from the U.S. Bankruptcy Court for the District of New Jersey to sell substantially all of its assets (cameras, computer, office equipment, trademarks) to Ribi Tech Products LLC for $887,750. Jack Benun, Jazz Photo's former President, is the Chief Executive Officer and Manager of Ribi Tech which is owned by Mr. Benun's wife and children. Pending litigation with the U.S. Customs and Border Protection [U.S. Court of International Trade, Case Nos. 04-00514, 04-00629 and 05-00029] involving camera units seized by the Customs agency spurred the Debtor's decision to sell substantially all of its assets. All of the Debtor's right, title and interest in and to claims or interests in the assets (including 1,390,000 camera units) subject to that litigation before the U.S. Court of International Trade will be assigned to Ribi. The sale proceeds will be transferred to a Liquidating Trust established under Jazz Photo's confirmed Liquidating Plan. Part of the sale proceeds -- $276,000 -- will be deposited in an escrow account pending the Court's decision on Agfa Photo Hong Kong Limited's claim. About Jazz Photo Jazz Photo Corp., designed, developed, importated and distributed cameras and other photographic products in North America, Europe and Asia. The Company filed for chapter 11 protection on May 20, 2003 (Bankr. N.J. Case No. 03-26565). Michael D. Sirota, Esq., and Warren A. Usatine, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., represent the Debtor. When the Company filed for protection from its creditors, it estimated $50 million in debts and assets. The Honorable Morris Stern confirmed Jazz Photo's Liquidating Plan on May 13, 2005. JOSEPH DOMAL: Case Summary & 18 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Joseph F. Domal 320 Sylvan Street Rutherford, New Jersey 07070 Bankruptcy Case No.: 05-29418 Chapter 11 Petition Date: June 10, 2005 Court: District of New Jersey (Newark) Debtor's Counsel: Robert Drexel, Esq. 2 University Plaza, Suite 118 Hackensack, New Jersey 07601 Tel: (201) 487-6000 Total Assets: $2,305,300 Total Debts: $1,862,668 Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Columbia Savings Judgment $158,406 19-01 Route 208 Fair Lawn, NJ 07410 Sovereign Bank Judgment $153,000 P.O. Box 12707 Reading, PA 19612-2707 Fleet Bank Loan $130,591 c/o Obrien & Taylor P.O. Box 505 West Caldwell, NJ 07007 PNC Bank Judgment $31,237 P.O. Box 96066 Pittsburgh, PA 15226 MBNA America Credit Card $30,121 P.O. Box 17054 Wilmington, DE 19884 GMAC Auto lease $20,154 P.O. box 105677 Atlanta, GA 30348 MBNA America Bank Credit Card $13,285 c/o Wolpoff & Abramson, L.L.P. 702 King Farm Boulevard Rockville, MD 20850-57758 Citi Credit Card $8,694 P.O. Box 6500 Sioux Falls, SD 57117 Amex Credit Card $7,415 P.O. Box 297871 Fort Lauderdale, FL 33329 Discover Financial Credit Card $7,066 P.O. Box 15316 ATT CMS Wilmington, DE 19850 Direct Merchants Bank Credit Card $6,177 16430 North Scottsdale Scottsdale, AZ 85254 Hann Financial Services Auto lease/loan $6,038 Raritan Plaza III Edison, NJ 08837 Discover Financial Services Credit Card $4,686 P.O. Box 15316 Wilmington, DE 19850 PNC Bank Auto lease $4,685 2730 Liberty Avenue Pittsburgh, PA 19809 Bank of America Credit Card $2,458 1825 East Buckeye Road Phoenix, AZ 85034 RSKMGTWSRV Collection $327 P.O. Box 105062 Atlanta, GA 30348 GEMB/EXNMBLE Credit Card $125 P.O. Box 981400 El Paso, TX 79998 Sunoco/Citi Credit Card $37 P.O. Box 6033 Hagerstown, MD 21747 LORAL SPACE: Wants Excl. Solicitation Period Extended Until Aug. 1 ------------------------------------------------------------------ Loral Space & Communications Ltd. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York, for an extension, through and including Aug. 1, 2005, of the time within which they alone can solicit acceptances of their proposed Third Amended Plan of Reorganization from their creditors. The Court approved the adequacy of the Debtors' Third Amended Disclosure Statement explaining the Plan on June 3, 2005. The Debtors give the Court three reasons why the solicitation period should be extended: a) since the current exclusive solicitation period expired on May 31, 2005, Section 1121(c)(3) of the Bankruptcy Code can permit any party-in-interest to file its own chapter 11 plan unless the Debtors' exclusive solicitation period is extended; b) the requested extension will facilitate orderly administration of the Debtors' chapter 11 cases and promote their expeditious and successful emergence from chapter 11; and c) the requested extension is in the best interest of the Debtors' creditors and other parties-in-interest and it will not prejudice those creditors and other parties in interest. About Loral Space Loral Space & Communications is a satellite communications company. It owns and operates a fleet of telecommunications satellites used to broadcast video entertainment programming, distribute broadband data, and provide access to Internet services and other value-added communications services. Loral also is a world-class leader in the design and manufacture of satellites and satellite systems for commercial and government applications including direct-to-home television, broadband communications, wireless telephony, weather monitoring and air traffic management. The Company and various affiliates filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-41710) on July 15, 2003. Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the company filed for bankruptcy, it listed total assets of $2,654,000,000 and total debts of $3,061,000,000. MEDICAL NUTRITION: April 30 Balance Sheet Upside-Down by $913,300 ----------------------------------------------------------------- Medical Nutrition USA, Inc., (OTC Bulletin Board: MDNU) reported financial results for the quarter ended April 30, 2005. Net sales for the quarter increased 25% to $1,547,500 from $1,240,700 in the comparable period of the prior year. The increase in sales for the quarter resulted primarily from increased sales of branded products, including the company's line of Pro-Stat(TM) hydrolyzed, liquid, modular proteins. Branded product sales increased 119% to $1,112,500 from $508,500. Gross profit for the quarter increased to $815,500 (52.7% of sales) from $605,100 (48.8% of sales) in the first quarter of the prior year. The increase in gross margin percentage for the quarter and the year was primarily attributable to increased sales of branded products. Cash flow from operations improved to $65,300 for the quarter as compared to negative cash flow of $501,400 in the first quarter of the prior year. Net income for the quarter improved to $40,800 as compared to a loss of $65,300 in the first quarter of the prior year. "The number of nursing homes and clinics including our products in their treatment plans continues to grow nicely, with approximately 490 additional facilities coming on stream in the quarter" said Frank A. Newman, Chairman and Chief Executive. "Pro-Stat is now recognized as a superior supplement for those at risk for protein energy malnutrition and pressure ulcers. We expect that our new unit dose packaging and Pro-Stat 150 formula will further expand usage." The Company believes that sales of its branded products will continue to increase at a rapid rate in line with its strategy, which is to increase distribution of its proprietary products and de-emphasize its sales to distributors that sell derivative formulations under their own brands (private labels). About the Company Medical Nutrition USA, Inc. -- http://www.pro-stat.info/-- develops and distributes products for the nutritionally at risk who are under medical supervision. Its products are used primarily in long-term care facilities, hospitals, dialysis clinics and bariatric clinics. The company's product lines include Pro-Stat(TM), Collagen Plus(TM) and the pbs Nutritional Support System(TM), as well as private label products. At Apr. 30, 2005, Medical Nutrition USA, Inc.'s balance sheet showed a $913,300 stockholders' deficit, compared to a $963,100 deficit at Jan. 31, 2004. MERRILL LYNCH: Fitch Rates 2 Private Class Certs. at Low-B ---------------------------------------------------------- Merrill Lynch Mortgage Investors, Inc., C-BASS mortgage loan asset-backed certificates, series 2005-CB3, are rated: -- $329 million class A (senior certificates) 'AAA'; -- $26.7 million class M-1 'AA+'; -- $14.4 million class M-2 'AA-'; -- $6.5 million class M-3 'A+'; -- $6.1 million class M-4 'A'; -- $5.6 million class B-1 'A-'; -- $4.8 million class B-2 'BBB+'; -- $4.2 million class B-3 'BBB+'; -- $3.8 million class B-4 'BBB'; -- $4.2 million privately offered class B-5 'BB+'; -- $7.1 million privately offered class B-6 'BB' (collectively the subordinate certificates). The 'AAA' rating on the senior certificates reflects the 21.20% initial credit enhancement provided by the 6.40% class M-1, the 3.45% class M-2, the 1.55% class M-3, the 1.45% class M-4, the 1.35% class B-1, the 1.15% class B-2, the 1.00% class B-3, the 0.90% class B-4, the 1.00% class B-5 and the 1.70% class B-6 certificates. Initial overcollateralization is 1.25% with a target OC of 1.25%. All certificates have the benefit of excess interest. In addition, the ratings also reflect the quality of the loans, the soundness of the legal and financial structures, and the capabilities of Litton Loan Servicing LP as servicer, (rated 'RPS1' by Fitch Ratings). The collateral pool consists of fixed- and adjustable-rate collateral totaling $417,458,657.91. The weighted average combined loan to value ratio is 81.15%, the average outstanding principal balance is $175,476.53, the weighted average coupon is 6.913% and the weighted average remaining term to maturity is 343 months. Second liens make up 3.86% of the pool and 81.69% of the loans have prepayment penalties. The loans are geographically concentrated in CA (41.57%), FL (4.97%) and WA (4.30%). Merrill Lynch Mortgage Investors, Inc. will deposit the mortgage loans into the trust. The depositor is a Delaware corporation and a wholly owned, indirect subsidiary of Merrill Lynch Mortgage Capital Inc. The depositor is an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, the underwriter. METALLURG INC: Moody's Lifts Sr. Implied Rating to Caa1 from Caa3 ----------------------------------------------------------------- Moody's Investors Service raised the ratings of Metallurg, Inc. and its parent Metallurg Holdings, Inc. The higher ratings take into account: * the companies' improved ability to service debt as a result of higher product prices, especially for vanadium products; * the sale or closure of many of its underperforming operations; and * a more profitable operating strategy for its US ferrovanadium operations. Metallurg's improved operating margins signal a return to positive cash flow and the potential reduction of at least a portion of its very expensive debt. The rating outlook was changed to stable from negative. These ratings were upgraded: Metallurg Holdings, Inc.: * senior implied rating, to Caa1 from Caa3; * $40.3 million of 12.75% senior discount notes, Series B, due July 15, 2008, to Ca from C; and * issuer rating, to Ca from C. Metallurg, Inc.: * $100 million of 11% guaranteed senior notes, Series B, due December 1, 2007, to Caa2 from Ca. After several years of very weak results, Metallurg Holdings, Inc. on a consolidated basis had EBITDA slightly greater than interest and capex in 2004. While its cash from operating activities was negative in 2004, and remained negative in the first quarter of 2005, a number of factors are pointing to generation of free cash flow in 2005. First, essentially all of its product prices are higher than they have been for many years. The increase in ferrovanadium prices has been most spectacular, with current prices up about ten-fold compared to 2003 and five-fold compared to 2004. Second, the company has shed 14 loss-making, underperforming, or non-core operations since 2002, which has raised the companies' base level of earnings. Third, a change in raw material sourcing for Metallurg's US ferrovanadium operations has limited the downside risk of this business even if vanadium prices were to decline to 2001-2002 lows. Metallurg's Cambridge, Ohio plant is now relying entirely on vanadium from secondary sources. Not that all of Metallurg's problems have been eliminated, as its ratings continue to indicate. Its earnings are still subject to commodity pricing pressures and it has far too much debt and interest expense given the volatility of the industrial markets it serves and the products it produces. The metal alloy markets are global but small and easily disrupted by the start-up of one or two mines or processing plants and oversized exports (China, Russia, and South Africa are major producers). Lack of producer discipline can lead to lengthy downcycles as witnessed in 2001- 2003. Metallurg also has underfunded defined benefit pension plans and relatively high environmental liabilities, $19 million of balance sheet reserves net of related trust funds. In addition to a risky business and financial profile, structural considerations and modest enterprise value constrain Metallurg's ratings. The debt at Metallurg, Inc. and Metallurg Holdings, Inc. is subordinated to debt and other liabilities at Metallurg's international subsidiaries, which do not guarantee the rated debt. The domestic companies that guarantee the Metallurg, Inc. notes have few assets (approximately $100 million in tangible assets) and Moody's expects that creditor losses would be quite high if the company were to default. The discount notes issued by Metallurg Holdings are unguaranteed and subordinated to all of its subsidiaries' debt and other liabilities. The Ca rating for Metallurg Holdings' 12.75% senior discount notes also reflects Moody's concerns about its ability to pay interest due on the discount notes. The interest is due July 15 and January 15. The interest payable to non-related parties is approximately $1.5 million. Metallurg Holdings currently does not have sufficient cash to make the interest payments and Metallurg, Inc. is not able to pay dividends to Metallurg Holdings due to its restricted payments basket being in a large deficit position. In March 2005, Metallurg Holdings received a letter of support from the firm's owner, Safeguard International, assuring support to Metallurg Holdings in meeting its cash flow needs through at least May 31, 2006. Moody's does not expect the restricted payments basket at Metallurg, Inc. will be restored by that time. However, strong product prices and demand give hope that Metallurg will be able to retire some of its debt, especially some of the high-coupon debt it added over the last several years, and potentially reduce both leverage and interest to more manageable levels. Until this happens, Moody's plans to keep a stable outlook on the company. A rating upgrade would require at least a 20% reduction in debt (approximately $40 million) and the expectation that cash flow will be sufficient to service all fixed charges, including environmental and pension costs, on a sustained basis. Metallurg, headquartered in New York City, is a leading international producer of high quality metal alloys and specialty metals used by manufacturers of: * steel, * aluminum, * superalloys, * chemicals, and * other metal consuming industries. MGM MIRAGE: Moody's Puts Ba2 Rating on $500M Sr. Unsec. Notes -------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to MGM MIRAGE's $500 million senior unsecured guaranteed notes due 2015 issued under Rule 144A. The proceeds of the notes will be used to term out existing bank debt. MGM's earnings are expected to increase over the next twelve months due to strong demand in Las Vegas, the addition of the Spa Tower at Bellagio and the acquisition of Mandalay Resort Group (MRG) in April 2005. Pro-forma leverage is expected to drop to around 5.5x by year-end 2005 from about 5.9x at closing. MGM's ratings reflect its strong brand equity, leading margins, as well as the excellent quality and locations of its well maintained properties that have strong asset values. MGMM has a strong operational management team in place with a proven track record of integrating acquired companies and achieving targeted synergies. The acquisition of MRG further solidifies MGM's position as the leading operator of resort casinos on the Las Vegas strip. The addition of MRG's convention center asset is expected to drive revenue and margin growth due to Las Vegas' increasing popularity as a convention destination, as well as better management of MRG's casino assets whose margins trail those of MGM. The company's largest properties are located in Nevada, which are the most stable and gaming friendly jurisdictions that helps to offset the company's geographic concentration to some degree. The ratings reflect the company's high pro-forma leverage and higher business risk due to concentration of earnings in Las Vegas, and the likelihood the company will pursue large scale ground up development projects, the timing of which are difficult to predict. In addition, more supply is being added in Las Vegas that could slow the pace of earnings growth. MGM has a 20 million share repurchase authorization in place and actively repurchased shares in 2003 and 2004. However, the current ratings assume the company will not repurchase shares in the near term. Potential earnings volatility caused by geo-political threats is an ongoing credit concern particularly given the company's reliance on the Las Vegas market. The rating outlook is stable reflecting the positive operating conditions in the company's primary markets and our expectation that free cash flow will be used to repay debt. The ratings could be upgraded if leverage is reduced to below 5.0x and is likely to remain so in the context of the company's capital spending program, financial policy priorities and business outlook. The ratings could be downgraded if leverage rises above 6.0x. The SGL-2 rating considers MGM's good liquidity position over the next twelve months. Moody's expects that internally generated cash flow, cash on hand, plus its committed financing facilities will be more than sufficient to cover the company's capital expenditures, debt amortization and the potential put of MRG's $250 million 6.50%, and $250 million 6.375% bonds. Approximately $1.0 billion of MRG's other outstanding bond indentures also contain change of control put options at a price of 101. However, these issues have been trading well above 101, and so are not likely to be put. MGMM provides a downstream guarantee to MRG's outstanding bonds as well as cross guarantees from its subsidiaries that guaranty its existing public debt, and MRG became a guarantor of MGM's bonds. Thus, no structural subordination exists in the company's capital structure. Non-restricted subsidiaries that do not provide guarantees include foreign subsidiaries and joint venture entities. The company expects to file the guaranty documents with its second quarter 10-Q. MGM has received collateral releases from all of its creditors and bond trustees, but is awaiting confirmation of the actual lien releases from each jurisdiction where its properties are located, and so its capital structure is effectively unsecured. MGM's indenture covenants are more typical of an investment grade borrower. Under its current terms, there are no covenants that limit restricted payments. The indentures also requires that in addition to existing subsidiary guarantors, any existing or future subsidiary shall become a subsidiary guarantor (other than excluded subsidiaries) if such subsidiary incurs any debt or provides a guaranty to any debt of MGM. Other select terms include: * limitation on liens; * sale and lease-back transactions; and * on mergers, consolidation or sale of assets. MGM MIRAGE Rating assigned: * $500 million senior unsecured guaranteed bond at Ba2. Headquartered in Las Vegas, Nevada, MGM MIRAGE owns and operates 24 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey, and the United Kingdom. MGM MIRAGE has also announced plans to develop Project CityCenter, a multi-billion dollar mixed-use urban development project in the heart of Las Vegas, and has a 50% interest in the MGM Grand Macau hotel/casino under construction in Macau S.A.R. MIRANT CORP: Asks Court to Approve Inter-Debtor Tolling Agreement ----------------------------------------------------------------- Mirant Corporation and most of its debtor-affiliates filed their voluntary Chapter 11 petitions on July 14, 2003, with certain other Debtors filing thereafter. As a result of the various transactions by and between the Debtors, certain claims and causes of action may have arisen by and between the Debtors pursuant to Sections 502, 506, 541, 544, 547, 548, 549, 550 and 553 of the Bankruptcy Code and applicable non-bankruptcy law. The statutes of limitations for those actions will, in many instances, expire on July 14, 2005. The Debtors are currently pursuing confirmation of their Plan. Confirmation of the Plan will extinguish most, if not all, of the claims and causes of actions that may currently exist among the Debtors. Michelle C. Campbell, Esq., at White & Case LLP, in Miami, Florida, relates that it is unlikely that Plan confirmation will occur prior to the Avoidance Deadline. To avoid the burden and expense of initiating numerous causes of action that may prove unnecessary and to preserve those claims and causes of action that may ultimately survive confirmation, the Debtors ask the U.S. Bankruptcy Court for the Northern District of Texas to extend the limitations periods to until the earlier of: (a) the Effective Date of Mirant's proposed Plan; and (b) the later of: (1) the first business day that is one year after the date the Bankruptcy Court enters an order approving the Motion; and (2) the date on which the limitations period that is applicable to the specific claim or cause of action expires. The Debtors also seek the Court's permission to utilize Sections 502(b)(1) and (d) as a defensive matter in claims litigation, even with respect to objections to claims that are not filed or resolved prior to the expiration of the Avoidance Deadline, or are not resolved by that date. Ms. Campbell contends that the Debtors will incur a significant burden and expense if they will be required to initiate and litigate claims and causes of action that may currently exist among the Debtors. By virtue of the proposed settlement of Intercompany Claims, Ms. Campbell says, most, if not all, of any existing claims and causes of action between the Debtors will be extinguished if the Plan is confirmed. The Debtors are thus faced with the difficult choice of initiating all possible inter- Debtor claims prior to the Avoidance Deadline and incurring the significant attendant burden and expense related thereto, or losing the claims altogether because they would become time barred. 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. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Wants to Enter into Third Party Tolling Agreements --------------------------------------------------------------- Many of Mirant Corporation and its debtor-affiliates' claims and causes of action may have arisen in respect of various non-Debtor third parties. Pursuant to Sections 108, 546(a) and 549(d) of the Bankruptcy Code, the statutes of limitation for those actions will expire on July 14, 2005. Michelle C. Campbell, Esq., at White & Case LLP, in Miami, Florida, relates that the Debtors have undertaken significant and detailed analysis of claims against: -- The Southern Company; -- Potomac Electric Power Company; and -- other potential defendants, including preference defendants, potential recipients of fraudulent conveyances, and obligations that may be avoided under applicable law. Ms. Campbell informs the U.S. Bankruptcy Court for the Northern District of Texas that the Debtors intend to either commence significant actions against identified third parties prior to the Avoidance Deadline or enter into tolling agreements with them. There are other claims against third parties that are of lesser magnitude that the Debtors may determine it is most prudent to commence at a later time, or which may be ascertained after the Avoidance Deadline. The number of other third parties who might conceivably be the subject of a lawsuit or claim makes obtaining a stipulation extending the statutes of limitations impractical. It is also impractical to commence Chapter 5 actions against some third parties whose actions are intertwined with inter-Debtor actions. Ms. Campbell says the Debtors' analysis and investigation of causes of action against third parties is ongoing. The Debtors ask the Court: (a) to toll, suspend, and extend the applicable statutes of limitation periods until the later of: (1) the first business day that is one year after the date an order approving the Motion is entered; and (2) the date on which the limitations period that is applicable to the specific claim or cause of action expires; (b) for authority to enter into tolling agreements with third parties, in the Debtors' reasonable business judgment, without further and specific Court approval; and (c) for an order confirming that the Debtors may utilize Section 502(b)(1) and (d) as a defensive matter in claims litigation, even with respect to objections to claims that are not filed or resolved prior to the expiration of the Avoidance Deadline, or are not resolved by that date. 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. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) MORGAN STANLEY: Fitch Affirms Low-B Rating on 5 Cert. Classes ------------------------------------------------------------- Fitch Ratings affirms Morgan Stanley's commercial mortgage pass- through certificates, series 1998-HF2: -- $544.6 million class A-2 at 'AAA'; -- Interest-only class X affirmed at 'AAA'; -- $52.9 million class B at 'AAA'; -- $52.9 million class C at 'AAA'; -- $58.2 million class D at 'A'; -- $21.2 million class E at 'BBB+'; -- $23.8 million class F at 'BBB'; -- $18.5 million class G at 'BB+'; -- $10.6 million class H at 'BB'; -- $21.2 million class J at 'B+'; -- $10.6 million class K at 'B'; -- $15.9 million class L at 'B-'; The $10.6 million class M remains at 'CC'. Fitch does not rate the $1.7 million class N certificates. The class A-1 certificates have been paid in full. The rating affirmations are a result of stable pool performance and paydown due to scheduled amortization. As of the May 2005 distribution report, the pool's aggregate certificate balance has been reduced 20.36% to $842 million from $1.1 billion at issuance There are currently five loans (1.27%) in special servicing. The largest loan (0.41%) in special servicing is 554-unit self-storage property in Mineola, NY and is 90 plus days delinquent. The loan transferred as a result of the borrowers' inability to fund the debt service. Occupancy at the property has suffered due to new competition in the area. The special servicer is working with the borrower and exploring several workout options. Recent appraised value indicates a loss if the asset is liquidated from the trust. The second largest loan (0.35%) in special servicing is a 70,000 square feet industrial property in Foster City, CA and is 30 days delinquent. The loan transferred to the special servicer in November 2004 due to monetary default. Recent appraised value of the asset exceeds the debt. NAPIER ENVIRONMENTAL: Inks Pact to Sell Significant Assets to SICO ------------------------------------------------------------------ Napier Environmental Technologies Inc. (TSX:NIR) entered into an agreement to sell a significant portion of its assets and business to SICO Inc., a major Canadian paint and coatings manufacturer. The company intends to use the proceeds from the sale transaction to make a definitive proposal to settle the outstanding claims of its unsecured creditors. Completion of the sale transaction is subject to unsecured creditors voting in favor of a definitive proposal to be filed by Napier and all requisite court approvals. The company filed for protection under the Bankruptcy and Insolvency Act on November 3, 2004. On May 20, 2005, Napier's unsecured creditors voted to provide an additional 120 days for the company to complete its restructuring and refinancing process and file a definitive proposal. Napier intends to file a definitive proposal within seven days. A meeting of unsecured creditors will then be scheduled to consider and vote on the company's proposal. SICO is a well-established and well-funded company, with considerable ability to complete the transaction and drive future market and customer development through a strong distribution network. In business since 1937, SICO is Canada's largest organization specializing in the development, manufacturing and marketing of paint, coatings and related products. The Canadian leader in the architectural paint market, SICO distinguishes itself for its innovative, high-quality products enjoying strong brand recognition, and the scope of its distribution network. SICO also markets industrial coatings, mainly for the railway, aerospace, heavy transportation, and specialized equipment industries. A public company listed on the Toronto Stock Exchange, SICO employs nearly 1,000 people in Canada, the United States and Mexico. Shareholders of Napier will not be entitled to vote on or participate in the definitive proposal to be filed by the company. If the definitive proposal is approved, SICO will acquire Napier's customer list, product formulations, intellectual property rights and certain manufacturing equipment. Napier would no longer have operations and its residual assets would be divested. The resulting proceeds would be used to discharge the company's secured and priority obligations and settle all unsecured claims. Shareholders should not expect to receive any value from the sale transaction, but would continue to have ownership of the corporate entity that remains. Pierre Dufresne, SICO's President and Chief Executive Officer, indicated that this acquisition, which is mostly strategic, is consistent with the objective of the architectural sector's objective to consolidate its leadership position in every major region of Canada. "It will also add a line of environmentally- friendly and high-quality architectural products to our existing offering, along with well known trademarks such as Bio-Wash, RemovAll and SARA Technologies." About SICO Inc. In business since 1937, SICO is the largest company in Canada specializing in the development, manufacture and marketing of paints, coatings and related products. In the architectural market, its primary sector, SICO stands out for its innovative, high-quality products, strong brand recognition and the scope of its distribution network, which includes some 2,400 points of sale from coast to coast. In addition, SICO commercializes, in North America, industrial coatings mostly for metal, mainly for the transportation equipment industry (subway and railway passenger cars, commercial and military aircrafts, truck trailers), the heavy machinery industry (agricultural, forestry and construction equipment) and other specialized applications such as metal furniture. SICO employs nearly 1000 people in Canada, the United States and Mexico. Napier is currently operating under the protection of the Bankruptcy and Insolvency Act. Napier develops and manufactures highly effective, safe and environmentally advantaged surface preparation products for stripping paints and coatings, as well as a complete line of wood restoration products. Napier's products are protected by a portfolio of patents and trademarks, including 'Bio-wash and RemovALL'. NATIONAL CENTURY: Long-Term Care Companies Can't Prosecute Suit --------------------------------------------------------------- As previously reported, Long Term Care Management, Inc., Quality Long Term Care Management, Inc., and Quality Long Term Care, Inc., commenced an adversary proceeding against NPF XII and National Century Financial Enterprises, Inc., in the U.S. Bankruptcy Court for the District of Nevada, where their chapter 11 cases are jointly administered. The LTC Entities allege, among other things, that the Debtors concealed material facts, which if known to them would have materially affected their commitment to pay the $1,300,000 settlement to NCFE under the LTC Plan of Reorganization. The VI/XII Collateral Trust has asked the U.S. Bankruptcy Court for the Southern District of Ohio to enforce the terms of the Confirmation Order of the Debtors' Plan of Liquidation and enjoin the LTC Entities from prosecuting the Adversary Proceeding. The Trust argued that the LTC Entities have violated the Confirmation Order in various ways. Judge Calhoun Grants the Trust's Request In a 19-page order dated June 2, 2005, Judge Calhoun finds that: A. As of the Petition Date, the Settlement Obligation became property of the NCFE estates. According to Judge Calhoun, the Settlement Obligation was due and owing to the Debtors upon confirmation of the LTC Plan. On the Petition Date, the Settlement Obligation owed to NCFE became property of the Debtors' estates. Upon the NCFE Plan's Effective Date, the Settlement Obligation was transferred to the VI/VII Trust free and clear of any liens or claims. Accordingly, the Settlement Obligation was property of the Debtors' estates and is now property of the Trust. B. The LTC Entities attempt to assert a claim against NCFE and NPF XII through the Adversary Proceeding. Although "couched in terms of a declaratory relief action," the Ohio Court views the Adversary Proceeding as an attempt by the LTC Entities to assert a claim against the Debtors. The Ohio Court notes that it is plausible that the LTC Entities may have monetary damage claims based on the alleged prepetition NCFE conduct that may have increased costs to the LTC Entities. They may also have claims against the Debtors that were settled through the LTC Plan. However, the Court believes that "trying to undo the settlement now will only expose these estates to claims that have been long since resolved." The LTC Entities had numerous opportunities to raise any claims for alleged prepetition conduct by the Debtors before the Bar Date or at confirmation of the NCFE Plan, Judge Calhoun states. The LTC Entities was served notice of the Bar Date by the Clerk of Court. Although Steven Pavlow, president of the LTC Entities, "indicated that he never received the Bar Date Notice, it is quite possible someone other than Mr. Pavlow had the notice," Judge Calhoun notes. In light of the Clerk of Court's certificate of service that the LTC Entities were served with the Bar Date notice, the Court concludes that the Pavlov Affidavit fails to rebut the presumption of receipt. Accordingly, the LTC Entities "cannot now attempt to circumvent the Bar Date" by filing the Adversary Proceeding " "in an attempt to undo the [S]ettlement and ultimately raise prepetition claims against NCFE," Judge Calhoun rules. "[T]his Court is not now going to allow the Adversary Proceeding to move forward, the effect of which may unscramble the proverbial egg to the detriment of the Debtors' creditors." C. The LTC Entities improperly invoked first the Nevada Court's jurisdiction. The parties have already determined, through a settlement, the amount, validity and extent of NPF XII's claim against the LTC Entities, Judge Calhoun points out. By confirming the LTC Plan, the Nevada Bankruptcy Court approved the settlement. Judge Calhoun finds nothing left for the Nevada Court to now determine that would invoke its jurisdiction. Accordingly, matters dealing with property of the NCFE estates, i.e., LTC Entities' rights and obligations under the settlement and prepetition claims against the Debtors are more appropriately first raised in the Ohio Court. D. The LTC Entities violated both the stay and injunction provisions in the NCFE Plan by filing the Adversary Proceeding. Judge Calhoun states that the LTC Entities, whether or not they accept the Plan, are bound by the provisions of the NCFE Plan and the Confirmation Order, which provides that: -- all stays and injunctions are retained until the NCFE cases close; and -- entities are permanently enjoined from commencing actions against the Trust, property of the Trust, or assets of the estates that the Trust retains. Hence, the LTC Entities are forbidden to undo or effectively exercise control over the Settlement Obligation absent relief from the stay and enjoined from filing the Adversary Proceeding. Consistent with prior rulings in the NCFE cases, the LTC Entities should, at a minimum, have requested to lift or modify the stay and injunctions before filing the Adversary Proceeding, Judge Calhoun says. E. An award of sanctions against the LTC Entities is the appropriate remedy for its violation of the Confirmation Order and NCFE Plan. In accordance with In re Continental Airlines, 236 B.R. 318, 330(Bankr. D. Del. 1999), sanctions for civil contempt are appropriate when three elements are established: "(1) a valid order of the court must exist; (2) the person to be charged with contempt must have actual knowledge of the order; and (3) the person must have disobeyed the order." The Ohio Court finds that the three elements are met. The Confirmation Order is a valid, final order and permanently enjoins parties from pursuing released and discharged claims as set forth more specifically in the Confirmation Order and the NCFE Plan. The LTC Entities had actual knowledge of the Confirmation Order and its effect. By filing the Adversary Proceeding to litigate a claim and potentially deplete estate assets that the LTC Entities are permanently enjoined from pursuing, they have violated the Confirmation Order. Accordingly, the Ohio Court grants the Trust's request. Judge Calhoun directs the LTC Entities to pay the attorneys' fees and costs incurred by NCFE in defending the Adversary Proceeding and prosecuting the Motion to Enjoin. Counsel for the Debtors are directed to file a statement detailing their fees and costs on or before July 2, 2005. The LTC Entities may then comment as to the reasonableness of the fees within 20 days after the filing. Once submitted, the Court will make an appropriate award. Judge Calhoun makes it clear that any further action by the LTC Entities in the Adversary Proceeding, except for the filing of a notice dismissal, will warrant further sanctions. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust, is in the midst of liquidating estate assets. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represents the Debtors. (National Century Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) NBTY INC: Inks $5.7 Million SISU Inc. Acquisition Pact ------------------------------------------------------ NBTY, Inc. (NYSE: NTY) acquired SISU Inc., a Canadian-based manufacturer and distributor of a well-established brand of premium quality vitamins and supplements sold to the independent health food stores. SISU is headquartered in Burnaby, British Columbia and had sales of approximately $14 million (USD) for fiscal year ended Sept. 30, 2004. SISU has been in business for over twenty-five years. The purchase price is $5.7 million (USD) in cash. In addition, NBTY will repay SISU's indebtedness of $2.5 million (USD). Included in the acquisition are net assets of approximately $330,000 (USD). NBTY Chairman and CEO, Scott Rudolph, said: "SISU will play a key role in expanding NBTY's presence in Canada. The SISU brand name is solidly entrenched with Canadian consumers. We continue to be committed to the independent health food stores. With our financial strength and proven management expertise, NBTY remains the predominant consolidator in the nutritional supplement industry." About the Company NBTY Inc. -- http://www.NBTY.com/-- is a leading vertically integrated manufacturer and distributor of a broad line of high- quality, value-priced nutritional supplements in the United States and throughout the world. The Company markets approximately 2,000 products under several brands, including Nature's Bounty(R), Vitamin World(R), Puritan's Pride(R), Holland & Barrett(R), Rexall(R), Sundown(R), MET-Rx(R), WORLDWIDE Sport Nutrition(R), American Health(R), GNC (UK)(R), DeTuinen(R) and Le Naturiste(TM). * * * As reported in the Troubled Company Reporter on June 9, 2005, Standard & Poor's Ratings Services placed its ratings on NBTY Inc., including its 'BB' corporate credit rating, on CreditWatch with negative implications. The Bohemia, New York-based vitamin, mineral, and supplement manufacturer had total debt outstanding of $292 million as of March 31, 2005. The CreditWatch listing follows the announcement by NBTY that it has signed a contract to acquire substantially all the assets of Solgar Vitamin and Herb for approximately $115 million. Solgar, an operating unit of Wyeth Consumer Healthcare, a division of Wyeth (A/Negative/A-1), manufactures and distributes nutritional supplements. The transaction is expected to be debt financed and is expected to close by August 2005, subject to regulatory approval. Standard & Poor's will review NBTY's near- and longer- term growth objectives, operating outlook, and overall financial policies to resolve the CreditWatch listing. NEP INC: Weak Operating Results Prompt S&P's Negative Outlook ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on NEP Inc. to negative from stable due to continued weak operating results. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on the company and its debt ratings on subsidiary NEP Supershooters LP, which is analyzed on a consolidated basis with NEP. The ratings on the first-lien bank and term loans are affirmed at 'B' with a '4' recovery rating, and the rating on the second-lien term loan facility is affirmed at 'CCC+' with a '5' recovery rating. The Pittsburgh, Pennsylvania-based national provider of outsourced media services for the delivery of live and broadcast sports and entertainment events had $242.1 million in debt as of March 31, 2005. "NEP's earnings continue to trail expectations, notwithstanding an increase in EBITDA in the first quarter of 2005 that was driven by two acquisitions," said Standard & Poor's credit analyst Steve Wilkinson. Earnings shortfalls reflect weak pricing for noncontract work in its Supershooters unit in early 2005, and underperformance in its Screenworks and Studios units in 2004. The rating on NEP reflects its: (1) cash flow concentration in the mobile TV production business, (2) high tolerance for financial risk, (3) potential volatility stemming from contract gains and losses, (4) the cyclical and somewhat unpredictable nature of its Screenworks and Studios units, (5) small cash flow base, and (6) a history of falling short of its budget in its limited track record as a consolidated entity. These factors are minimally offset by NEP businesses' good competitive positions and decent margins. NEIGHBORCARE INC: Moody's Reviewing Ratings for Possible Downgrade ------------------------------------------------------------------ Moody's Investors Service placed the ratings of NeighborCare, Inc. (senior implied at Ba2) under review for possible downgrade. The rating actions are based on concerns that: (1) the company has not met expected cash flow targets since the spin-off of its nursing home operations because of competitive and reimbursement pressures; (2) liquidity has been constrained by higher than expected capital and acquisition spending; (3) the immediate reimbursement environment has become more risky, due largely to pressures on Medicaid; and (4) there is significant uncertainty around reimbursement associated with new legislation under Medicare Part D. Since late 2003, when Moody's upgraded the company's debt ratings following the spin-off of its nursing home operations, NeighborCare (formerly Genesis Health Ventures) has not performed to Moody's expectations. Medicaid reimbursement pressures and pricing competition have been the key factors driving weaker performance. In addition, a take-over bid by Omnicare -- which was launched less than one year following the spin-off -- may have made it more difficult to attract new business. Moody's does not anticipate that Omnicare will proceed with a transaction until after June 16, 2005, assuming the company receives FTC approval based on public disclosures made by Omnicare. Moody's understands that NeighborCare is not interested in the current tender price of $30 per share. NeighborCare has significant exposure to two large contracts with Manor Care and Genesis HealthCare, totaling approximately 21% of total revenues for the first quarter 2005. In addition to general concentration risk, both contracts are based on Medicaid rates, which continue to face pressure due to budgetary constraints. Also, industry-wide competitive pricing pressures have grown as smaller regional and local long-term care pharmacies are negotiating better rates with nursing homes. Free cash flow and liquidity have been constrained by reduced profitability, but also higher than expected capital spending (about $40 million versus Moody's forecast of $20 million) associated with the decision to accelerate automation of certain distribution facilities. Acquisition spending has also increased significantly relative to expectations (estimated at $75-90 million versus Moody's forecast of $25 million.) A new drug reimbursement model proposed under the Medicare Modernization Act of 2003 creates uncertainty for institutional pharmacies. While a significant portion of NeighborCare's revenues (approximately 50%) are at risk for change, it is not yet clear how the new system will affect the company's performance. While some features of the legislation may prove to be positive, Moody's believe that there is risk that rates negotiated with the new intermediaries - Prescription Drug Plans (PDPs) - may be even lower than those offered by state Medicaid programs. In addition, there is risk that some portion of rebates from manufacturers may eventually shift to PDPs, which will now have control over drug formularies. Moody's rating review will consider: (1) future operating and free cash flow levels especially in light of higher capital spending; (2) liquidity sources to fund future cash needs including acquisitions; and (3) the extent to which reimbursement pressures may affect future cash flows. If a bid by Omnicare is eventually accepted by NeighborCare, Moody's would consider how that combination may affect the credit quality of NeighborCare's debt. However, Moody's will not necessarily await final resolution of a combination in order to conclude its rating review. Ratings placed under review for possible downgrade: NeighborCare, Inc (formerly Genesis Health Ventures): * Ba1 $100 million secured bank revolver; * Ba3 $250 million senior subordinated notes; * Ba2 senior implied rating; and * Ba2 issuer rating. NeighborCare, Inc, based in Baltimore, Maryland, is one of the nation's largest providers of institutional pharmacy services and serves approximately 300,000 institutional beds in long-term care settings. NRG ENERGY: Declares Preferred Stock Dividend of $10 Per Share -------------------------------------------------------------- NRG Energy, Inc. (NYSE:NRG) disclosed a $10 per share cash dividend on its preferred stock issuance completed on Dec. 27, 2004. The dividend is payable on Wednesday, June 15, 2005, to shareholders of record as of June 1, 2005. NRG Energy, Inc., owns and operates a diverse portfolio of power-generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged from chapter 11 on December 5, 2003, under the terms of its confirmed Second Amended Plan. James H.M. Sprayregen, Esq., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented NRG Energy in its $10 billion restructuring. * * * Moody's Investor Services and Standard & Poor's assigned single-B ratings to NRG Energy's 8% secured notes due 2013. NUCENTRIX BROADBAND: Distributes $0.435 Per Share to Stockholders ----------------------------------------------------------------- Nucentrix Broadband Networks, Inc., funded an additional distribution of $0.435 per share to holders of Nucentrix common stock of record as of June 10, 2004. The distribution will be made through the Company's disbursing agent, Computershare Trust Company, Inc. The distribution of $0.435 per share announced today, together with the distribution of $2.25 per share made in November 2004, will total $2.685 per share distributed to Record Holders. As previously reported, the U.S. Bankruptcy Court for the Northern District of Texas confirmed the Company's First Amended Joint Plan of Liquidation (Plan) in May 2004 and, in June 2004, the Company completed the sale of substantially all of its assets to Nextel Spectrum Acquisition Corp. The effective date of the Plan is June 10, 2004. In accordance with the Plan, shares of common stock of Nucentrix were canceled and the transfer books of the Company were closed at 3:00 p.m. (CDT) on June 10, 2004. Under the Plan, Record Holders of Nucentrix common stock are entitled to receive distributions of the remaining net proceeds from the sale of the Company's assets after payment has been made to holders of allowed claims. To claim their distributions, Record Holders are required to surrender their stock certificates and otherwise follow the instructions contained in the letter of transmittal mailed to Record Holders in November 2004. Beneficial owners whose shares of Nucentrix common stock are held through a nominee holder such as Cede & Co. or a depository institution such as a bank or brokerage firm should direct any questions to such holder or institution. Copies of the transmittal letter mailed to Record Holders may be obtained (at the requesting party's expense) from, and questions regarding the distribution to Record Holders may be directed to, the Company's disbursing agent: Computershare Trust Company, Inc. 350 Indiana Street, Suite 850 Golden, CO 80401 Telephone (303) 262-0600 All distributions will be made pursuant to, and subject to the conditions of, the Plan. The Company expects the distribution announced today to be the final distribution made to Record Holders. The Company has filed a Motion for Entry of Final Decree with the Bankruptcy Court to close the Company's chapter 11 case. The Motion currently is scheduled for hearing today, June 13, 2005, at 2:00 p.m. (CDT) in the Honorable Judge Harlin D. Hale's courtroom, 14th floor, at the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, Earle Cabell Federal Building, 1100 Commerce Street, Dallas, Texas 75242. Nucentrix Broadband Networks, Inc., provided broadband wireless Internet services using radio spectrum licensed by the Federal Communications Commission (FCC). The Company and certain subsidiaries filed chapter 11 petitions on Sept. 5, 2003 (Bankr. N.D. Tex. Case No. 03-39123). The U.S. Bankruptcy Court for the Northern District of Texas has confirmed the First Amended Joint Plan of Liquidation of the Company and its debtor subsidiaries in May 2004. The plan took effect on June 10, 2004. OPTINREALBIG.COM: Creditors Must File Proofs of Claim by July 29 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Colorado, set 5:00 p.m., on July 29, 2005, as the deadline for all creditors owed money by OptinRealBig.com, LLC, on account of claims arising prior to March 25, 2005, to file formal written proofs of claim. Creditors must deliver their claim forms to the: Clerk of the U.S. Bankruptcy Court for the District of Colorado United States Custom House 721 19th Street Denver, Colorado 80202-2508 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. OWENS CORNING: VPs Dana, Dietzel & Krull Sell 3,090 Shares ---------------------------------------------------------- In separate Form 4 filings with the Securities and Exchange Commission, three Owens Corning officers report that they disposed of 3,090 shares in the aggregate. No. of Shares Shares Owned After Officer Position Disposed Transaction ------- -------- -------- ------------- Charles E. Dana Vice President, 903 1,333 President for Composite Solutions Daniel Dietzel Vice President, 2,075 1,333 President for Siding Solutions Stephen K. Krull Senior 112 0 Vice President, General Counsel and Secretary Messrs. Dana and Dietzel's shares were sold at $4.95 per share. Mr. Krull's shares were sold at $4.56 per share. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) PAGSTA INTERNATIONAL: Case Summary & 20 Largest Creditors --------------------------------------------------------- Debtor: Pagsta International, LLC 240 Stoneridge Drive, Suite 300 Columbia, South Carolina 29210 Bankruptcy Case No.: 05-06671 Type of Business: The Debtor designs custom motorcycles. The Pagsta Mini and Pagsta Choppa are the company's first mass-produced motorcycle models. See http://www.pagsta.com/ Chapter 11 Petition Date: June 8, 2005 Court: District of South Carolina (Columbia) Judge: William Thurmond Bishop Debtor's Counsel: Barbara George Barton, Esq. Robinson, Barton, McCarthy, Calloway & Johnson, P.A. P.O. Box 12287 Columbia, South Carolina 29211 Tel: (803) 256-6400 Estimated Assets: $587,109 Estimated Debts: $5,741,192 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ James Stebbins $1,250,000 1467 Conway Lake Forest, IL 60045 Andrew Gold $1,250,000 10835 Lockland Road Potomac, MD 20854 First Coastal Bank NA $662,078 Gardena Branch Secured Value: 1644 West Redondo Beach Boulevard $350,922 Gardena, CA 90247 Averitt Express $175,307 P.O. Box 3145 Cookeville, TN 38502-3145 Sutherlin Asbill Brennan $126,119 999 Peachtree Street Atlanta, GA 30309-3996 Anna K Williamson $125,000 9100 Prestwick Club Drive Duluth, GA 30097 Rumilla International Group $90,000 Diaz Miron No. 39 Jalcingo, Veracruz 93660 John C. Burke $75,000 P.O. Box 2285 Sedona Az 86339 Jami Facchinello $75,000 P.O. Box 4747 Sedona, AZ 86340 RSM Mcgladrey $53,566 20 North Martingale Road, Suite 500 Schaumburg, IL 60173 American Art Design Group $36,000 19425 Londelius Street Northridge, CA 91324 Lifeng Group Company Ltd. $33,000 No. 120 Jintai Mansion, Chezhandadoa Wenzhou Zh, China American Express $30,129 Box 0001 Los Angeles, CA 90096 Fidiciary Management $25,000 P.O. Box 61010 Potomac Village Station Potomac, MD 20859 Christensen Miller Fink Et Al $22,656 10250 Constellation Boulevard, 19th Floor Los Angeles, CA 90067 Transit Air Cargo $21,335 2204 East Fourth Street Santa Ana, CA 92705 Richard Coury $18,461 7565 Brookstead Crossing Duluth, GA 30097 Wherley Moving And Storage Inc. $18,000 216 2nd Street Northeast East Grand Forks, MN 56721 Eugene Carter $17,307 130 Magnolia Avenue Palatka, FL 32177 X Test Inc. $16,650 9030 El Doric Court Gilroy, CA 95020 PARMALAT GROUP: Releases Financial Results as of April 30, 2005 --------------------------------------------------------------- Parmalat Finanziaria S.p.A. in Extraordinary Administration reports the operating and financial results of the Parmalat Group at April 30, 2005. Scope of Consolidation The scope of consolidation has been defined using principles that are consistent with those adopted in preparing the statement of income and balance sheet at December 31, 2004. Companies that are subject to restrictions on their management as a result of local bankruptcy proceedings that have placed them outside the control of Parmalat Finanziaria S.p.A. in Extraordinary Administration, and companies in voluntary liquidation, are no longer consolidated on a line-by-line basis. The current scope of consolidation no longer includes companies in which the Group held equity investments that were sold after January 1, 2005. The corresponding 2004 data have been restated accordingly on a pro forma basis. The operations divested in 2005 include the companies that comprised the USA Bakery Division (Mother's Cake & Cookies, Archway Cookies and three production units in Canada), which were sold in January 2005, and Parmalat Uruguay, which was sold in February 2005. Margherita Yogurt, which was placed in liquidation in February 2005, has also been removed from the scope of consolidation. Financial Highlights Cumulative Through April (in EUR millions) Revenues -------------------------------- Previous Previous year Current year Pro-Forma year -------- ------------- ------- Core Activities 1,171.5 1,171.5 1,215.4 Non Core Activities 102.8 93.1 85.4 -------- ------------- ------- Total 1,274.3 1,264.6 1,300.8 ======== ============= ======= EBITDA -------------------------------- Previous Previous year Current year Pro-Forma year -------- ------------- ------- Core Activities 74.5 74.5 89.7 Non Core Activities (0.3) 0.1 3.4 -------- ------------- ------- Subtotal 74.2 74.6 93.1 Proceedings costs (19.4) (19.4) (21.0) -------- ------------- ------- Total 54.8 55.2 72.1 ======== ============= ======= % of Revenues -------------------------------- Previous Previous year Current year Pro-Forma year -------- ------------- ------- Core Activities 6.4 6.4 7.4 Non Core Activities (0.3) 0.1 4.0 -------- ------------- ------- Subtotal 5.8 5.9 7.2 Total 4.3 4.4 5.5[sic] ======== ============= ======= * The Core Businesses include beverages (milk and fruit juices) and functional dairy products, which are sold under approximately 30 brands primarily in high-potential countries in which there is sustained demand for healthy products, consumers are willing to pay a premium price for Parmalat brands and there is access to leading-edge technologies. ** The Non-core Businesses are those that are located in countries or engaged in activities that are not strategically significant and have been earmarked for divestiture. Core Businesses In the four months ended April 30, 2005, the Group's Core Businesses had revenues of EUR1,215.4 million, a gain of 3.7% over the EUR1,171.5 million reported at the end of April 2004. EBITDA also improved, growing both in absolute terms (from EUR74.5 million to EUR89.7 million) and as a percentage of revenues (from 6.4% to 7.4%). These data do not reflect the impact of the nonrecurring charges related to the extraordinary administration proceedings, which amounted to about EUR21.0 million. Monthly revenues (difference between the cumulative figures at April 30 and March 31) totaled EUR334.9 million, up from EUR325.6 million in April 2004, and EBITDA rose to EUR27.9 million (EUR23.9 million in April 2004). [Parmalat provides an] analysis of the Group's results in the main geographic regions in which it operates. -- Italy At EUR445.5 million, cumulative revenues were slightly lower (-2.4%) compared with the first four months of 2004 (EUR456.5 million). EBITDA totaled EUR30.7 million, equal to 6.9% of revenues. If the data for the affiliate Boschi S.p.A. in Extraordinary Administration are excluded, overall revenues show virtually no year-over-year change, while EBITDA improved slightly. The Group has launched a program that will restore forward momentum to its Italian operations by focusing on the fresh-milk segment of the market, implementing a more aggressive and competitive marketing strategy, and introducing the Jeunesse line of functional products. In the main business segments in which the Group operates, market shares have been improving steadily, rebounding to the levels attained prior to the start of the Extraordinary Administration proceedings. -- Spain While the overall revenues for the first four months of 2005 were down slightly compared with the same period last year, the trend showed a significant improvement in the month of April. Cumulative revenues for the period fell from EUR71.2 million in 2004 to EUR68.1 million in 2005, but EBITDA held relatively steady both in absolute terms (EUR4.7 million, compared with EUR4.8 million in 2004) and as a percentage of revenues (6.9%, compared with 6.7% in 2004). In April 2005, monthly revenues and EBITDA improved compared with the first three months of the year, totaling EUR18.6 million and EUR1.6 million, respectively. The problems that have been hampering the performance of the Spanish operations are well known: a general contraction in consumer demand, strong competition (particularly in the yogurt and dessert market segments) and a steady rise in the cost of packaging plastics (increases ranging between 20.0% and 34.0% compared with 2004). Nevertheless, the monthly data show evidence of a turnaround, thanks to a change in the sales mix. In the coming months, the repositioning of the bioliquids and Activ Soja product lines should provide an additional boost to sales. -- South Africa Cumulative revenues through April 30, 2005 totaled EUR89.6 million, up from EUR74.9 million in the first four months of 2004. EBITDA also increased, rising from EUR6.9 million (9.2% of revenues) to EUR8.6 million (9.6% of revenues). Monthly data for April 2005 show revenues of EUR23.4 million. EBITDA amounted to EUR2.7 million (11.5% of revenues), as profitability improved compared with March 2005. The performance of the South African operations reflects a positive contribution by all divisions, with the best gains reported in the UHT milk, yogurt, cheese and fruit juice segments. A more favorable average exchange rate than in the first four months of 2004 (the rand appreciated by 5.2% compared with the euro) was also a factor. -- Venezuela Even though the bolivar continued to lose value versus the euro during the first four months of 2005 (a decline of 18.9% compared with the average exchange rate for the same period last year) the Venezuelan operations posted highly positive results. At EUR47.1 million, revenues were lower than the EUR49.8 million booked in the four months ended April 30, 2004, but EBITDA jumped to EUR4.5 million (9.5% of revenues), up from EUR1.0 million (2.1% of revenues). Savings in raw material costs and an increase in the efficiency of the manufacturing organization and the logistics/distribution system, coupled with a reduction in overhead, are the main reasons for this improvement. In April 2005, monthly revenues totaled EUR11.6 million, about the same as in March 2005, and EBITDA amounted to EUR1.2 million (10.4% of revenues). -- Canada Revenues for the first four months of 2005 were higher (+12.8%) than in the same period last year, rising from EUR360.0 million to EUR406.1 million. At the same time, EBITDA grew to EUR27.3 million (EUR19.3 million in the four months ended April 30, 2004), equal to 6.7% of revenues (5.4% in the same period last year). Monthly data for April 2005 show revenues of EUR123.4 million and EBITDA of EUR9.6 million (5.8% of revenues), as profitability improved compared with March 2005. Higher unit sales for several product categories and a reduction in distribution expenses and overhead are the main reasons for the improved performance in April and the first four months of 2005, compared with the corresponding periods a year ago. -- Australia In the first four months of 2005, the Australian operations achieved modest improvements in revenues (EUR125.2 million compared with EUR123.0 million in the same period last year) and in EBITDA, which increased both in absolute terms (up from EUR9.4 million and EUR9.8 million) and as a percentage of revenues (from 7.6% to 7.8%). Revenues for the month of April totaled EUR34.4 million. EBITDA, which amounted to EUR3.9 million, were higher than in the earlier months of 2005. The performance of the Australian operations in the first four months of 2005 reflects the positive impact of the higher revenues and margins generated by sales of pasteurized milk, UHT milk and yogurt, offset in part by a slight depreciation of the Australian dollar versus the euro (-3.4% compared with the average exchange rate for the first four months of 2004). Non-core Businesses In the first quarter of 2005, the Group's Non-core Businesses reported revenues of EUR85.4 million, a decrease of 7.7% from pro forma revenues of EUR92.5 million in the same period last year. However, even though net revenues were down, chiefly as a result of the divestiture of the Mexican operations in 2004, EBITDA improved from EUR0.1 million to EUR3.4 million, due mainly to the successful implementation of cost cutting programs by the Group's other operations. Revenues for the month of April were down slightly compared with April 2004, totaling EUR16.5 million, and EBITDA were negative by EUR0.6 million. NET FINANCIAL POSITION Highlights (in EUR millions) Balance Balance Balance as at as at as at 12/31/04 03/31/05 04/30/05 -------- -------- -------- Short term financial assets (375.6) (358.7) (354.5) broken down as: Financial assets not held as fixed assets (0.4) (0.3) (0.3) Liquid assets (375.2) (358.3) (354.3) Financial accrued income and prepaid expenses (incl. intra-Group) (66.0) (65.2) (67.5) -------- -------- -------- Total short-term financial assets (441.6) (423.8) (422.1) ======== ======== ======== Financial debts 11,455.3 11,460.5 11,471.7 Financial accrued expenses & deferred income 14.3 12.7 7.9 -------- -------- -------- Total financial liabilities 11,469.6 11,473.2 11,479.7 Indebtedness owed to lenders outside the Group/ (Financial assets) of companies consolidated line-by-line 11,028.0 11,049.3 11.057.6 Indebtedness owed by companies consolidated line-by-line to companies that are parties to local composition-with-creditors proceedings 316.6 325.8 325.2 Indebtedness/(Financial assets) of companies consolidated line-by-line 11,344.6 11,375.1 11,382.8 Indebtedness/(Financial assets) of companies not consolidated line-by-line 7.6 7.5 7.5 -------- -------- -------- Total indebtedness/ (financial assets) 11,352.2 11,382.6 11,390.3 ======== ======== ======== At the end of April 2005, the indebtedness of companies consolidated line by line totaled EUR11,057.6 million, or EUR29.6 million more than at December 31, 2004. This increase reflects primarily a reduction in liquid assets, which occurred because Parmalat S.p.A. in Extraordinary Administration underwrote a capital increase carried out by a Portuguese affiliate, repaid certain debt installments upon maturity, and recognized the weakening of the euro versus the reporting currencies of its companies in South Africa and Canada and the U.S. dollar. In April 2005, the indebtedness of companies consolidated line by line increased by EUR8.3 million compared with the previous month (EUR11,049.3 million), reflecting minor changes in certain debt positions and the impact of fluctuations in foreign exchange rates. Also in April, the Group collected proceeds of EUR2.3 million from the sale of the business operations of Streglio S.p.A. in Extraordinary Administration. The combined indebtedness owed to lenders outside the Group by subsidiaries that are parties to local composition-with-creditors proceedings and, consequently, have been deconsolidated is not reflected in the net financial position. Some of these borrowings are secured by guarantees provided by Parmalat S.p.A. in Extraordinary Administration and Parmalat Finanziaria S.p.A. in Extraordinary Administration in the amount of EUR1,701.3 million. The indebtedness owed by the Group to companies in special proceedings that are not consolidated line by line amounted to EUR325.2 million. The change, compared with the balance owed at December 31, 2004 (EUR316.6 million) reflects mainly changes in foreign exchange translations. As of today, no amount has been drawn from the EUR105.8-million line of credit that a pool of banks provided to Parmalat S.p.A. in Extraordinary Administration on March 4, 2004 and later renewed until September 2, 2005. A breakdown of the net indebtedness owed to lenders outside the Group by companies consolidated line by line: (in EUR millions) Balance Balance Balance as at as at as at 12/31/04 03/31/05 04/30/05 -------- -------- -------- Companies in EA subject to proposed composition with creditors 9,813.0 9,822.7 9,828.4 Other companies in EA 89.7 89.9 88.8 Other companies 1,125.3 1,136.7 1,140.4 -------- -------- -------- Total indebtedness/ (financial assets) 11,028.0 11,049.3 11,057.6 ======== ======== ======== Companies in Extraordinary Administration The net indebtedness incurred by companies under extraordinary administration toward lenders outside the Group prior to their becoming eligible for extraordinary administration is all short- term, since all of these companies are in default of the covenants of the respective loan agreements. Liquid assets held by the companies included in the Proposal of Composition with Creditors were down slightly, falling from EUR239.8 million at March 31, 2005 to EUR234.1 million at April 30, 2005. The main reason for this decrease is a change in the liquid assets held by Parmalat S.p.A. in Extraordinary Administration, which is explained in the section of this press release that discusses the performance of Parmalat S.p.A. in Extraordinary Administration. The liquid assets mentioned above include EUR6.6 million in deposits from subsidiaries, offset by the recognition of an equal liability. Other Companies At April 30, 2005, the net indebtedness owed to lenders outside the Group by the remaining operating and financial companies, which are consolidated line by line but are not included in the extraordinary administration proceedings, totaled EUR1,140.4 million (including EUR698.4 million in long-term debt), about the same as at March 31, 2005, when it amounted to EUR1,136.7 million. Some Group companies are currently renegotiating their indebtedness in order to restructure it. Principal Companies Under Extraordinary Administration Financial highlights of the principal Italian companies under extraordinary administration: Parmalat Finanziaria SpA (Amounts in millions of Euros) Balance Balance Balance as at as at as at 12/31/04 03/31/05 04/30/05 -------- -------- -------- Short-term financial assets (24.4) (24.0) (23.8) broken down as: Intra-Group loans receivable (17.1) (17.1) (17.1) Financial assets not held as fixed assets - - - Liquid assets (7.4) (7.0) (6.7) Financial accrued income and prepaid expenses (including intra-Group) - (0.2) (0.2) -------- -------- -------- Total short-term financial assets (24.4) (24.2) (24.0) ======== ======== ======== Financial liabilities (including intra-Group) 1,286.0 1,289.0 1,289.0 broken down as: Intra-Group loans payable 1,019.5 1,022.5 1,022.5 Other financial debts 266.5 266.5 266.5 Financial accrued expenses and deferred income (including intra-Group) - - 0.1 -------- -------- -------- Total financial liabilities 1,286.0 1,289.0 1,289.1 -------- -------- -------- Total indebtedness/ (financial assets) 1,261.6 1,264.8 1,265.1 ======== ======== ======== No significant changes have occurred since the previous month. Parmalat SpA (Amounts in millions of Euros) Balance Balance Balance as at as at as at 12/31/04 03/31/05 04/30/05 -------- -------- -------- Short-term financial assets (152.7) (143.9) (139.7) broken down as: Intra-Group loans receivable (32.3) (30.4) (32.4) Financial assets not held as fixed assets - - - Liquid assets (120.4) (113.5) (107.3) Financial accrued income and prepaid expenses (including intra-Group) - - (0.1) -------- -------- -------- Total short-term financial assets (152.7) (143.9) (139.8) ======== ======== ======== Financial liabilities (including intra-Group) 3,766.7 3,766.7 3,766.7 broken down as: Intra-Group loans payable 997.2 997.2 997.2 Other financial debts 2,769.6 2,769.6 2,769.6 Financial accrued expenses and deferred income (including intra-Group) - - - -------- -------- -------- Total financial liabilities 3,766.7 3,766.7 3,766.7 -------- -------- -------- Total indebtedness/ (financial assets) 3,614.0 3,622.9 3,627.0 ======== ======== ======== The change in indebtedness is mainly the result of a reduction in short-term financial assets. More specifically, intra-Group loans receivable increased by EUR2.0 million due mainly to the granting of a EUR1.7-million loan to Latte Sole S.p.A. and other smaller loans totaling EUR0.3 million. Liquid assets decreased by EUR6.2 million reflecting the disbursement of the abovementioned loans and other changes caused by normal fluctuations in working capital. Eurolat SpA (Amounts in millions of Euros) Balance Balance Balance as at as at as at 12/31/04 03/31/05 04/30/05 -------- -------- -------- Short-term financial assets (13.5) (14.2) (14.2) broken down as: Intra-Group loans receivable (2.2) (2.2) (1.9) Financial assets not held as fixed assets - - - Liquid assets (11.3) (12.0) (12.3) Financial accrued income and prepaid expenses (including intra-Group) - (0.1) (0.0) -------- -------- -------- Total short-term financial assets (13.5) (14.3) (14.2) ======== ======== ======== Financial liabilities (including intra-Group) 188.2 188.2 188.2 broken down as: Intra-Group loans payable 43.8 43.8 43.8 Other financial debts 144.4 144.4 144.4 Financial accrued expenses and deferred income (including intra-Group) - - - -------- -------- -------- Total financial liabilities 188.2 188.2 188.2 -------- -------- -------- Total indebtedness/ (financial assets) 174.7 173.9 174.0 ======== ======== ======== No significant changes have occurred since the previous month. Lactis SpA (Amounts in millions of Euros) Balance Balance Balance as at as at as at 12/31/04 03/31/05 04/30/05 -------- -------- -------- Short-term financial assets (4.4) (3.7) (2.7) broken down as: Intra-Group loans receivable - - - Financial assets not held as fixed assets - - - Liquid assets (4.4) (3.7) (2.7) Financial accrued income and prepaid expenses (including intra-Group) (0.0) (0.0) (0.0) -------- -------- -------- Total short-term financial assets (4.4) (3.7) (2.7) ======== ======== ======== Financial liabilities (including intra-Group) 18.6 18.6 18.6 broken down as: Intra-Group loans payable 8.6 8.6 8.6 Other financial liabilities 10.0 10.5 10.0 Financial accrued expenses and deferred income (including intra-Group) - 0.0 0.0 -------- -------- -------- Total financial liabilities 18.6 18.6 18.6 -------- -------- -------- Total indebtedness/ (financial assets) 14.2 14.9 15.9 ======== ======== ======== No significant changes have occurred since the previous month. Significant Events April 1 Streglio S.p.A. in Extraordinary Administration, acting with the prior approval of the Italian Ministry of Production Activities, sells to Gruppo Borsci Industria Liquori certain business operations consisting of the production and marketing of cocoa, chocolate, confectionery, and other candies and pastries and chocolate-based products, and transferred to the buyer the ownership of the Streglio brand. The agreement calls for the buyer to maintain employment at the level provided for in the Business Continuity Plan appended to the buyer's offer for a period of at least two years. April 29 The financial statements at December 31, 2004 of Parmalat Finanziaria Spa in Extraordinary Administration and the 2004 Annual Report the Parmalat Group are published. The Annual Report includes the Report on Operations and a Report of the Independent Auditors PricewaterhouseCoopers Spa. Headquartered in Wallington, New Jersey, Parmalat U.S.A. Corporation -- http://www.parmalatusa.com/-- generates more than EUR7 billion in annual revenue. The Parmalat Group's 40- some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company employs over 36,000 workers in 139 plants located in 31 countries on six continents. It filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The Bankruptcy Court confirmed the U.S. Debtors' Plan of Reorganization on March 7, 2005. (Parmalat Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) PATHMARK STORES: Shareholders Accept Yucaipa's $150 Million Offer ----------------------------------------------------------------- Pathmark Stores Inc.'s shareholders met on Thursday, June 9, 2005, to decide whether to accept an offer from Ron Burkle, owner of The Yucaipa Cos., to buy a 40% equity stake for $150 million from the financially troubled grocer. The Associated Press reports that more than 83% of the shareholders favored the proposal at Thursday's special meeting. Yucaipa will own approximately 8.76 million shares of Pathmark. "Pathmark has tremendous assets on which to build, and we are eager to work with the Pathmark team to help the company capitalize on its strong market position and competitive advantages," Mr. Burkle told the AP. Yucaipa owns several supermarket chains and has investments at Food4Less, Dominick's, Ralphs Grocery Co., Smith Food and Drug, and Fred Meyer. Pathmark's shares closed at $8.99 on Friday, June 10, 2005. The shares traded for $8.86 after the deal was announced on Thursday. When the Yucaipa offer was disclosed in March, Pathmark shares traded below $5. Pathmark Stores is a regional supermarket currently operating 142 supermarkets primarily in the New York - New Jersey and Philadelphia metropolitan areas. The Company filed for chapter 11 protection on July 12, 2000 (Bankr. Case 00-02963). The Bankruptcy Court confirmed Pathmark's prepackaged Plan of Reorganization on Sept. 7, 2004. The company reported a $2.1 million net loss for the quarter ending April 30, 2005. For the fiscal year 2004, the company suffered a $308 million loss. As of April 30, 2005, the company listed $1,254,000,000 in assets and $1,190,000,000 in debts. S&P currently rates Pathmark's $350 million 8-3/4% Senior Subordinated Notes due 2012 at CCC+. PEGASUS SATELLITE: Trustee Modifies Recovery Analysis ----------------------------------------------------- Ocean Ridge Capital Advisors, LLC, as Liquidating Trustee for The PSC Liquidating Trust, disclosed the creation of a Web site at http://www.psc-trust.com/to provide beneficiaries of The PSC Liquidating Trust with key information concerning the Trust, including the status of distributions to Trust beneficiaries. The recovery analysis contained in the First Amended Disclosure Statement provides an estimated range of recovery for Class 3A Claims of 56% to 60%. The revised recovery analysis, presented in detail on the Web site, provides an estimated range of recovery of 56% to 59% of face value of the Senior Notes (53% to 57% of par plus accrued interest through the bankruptcy petition date on the Senior Notes), depending on a number of factors which may be subject to change from time to time. To gain a better understanding of the components of the revised recovery analysis, the Liquidating Trustee recommends that holders of Class 3A Claims refer to the information presented on the website. It is crucial to note that the revised recovery analysis is only an estimate, and as such, there is no guarantee that actual recoveries will be within the estimates provided by the Liquidating Trustee. The Liquidating Trustee hopes to make an initial distribution to holders of Class 3A Claims prior to the end of June, provided that it can reach an agreement with the contingent and unliquidated claim holders on the establishment of appropriate reserves. In addition, the Liquidating Trustee is targeting June 2006 for liquidating the Trust assets and completing distributions to beneficiaries of the Trust. However, this target date is subject to a number of factors including, but not limited to, accomplishing a sale of the broadcast television assets during 2005, an event which is not certain at this time. The site also contains documentary and financial information about the operations of the Trust and the assets owned and/or controlled by the Trust. About The PSC Liquidating Trust The PSC Liquidating Trust was established by order of the Bankruptcy Court for the District of Maine, pursuant to the First Amended Joint Chapter 11 Plan of Pegasus Satellite Communications, Inc. and its related direct and indirect subsidiaries. The Plan became effective on May 5, 2005. In accordance with the terms of the Plan, the purpose of the Trust is to maximize the value of certain of the Debtors' assets, to evaluate and pursue, if appropriate, rights and causes of actions, as successor to and representative of the Debtors' estates in accordance with section 1123(b)(3)(B) of the Bankruptcy Code, and to make distributions to its beneficiaries. The Trust is not a public reporting entity and has no reporting requirements other than those specifically provided for in the Plan. The Liquidating Trustee has provided the information on the website only as an accommodation to beneficiaries of the Trust. The Trust maintains offices in Bala Cynwyd, PA and Jackson, MS. The Liquidating Trustee maintains offices in New Rochelle, NY. Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Maine Case No. 04-20889) on June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. POLYMER RESEARCH: Ch. 7 Trustee Gets $250K Loan for Clean-Up Work ----------------------------------------------------------------- Alan Nisselsen, the chapter 7 trustee overseeing the liquidation of Polymer Research Corp. of America, asks the U.S. Bankruptcy Court for the Eastern District of New York for authority to enter into a $250,000 postpetition financing agreement with Wachovia Bank N.A., acting as indenture trustee for Bayview Series 2002-D. The loan will be used to preserve and dispose of a parcel of commercial real estate, which is the bankruptcy estate's most valuable asset. The Trustee relates that before the property can be offered for sale, it should be cleaned-up by disposing of certain chemicals and other environmental hazards. Wachovia Bank holds a first priority secured lien against the property and agrees to fund the clean-up. Paragon Environmental Services, Inc., estimates that the cost of the clean-up is approximately $172,000. The postpetition loan will be secured by a priming lien on all of the estate's property pursuant to Section 364(d) of the Bankruptcy Code. Wachovia also wants -- and is entitled to -- super-priority administrative expense claim status, the Trustee tells the Court. Headquartered in Brooklyn, New York, Polymer Research Corp. of America -- http://www.polymer-ny.com/-- was a company devoted to research and development of utilizing a proprietary process called chemical grafting. The Company filed for chapter 11 protection on October 1, 2004 (Bankr. E.D.N.Y. Case No. 04-24036). Randy M. Kornfeld, Esq., at Stavis & Kornfeld LLP, represents the Debtor. When the Debtor filed for chapter 11 protection, it listed $15,000,000 in total assets and $5,033,000 in total liabilities. The Court converted the Debtor's case to a chapter 7 liquidation proceeding on Feb. 25, 2005. Alan Nisselson, Esq., is the chapter 7 Trustee for the Debtor's estate. POLYONE CORP: Reduces Income Outlook for Second-Quarter of 2005 --------------------------------------------------------------- PolyOne Corporation (NYSE: POL) updated its revenue and income outlook for the second quarter that will end June 30, 2005. This action is part of PolyOne's effort to inform investors at mid- quarter of any material changes to major business drivers. PolyOne anticipates that revenues from continuing operations should increase between 2 percent and 4 percent in the second quarter compared with the first quarter of 2005, down from expectations of the 7 percent to 10 percent increase that the Company communicated in its April 28, 2005, earnings release. Typically, the second quarter is seasonally stronger than the first quarter. Currently, however, the Company projects that shipments will be flat versus first-quarter 2005, as North American customers appear to be reducing their inventories and European demand remains sluggish. The Company has also adjusted down by approximately $1 million its earlier projection for the Resin and Intermediates segment's operating income, due to less-than-anticipated polyvinyl chloride resin price increases in the market place. PolyOne now projects that segment operating income should increase between $6 million and $9 million in the second quarter compared with the first quarter of 2005. Within the Performance Plastics segment, softness in demand has made efforts to improve product spreads (selling price less raw material costs), much more difficult. Within the Distribution segment, shipments are expected to be similar to first-quarter 2005 levels. In addition, PolyOne does not expect to realize the benefit of one-time favorable items during the second quarter, as it did in the first quarter. These items included approximately $4 million related primarily to the settlement of legal issues and adjustments to associated reserves. As a result of the above factors, the Company projects that operating income from continuing operations should improve by no more than $1 million over first-quarter 2005. Included in this total is the anticipated improvement in Resin and Intermediates segment operating income. Due to worse-than-anticipated automotive sales and dynamics in North America, the Engineered Films business' contribution to earnings of discontinued operations is likely to be lower than earlier expected. By contrast, the Company projects improved shipments and product spreads for the Specialty Resins business unit. PolyOne now projects that net income from discontinued operations should be between $6 million and $8 million in the second quarter, which is about $1 million lower than anticipated in the April earnings release. About the Company PolyOne Corporation -- http://www.polyone.com/-- with 2004 annual revenues of approximately $2.2 billion, is a leading global compounding and North American distribution company with continuing operations in thermoplastic compounds, specialty polymer formulations, color and additive systems, and thermoplastic resin distribution. Headquartered in northeast Ohio, PolyOne has employees at manufacturing sites in North America, Europe, Asia and Australia, and joint ventures in North America and South America. * * * As reported in the Troubled Company Reporter on Feb. 18, 2005, Moody's Investors Service affirmed PolyOne Corp.'s Senior Implied rating at B2. In addition, Moody's ratings for the Company's senior unsecured notes and issuer rating were affirmed at B3. The rating outlook has been changed to stable from negative. PONDEROSA PINE: Wants to Hire Nixon Peabody as Litigation Counsel ----------------------------------------------------------------- Ponderosa Pine Energy, LLC, and its affiliates ask the U.S. Bankruptcy Court for the District of New Jersey for permission to employ and retain Nixon Peabody LLP as their special corporate and litigation counsel. The Debtors want Nixon Peabody to continue to provide legal services in corporate and litigation matters. Presently, the Firm advises the Debtors with respect to indemnification claims arising out of litigation involving property in Johnson County. Robert N.H. Christmas, Esq., a partner of Nixon Peabody, discloses that his Firm's professional bill: Designation Hourly Rate ----------- ----------- Attorney $290 - $650 Paralegals $150 - $200 To the best of the Debtor's knowledge, Nixon Peabody is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Morristown, New Jersey, Ponderosa Pine Energy, LLC, and its affiliates are utility companies that supply electricity and steam. The Company and its debtor-affiliates filed for chapter 11 protection on April 14, 2005 (Bankr. D.N.J. Case No. 05-22068). Mary E. Seymour, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC represent the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. POPE & TALBOT: High Debt Prompts S&P to Lower Ratings to BB- ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit and other ratings on pulp and lumber producer Pope & Talbot Inc. to 'BB-' from 'BB' and placed them on CreditWatch with negative implications. "The rating action reflects Portland, Oregon-based Pope & Talbot's stubbornly high debt level and our expectation of negative free cash flow for 2005, given the recent decline in northern bleached softwood kraft pulp prices and the strong Canadian dollar," said Standard & Poor's credit analyst Dominick D'Ascoli. "We have become increasingly concerned about the competitiveness of Canadian pulp producers, considering the relative exchange-rate disadvantage, and debt, which rose $37 million in April with the acquisition of the Fort St. James sawmill. We are also concerned about the ramp-up of new European and South American pulp capacity that is likely to dampen pricing improvement." The majority of the company's costs are paid in the Canadian dollar, which has appreciated 23% against the U.S. dollar over the past three years, while the majority of Pope & Talbot sales are in U.S. dollars. Ratings will remain on CreditWatch with negative implications pending S&P's review of the company's cash flow generating capacity. Some factors to be considered include Pope & Talbot's intention to issue common stock in the near future and the uncertainty surrounding the potential refunding of duties on softwood lumber imported to the U.S. from Canada. PRICELINE.COM: Names Tim Gordon & Mark Koehler as Senior VPs ------------------------------------------------------------ Priceline.com(R) Inc. (Nasdaq: PCLN) disclosed the appointments of two executives to senior management positions within its core travel services business. Tim Gordon, priceline.com's former Senior Vice President, Travel, was named Senior Vice President, Hotels. Mark Koehler joined the Company as Senior Vice President, Airlines. Both executives report to Executive Vice President, Travel Services Chris Soder and the appointments become effective June 13, 2005. Mr. Gordon was responsible for leading the successful transition of priceline.com's airline tickets service in 2004 from a purely opaque Name-Your-Own-Price(R) offering to a mix of opaque and published-price ticket offerings. In addition to airline ticketing, he also launched and managed priceline.com's rental cars product. Mr. Gordon joined priceline.com in 1999 as Vice President, Planning and Analysis. Prior to priceline.com, he held several positions at Alamo Rent a Car, including responsibility for e-commerce, distribution planning and revenue management. Before Alamo, he worked in the airline industry for seven years at Northwest Airlines and American Airlines in the financial analysis, revenue planning, corporate sales and financial accounting functions. "As one of priceline.com's longest-tenured senior managers, Tim Gordon brings a wealth of Company-specific experience and knowledge to his position," said Mr. Soder. "In particular, we expect that Tim will leverage his expertise in successfully transitioning our airline tickets business as priceline.com continues to evolve its hotel business into a similar complementary offering of opaque and published-price rooms." Mr. Koehler brings to priceline.com a lengthy track record of experience in the airline and Internet travel industries. For 13 years, he served at United Airlines in several revenue management, sales planning and distribution positions. He also has served as the Vice President of Interactive Marketing at Starwood Hotels and as Senior Vice President - Walt Disney Parks & Resorts Online. "In addition to delivering value and savings to our customers, priceline.com is committed to providing our airline partners with an Internet distribution channel that meets their distribution and revenue management needs," said Mr. Soder. "Mark Koehler has all the tools to accomplish those goals and we're excited to have him join our team." About Priceline.com Priceline.com is a travel service that offers leisure airline tickets, hotel rooms, rental cars, vacation packages and cruises. Priceline.com also has a personal finance service that offers home mortgages, refinancing and home equity loans through an independent licensee. Priceline.com operates the travel Web sites priceline.co.uk, Travelweb.com, Activehotels.com, Lowestfare.com, Rentalcars.com and Breezenet.com. Priceline.com licenses its business model to independent licensees, including pricelinemortgage and certain international licensees. * * * Priceline.com's 1% convertible senior notes due 2010 carry Standard & Poor's single-B rating. PRIME TECHNOLOGY: Case Summary & 21 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Prime Technology Group I, LLC dba Prime Technology Group dba Prime Technology Group, LLC 455 Gees Mill Business Court Conyers, Georgia 30013 Bankruptcy Case No.: 05-70721 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Gees Mill Supply, Inc. 05-70722 Type of Business: The Debtor is a manufacturers representative firm for the plastics industry in the Southeastern United States. See http://www.4ptg.com/ Chapter 11 Petition Date: June 10, 2005 Court: Northern District of Georgia (Atlanta) Debtors' Counsel: Todd E. Hennings, Esq. Macey, Wilensky, Cohen, et al Suite 600 Marquis Two Tower 285 Peachtree Center Avenue, Northeast Atlanta, Georgia 30303-1229 Tel: (404) 584-1222 Fax: (404) 681-4355 Estimated Assets Estimated Debts ---------------- --------------- Prime Technology $500,000 to $1 Million to Group I, LLC $1 Million $10 Million Gees Mill Supply, Less than $50,000 $1 Million to Inc. $10 Million A. Prime Technology Group I, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tempco Electric Heater Corp. $1,500,000 607 North Central Avenue Wood Dale, IL 60191 Truserv Corporation Trade debt $102,143 7600 Jonesboro Road Store #17492-3 Jonesboro, GA 30236 Eurotherm Controls, Inc. Trade debt $68,145 751 Miller Drive, Suite D1 Leesburg, VA 20175-8993 Dynisco Instruments Trade debt $57,727 Hunton & Williams $54,640 Watlow #064823 Trade debt $48,076 Durex Industries Trade debt $32,502 Heat & Sensor Tech., LLC Trade debt $26,136 Formsouth Trade debt $25,440 Fast Heat, Inc. Trade debt $22,346 Plasti-Co Equipment Company Trade debt $21,631 Tool-Smith Trade debt $20,660 Oseco Trade debt $19,985 Mac-Weld Machining & Trade debt $10,610 Mfg. Ltd Applied Industrial Controls Trade debt $10,428 Motion Industries, Inc.- SC Trade debt $8,016 Dwyer Instruments, Inc. Trade debt $7,459 UPS Trade debt $7,296 Hot Melt Technologies, Inc. Trade debt $7,110 Linde Gas Trade debt $6,685 B. Gees Mill Supply, Inc.'s Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Tempco Electric Heater Corp. $1,500,000 607 North Central Avenue Wood Dale, IL 60191 PROXIM CORP: Files Chapter 11 Petition in Delaware to Effect Sale ----------------------------------------------------------------- Proxim Corporation (Nasdaq: PROX) and three of its affiliates filed for chapter 11 protection in the United States Bankruptcy Court for the District of Delaware on June 11, 2005, to implement the sale of substantially all of their assets to Moseley Associates, Inc. Under the agreement, Moseley will acquire and assume most of the domestic and foreign operations of Proxim for a purchase price of $21 million, subject to certain adjustments and deductions. The Debtors believe that the proposed going concern sale to Moseley is preferable to a liquidation proceeding. The sale will preserve over 200 jobs worldwide and much of the Debtors' going concern value. Because the sale is expressly subject to overbids and an auction process, the Debtors believe that the sale will ensure that the maximum possible value is generated for the Debtors' assets. Principal Indebtedness The Debtors owe The Warburg Group $10 million in principal obligation under the convertible secured promissory notes. The Bridge Notes will mature on June 30, 2005, and bear interest at 15%. The Debtors' obligations under the Bridge Notes are secured by a second priority lien on substantially all of the Debtors' assets. Proxim's remaining indebtedness consists of $42 million in unsecured debt, of which approximately $17.8 million is on account of a settlement agreement with Symbol Technologies, Inc., in connection with a patent infringement judgment against Proxim. DIP Financing In connection with the sale, Moseley has agreed to provide Proxim with bridge financing in the principal amount of up to $6.2 million, to be offset against the purchase price. Under the terms of the transaction as contemplated, no proceeds of the sale are expected to be distributed to Proxim stockholders. The contemplated acquisition by Moseley would be expected to preserve most of Proxim's operations. Moseley and Proxim believe there are significant synergies and advantages to the combination of their businesses. Proxim's focus on Wi-Fi, WiMAX and broadband wireless access for enterprises and service providers has resulted in solutions for the mobile enterprise, last mile access, metropolitan area networks, public safety, and voice and data backhaul. Combining Proxim's offerings with Moseley's diversified global product lines will enable Moseley to offer an expanded and differentiated portfolio of wireless products covering spectrum from 200 MHz to 38 GHz. "This proposed acquisition is a continuation of our strategy to be a global, diversified and profitable leader in the wireless marketplace," said Jamal Hamdani, president and chief executive officer of Moseley. "Proxim's pioneering leadership in license- exempt technologies and the 802.11 a, b, and g wireless access marketplace will significantly enhance our product portfolio. Proxim's strong global distribution channels and understanding of low-cost manufacturing will accelerate our growth and fortify our position as one of the industry's preeminent suppliers." "Our principal post-acquisition focus will be to earn the trust and respect of Proxim's customers, suppliers, partners, and employees," continued Mr. Hamdani. "We intend to fully support all of Proxim's existing customers and product warranties. Our plan includes providing an invigorating and exciting work environment for Proxim's employees as well." Moseley was ranked for the past three years on the Deloitte Technology Fast 500, a ranking of the 500 fastest growing technology companies in North America. From 1999-2003 the company grew 529%. Upon completion of the transaction, Proxim will be a wholly-owned subsidiary of Moseley, joining Moseley's subsidiaries Microwave Data Systems, Axxcelera Broadband Wireless and CarrierComm, all acquired within the past 5 years. The combined company will have revenues approaching US $200 million. Delisting As reported in the Troubled Company Reporter on June 9, 2005, Proxim received a letter from The Nasdaq Stock Market, Inc., on June 3, 2005, notifying the Company that for the 30 consecutive trading days preceding the date of the letter, the bid price of the Company's common stock had closed below the $1.00 per share minimum required for continued inclusion on the Nasdaq National Market pursuant to Nasdaq Marketplace Rule 4450(a)(5). The letter further notified the Company that, in accordance with Nasdaq Marketplace Rule 4450(e)(2), the Company will be provided 180 calendar days, or until Nov. 30, 2005, to regain compliance with the minimum bid price requirement. Compliance will be achieved if the bid price per share of the Company's common stock closes at $1.00 per share or greater for a minimum of ten consecutive trading days prior to Nov. 30, 2005. About Moseley Associates Moseley -- http://www.moseleysb.com/-- is an ISO 9001 company with offices in Santa Barbara, California; Rochester, New York; China; United Kingdom; and Brazil. Distributors and agents in over 100 countries augment Moseley's 300 employees, including over 100 engineers. Moseley has more than 800,000 ETSI-, FCC-, Anatel-, IC-, UL-, and CE-approved radios deployed in over 120 countries. Profitable for each year of its operation, Moseley has grown from revenues of US $8 million and EBITDA of $1 million in 1996 to revenue of over US $90 million and EBITDA of $20 million in 2004. Moseley and its wholly owned subsidiaries Microwave Data Systems (2000 acquisition), Axxcelera Broadband Wireless (2001 acquisition), and CarrierComm (2002 acquisition) now offer wireless solutions from 9.6 kbps to 311 Mbps covering the 200 MHz to 38 GHz spectrum for both point-to-point and point-to-multipoint applications for the broadcast, industrial, broadband enterprise, and service provider marketplaces. Moseley uses proprietary technologies with more than 200 patents of its own. Moseley's products are built at many of its own world class manufacturing facilities in the United States. Extensive HALT and HASS processes are used to ensure best in class quality. Headquartered in San Jose, California, Proxim Corporation -- http://www.proxim.com/-- designs and sells wireless networking equipment for Wi-Fi and broadband wireless networks. The company is providing its enterprise and service provider customers with wireless solutions for the mobile enterprise, security and surveillance, last mile access, voice and data backhaul, public hot spots, and metropolitan area networks. The Company and three of its affiliates filed for chapter 11 protection on June 11, 2005 (Bankr. Del. Case No. 05-11639). Laura Davis Jones, Esq., and Tobias S. Keller, Esq., at Pachulski, Stang, Ziehl, Young, represent the Debtors in their restructuring efforts. As of Apr. 1, 2005, the Debtors reported $55,361,000 in total assets and $101,807,000 in total debts. PROXIM CORPORATION: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Lead Debtor: Proxim Corporation 2115 O'Nel Drive San Jose, California 95131 Bankruptcy Case No.: 05-11639 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Proxim Wireless Networks, Inc. 05-11640 Proxim International Holdings, Inc. 05-11641 WirelessHome Corporation 05-11642 Type of Business: Proxim Corporation designs and sells wireless networking equipment for Wi-Fi and broadband wireless networks. The Debtors provide wireless solutions for the mobile enterprise, security and surveillance, last mile access, voice and data backhaul, public hot spots, and metropolitan area networks. See http://www.proxim.com/ Chapter 11 Petition Date: June 11, 2005 Court: District of Delaware (Delaware) Debtors' Counsel: Laura Davis Jones, Esq. Tobias S. Keller, Esq. Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. 919 North Market Street, 16th Floor Wilmington, Delaware 19899-8705 Tel: (302) 652-4100 Fax: (302) 652-4400 Consolidated Financial Condition as of April 1, 2005: Total Assets: $55,361,000 Total Debts: $101,807,000 Consolidated List of Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Symbol Technologies, Inc. Patent $17,750,000 One Symbol Plaza Infringement Holtsville, NY 11742-1300 Settlement Attn: Peter Lieb Agreement Tel: (631) 738-4765 Fax: (631) 738-5980 Universal Scientific Trade Debt $1,295,034 Industrial Company 141 Taiping Road, Section 1 Tsao Tuen Nan Tou Hsien, Taiwan Attn: Frank Chu Tel: (886) 49 226-1876 Fax: (886) 49 226-2170 Flextronics Technology Trade Debt $1,125,775 (Malaysia) P.O. Box 1038 Pusat Mel Johr Bahur, 80357 Johor Bahur, Johor Malaysia Hon Hai Precision Industry Trade Debt $801,644 Company Ltd. 5F-1, 5 Hsin-An Road Hsinchu Science-Based Industrial Park Hsinchu, Taiwan Attn: Ronald Lee Tel: (886) 35 78-4975 Fax: (886) 35 79-9178 Flash Trade Debt $595,123 4050 Starboard Drive Fremont, CA 94538 Iis Surface Mounting Trade Debt $490,522 P.O. Box 1089 San Jose, CA 95108-1089 Exel Logistics Trade Debt $334,060 5798 Collections Center Drive Chicago, IL 60693 Accton Technology Corporation Trade Debt $329,101 4F No. 9 Park Avenue II Science-Based Industrial Park Hsinchu 300, Taiwan Pemstar Trade Debt $245, 911 P.O. Box 90422 Chicago, IL 60696 Stephen Gould Corporation Trade Debt $210,626 35 South Jefferson Road Whippany, NJ 07981 Smartant Telecom Company Ltd. Trade Debt $181,989 Agere Systems Inc. Trade Debt $150,589 Powerdsine Ltd. Trade Debt $121,668 Wind River Systems Inc. Trade Debt $98,543 UPS Supply Chain Solutions Trade Debt $97,898 CDW Computer Centers Inc. Trade Debt $91,967 Duke Realty Corporation Real Property $71,591 Lease Fritz Air Freight Trade Debt $59,920 (Taiwan) Ltd. - Wt EDO/TSO Trade Debt $58,862 American Express Trade Debt $57,291 RHODES INC: Names Joel Dugan President & Chief Executive Officer ---------------------------------------------------------------- Rhodes, Inc., has named Joel H. Dugan as its Chief Executive Officer and President effective July 5, 2005. Mr. Dugan, a veteran member of Rhodes' management team, currently serves as the Company's Chief Financial Officer and has been employed by Rhodes since 1985. Rhodes is in the process of formulating its Chapter 11 reorganization plan and expects to emerge from bankruptcy by early fall. Rhodes' current CEO, Steven S. Fishman, has accepted a position as Chairman, Chief Executive Officer and President of Big Lots, Inc. He will assume that position effective July 6, 2005. Mr. Fishman will continue to serve on Rhodes, Inc.'s board of directors. "Rhodes is well positioned to emerge from Chapter 11, having successfully implemented a substantial portion of its reorganization strategy. Given his long history with Rhodes and his significant involvement in the reorganization process to date, Joel is particularly well equipped to lead this Company out of bankruptcy" stated Mr. Fishman. Headquartered in Atlanta, Georgia, Rhodes, Inc., will continue to offer brand-name residential furniture to middle- and upper- middle-income customers through 63 stores located in 11 southern and midwestern states (after disposing of the locations listed above). The Company and two of its debtor-affiliates filed for chapter 11 protection on Nov. 4, 2004 (Bankr. N.D. Ga. Case No. 04-78434). Paul K. Ferdinands, Esq., and Sarah Robinson Borders, Esq., at King & Spalding represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated less than $50,000 in assets and more than $10 million in total debts. ROTECH HEALTHCARE: Restating Financials to Correct Acctg. Errors ---------------------------------------------------------------- The Audit Committee of Rotech Healthcare Inc.'s (Pink Sheets:ROHI) Board of Directors -- together with the Company's management -- have concluded that the Company will restate its financial statements for the years ended Dec. 31, 2004 and 2003 and the nine months ended Dec. 31, 2002, and for each of the quarterly periods during those years. The restatements will correct the errors identified in calculating reserves for contractual allowances and bad debts. These errors in calculating reserves began in 2001 with the Company's predecessor, Rotech Medical Corporation, which was a subsidiary of Integrated Health Services, Inc., and were reflected in the predecessor's financial statements and continued in the Company's financial statements through 2004. Accordingly, these Company financial statements and the related reports of the independent registered public accounting firm should no longer be relied upon because of these errors. Management and the Audit Committee have discussed these matters with the Company's independent registered public accounting firm, Deloitte & Touche LLP. The restatement is not expected to have an impact on the Company's cash balances. In addition, in connection with the results of the abovementioned evaluation, the Company expects that it will change its estimate of the accounts receivable reserve effective in the first quarter of 2005. The Company will file an amended annual report on Form 10-K/A for the year ended Dec. 31, 2004, with the Securities and Exchange Commission to address the errors described above and to present restated financial information for the periods presented in such report. ALso, the Company will be correcting the selected financial information of its predecessor for the year ended December 31, 2001 and the three months ended March 31, 2002 included in the Company's 2004 Form 10-K. Technical Default The Company will be further delayed in filing its Form 10-Q for the quarter ended March 31, 2005, due to the pending restatement referenced above. As previously reported, the delay in this filing has resulted in a technical default under the Company's credit agreement and indenture, which default is subject to a cure period through June 15 under the credit agreement and through July 15 under the indenture. If the default extends beyond the applicable cure periods, the Company will seek a waiver to avoid an event of default. The Company is currently analyzing the impact of the above referenced accounting together with other events as they relate to the Company's previously announced 2005 earnings per share guidance and at this time believes that such guidance is no longer accurate and therefore should not be relied upon. Postponement of Annual Meeting As a result of the accounts receivable reserve review referenced above, the Company is postponing its 2005 Annual Meeting of Stockholders which was previously scheduled for June 29, 2005. The record date of May 2, 2005, used to determine the stockholders that are entitled to notice of and to vote at the Annual Meeting will also be changed. The Board of Directors believes that it is in the best interests of the stockholders to postpone the Annual Meeting until after the Company files its amended annual report on Form 10-K/A for the year ended Dec. 31, 2004, with the SEC as described above. On May 2, 2005, the Company filed a definitive proxy statement with the SEC relating to the Company's Annual Meeting. The Company intends to file an amended proxy statement with the SEC to reflect, among other things, the rescheduled date for the Annual Meeting and the new record date for the Annual Meeting as discussed above. Rotech Healthcare Inc. is a leading provider of home respiratory care and durable medical equipment and services to patients with breathing disorders such as chronic obstructive pulmonary diseases (COPD). The Company provides its equipment and services in 48 states through approximately 475 operating centers, located principally in non-urban markets. The Company's local operating centers ensure that patients receive individualized care, while its nationwide coverage allows the Company to benefit from significant operating efficiencies. * * * Rotech was part of Integrated Health Services, Inc., and filed for chapter 11 protection on Feb. 2, 2000 (Bankr. D. Del. Case Nos. 00-00389 through 00-00825). Judge Walrath confirmed a separate standalone plan of reorganization for Rotech on Feb. 13, 2002, and Rotech emerged from chapter 11 independent of IHS on March 26, 2002. Deloitte & Touche LLP serves as Rotech's auditors. Rotech's balance sheet dated Dec. 31, 2004, shows $1 billion in assets and $446 million in liabilities. ROTECH HEALTHCARE INC., is the borrower under a $275,000,000 Credit Agreement, dated as of March 26, 2002 (as twice amended) with UBS WARBURG LLC and GOLDMAN SACHS CREDIT PARTNERS L.P., as joint lead arrangers and joint bookrunners, GOLDMAN SACHS CREDIT PARTNERS L.P., as Syndication Agent, THE BANK OF NOVA SCOTIA, DEUTSCHE BANK SECURITIES INC. (formerly known as Deutsche Banc Alex. Brown Inc.) and GENERAL ELECTRIC CAPITAL CORPORATION, as Co-Documentation Agents, GENERAL ELECTRIC CAPITAL CORPORATION, as Collateral Agent, and UBS AG, STAMFORD BRANCH, as Administrative Agent. SALTON INC.: Recalls 100,000 Coffee Makers from Sears Stores ------------------------------------------------------------ Salton, Inc., is voluntarily recalling approximately 100,000 Kenmore(R) 12-Cup Percolator, Model No. KCP12, manufactured for Salton by Chiaphua Industries Limited, and distributed only through Sears due to a risk that the Percolator may leach lead. Lead exposure may cause injury to pregnant women. Salton, Inc., says it has not received any inquiries or complaints about the Percolator. The affected Percolators are the Kenmore(R) 12-Cup Percolators, Model No. KCP12 shipped in limited quantities only during the period between July 2001 and April 2004. The affected Percolators were sold in the United States through Sears stores during that same period of time. Liquidity Problems Salton, which makes a wide variety of kitchen appliances, including George Foreman grills, has $125 million of 10-3/4% senior subordinated notes coming due in December. Salton doesn't have the cash to make the payment. Silver Point Finance LLC provides the company with working capital financing under the terms of an Amended and Restated Credit Agreement, dated as of May 9, 2003. Salton Europe, Limited, the Company's wholly owned subsidiary, obtains working capital financing under an agreement with Hong Kong Shanghai Bank. Salton has retained Houlihan Lokey Howard & Zukin for financial advice. Third Point LLC, a large holder of Salton debt, has joined with other bondholders, and retained legal counsel and financial advisors, according to a report from Harris Rubinroit at Bloomberg News. About Salton, Inc. Salton, Inc. is a leading designer, marketer and distributor of branded, high quality small appliances, home decor and personal care products. Our product mix includes a broad range of small kitchen and home appliances, tabletop products, time products, lighting products, picture frames and personal care and wellness products. We sell our products under our portfolio of well recognized brand names such as Salton, George Foreman, Westinghouse(TM), Toastmaster, Melitta, Russell Hobbs, Farberware, Ingraham and Stiffel. The company believes its strong market position results from its well-known brand names, high quality and innovative products, strong relationships with customer base and focused outsourcing strategy. * * * As reported in the Troubled Company Reporter's Nov. 25, 2004 edition, Standard & Poor's Ratings Services lowered its corporate rating on small appliance manufacturer Salton Inc. to 'CCC' from 'CCC+', and lowered its subordinated debt rating to 'CC' from 'CCC-'. The outlook on Lake Forest, Illinois-based Salton is negative. Total debt outstanding as of October 2, 2004, was $490.0 million. "The downgrade is based on Salton's increasingly constrained liquidity and lower prospects for improving profitability for the upcoming Christmas selling season," said Standard & Poor's credit analyst Martin S. Kounitz. The ratings reflect Salton's weak liquidity, a result of increasingly challenging conditions in the small appliance market. SONICBLUE INC: Wants Exclusive Filing Period Extended to July 18 ---------------------------------------------------------------- SONICblue Incorporated and its debtor-affiliates and its Official Committee of Unsecured Creditors ask the U.S. Bankruptcy Court for the Northern District of California to approve a Sixth Stipulation calling for the extension of their exclusive right to file a joint chapter 11 plan through and including July 18, 2005. The Debtors and the Committee also ask the Court for more time to solicit acceptances of that plan from their creditors, through Sept. 19, 2005. The Debtors and the Committee explain that they have been actively evaluating, litigating and settling objections to claims and as result of their efforts, more than $149,000,000 in claims have been disallowed, subordinated or withdrawn to date. The Debtors and the Committee are currently involved in litigation regarding claims of more than $70 million filed by VIA Inc., and S3 Graphics Ltd. against the Debtors' estates. The Debtors and the Committee give the Court three reasons why the extension is warranted: a) before they can propose a joint chapter 11 plan, they must complete the review of the claims filed, resolve objections to disputed claims and determine the total amount, number and type of claims or interests that must be treated under the proposed chapter 11 plan; b) the ongoing litigation against VIA, Inc. and S3 Graphics must first be resolved because those two claims are critical to the distribution projections under the proposed plan; and c) until all the claims are fully resolved, any liquidating chapter 11 plan the Debtors and the Committee will propose will not be complete and be subjected to modifications that will significantly increase administrative expenses for the Debtors' estates. Headquartered in Santa Clara, California, SONICblue Incorporated is involved in the converging Internet, digital media, entertainment and consumer electronics markets. The Company, together with three of its wholly owned subsidiaries, Diamond Multimedia Systems, Inc., ReplayTV, Inc., and Sensory Science Corporation, filed for chapter 11 protection on March 21, 2003 (Bankr. N.D. Calif. Case No. 03-51775). When the Debtors filed for protection from their creditors, they listed total assets of $342,871,000 and total debts of $335,473,000. TOYS 'R' US: Posts $41 Million Net Loss for First Quarter 2005 -------------------------------------------------------------- Toys "R" Us, Inc., reported results for its first quarter ended April 30, 2005. Total net sales were $2.132 billion for the first quarter, up 3.6% from $2.058 billion for the first quarter of 2004. Total net sales for the first quarter 2005 include $25 million due to the impact of currency translation, while net sales in the 2004 first quarter included $27 million from the now closed Kids "R" Us business. Excluding these amounts, net sales increased 3.7% in the first quarter of 2005. The Company reported a net loss of $41 million for the first quarter of 2005, compared with a net loss of $28 million, for the same period last year. The 2004 operating results have been restated to reflect a correction in the Company's accounting practices for leases and leasehold improvements. In the U.S. Toy Store division, comparable store sales decreased 0.7% for the first quarter of 2005. Sales of video merchandise increased 14%; however, sluggish sales in the seasonal and juvenile products contributed to the overall sales decline. Operating loss for the first quarter was $32 million versus a loss of $15 million in 2004. A decline in net margins, due primarily to the increase in sales of lower margin video products, more than offset the overall expense savings that were achieved. In the International division, comparable toy store sales in local currencies increased 4.2% during the first quarter. Total net sales were $463 million this year, up from $416 million last year, an 11.3% increase. Excluding the impact of currency translation, total net sales in the International division increased 5.3% to $438 million. Operating losses for the quarter were $20 million versus a loss of $14 million last year. Although foreign currency translation had an impact on sales, it had no impact on the overall operating results of the international division. At Babies "R" Us, comparable store sales increased 4.3% during the first quarter. Total net sales increased by 10.4% to $542 million versus $491 million for the same period last year. Operating earnings increased to $65 million for the first quarter, a 3.2% increase versus the same period last year. Babies "R" Us opened 2 new stores during the first quarter. At Toysrus.com, first quarter 2005 net sales increased 20.8% to $64 million compared to $53 million for the first quarter of 2004. Sales were strong across all product categories at Toysrus.com, with the juvenile and toy businesses each posting more than 20% gains. The operating loss for first quarter of 2005 was reduced to ($2) million from ($5) million for the first quarter 2004. On March 17, 2005, Toys "R" Us entered into a definitive agreement to sell its entire worldwide operations, including both its global Toys "R" Us and Babies "R" Us businesses, to an investment group consisting of affiliates of Bain Capital Partners LLC, Kohlberg Kravis Roberts & Co., L.P., and Vornado Realty Trust (NYSE: VNO), for $26.75 per share. The Company has scheduled a meeting of its stockholders on Thursday, June 23, 2005 for the purpose of adopting the merger agreement. Further details on the special stockholders' meeting are available in the Company's proxy statement, which has been filed with the Securities and Exchange Commission. John Eyler, Chairman and Chief Executive Officer, commented, "We continue to maintain a solid balance sheet and substantial liquidity. We ended the first quarter with $1.9 billion of cash and cash equivalents, a $1 billion increase from our first quarter last year." Mr. Eyler added, "The Company continues to expect to complete the merger by the end of July 2005, subject to the adoption of the merger agreement by the Company's stockholders and the satisfaction of other closing conditions." About the Company Toys "R" Us, Inc., is one of the leading specialty toy retailers in the world. It currently sells merchandise through more than 1,500 stores, including 680 toy stores in the U.S. and 608 international toy stores, including licensed and franchise stores as well as through its Internet sites at http://www.toysrus.com/and http://www.imaginarium.com/and http://www.sportsrus.com/ Babies "R" Us, a division of Toys "R" Us, Inc., is the largest baby product specialty store chain in the world and a leader in the juvenile industry, and sells merchandise through 219 stores in the U.S. as well as on the Internet at http://www.babiesrus.com/ * * * As reported in the Troubled Company Reporter on March 21, 2005, Fitch Ratings believes that Toys 'R' Us, Inc., could be downgraded, and possibly into the 'B' category, following the sale of the company to a joint venture formed by affiliates of Kohlberg Kravis Roberts & Co., Bain Capital Partners LLC, and Vornado Realty Trust. This investor group has agreed to acquire TOY for $6.6 billion and assume TOY's debt, which totals approximately $2.3 billion. TOY's senior notes are currently rated 'BB' by Fitch and remain on Rating Watch Negative, where they were placed in August 2004. It is currently expected that the acquisition will be financed with a material debt component. Vornado separately announced this morning that it will be investing $450 million for a one-third interest in the acquiring joint venture, implying a total equity component of $1.35 billion. This, in turn, implies a debt component of the purchase price in excess of $5 billion. This amount of debt would push TOY's adjusted debt/EBITDAR to around nine times on a pro forma basis from around 5.0 times in the twelve months ended Oct. 30, 2004. It is possible that the company will raise additional equity or engage in asset sales, with the proceeds used to reduce acquisition debt. Nonetheless, the Rating Watch Negative status reflects the expectation that without a significant equity component to the financing, a downgrade of potentially several notches would likely be warranted. Fitch will base its final rating decision on an assessment of the structure and financial profile of the acquiring entity. Fitch will also continue to evaluate trends in TOY's operations, which remain pressured by competition from the discounters and general weakness in toy retailing. TRANSTECH INDUSTRIES: Settles Claims with Insurance Carriers ------------------------------------------------------------ Robert V. Silva, President and Chief Executive Officer of Transtech Industries, Inc. (OTC BB:TRTI) said that the Company settled claims filed against the estates of four insolvent excess insurance carriers. The estates pay a percentage of the agreed claim amount based upon projected assets and claims against such assets. The Company received a payment of approximately $2.7 million, representing approximately 62% of the aggregate amount of the claims against the four estates. The claim proceeds will be subject to federal and state income taxes. Further claims against the estates have been barred in accordance with their liquidation plans, and there are no assurances that additional distributions will be paid by the estates. One management firm administers the affairs of the four estates. The four insolvent excess insurers were among the excess insurers named as defendants in the suit brought by the Company in 1995 which sought reimbursement of past remediation costs. A settlement was reached with the majority of the defendant carriers during October 2001. A portion of the claim proceeds, $250,000 less related legal fees, will be shared with a group of companies participating in the remediation of a site in Carlstadt, New Jersey in accordance with a 1995 agreement, as amended, that resolved litigation regarding the allocation of that site's remediation costs. Liquidity and Capital Resources The Company faces significant short-term and long-term cash requirements for: (i) funding its professional and administrative costs, (ii) federal income taxes and interest, and (iii) funding post-closure costs and other expenses associated with sites of past operations. The Company owes the Internal Revenue Service approximately $1.5 million as a result of the settlement of issues before the U.S. Tax Court regarding the Company's income tax liability for the years 1980 through 1991. The Company's past participation in the waste handling, treatment and disposal industries subjects the Company to future events or changes in environmental laws or regulations, that cannot be predicted at this time, which could result in material increases in post-closure costs, and other potential liabilities that may ultimately result in costs and liabilities in excess of its available financial resources. Bankruptcy Warning The Company continues to pursue the sale of certain assets and claims against non-settling excess insurers, however, no assurance can be given that the timing and amount of the proceeds from such sales and claims will be sufficient to meet the cash requirements of the Company as they come due. In addition, the Company cannot ascertain whether its remaining operations and funding sources will be adequate to satisfy its future cash requirements. In the event of an unfavorable resolution of the Company's challenge to the arbitrator's award to SCA Services, Inc., and claims made against the Company by the United States Environmental Protection Agency, or should the proceeds of asset sales and claims against the estates of certain excess insurance carriers be insufficient to meet the Company's future cash requirements, including its tax liabilities, then, if other alternatives are unavailable at that time, the Company will be forced to consider a plan of liquidation of its remaining assets, whether through bankruptcy proceedings or otherwise. Headquartered in Piscataway, New Jersey, Transtech Industries, through its subsidiaries, generates electricity utilizing methane gas, supervises and performs landfill monitoring and closure procedures and manages methane gas recovery operations. UAL CORP: Wants Exclusive Right to File Plan Until Sept. 1 ---------------------------------------------------------- Pursuant to Section 1121(d) of the Bankruptcy Code, UAL Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois for another extension of the exclusive period to file and solicit acceptances for a Chapter 11 Plan of Reorganization. The Debtors want their Exclusive Plan Filing Period extended until September 1, 2005, and their Exclusive Solicitation Period extended until November 1, 2005. According to James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, "these past 60 days have been well spent." The Debtors have a global settlement with the Pension Benefit Guaranty Corporation, a new collective bargaining agreement with the Aircraft Mechanics Fraternal Association, and an agreement in principle with the International Association of Machinists. The Debtors' labor cost restructuring is largely complete. The Debtors have altered course in their litigation and negotiation with the Aircraft Trustees. The Debtors' recent concessions to the Trustees, namely dropping the antitrust complaint, should pave the way for constructive negotiations. These achievements another extension of the Exclusive Periods, Mr. Sprayregen insists. The Debtors will work with their stakeholders to develop and articulate a business plan, obtain exit financing commitments, formulate a plan of reorganization, complete the plan voting and confirmation process, and emerge from bankruptcy. The Debtors intend to seek another extension before the August 26, 2005 omnibus hearing that will detail this timeline. 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. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Court Okays Pact Resolving CIT Financial's $1.2M Claim ---------------------------------------------------------------- UAL Corporation and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Northern District of Illinois to enter into a stipulation with CIT Communications Finance Corporation, doing business as Avaya Financial Services. On Nov. 10, 1992, the Debtors and CIT, as successor-in-interest to Newcourt Communications Finance Corporation, successor-in-interest to AT&T Credit Corporation, entered into a Master Equipment Lease Agreement, whereby CIT provided financing for certain communication and other related equipment to the Debtors. On May 29, 2003, CIT filed a claim against the Debtors for $1,241,008 for a contingent, unliquidated claim relating to future obligations under the Lease. Under the Stipulation, the Debtors will assume the Lease and CIT will release the Debtors from the Claim. 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) UAL CORP: PBGC Says Pension Funding Data Reported is Inaccurate --------------------------------------------------------------- Bradley D. Belt, Executive Director of the Pension Benefit Guaranty Corporation, disclosed at a hearing before the Senate Committee on Finance on June 7, 2005, that during the period from 2000 onward, when the true funded status of each of United Air Lines' pension plans was deteriorating and the financial health of the company was becoming more precarious, United: 1. put little if any cash into its pension plans; 2. rarely made a deficit reduction contribution; 3. never provided any notices of underfunding to participants; and 4. almost never paid a variable rate premium. This allowed United to claim that its pension plans were "fully funded" on a current liability basis. United's plans currently have an aggregate shortfall of almost $10 billion and an aggregate funded ratio of 41%. According to Mr. Belt, United offers important lessons that illustrate the flaws in current law and which should serve as guide in the reformation of the defined benefit system and pension insurance program. Mr. Belt explained that the current funding rules have failed to ensure that companies make good on the commitments they make to their workers and retirees. The rules even allow companies to make new benefit promises when their plans do not have enough assets to meet existing obligations. Mr. Belt said that there are several aspects of the current funding rules that contributed to the disaster scenario, including the use of credit balances and the ability to "smooth" assets and liabilities. Just at the point in time when contributions to the plans were most needed as asset values were falling and liabilities growing, Mr. Belt pointed out that United was able to use credit balances built up during the 1990s bull market to avoid putting cash into the plans. Notwithstanding the fact that the United pilots plan is underfunded by almost $3 billion, the company has not made, and has not been required to make, a cash contribution to that plan for the years 2000 through 2004 -- and none would have been required until the end of 2005. "Some have argued that without credit balances, companies will have no incentive to make more than the required minimum contribution during good times," Mr. Belt said. "We believe the Administration's proposal provides ample incentives to appropriately fund pension plans." Mr. Belt also noted that plans can smooth assets over five years and can smooth liabilities based on a four-year weighted average interest rate. "Those who want to retain these mechanisms argue that it is necessary to reduce volatility. But, of course, the volatility isn't reduced, it is simply masked -- hidden from the view of participants." The smoothed asset and liability calculations not only allowed companies to report a distorted funded ratio, Mr. Belt explained, it also enabled them to avoid the deficit reduction contribution requirements, the variable rate premium, and the notice to participants. These issues are hardly unique to United, according to Mr. Belt. A full-text copy of Bradley Belt's testimony is available at no charge at: http://www.pbgc.gov/news/speeches/testimony_060705.htm 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. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNIHEALTH SERVICES: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Unihealth Services Inc. dba Mediclinic 15103 Jones Road Houston, Texas 77070 Bankruptcy Case No.: 05-39109 Type of Business: The Debtor operates several industrial and emergency clinics. Chapter 11 Petition Date: June 9, 2005 Court: Southern District of Texas (Houston) Judge: Letitia Z. Clark Debtor's Counsel: Roger H. Broach, Esq. P.O. Box 56143 Houston, Texas 77256-6143 Tel: (281) 820-4878 Total Assets: $30,000 Total Debts: $1,000,000 The Debtor did not file a list of its 20 Largest Unsecured Creditors. UNITED PRODUCERS: Wants Bartlett Benner as Real Estate Brokers -------------------------------------------------------------- United Producers, Inc., and its debtor-affiliate, ask the U.S. Bankruptcy Court for the Southern District of Ohio, Eastern Division, for permission to employ Bartlett Benner Realty as their Special Real Estate Broker. The Debtors' want to list and sell their property located in 450 South Maple Drive, Lancaster, Ohio, for $450,000. Bartlett Benner is expected to: (a) list and sell the Debtors' property; (b) select the title and surveyor, and review title insurance commitments, title insurance policies, surveys and other matters of public record; (c) assist in the drafting, reviewing and negotiating real estate purchase and sale agreements; (d) prepare and review closing statements; (e) prepare and review transfer documents including bills of sale, deeds, affidavits, and corporate resolutions and incumbency certificates; (f) prepare escrow closing instructions to title insurers; and (g) consult with the Debtors' concerning the proposed real estate transaction. Gary Bartlett, a broker at Bartlett Benner, tells the Court that the Firm will be paid at 5% of the selling price. The Debtors' believe that the Firm is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Columbus, Ohio, United Producers, Inc. -- http://www.uproducers.com/-- offers marketing, financing, and credit services to its member livestock producers in the U.S. corn belt, southeast, and midwest areas. The company and its debtor- affiliate filed for chapter 11 protection on Apr. 1, 2005 (Bankr. S.D. Ohio Case No. 05-55272). Reginald W. Jackson, Esq. at Vorys, Sater, Seymour and Pease, LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated $10 million to $50 million in assets and debts. UNOVA INC: Good Revenue Growth Prompts S&P's Positive Outlook ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Everett, Washington-based UNOVA, Inc., and revised its outlook to positive from stable. The outlook revision reflects good revenue growth and an improving financial profile. "The rating on UNOVA Inc. reflects a relatively narrow business profile, competitive market conditions, and ongoing product development requirements, driven by evolving technology standards," said Standard & Poor's credit analyst Martha Toll- Reed. These factors partly are offset by a good market position, a diversified customer base, and an improving financial profile. UNOVA is a global provider of supply chain solutions, including the development, sales, and integration of wired and wireless automated data collection, radio frequency identification tags, mobile computing systems, bar code printers, and label media. These products are used primarily for the routing and distribution of goods, inventory management, transportation, and logistics. Effective in the fourth quarter of 2004, UNOVA committed to a plan to sell its industrial automation systems businesses, and has classified them as discontinued operations. UNOVA reported revenues from discontinued operations of $471 million in fiscal 2004, and a pre-tax loss from discontinued operations in each of the past three years. Double-digit revenue growth is expected to be driven by customers' need to maximize supply chain efficiency, increasing market interest in RFID technology, and UNOVA's expanding international presence. EBITDA margins (adjusted for discontinued operations and capitalized operating leases, and excluding intellectual property settlement payments) were adequate for the rating at 8% in fiscal 2004. Revenue growth and profitability are expected to benefit from greater management focus on the core business; the exit from the IAS business is expected to be completed in fiscal 2005. WATTSHEALTH FOUNDATION: Look for Bankruptcy Schedules on Aug. 1 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, gave WATTSHealth Foundation, Inc., dba UHP Healthcare, more time to file its Schedules of Assets and Liabilities, Statements of Financial Affairs and Statements of Executory Contracts and Unexpired Leases. The Debtor has until Aug. 1, 2005, to file those documents. The Debtor explains that because it filed its bankruptcy case on an emergency basis, it was not able to make advance preparations for all the documents required for its bankruptcy filing, including the Schedules and Statements. Since the Petition Date, the Debtor's executives and staff have devoted substantial time and effort in preparing the Schedules and Statements, but the Debtor still cannot file those documents within the 15-day period after the bankruptcy filing. This is because the Debtor's personnel had to focused first on preserving the confidence of members and providers and ensuring the continued and uninterrupted operation of its medical services. Headquartered in Inglewood, California, WATTSHealth Foundation, Inc., dba UHP Healthcare, provides comprehensive medical and dental services for Commercial, Medi-Cal and Medicare members in the Greater Southern California area. The Company filed for chapter 11 protection on May 31, 2005 (Bankr. C.D. Calif. Case No. 05-22627). Gary E. Klausner, Esq., at Stutman Treister & Glatt represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $50 million to $100 million. WINN-DIXIE: Hires Blackstone Group as Restructuring Consultant -------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida approved Winn-Dixie Stores, Inc., and its debtor-affiliates' modified application to employ The Blackstone Group, L.P., as their restructuring consultant. The Blackstone Group, L.P., will not be required to maintain time records or receipts for expenses in amounts less than $75. All requests of Blackstone for payment of indemnity will be made by means of an application and will be subject to review by the Court. With respect to a Transaction Fee relating to stores sold during the enterprise phase of the Debtors' sale process, the Court entitles Blackstone a Transaction Fee only in the event the winner bidder is listed in Blackstone's Revised Engagement Letter. In that event, DJM Asset Management, LLC, and the Food Partners, LLC, will receive from Blackstone a marketing fee equal to 50 basis points of the Transaction Fee. 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Court OKs Panel's Retention of A&M as Advisor --------------------------------------------------------- The Honorable Judge Funk gave permission to the Official Committee of Unsecured Creditors of Winn-Dixie Stores, Inc., and its debtor- affiliates to retain Alvarez & Marsal, LLC, as the panel's operation and real estate advisor as of March 4, 2005. In the event the Court confirms a plan of reorganization of the Debtors that provides that all unsecured creditors are paid in full in cash, then the maximum restructuring fee payable to A&M will $1,250,000. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Court OKs Panel's Retention of Houlihan as Advisor -------------------------------------------------------------- The Honorable Judge Funk gave permission to the Official Committee of Unsecured Creditors of Winn-Dixie Stores, Inc., and its debtor- affiliates to retain Houlihan Lokey & Zukin Capital as the panel's financial advisor effective as of March 3, 2005. All compensation and reimbursement of expenses to be paid to Houlihan Lokey will be subject to prior Court approval and only the Unites States Trustee will retain the right to object to the firm's fee applications. The maximum distribution fee payable to Houlihan Lokey will be $3,750,000, in the event a plan of reorganization is confirmed by the U.S. Bankruptcy Court for the Middle District of Florida that provides all unsecured creditors to be paid in full. 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). WSNET HOLDINGS: Court Approves Disclosure Statement --------------------------------------------------- The Honorable Larry E. Kelly of the U.S. Bankruptcy Court for the Western District of Texas approved, on June 6, 2005, the Disclosure Statement explaining the Plan of Liquidation in WSNet Holdings, Inc.'s chapter 11 case. CRT Satellite Investors LLC and Digital Satellite Lenders LLC filed the Liquidation Plan and the Disclosure Statement on April 19, 2005. Judge Kelly rules that the Disclosure Statement contains the right amount of the right kind of information to allow the creditors to make an informed decision about the Liquidation Plan. The Plan Proponents are now authorized to distribute the Disclosure Statement to solicit acceptances from the Company's creditors. The Plan Proponents are respondents to a lawsuit commenced by the Debtor's shareholders in the 200th Judicial District Court of Travis County, Texas (Case No. GN200604). The Plan Proponents are also respondents to an adversary proceeding commenced by the Debtor's chapter 11 Trustee, Joseph D. Martinec. The Adversary Proceeding seeks to recharacterize the debts owed to the Plan Proponents' as equity. If the Plan takes effect, the Plan Proponents agree to subordinate their claims to general unsecured claims. CRT Satellite asserted a $56,837,167 claim against the Debtor. Digital Satellite filed a $4,395,521 proof of claim. The Chapter 11 Trustee has filed an objection to the Plan Proponents' claims. Terms of the Plan The Plan Proponents offer to fund the Plan for $500,000 to pay administrative claims, allowed priority claims and general unsecured claims in exchange for: * settlement and dismissal of the State Court Action; * settlement and dismissal of the Equitable Subordination Action; and * dismissal of the Chapter 11 Trustee's Claims Objection. The Plan Proponents' counsel -- Stephanie S. Rosenberg, Esq., at Bracewell & Guiliani LLP, in Houston, Texas -- tells the Court that the Debtor owns no meaningful assets, as it is simply a shell holding company for World Satellite Network, Inc. The Debtor has never had any operations and merely owns World Satellite's stock. World Satellite's stock will be cancelled under World Satellite's liquidation plan. Administrative claims -- the Chapter 11 Trustee's attorney's fees, totaling about $442,000 -- will be paid in full out of the Plan Fund. General unsecured claims, comprised of settlement claims aggregating around $13,000 plus interest at the prime rate, will be paid in full on the effective date of the Plan. Motorola, holding a $10,000,000 subordinated claim, will get nothing. Equity interests will be cancelled. The Court will consider confirmation of the Liquidation Plan on June 27, 2005. WSNet Holdings, Inc., through its subsidiary World Satellite Network, Inc., provides satellite TV to cable companies. Franchise and independent cable companies throughout the country contract with WSNet to provide the programming, which they later distribute to individual customers. The company offers nearly 200 channels of programming and serves more than 750,000 customers. WSNet Holdings and World Satellite filed for chapter 11 on Oct. 21, 2002 (Bankr. W.D. Tex. Case No: 02-14228). J. Maxwell Tucker, Esq., and Jeff Carruth, Esq., at Winstead, Sechrest & Minick, P.C. represent the Debtors in their restructuring efforts. * BOND PRICING: For the week of June 6 - June 10, 2005 ------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- AAIPharma Inc. 11.000% 04/01/10 48 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 75 Adelphia Comm. 3.250% 05/01/21 5 Adelphia Comm. 6.000% 02/15/06 5 Aetna Industries 11.875% 10/01/06 7 Allegiance Tel. 11.750% 02/15/08 25 Allegiance Tel. 12.875% 05/15/08 1 Allied Holdings 8.625% 10/01/07 37 Amer. Color Graph. 10.000% 06/15/10 71 Amer. Plumbing 11.625% 10/15/08 14 Amer. Restaurant 11.500% 11/01/06 61 Amer. Tissue Inc. 12.500% 07/15/06 2 American Airline 7.377% 05/23/19 68 American Airline 7.379% 05/23/16 68 American Airline 8.839% 01/02/17 74 American Airline 8.800% 09/16/15 74 American Airline 10.180% 01/02/13 72 American Airline 10.600% 03/04/09 66 American Airline 10.680% 03/04/13 65 AMR Corp. 9.200% 01/30/12 74 AMR Corp. 9.750% 08/15/21 68 AMR Corp. 9.800% 10/01/21 67 AMR Corp. 9.880% 06/15/20 63 AMR Corp. 10.000% 04/15/21 75 AMR Corp. 10.125% 06/01/21 68 AMR Corp. 10.150% 05/15/20 60 AMR Corp. 10.200% 03/15/20 68 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 6 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 32 ATA Holdings 12.125% 06/15/10 42 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 Autocam Corp. 10.875% 06/15/14 53 B&G Foods Holding 12.000% 10/30/16 8 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 64 Burlington Inds. 7.250% 08/01/27 4 Calpine Corp. 4.750% 11/15/23 60 Calpine Corp. 7.750% 04/15/09 59 Calpine Corp. 7.875% 04/01/08 61 Calpine Corp. 8.500% 07/15/10 71 Calpine Corp. 8.500% 02/15/11 59 Calpine Corp. 8.625% 08/15/10 59 Calpine Corp. 8.750% 07/15/07 64 Calpine Corp. 8.750% 07/15/13 70 Calpine Corp. 9.875% 12/01/11 71 Charter Comm Hld. 8.625% 04/01/09 73 Charter Comm Hld. 9.625% 11/15/09 73 Charter Comm Hld. 10.000% 05/15/11 72 Charter Comm Hld. 10.250% 01/15/10 73 Charter Comm Hld. 11.125% 01/15/11 72 Charter Comm Inc. 5.875% 11/16/09 58 Ciphergen 4.500% 09/01/08 72 Coeur D'Alene 1.250% 01/15/24 69 Collins & Aikman 10.750% 12/31/11 42 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 Covad Communication 3.000% 03/15/24 65 Covanta Energy 7.500% 03/15/12 69 Cray Research 6.125% 02/01/11 42 Curagen Corp. 4.000% 02/15/11 63 Curagen Corp. 4.000% 02/15/11 65 Delta Air Lines 2.875% 02/18/24 31 Delta Air Lines 7.299% 09/18/06 56 Delta Air Lines 7.711% 09/18/11 50 Delta Air Lines 7.779% 01/02/12 57 Delta Air Lines 7.900% 12/15/09 41 Delta Air Lines 7.920% 11/18/10 50 Delta Air Lines 8.000% 06/03/23 38 Delta Air Lines 8.300% 12/15/29 28 Delta Air Lines 8.540% 01/02/07 45 Delta Air Lines 8.540% 01/02/07 33 Delta Air Lines 8.540% 01/02/07 70 Delta Air Lines 9.000% 05/15/16 31 Delta Air Lines 9.200% 09/23/14 30 Delta Air Lines 9.250% 03/15/22 28 Delta Air Lines 9.300% 01/02/10 68 Delta Air Lines 9.300% 01/02/11 32 Delta Air Lines 9.320% 01/02/09 42 Delta Air Lines 9.480% 06/05/06 66 Delta Air Lines 9.750% 05/15/21 29 Delta Air Lines 10.000% 08/15/08 42 Delta Air Lines 10.000% 06/01/10 36 Delta Air Lines 10.000% 06/18/13 50 Delta Air Lines 10.000% 12/05/14 35 Delta Air Lines 10.060% 01/02/16 50 Delta Air Lines 10.125% 05/15/10 40 Delta Air Lines 10.140% 08/26/12 47 Delta Air Lines 10.375% 02/01/11 41 Delta Air Lines 10.375% 12/15/22 34 Delta Air Lines 10.430% 01/02/11 53 Delta Air Lines 10.790% 09/26/13 37 Delta Air Lines 10.790% 09/26/13 36 Delta Air Lines 10.790% 03/26/14 30 Delta Air Lines 10.790% 03/26/14 37 Delphi Auto System 7.125% 05/01/29 70 Delphi Corp. 6.500% 08/15/13 74 Delphi Trust II 6.197% 11/15/33 51 Diva Systems 12.625% 03/01/08 0 Dura Operating 9.000% 05/01/09 72 Dura Operating 9.000% 05/01/09 69 DVI Inc. 9.875% 02/01/04 8 Dyersburg Corp. 9.750% 09/01/07 0 Eagle-Picher Inc. 9.750% 09/01/13 68 Eagle Food Center 11.000% 04/15/05 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. 11.625% 07/15/10 0 Falcon Products 11.375% 06/15/09 42 Fedders North Am. 9.875% 03/01/14 61 Federal-Mogul Co. 7.375% 01/15/06 24 Federal-Mogul Co. 7.500% 01/15/09 23 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 Finova Group 7.500% 11/15/09 43 Firstworld Comm 13.000% 04/15/08 1 Foamex L.P. 9.875% 06/15/07 56 General Motors 7.400% 09/01/25 75 GMAC 5.250% 01/15/14 74 GMAC 5.850% 06/15/13 71 GMAC 5.900% 01/15/19 73 GMAC 5.900% 01/15/19 74 GMAC 5.900% 02/15/19 74 GMAC 5.900% 10/15/19 71 GMAC 6.000% 02/15/19 71 GMAC 6.000% 02/15/19 72 GMAC 6.000% 02/15/19 72 GMAC 6.000% 03/15/19 71 GMAC 6.000% 03/15/19 74 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 72 GMAC 6.000% 03/15/19 73 GMAC 6.000% 04/15/19 74 GMAC 6.000% 09/15/19 71 GMAC 6.000% 09/15/19 71 GMAC 6.050% 08/15/19 71 GMAC 6.050% 08/15/19 71 GMAC 6.050% 10/15/19 74 GMAC 6.100% 09/15/19 72 GMAC 6.125% 10/15/19 66 GMAC 6.150% 09/15/19 72 GMAC 6.200% 04/15/19 74 GMAC 6.250% 12/15/18 74 GMAC 6.250% 05/15/19 74 GMAC 6.250% 07/15/19 73 GMAC 6.300% 08/15/19 75 GMAC 6.500% 11/15/18 74 GMAC 6.500% 12/15/18 69 GMAC 6.500% 02/15/20 72 GMAC 6.650% 02/15/20 74 Golden Books Pub 10.750% 12/31/04 0 Golden Northwest 12.000% 12/15/06 10 Graftech Int'l 1.625% 01/15/24 59 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 Holley Perf. Prod. 12.250% 09/15/04 74 Icos Corp. 2.000% 07/01/23 73 Idine Rewards 3.250% 10/15/23 74 Imperial Credit 9.875% 01/15/07 0 Impsat Fiber 6.000% 03/15/11 64 Inland Fiber 9.625% 11/15/07 46 Integrated Elec. Sv 9.375% 02/01/09 75 Intermet Corp. 9.750% 06/15/09 43 Intermune Inc. 0.250% 03/01/11 73 Iridium LLC/CAP 10.875% 07/15/05 14 Iridium LLC/CAP 11.250% 07/15/05 14 Iridium LLC/CAP 13.000% 07/15/05 14 Iridium LLC/CAP 14.000% 07/15/05 15 Jordan Industries 10.375% 08/01/07 50 Kaiser Aluminum & Chem. 12.750% 02/01/03 8 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 71 Kmart Corp. 9.350% 01/02/20 26 Kulicke & Soffa 0.500% 11/30/08 71 Lehman Bros. Holding 7.500% 09/03/05 31 Level 3 Comm. Inc. 2.875% 07/15/10 52 Level 3 Comm. Inc. 6.000% 09/15/09 54 Level 3 Comm. Inc. 6.000% 03/15/10 51 Liberty Media 3.750% 02/15/30 61 Liberty Media 4.000% 11/15/29 63 Lukens Inc. 7.625% 08/01/04 0 LTV Corp. 8.200% 09/15/07 0 Metaldyne Corp. 11.000% 06/15/12 74 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 46 MSX Intl. Inc. 11.375% 01/15/08 61 Natl Steel Corp. 8.375% 08/01/06 0 North Atl Trading 9.250% 03/01/12 72 Northern Pacific Railway 3.000% 01/01/47 63 Northwest Airlines 7.248% 01/02/12 60 Northwest Airlines 7.360% 02/01/20 55 Northwest Airlines 7.626% 04/01/10 69 Northwest Airlines 7.875% 03/15/08 54 Northwest Airlines 8.070% 01/02/15 53 Northwest Airlines 8.130% 02/01/14 54 Northwest Airlines 8.700% 03/15/07 63 Northwest Airlines 8.970% 01/02/15 62 Northwest Airlines 9.875% 03/15/07 66 Northwest Airlines 10.000% 02/01/09 56 Northwest Airlines 10.500% 04/01/09 74 Northwest Steel & Wir. 9.500% 06/15/01 0 Nutritional Src. 10.125% 08/01/09 70 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 41 Orion Network 11.250% 01/15/07 54 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 9.750% 12/01/06 60 Pegasus Satellite 12.375% 08/01/06 56 Pegasus Satellite 12.500% 08/01/07 56 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings Inc. 9.875% 06/15/08 62 Piedmont Aviat 9.900% 11/08/06 8 Pixelworks Inc. 1.750% 05/15/24 75 Polaroid Corp. 6.750% 01/15/02 1 Polaroid Corp. 7.250% 01/15/07 0 Polaroid Corp. 11.500% 02/15/06 0 Portola Packaging 8.250% 02/01/12 64 Primedex Health 11.500% 06/30/08 48 Primus Telecom 3.750% 09/15/10 26 Primus Telecom 5.750% 02/15/07 36 Primus Telecom 8.000% 01/15/14 52 Primus Telecom 12.750% 10/15/09 50 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 74 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 24 Reliance Group Holdings 9.750% 11/15/03 4 RJ Tower Corp. 12.000% 06/01/13 61 Salton Inc. 10.750% 12/15/05 54 Salton Inc. 12.250% 04/15/08 46 Scotia Pac Co. 6.550% 01/20/07 64 Scotia Pac Co. 7.110% 01/20/14 68 Scotia Pac Co. 7.710% 01/20/14 67 Solectron Corp. 0.500% 02/15/34 71 Specialty Paperb. 9.375% 10/15/06 69 Syratech Corp. 11.000% 04/15/07 30 Tekni-Plex Inc. 12.750% 06/15/10 69 Tops Appliance 6.500% 11/30/03 0 Tower Automotive 5.750% 05/15/24 21 Trans Mfg Oper 11.250% 05/01/09 50 Triton PCS Inc. 8.750% 11/15/11 68 Triton PCS Inc. 9.375% 02/01/11 69 Tropical SportsW 11.000% 06/15/08 35 Twin Labs Inc. 10.250% 05/15/06 14 United Air Lines 6.831% 09/01/08 19 United Air Lines 6.932% 09/01/11 57 United Air Lines 7.270% 01/30/13 34 United Air Lines 7.762% 10/01/05 12 United Air Lines 7.811% 10/01/09 44 United Air Lines 8.030% 07/01/11 26 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 51 United Air Lines 9.000% 12/15/03 12 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 12 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 51 United Air Lines 9.560% 10/19/18 37 United Air Lines 9.750% 08/15/21 12 United Air Lines 10.110% 01/05/06 44 United Air Lines 10.110% 02/19/06 44 United Air Lines 10.125% 03/22/15 45 United Air Lines 10.250% 07/15/21 12 United Air Lines 10.360% 11/13/12 54 United Air Lines 10.670% 05/01/04 13 United Air Lines 11.210% 05/01/14 12 Univ. Health Services 0.426% 06/23/20 68 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. 10.900% 01/01/08 3 US Airways Inc. 7.960% 01/20/18 48 Utstarcom 0.875% 03/01/08 67 Venture Hldgs 9.500% 07/01/05 0 Venture Hldgs 11.000% 06/01/07 0 WCI Steel Inc. 10.000% 12/01/04 69 Werner Holdings 10.000% 11/15/07 70 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 52 Winsloew Furniture 12.750% 08/15/07 28 Winstar Comm 14.000% 10/15/05 1 Winstar Comm Inc. 10.000% 03/15/08 0 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. 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