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/raid1/www/Hosts/bankrupt/TCR_Public/050627.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 27, 2005, Vol. 9, No. 150 Headlines ADELPHIA COMMS: Files Second Amended Plan of Reorganization AES CORP: Barry Sharp to Resign as EVP & CFO by Year-End AMERICAN NATURAL: Gets Stockholders' Nod to Issue 150M More Shares AMERICA ONLINE: Case Summary & 20 Largest Unsecured Creditors AOL LATIN: Files for Chapter 11 Protection in Delaware ARVINMERITOR INC: Moody's Cuts Corporate Family Rating to Ba2 AURORA PLATINUM: Shareholders & Court Approve Plan of Arrangement BANC OF AMERICA: S&P Lifts Rating on Classes SB-D & SB-E Certs. BEAR STEARNS: Fitch Puts 6 Cert. Classes on Rating Watch Negative BUEHLER FOODS: Committee Taps Frost Brown as Counsel CATHOLIC CHURCH: Spokane Tort Panel Wants Bar Date Notice Revised CELESTICA INC: Completes $250 Million Sale of 7.625% Sr. Sub. Debt CENTURY/ML: Asks Court to Approve San Juan Bid Protections CITYSCAPE HOME: S&P Holds Ratings on 1997-1 Class M-2 Certs. at B CONGOLEUM CORP: Court Approves Third Amendment to DIP Financing CONTECH CONSTRUCTION: Moody's Rates $450M Credit Facilities at Ba3 CONTINENTAL AIRLINES: Seeks Mediation With Flight Attendants Union CONTRACTOR TECH: Court Denies Retention of Travis Law as Counsel COVANTA ENERGY: Taps Struble Ragno as Ordinary Course Professional CYPRESS COMMS: Expects FCC Nod on Arcapita Merger Before July DALLAS AEROSPACE: Ch. 7 Trustee Taps Stuart Jackson as Counsel DOBSON COMMS: Elects to Defer Preferred Stock Dividends DRY TECH: Case Summary & 20 Largest Unsecured Creditors EMPIRE FUNDING: S&P Holds Rating on 1997-A Class B Certs. at B EXIDE TECH: Investors Sue Officers for Violating Securities Laws EXIDE TECH: Mellon Strategies Discloses 9.9% Equity Stake FALCON PRODUCTS: Panel Hires Morgan Keegan as Investment Banker FEDERAL-MOGUL: Panel Won't Hire Lobbyists Due to Objections FIBERMARK INC: Files New Reorg. Plan & Disclosure Statement in Vt. FIRST DOMINION: Moody's Confirms $14.2M Class D-2 Notes Ba3 Rating GALEY & LORD: U.S. Trustee Wants N.Y. Case Dismissed or Converted GRANT PRIDECO: Good Performance Cues S&P to Lift Ratings to BB GS MORTGAGE: Fitch Assigns Low-B Ratings to 6 Cert. Classes HOLLINGER INT'L: Asks Illinois Court to Dismiss Class Action HOLLINGER INT'L: Declares $0.05 per Share Quarterly Dividend INNOVA: S&P Lifts Rating on $300 Million Sr. Unsec. Notes to BB- INTERMET CORP: Files Plan of Reorganization in E.D. of Michigan JETSGO CORP: Unsecured Creditors Could Recover 11% of Claims KRAMONT REALTY: Fitch Withdraws BB- Rating on Preferred Stock LUIS MORALES: Case Summary & 11 Largest Unsecured Creditors LY-CON INC: Voluntary Chapter 11 Case Summary MARKWEST ENERGY: Earns $3.8 Million of Net Income in 4th Quarter MATRIA HEALTHCARE: Moody's Withdraws $86M Sr. Sub. Notes B3 Rating MAYTAG CORP: Inks Commitment Letter for $500M Sr. Sec. Facility MERIDIAN AUTOMOTIVE: Wants to Use Lenders' Cash Collateral MERIDIAN AUTOMOTIVE: Ct. OKs Appleton Sublease Over DBSI Objection MERIDIAN AUTOMOTIVE: Court Okays Mercer Human as Consultants MILANO CONSTRUCTION: Voluntary Chapter 11 Case Summary MORGAN'S FOODS: Recurring Losses Trigger Going Concern Doubt MYSTIC TANK: Officially Emerges From Chapter 11 NATIONAL CENTURY: LTC Entities Appeal Bankr. Court's Injunction NOBLE DREW: U.S. Trustee Picks Three-Member Creditors Committee NORTHERN BERKSHIRE: Recurring Losses Cue S&P to Cut Rating to BB- OLD MET BBQ LLC: Case Summary & 3 Largest Unsecured Creditors ORBIT BRANDS: Executes Term Sheet to Pay Professionals OWENS CORNING: Court Extends Exclusive Solicitation Period PLAZA GARDENS: Wants to Hire McDowell Rice as Bankruptcy Counsel PLAZA GARDENS: Section 341(a) Meeting Slated for July 18 POLYAIR INTER: Wants Amendments to Financial Covenants Extended Q COMM: Restates Financial Reports Due to Possible Weakness REGIONAL DIAGNOSTICS: Wants Until Plan Filing to Decide on Leases ROYAL GROUP: Dual Class Share Structure Collapses SATELITES MEXICANOS: Has Until July 7 to Answer Ch. 11 Petition SHAWN ANTLE: Case Summary & 22 Largest Unsecured Creditors SEARS HOLDINGS: Third Avenue Acquires 140,000 Shares for $2MM SECURITY CAPITAL: AMEX Halts Stock Trading SOLECTRON CORP: Incurs $67 Million GAAP Loss in Third Quarter SOLUTIA INC: Arklow Replaces Candlewood in Equity Committee SOUNDVIEW HOME: Fitch Puts Low-B Ratings on $32M Class B Certs. SOUTH DAKOTA: Wants to Hire Stuart Gerry as Bankruptcy Counsel SPHERE DRAKE: Section 304 Petition Summary SUPERIOR WHOLESALE: Fitch Puts BB+ Rating on $53M Class D Certs. SYL-SU REALTY: Case Summary & 18 Known Creditors TELVUE CORP: Majority Shareholder Agrees to Certain Concessions TEMBEC INC: Spruce Falls Unit Gets $190M Working Capital Loan THE COOPER: Moody's Affirms $750 Million Debts' Ba3 Rating THERMA-WAVE: Delays Annual Report Filing Due to Material Weakness TOYS 'R' US: 98% of Stockholders Approve Merger Agreement TRANSTECHNOLOGY CORP: March 31 Balance Sheet Upside-Down by $6.4MM UNITED SUBCONTRACTOR: S&P Rates $305 Million Bank Loans at B+ USEC INC: Moody's Downgrades Sr. Unsec. Debt Rating to B2 from Ba3 WASTE CONNECTIONS: Good Credit Measures Cue S&P's Positive Outlook WILLIAMS SCOTSMAN: Launches Tender Offer for 9-7/8% Senior Notes WINN-DIXIE: Court Okays Deloitte Consulting as Consultants WINN-DIXIE: Wants to Reject Madison Grocery Store Lease WINN-DIXIE: Wants to Reject Pewter Partner Agreement WISTON XIV: Sapient Capital Opposes Amended Request for DIP Loan YUKOS OIL: Manager of Yukos Unit Detained by Russian Authorities * Marshall & Stevens Adds Alfred King & Robert Kleeman to Firm * The Garden City Group Promotes Jennifer M. Keough to Senior VP * BOND PRICING: For the week of June 20 - June 24, 2005 ********* ADELPHIA COMMS: Files Second Amended Plan of Reorganization ----------------------------------------------------------- Adelphia Communications Corporation (OTC: ADELQ) filed a second amended plan of reorganization with the U.S. Bankruptcy Court for the Southern District of New York, together with the related amended disclosure statement explaining the Plan. The filing represents continued progress toward ultimate resolution of the Adelphia bankruptcy case. A disclosure hearing is expected later this summer, followed by creditor balloting, and a confirmation hearing to approve a final plan of reorganization. "This amended plan is another milestone in our bankruptcy process, but we still have significant work to do with all the relevant constituents," said Bill Schleyer, chairman and CEO of Adelphia. "Over the course of the summer, we will work diligently to balance the competing interests of our bankruptcy constituents and address open issues with a goal of being prepared for a disclosure hearing by the end of summer. Throughout this process, maximizing value for our bankruptcy constituents has remained our most important goal. We will keep the process moving ahead." The Company noted that this filing sets the stage for the next round of negotiations regarding the plan of reorganization. It is expected that there will be significant negotiations regarding the terms of the proposed plan of reorganization and disclosure statement as the constituents work through a number of inter- creditor issues. It is also expected that the open issues noted in the document and the anticipated negotiations, will result in additional material changes to the proposed plan and disclosure statement. On April 21, 2005, Adelphia disclosed that it has reached definitive agreements for Time Warner Inc. (NYSE: TWX) and Comcast Corporation (Nasdaq: CMCSA, CMCSK) to acquire substantially all the U.S. assets of Adelphia for $12.7 billion in cash and 16 percent of the common stock of Time Warner's cable subsidiary, Time Warner Cable Inc. Copies of the amended plan and the amended disclosure statement as well as a motion for order in aid of confirmation are available in the investor relations and press room sections of the Adelphia corporate web site http://www.adelphia.com/ 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. AES CORP: Barry Sharp to Resign as EVP & CFO by Year-End -------------------------------------------------------- The AES Corporation (NYSE:AES) reported that Barry Sharp will resign from his position as Executive Vice President and Chief Financial Officer by the end of this year. Following his departure from AES, Mr. Sharp will continue to work with the company as a consultant and assist the new AES CFO during a transition period. AES has initiated a search for a successor for the CFO position. Mr. Sharp has accepted a directorship position with Imagine Schools, a company that operates public charter schools in nine states and the District of Columbia. Upon the appointment of a successor, but no later than year-end, he plans to join the education company as CFO. Mr. Sharp joined AES in 1986 as Director of Finance and Administration and has served as CFO for the past 18 years. "After nearly 20 years of dedicated service to AES, Barry has decided to move on to pursue his other interests. Barry was instrumental in building AES into the global power company that it is today," said Paul Hanrahan, AES President and Chief Executive Officer. "He led the company through a difficult restructuring period and played a major role in restoring AES to the solid financial position it has today. I am personally very grateful for his contributions and look forward to his continued involvement with the company." Mr. Sharp commented, "My decision to leave AES was difficult, but after almost 20 years with the company, I have decided that this is the right time to make a transition to a new set of challenges. I have made this decision with the confidence that AES is on strong financial ground with an exceptional team of people. Although I will not be leaving my current position until an orderly transition has been arranged, I wish to take this opportunity to express my sincere appreciation to all AES people for the tremendous experience of the last 20 years. I look forward to continuing my relationship with AES in the future." AES Corporation -- http://www.aes.com/-- is a leading global power company, with 2004 revenues of $9.5 billion. AES operates in 27 countries, generating 44,000 megawatts of electricity through 124 power facilities and delivers electricity through 15 distribution companies. Our 30,000 people are committed to operational excellence and meeting the world's growing power needs. * * * As reported in the Troubled Company Reporter on June 23, 2005, Fitch Ratings has upgraded and removed the ratings of AES Corporation from Rating Watch Positive, where it was initially placed on Jan. 18, 2005 pending review of the company's year-end financial results. Fitch said the Rating Outlook is Stable. Following the completion of its review, Fitch's upgrade reflects the significant progress AES had made in retiring parent company recourse debt and improving liquidity. In addition, AES has refinanced several near term debt maturities and extended the company's debt maturity profile. The company has successfully accessed both the debt and equity markets in 2004 and 2003. Furthermore, AES has in place a $450 million revolving credit facility which significantly improves the company's liquidity position. Finally, management has affirmed the goal of continued debt reduction committing to $600 million in parent company debt retirements in 2005. In this regard, AES called for early redemption approximately $112 million of notes in May 2005. These notes were redeemed in full on June 1, 2005. While AES has made significant progress in reducing debt and improving liquidity, Fitch recognizes that the company's management emphasis has shifted from debt reduction to a resumed focus on growth. AES recently made two acquisitions in the domestic wind power generation sector. While these acquisitions have been modest, Fitch notes that wind is a new technology for AES and as such, raises some execution risk. Internationally, AES has indicated that growth will be focused on platform extensions (i.e. expansion opportunities around existing assets) and 'emergent' countries (i.e. countries which are approaching developed nation status). Management has stressed that such expansion will be funded with a prudent mix of equity and debt. Fitch's rating and Outlook would be adversely affected if AES' future investments result in escalating parent company leverage. This rating action does not affect the ratings of other AES affiliates rated by Fitch listed below. In general, these rated entities are bankruptcy remote from AES by virtue of their legal structure or by virtue of their country of location. These entities include: * AES Clesa * AES Eastern Energy * AES Gener * AES Puerto Rico * AES Tiete * Electricidad de Caracas * Eletropaulo Metropolitana Eletricidade de Sao Paulo Fitch placed the ratings of IPALCO Enterprises Inc., and Indianapolis Power & Light Company on Rating Watch Positive on Jan. 18, 2005. The ratings of these entities which are potentially affected by the AES ratings upgrade will be resolved in the near future. Fitch has upgraded these ratings: AES Corporation -- Senior secured credit facility to 'BB+' from 'BB'; -- Junior secured notes to 'BB+' from 'B+'; -- Senior unsecured notes to 'B+' from 'B'; -- Senior subordinated notes to 'B' from 'B-'; -- Convertible notes to 'B' from 'B-'; -- Rating Outlook Stable. AES Trust III -- Trust preferred securities to 'B-' from 'CCC+' -- Rating Outlook Stable. AES Trust VII -- Trust preferred securities to 'B-' from 'CCC+' -- Rating Outlook Stable. AMERICAN NATURAL: Gets Stockholders' Nod to Issue 150M More Shares ------------------------------------------------------------------ American Natural Energy Corporation (TSX Venture: ANR.U) reported that at a meeting of its stockholders held on June 23, 2005, its stockholders approved an amendment to ANEC's Certificate of Incorporation to increase the number of shares of Common Stock ANEC is authorized to issue to 250 million from 100 million. This approval was a condition to effecting the amendment of Indenture for ANEC's outstanding 8% Convertible Secured Debentures. The final terms of the amendments were previously announced May 18, 2005, and include, among other things, an extension of the maturity date of the Debentures to September 30, 2006 and the reduction through the extended maturity date of the Debentures of the price at which the principal of the Debentures can be converted into shares of Common Stock to US$0.15 per share. Also occurring at the meeting, ANEC's stockholders elected Michael Paulk, Steven Ensz, Brian Bayley, John Campbell, Jules Poscente and Gerry Curtis to the board of directors and approved certain technical amendments to ANEC's Stock Option Plan so as to comply with certain TSX Venture Exchange requirements. American Natural Energy Corporation is engaged in the acquisition, development, exploitation and production of oil and natural gas. The company operates in St. Charles Parish, Louisiana. Since December 31, 2001, the Company has engaged in several transactions, which it believes will enhance its oil and natural gas development, exploitation and production activities and our ability to finance further activities. ANEC is publicly traded on the TSX Venture Exchange as ANR.U. At Mar. 31, 2005, American Natural Energy Corporation's balance sheet showed a $10,991,124 stockholders' deficit, compared to a $9,596,356 deficit at Dec. 31, 2004. PricewaterhouseCoopers, LLP, expressed substantial doubt about American Natural Energy Corporation's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditing firm points to the Company's accumulated deficit and working capital deficiencies. The Company experienced a net loss of $1.5 million in the three month period ended March 31, 2005, and has a working capital deficiency and an accumulated deficit at March 31, 2005, all of which lead to questions concerning its ability to meet its obligations as they come due. The Company also has a need for substantial funds to develop oil and gas properties and repay borrowings. Historically the Company has financed its activities using private debt and equity financing. American Natural Energy has no line of credit or other financing agreement providing borrowing availability. As a result of the losses incurred and current negative working capital and other matters described, there is no assurance that the carrying amounts of its assets will be realized or that liabilities will be liquidated or settled for the amounts recorded. AMERICA ONLINE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: America Online Latin America, Inc. 6600 North Andrews Avenue, Suite 400 Fort Lauderdale, Florida 33309 Bankruptcy Case No.: 05-11778 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- AOL Latin America Management LLC 05-11779 AOL Puerto Rico Management Services, Inc. 05-11780 America Online Caribbean Basin, Inc. 05-11781 Type of Business: America Online Latin America offers AOL-branded Internet service in Argentina, Brazil, Mexico, and Puerto Rico, as well as localized content and online shopping over its proprietary network. Subscribers also get access to popular AOL services like instant messaging, online chat, e-mail, and personalized homepages. In addition, the company maintains localized Internet portals serving users in about 20 countries. In total AOLA has more than 460 thousand members. Principal shareholders in AOLA are Cisneros Group, one of Latin America's largest media firms, Brazil's Banco Itau, and Time Warner, through America Online. See http://www.aola.com/ Chapter 11 Petition Date: June 24, 2005 Court: District of Delaware Judge: Mary F. Walrath Debtors' Counsel: Edmon L. Morton, Esq. Margaret B. Whiteman, Esq. Pauline K. Morgan, Esq. Young, Conaway, Stargatt & Taylor, LLP The Brandywine Building 1000 West Street, 17th Floor P.O. Box 391 Wilmington, Delaware 19899 Tel: (302) 571-6600 Fax: (302) 571-1253 Consolidated Financial Condition as of March 31, 2005: Total Assets: $28,500,000 Total Debts: $181,774,000 Consolidated List of Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Time Warner, Inc. Loan Agreement $160,000,000 One Time Warner Center plus accrued New York, NY 10019 interest Fax: (212) 484-7151 America Online, Inc. Trade Debt $1,562,389 22000 AOL Way Dulles, VA 20166 Fax: (703) 265-8433 Cypress Center Office Lease $640,350 CYP Owner LLC One Independent Drive, Suite 114 Jacksonville, FL 32202 Fax: (904) 358-5479 HR Real Estate Management Inc. Office Lease $164,300 GE Capital Equipment Lease $47,700 Addecco Trade Debt $32,944 Eduardo Hauser Trade Debt $30,591 Xerox Capital Services LLC Equipment Lease $28,450 Bruno Harig & Associates Trade Debt $13,020 Plaza las Americas Lease $72,000 Plaza Carolina Lease $21,000 Plaza del Sol Lease $22,000 United Healthcare United Health $17,505 Insurance Plaza del Caribe Lease $4,000 Kelly Temporary Services Trade Debt $8,329 Fiddler, Gonzalez & Rodrigues Trade Debt $7,619 Browne of Atlanta Trade Debt $7,619 Ultimate Media Trade Debt $6,500 Kmart Corporation Trade Debt $3,636 Creative Graphics Group Trade Debt $3,425 AOL LATIN: Files for Chapter 11 Protection in Delaware ------------------------------------------------------ America Online Latin America, Inc., together with its subsidiaries -- AOL Puerto Rico Management Services, Inc., America Online Caribbean Basin, Inc., and AOL Latin America Management LLC. -- filed voluntary chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware on June 24, 2005. Time Warner and America Online, the Debtors' largest stakeholders, assert a $161.6 million unsecured claim against AOLA. The chapter 11 filing was made to wind down the Debtors' businesses by either selling all or a portion of their assets and closing those that could not be sold. Each of the Debtors' board of directors and board of managers approved the wind-down of operations. The AOLA Group, as a whole, has never generated positive cash flow since its inception in 1998. Other than the proceeds received from the issuance of senior convertible notes due in March 2007, the Debtors relied heavily on certain affiliates' equity capital and the U.S. public equity market for their working capital needs and expenses. For the three-month period ended March 31, 2005, the Debtors recorded a $72.6 million net loss on $12.8 million of revenues. The Debtors reported approximately $1 billion in accumulated deficit as of March 31, 2005. Liquidation Plan Before filing for bankruptcy, the Debtors and their principal stockholders, including Time Warner and AOL Online, negotiated the terms of a plan of liquidation under a letter and support agreement. Pursuant to the letter agreement, the principal stockholders agreed to support a Plan that provided for the subordination of America Online's and Time Warner's claims to the general unsecured creditors. Consenting creditors will receive 100% of the allowed amount of their claims if they release the principal stockholders from any liability. From the remaining available cash, the Debtors will distribute 60% to America Online and Time Warner while 40% will go to the 31.6% equity stakeholder, The Cisneros Group. In light of the letter and support agreement, the Debtors expect to file a disclosure statement explaining a Plan of Liquidation with the Bankruptcy Court as soon as possible. AOL Latin America's other subsidiaries will continue normal operations, and its subscribers will continue to receive the America Online branded service without interruption. Headquartered in Fort Lauderdale, Florida, America Online Latin America offers AOL-branded Internet service in Argentina, Brazil, Mexico, and Puerto Rico, as well as localized content and online shopping over its proprietary network. The Company and three of its affiliates filed for chapter 11 protection on June 24, 2005 (Bankr. D. Del. Case No. 05-11778 through 05-11781). Edmon L. Morton, Esq., Margaret B. Whiteman, Esq., and Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represent the Debtors in their liquidation efforts. When the Debtors filed for protection from their creditors, they listed $28,500,000 in total assets and $181,774,000 in total debts. As of June 24, 2005, the AOLA Group employs 346 full-time workers -- 67 in Brazil, 87 in Mexico, 146 in Argentina, 19 in the United States and 27 in Puerto Rico. ARVINMERITOR INC: Moody's Cuts Corporate Family Rating to Ba2 ------------------------------------------------------------- Moody's Investors Service has downgraded the corporate family rating (formerly senior implied rating) and senior unsecured ratings of ArvinMeritor, Inc. to Ba2 from Ba1. The speculative grade liquidity rating has been lowered to SGL-3 (adequate) from SGL-2 (good). The actions consider the challenging automotive production environment the company's Light Vehicle Systems Group continues to face and the impact to the company's liquidity profile arising from restructuring programs and reduced, but adequate, access to its revolving credit as a result of narrowed headroom under its financial covenants. However, the company's Commercial Vehicle Systems Group is benefiting from higher levels of Class 8 truck production in North America as well as stronger demand in Europe for medium and heavy duty commercial vehicles. To date the strength in CVS has not fully offset weakness in LVS with consolidated numbers and cash flows from continuing operations exhibiting lower debt protection measures and higher levels of adjusted debt. Going forward improving CVS contributions should produce stronger consolidated performance. The company's revised guidance on cash flows for the current fiscal year are negative with cash disbursements under restructuring programs expected to continue into fiscal 2006. However, the company has indicated its intention to complete the sale of the North American portion of its Aftermarket business before the end of the current fiscal year (September). Proceeds from that sale would replenish liquidity and potentially facilitate a reduction in leverage. The stable outlook reflects the net effect of these developments with the company continuing with an elevated level of indebtedness. These ratings were affected: ArvinMeritor, Inc. * Corporate Family (previously called Senior Implied) to Ba2 from Ba1 * Senior Unsecured to Ba2 from Ba1 * Issuer rating to Ba2 from Ba1 * Senior Unsecured shelf to (P)Ba2 from (P)Ba1 * Speculative Grade Liquidity rating to SGL-3 from SGL-2 Arvin Capital I * Preferred stock to Ba3 from Ba2 Lower automotive vehicle production in North America and Europe and higher steel costs have adversely impacted the results of the LVS group, which has reported operating losses through the first half of fiscal 2005. While these losses included charges for restructuring and the bankruptcy of a British customer, operating results would still have only been close to a 1% operating margin. CVS has experienced strengthening demand as cyclical recoveries in heavy and medium duty trucks in both North America and Europe have begun to accelerate. However, combined with increased working capital investment, the cash impact of restructuring actions taken to date, the net effect has been a deterioration in profit margins, negative free cash flow, and higher levels of adjusted debt. The company's restructuring actions are expected to aggregate $135 million with $62 mm having been taken in the second fiscal quarter. Of the total expected charges, about $110 million will have a cash impact, with $23 million incurred thus far. Adjusted debt (ex-pension)/EBITDAR on a last twelve months basis stood at 3.6 X at March 2005. Revised cash flow guidance for the current fiscal year indicates negative free cash flow. Going forward strength in CVS is more likely to offset weakness in LVS as demand for commercial vehicles is anticipated to remain strong into 2006. However, current leverage statistics are elevated and cash flow generation from operations has been poor. As a result, debt protection measures no longer reflect a Ba1 credit. To date asset sales have supplemented liquidity. The company also anticipates the sale of the North American portion of its Aftermarket business in the next 4 months. Proceeds from this transaction will improve the company's liquidity and potentially facilitate lower levels of indebtedness. While the downgrade considers the challenging business environment in LVS and the company's elevated leverage, the stable outlook anticipates improved contributions from CVS, cost reductions from restructuring and potential debt reduction from proceeds of asset sales The liquidity rating has been lowered to SGL-3 representing adequate liquidity over the next twelve months. Lower levels of cash flow generation have impacted the company's liquidity profile. At March 31, 2005 the company had approximately $99 million of cash, down from $132 million at its fiscal year-end in September 2004. Free cash flow from operations will be constrained over the next 18 months as the cash portion of the company's restructuring initiatives will reduce cash generated from operations. The sale of the North American portion of its Aftermarket business should more than offset these cash uses. Furthermore, when completed, the restructuring program is represented to generate annual savings of between $50-$60 million/year. The company's unsecured bank credit facility is for $900 million and has a maturity in 2008. The facility provides for same-day borrowing capability for the full amount of the facility, but does include a MAC clause at each drawing for so long as the company does not have an investment grade rating. The principle financial covenants are; Net Debt/EBITDA not to exceed 3.25 times, and (EBITDA less capex)/Interest greater than 1.50 times. The company has remained in compliance with these covenants, but headroom has diminished during the course of the fiscal year. While potential improvements in operating results could improve the cushion over the next year, the covenants currently limit the company's access to less than the full amount of the facility. There are no rating triggers involved, but the pricing grid is driven by the company's long-term debt ratings. At the end of March approximately $48 million was drawn under the revolver with roughly $30 million of letters of credit issued under its commitment. ArvinMeritor's $250 million domestic account receivable securitization facility has a current maturity date in September 2005. A Euro 50 million (approx. $60 million) facility for European receivables expired at the end of March. The domestic facility does have a rating trigger, but the company's ratings are above this level (ratings must fall below Ba3 at Moody's or below BB- at Standard & Poor's. At March 31 the company had utilized approximately $65 million of the commitments under the securitization arrangement. European subsidiaries had factored approximately $15 million of receivables at the end of second fiscal quarter. Negative rating developments would arise from further erosion in core business performance resulting in deterioration in operating profits, adjusted leverage approaching 4 times; persistent negative free cash flow, and EBIT/Interest below 2 times. Factors that would lead to positive ratings developments include: * adjusted leverage retreating below 3 times; * EBIT/Interest coverage sustained closer to 3 times; and * free cash flow/debt at 6% or higher. ArvinMeritor is an $8 billion global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company is headquartered in Troy, MI and services: * the light vehicle, * commercial truck, * trailer and specialty equipment manufacturers, and * related aftermarkets. The company employs approximately 31,000 people at manufacturing locations in 25 countries. AURORA PLATINUM: Shareholders & Court Approve Plan of Arrangement ----------------------------------------------------------------- Aurora Platinum Corp. (TSX VENTURE:ARP) and FNX Mining Company Inc. disclosed that 83% of the holders of Aurora's common shares voted in favor of the plan of arrangement detailing the acquisition of the Company's assets by FNX Mining. The Supreme Court of British Columbia approved the arrangement on June 22, 2005. The transaction is expected to close as of July 1, 2005 and is subject to customary closing conditions. As the share exchange ratio has now been set at approximately 0.1918 common shares of FNX for each common share of Aurora, on completion of the transaction, FNX will issue approximately 4,270,803 common shares to acquire all of the 22,266,414 issued and outstanding shares of Aurora. Aurora shareholders will receive a letter of transmittal providing instructions on how to exchange their shares pursuant to the arrangement. FNX has agreed to transfer to Dynatec Corporation an indirect 50% interest in Aurora immediately following the acquisition in exchange for 7,716,594 common shares of Dynatec and $12,246,528 in cash. BANC OF AMERICA: S&P Lifts Rating on Classes SB-D & SB-E Certs. --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on five classes of Banc of America Commercial Mortgage Inc.'s commercial mortgage pass-through certificates from series 2003-1 to 'AAA'. The rating actions follow the full defeasance on June 23, 2005, of the $129 million first mortgage loan secured by an office building located at 1334 York Avenue, New York, New York, also known as the Sotheby's Building (the SB loan). Each of the upgraded classes is backed solely by the subordinate component of the SB loan. The real estate collateral securing the loan has been replaced with defeasance collateral consisting of a Freddie Mac step medium-term note. The defeasance collateral will provide a revenue stream sufficient to pay each scheduled principal and interest payment when due on the mortgage note through its March 2013 maturity date. Ratings Raised Banc of America Commercial Mortgage Inc. Commercial mortgage pass-through certs series 2003-1 Rating ------ Class To From ----- -- ---- SB-A AAA BBB+ SB-B AAA BBB SB-C AAA BBB- SB-D AAA BB+ SB-E AAA BB BEAR STEARNS: Fitch Puts 6 Cert. Classes on Rating Watch Negative ----------------------------------------------------------------- Fitch Ratings places these classes of Bear Stearns Commercial Mortgage Securities, Inc. series 2001-Top 2 Trust Fund on Rating Watch Negative (RWN): -- $16.4 million class G 'BB+'; -- $6.3 million class H 'BB'; -- $7.5 million class J 'BB-'; -- $3.8 million class K 'B+'; -- $5 million class L 'B'; -- $2.5 million class M 'B-'; Class N is not rated by Fitch. The classes have been placed on RWN due to litigation between GMAC Commercial Mortgage Corporation and the borrower of a loan in the trust. The dispute arose when the borrower, after leasing a portion of the space, requested the return of a lease termination fee. GMACCM, the special servicer, refused the release. The litigation went to jury trial and a verdict was rendered in favor of the borrower. The Jan. 25, 2005 verdict awarded the borrower $7.8 million for breach of contract as well as $33 million in punitive damages for committing conversion. In June of 2005 the court issued a Statement of Decision and Notice of Judgment affirming its ruling in favor of the borrower and award of punitive damages. There is uncertainty as to whether the trust would be responsible for the payment of the punitive damages. GMACCM is continuing to pursue all legal remedies including an appeal of the judgment. Classes G through N are currently not receiving interest due to the recovery of legal expenses by the master and special servicers. Accrued legal expenses through June 2005 are $896,000, which will be reimbursed over the next several months. Ongoing expenses are expected as litigation continues, averaging an additional $125,000/month for the foreseeable future. Fitch continues to closely monitor the litigation, and its impact on the certificates. BUEHLER FOODS: Committee Taps Frost Brown as Counsel ---------------------------------------------------- The Official Committee of Unsecured Creditors of Buehler Foods, Inc., and its debtor-affiliates asks the U.S. Bankruptcy Court for the Southern District of Indiana, Evansville Division, for authority to retain Frost Brown Todd LLC as co-counsel to its lead counsel, Otterbourg, Steindler, Houston & Rosen, P.C. Frost Brown is expected to: a) advise the Committee with respect to its powers, duties and responsibilities in these cases; b) provide assistance in the Committee's investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors, the operation of the Debtors' businesses and desirability of the continuance of the businesses, and any other matters relevant to the cases or to the negotiation and formulation of a chapter 11 plan; c) prepare on behalf of the Committee all necessary pleadings and other documentation; d) advise the Committee with respect to the Debtors' formulation of a plan, prosecute claims against third parties and any other matters relevant to the case or formulation of a chapter 11 plan; e) provide assistance, advice and representation, with respect to the employment of a trustee or examiner; f) represent the Committee in hearings and proceedings involving the Committee; and g) perform other legal services as may be necessary and in the best interest of the creditors and the Committee. Edward M. King, Esq., a member at Frost Brown, discloses his Firm's professionals current hourly billing rates: Designation Rate ----------- ---- Members $265 - $325 Associates $175 - $230 Paralegals $115 - 125 To the best of the Committee's knowledge, Frost Brown 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, along with its three affiliates, 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 Debtors in their 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. CATHOLIC CHURCH: Spokane Tort Panel Wants Bar Date Notice Revised ----------------------------------------------------------------- As previously reported, the Spokane Diocese asked Judge Williams to set the bar date for filing non-governmental proofs of claim at 90 days after the Court approves the request or at another date that the Court determines to be appropriate under the circumstances. Responses A. Spokane Insurers General Insurance Company of America and ACE Property & Casualty Insurance Company remind the U.S. Bankruptcy Court for the Eastern District of Washington that the overriding goal of the Bankruptcy Code is to deal with any and all claims in the bankruptcy case while providing a fresh start for the debtor. Excusing the Causal Link Claimants from filing a proof of claim will thwart this goal because the Diocese of Spokane will not be able to quantify or value their claims in order to resolve them. Casual Link Claimants are aware of the Diocese's allegedly wrongful conduct and are capable of understanding and protecting their legal rights. The Spokane Insurers, hence, support the Diocese's request and submit that it is absolutely appropriate under the circumstances of the case for Causal Link Claimants to be required to file proofs of claim pursuant to the procedures outlined, or in the alternative, to file "registration" forms at the very least, so that the Diocese can deal with the claims and achieve a fresh start. B. Tort Committee On behalf of the Tort Claimants Committee, Joseph E. Shickich, Jr., Esq., at Riddell Williams P.S., in Seattle, Washington, asserts that the Published Notice, the Sexual Abuse Proof of Claim, the Claims Bar Date Notice, and the Media Notice Program should be revised. The Tort Committee believes that Spokane's proposed Published Notice is inadequate because it describes sexual abuse in vague and general terms. According to Mr. Shickich, victims of sexual abuse often do not connect, or repress, the fact that they were sexually abused or that the conduct to which they have been subjected constitutes sexual abuse. The more concrete and specific the description, the more likely it is that the victim will recall the sexual abuse or realize that the conduct to which he or she has been subjected constitutes sexual abuse. Mr. Shickich tells Judge Williams that: (a) the proposed Published Notice does not inform victims of the availability of counseling, and does not assure confidentiality. It lumps sexual abuse with general creditor claims, all of which would discourage victims from filing proofs of claim; and (b) the proposed Sexual Abuse Proof of Claim requires detailed personal information not required by the general proof of claim and would discourage victims from filing proofs of claim. It also does not adequately assure victims that their claims will be kept confidential, does not make clear that any confidentiality will be lost if it is filed with the court, and does not adequately describe the types of sexual abuse covered by the form. It provides that the Diocese's Claims Agent must actually receive the Proof of Claim by the Bar Date, instead of determining timeliness by the postmark date. Spokane's proposal that the information that the victims confide in independent counselors should be confidential only if the victim does not file a claim by the Bar Date and later files a claim, would discourage victims from using the counselors, Mr. Shickich says. Information that victims confide in independent counselors should be confidential and not be given to Spokane, its insurers or anyone else under any circumstances. The Tort Committee insists that the Claims Bar Date Notice should include information about the confidentiality of victims' Proofs of Claim. Only redacted claims should be available to Spokane's insurers, the Tort Committee and the Tort Litigants' Committee, and the Future Claims Representative, and their counsel. The Tort Committee wants the Claims Bar Date Notice revised to: (i) specifically describe sexual abuse; (ii) be applicable only to Sexual Abuse Claims; (iii) specifically name the Priests and others known to have abused victims; (iv) make related and conforming changes; and (v) remove argumentative provisions, which argue Spokane's theory of the case. The Notice should also warn victims to consult with counsel before filing a Proof of Claim if it includes information about the time the victim recalled the abuse or last suffered injury from the abuse, and should give victims who are not represented information about qualified attorneys who will provide an initial free consultation about their claims. Contrary to Spokane's unsupported assertion that victims who have not yet been identified all live in Washington, Idaho and Oregon, Mr. Shickich notes that approximately 31.2% of persons moving from the counties comprising the Spokane Diocese between 1995 and 2000 moved to destinations other than Washington, Oregon and Idaho. Mr. Shickich contends that these persons will not be reached by Spokane's Media Notice Program unless publication is required outside Washington, Oregon and Idaho. Additional publication also should be required in Western Washington, Idaho, Oregon and nationally. The Tort Committee further asserts that: -- Spokane's proposed unilateral press releases and public service announcements must first be approved by the Committees and the Future Claims Representative, or by the Court. Copies of the Claims Bar Date Notice and the Sexual Abuse Proof of Claim should be available in each Church and Chapel in the Spokane Diocese, and their location in the Church and Chapel and the Bar Date should be announced at each weekend Mass until the Bar Date; -- Since sexual abuse victims often have developed coping mechanisms that make it difficult for them to confront the connection between their abuse and their damages, these victims should be given at least 120 days, not 90 days as proposed, to come forward with their claims; -- The Diocese has not have given attorneys for tort litigants clear notice of its proposal that these attorneys be required to receive and forward the bar notice to their clients. Spokane should give a supplemental notice and an opportunity to object to these attorneys; and -- The Diocese's insurers are seeking a determination that the Causal Link Claimants hold "claims" as defined under Section 101(5) of the Bankruptcy Code without adequate notice and an opportunity to develop a factual record and fully brief the issue. Whether or not Causal Link Claimants hold claims, the Future Claims Representative should be permitted to file proofs of claim for those who do not file their own. C. Tort Litigants Committee The Committee of Tort Litigants recognizes that the Causal Link Claimants cannot prosecute or defend their claims at this time because, by definition, they do not make the causal link, which would be prima facie part of their claim. However, the Tort Litigants Committee believes that the estate will be served by obtaining as much information about holders of Causal Link Claims. James Stang, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC, in Los Angeles, California, points out that information relating to the number of claimants, the abuse they suffered and the consequences of that abuse is important for all parties-in-interest so that a plan of reorganization can be negotiated that is based on as much factual information as possible and as little speculation as is otherwise necessary in evaluation of repressed memory or minors' claims. Thus, while the Tort Litigants does not object to the Future Claims Representative filing claims on behalf of the Casual Link Claimants, the Tort litigants believe that the forms of notice should not discourage individual Causal Link Claimants from filing their own proof of claim. Mr. Stang asserts that proof of claim must be made available to the Tort Committee and the Tort Claimants Committee, the Committees' counsel and the attorneys for the Committee members. Since the Committees and the Future Claims Representative have a right to object to proofs of claim, any purported justification of the confidentiality based on privacy concerns goes right out the window. The members of the Tort Litigants Committee's access to the claims is an important part of the evaluation process, Mr. Stang says. The Committee members are part of the Spokane survivors community and their personal experience and relationships enable them to evaluate aspects of the claims. The Tort Litigants further assert that survivors should be given the opportunity to describe their experiences in their own words in the context of possibly not being subjected to intimidation and hostility. The Tort Litigants also contend that the existence of the attorney client relationship is confidential until the client elects to disclose that relationship. Spokane's procedure violates that confidentiality and should not be approved. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000) CELESTICA INC: Completes $250 Million Sale of 7.625% Sr. Sub. Debt ------------------------------------------------------------------ Celestica Inc. (NYSE, TSX: CLS) completed its previously announced sale of $250 million aggregate principal amount of 7.625% senior subordinated notes due 2013. The net proceeds of the offering of the senior subordinated notes are currently anticipated to be used for the repurchase of Liquid Yield Option Notes, or LYONs. Banc of America Securities LLC, Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. acted as joint book-running managers for Celestica's notes offering. Celestica, Inc. -- http://www.celestica.com/-- is a world leader in the delivery of innovative electronics manufacturing services -- EMS. Celestica operates a highly sophisticated global manufacturing network with operations in Asia, Europe and the Americas, providing a broad range of integrated services and solutions to leading OEMs (original equipment manufacturers). Celestica's expertise in quality, technology and supply chain management, enables the company to provide competitive advantage to its customers by improving time-to-market, scalability and manufacturing efficiency. * * * As reported in the Troubled Company Reporter on Feb. 8, 2005, Moody's Investors Service has lowered the credit ratings of Celestica Inc., concluding the review that was initiated on December 10, 2004. Specifically, the senior implied rating was lowered to Ba3 from Ba2, the senior unsecured issuer rating was lowered to B1 from Ba3 and the subordinated notes' senior subordinated and LYONS, rating was lowered to B2 from Ba3. The SGL-1 liquidity rating was affirmed. Moody's says the rating outlook is stable. CENTURY/ML: Asks Court to Approve San Juan Bid Protections ---------------------------------------------------------- As previously reported, Century/ML Cable Venture sought the U.S. Bankruptcy Court for the Southern District of New York's authority to file under seal a motion seeking an order approving an expense reimbursement and break-up fee for a certain buyer and approving certain terms of an Interest Acquisition Agreement in connection with the sale of its business. Now unsealed, the motion specifies that Century/ML seeks the Court's approval of an expense reimbursement, a break-up fee and certain exclusivity provisions with San Juan Cable, LLC, for the sale of Century/ML's cable business, and that of its wholly-owned subsidiary, Century/ML Cable Corporation. Richard S. Toder, Esq., at Morgan Lewis & Bockius LLP, in New York, relates that Century/ML, through its partners, Century Communications Corporation and ML Media Partners, L.P., has undertaken efforts to sell the cable businesses. After protracted efforts to locate a buyer, the Century Entities entered into discussions with San Juan Cable, which led to the negotiation of a letter of intent dated January 19, 2005, and a term sheet encompassing the terms of a proposed transaction among the parties. The Court previously authorized Century/ML to pay San Juan Cable's expenses related to the Proposed Transaction pursuant to a certain reimbursement agreement dated January 19, 2005, as amended and restated. The parties' continued negotiations resulted in the execution of the Interest Acquisition Agreement, by and among the Century Entities and San Juan Cable. The Agreement provides for the purchase by San Juan of the joint venture interests in Century/ML pursuant to a Plan of Reorganization to be filed by Century/ML. As a result of the sale and purchase, Century/ML will, by operation of law, be liquidated into San Juan. Immediately thereafter, San Juan will cause Cable Corp. to be merged into San Juan, with San Juan as the surviving entity in the merger. The purchase price for the transaction is around $520 million in cash, subject to certain adjustments. An integral part of the Interest Acquisition Agreement is Century/ML's payment to San Juan of an expense reimbursement and a Break-Up Fee. At Century/ML's request, Judge Gerber approves the proposed expense reimbursement, Break-Up Fee and certain exclusivity provisions with San Juan Cable. Expense Reimbursement The terms of the Expense Reimbursement provides that Century will reimburse San Juan Cable for all of its reasonable out-of-pocket expenses incurred in connection with the Interest Acquisition Agreement, up to $6,000,000 in same-day funds, if the Agreement is terminated: A. by either of the Century Entities or San Juan, if the Closing has not taken place on or before the Termination Date (December 31, 2005, or under certain circumstances, January 31, 2006) other than by reason of a material breach or default of any of the covenants or agreements contained in the Agreement: (i) by either of the Century Entities, if one of them is seeking to terminate; or (ii) by San Juan, if it is seeking to terminate (but in either case only if (x) San Juan has satisfied all conditions to closing and (y) the failure of the closing to occur on or before the Termination Date is the result of a willful breach by either of the Century Entities); B. (i) by San Juan, at any time, if the representations and warranties of the Century Entities are not true and correct and remain uncured after 30 days after notice, and the failure to be true and correct is willful, provided that San Juan is not then in material default of any of its covenants, agreements, representations or warranties under the Agreement; or (ii) by San Juan, at any time, if the Century Entities are in material and willful breach or default of any of their covenants, agreements or obligations under the Agreement, which remain uncured after 30 days after notice, provided that San Juan is not then in material breach or default of any of its covenants, agreements, representations or warranties; C. (i) by San Juan, on or after 30 days from the date of the Agreement, if an order has not been entered by the Court approving the Agreement; (ii) by San Juan or either of the Century Entities, if a Confirmation Order is not entered by September 9, 2005 (or by September 30, 2005, if there are objections to the Confirmation Order); (iii) by San Juan, if Century/ML or Century: -- notifies San Juan of its intention to exercise rights with respect to an Acquisition Proposal; and -- has not notified San Juan within 20 days of the delivery of a notice that it has determined not to pursue, and has ceased all discussions and negotiations concerning, the Acquisition Proposal; (iv) by the parties, if Century/ML and Century obtain the Court's approval of any Alternate Transaction; (v) by San Juan, if: -- certain conditions relating to the minimum customer numbers or the minimum Operating Cash Flow is not satisfied; or -- the Century Entities have not delivered certain financial statements and related documents pursuant to the terms of the Agreement; or -- any condition set forth in the Agreement with respect to the Audited Financials or the Draft 2004 Financials is not satisfied; (vi) by the Century Entities, if: -- a hurricane or other force majeure event occurs after the date of the Agreement; -- the actual expense to Century/ML and Cable Corp. to repair the damage caused to the Systems exceeds $500,000; and -- San Juan or its lenders do not consent to an adjustment to Operating Cash Flow in the full amount of the expenses; (vii) by the Century Entities, if: -- the reductions of the Purchase Price made on the Closing Date result in more than a $20 million reduction of the Purchase Price; and -- San Juan has not agreed to limit the reduction of the Purchase Price to $20 million; or (viii) by the parties, if any governmental authority that must grant a material consent has denied approval of the transactions and the denial has become final and nonappealable, or any Governmental Authority of competent jurisdiction will have entered a final and nonappealable order permanently enjoining or otherwise prohibiting consummation of the transactions. Break-Up Fee In the event that the Interest Acquisition Agreement is terminated as a result of the Termination Events in Sections A, B, C(ii) or C(viii), then, in addition to the Expense Reimbursement, if within 12 months of the termination the Century Entities consummate the transactions contemplated by any Acquisition Proposal (or, if the Chapter 11 Case has not been finally concluded within the 12-month period, obtain an order of the Court authorizing the transactions contemplated by any Acquisition Proposal), Century/ML and Century, will pay San Juan a $15,600,000 Break-Up Fee less the amount of the Expense Reimbursement. In the event that the Interest Acquisition Agreement is terminated as a result of the Termination Events in Section C(iii) or C(iv), then, in addition to the Expense Reimbursement: 1. Century will pay San Juan 50% of the Break-Up Fee, in same- day funds, on the day the transactions contemplated by an Alternative Agreement are consummated; and 2. if, within 12 months of the termination, ML Media sells its joint venture interest in the Cable Venture to a person, other than San Juan or its affiliates, at a price greater than or equal to the price at which Century sold its joint venture interest pursuant to the Alternative Agreement, ML Media will pay San Juan 50% of the Break-Up Fee, in same- day funds, on the day it consummates the sale. Exclusivity and Fiduciary Out Under the Court-approved Exclusivity Provisions, the Century Entities will not take any action, or permit any of their affiliates, officers, directors and agents to take any action, with respect to an alternative transaction. On the execution and delivery of the Interest Acquisition Agreement, the Century Entities will cease any activities with respect to any alternative transaction. In the event that an unsolicited, bona fide, written Superior Proposal is received prior to entry of the Confirmation Order of a plan, then Century will not be prohibited from taking those actions set forth in the Acquisition Agreement with respect to the proposal, subject to certain provisions, including, but not limited to, giving notice and "matching rights" to the Buyer. 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. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) CITYSCAPE HOME: S&P Holds Ratings on 1997-1 Class M-2 Certs. at B ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 70 classes of certificates from 18 second-lien high combined loan-to- value transactions. The certificates were issued by Cityscape Home Loan Owner Trust, Empire Funding Home Loan Owner Trust, and FirstPlus Home Loan Owner Trust. The affirmed ratings reflect the following: -- Levels of credit support are sufficient to maintain the current ratings; -- The transactions are past the peak years on their respective loss curves; -- The majority of the transactions have paid down to less than 5% of their original pool balances; and -- The majority of the securitizations have at least seven years of seasoning. As of the May 2005 remittance date, the four Cityscape Home Loan Owner Trust transactions had delinquencies ranging between 11.71% (series 1997-3) and 14.18% (1997-4). Cumulative realized losses ranged between 14.66% (1997-4) and 18.83% (1997-1). The eight Empire Funding Home Loan Owner Trust transactions had delinquencies ranging between 7.49% (1997-3) and 14.20% (1997-4). Cumulative realized losses ranged between 8.45% (1999-1) and 17.14% (1997-1). The six FirstPlus Home Loan Owner Trust transactions had delinquencies ranging between 8.52% (1997-2) and 10.70% (1998-1). Cumulative realized losses ranged between 9.81% (1998-5) and 11.58% (1997-2). Credit support for the transactions is provided by a combination of subordination, excess interest, and overcollateralization. The collateral backing these transactions originally consisted of loans originated for the purpose of debt consolidation, home improvement, or other reasons not specified by the borrower, with CLTV ratios in excess of 100%. Ratings Affirmed Cityscape Home Loan Owner Trust Series Class Rating ------ ----- ------ 1997-1 A-4 AAA 1997-1 M-1 AA 1997-1 M-2 B 1997-2 A-5, A-6 AAA 1997-2 M-1 AA 1997-2 M-2 BBB 1997-3 A-5, A-6 AAA 1997-3 M-1 AA+ 1997-3 M-2 A 1997-4 A-4, A-5 AAA 1997-4 M-1 AA+ 1997-4 M-2 A- Empire Funding Home Loan Owner Trust Series Class Rating ------ ----- ------ 1997-1 A-4, A-5 AAA 1997-1 M-1 AA 1997-1 M-2 BBB- 1997-2 A-5, A-6 AAA 1997-2 M-1 AA+ 1997-2 M-2 BBB 1997-3 A-7 AAA 1997-3 M-1 AA+ 1997-3 M-2 A 1997-3 B-1 BBB 1997-4 A-5 AAA 1997-4 M-1 AA 1997-4 M-2 A 1997-4 B-1 BB 1997-5 A-4 AAA 1997-5 M-1 AA 1997-5 M-2 A 1997-5 B-1 BBB 1997-A A-3 AAA 1997-A M-1 AA 1997-A M-2 BBB- 1997-A B B 1998-2 A-5, A-6 AAA 1998-2 M-1 AA+ 1998-2 M-2 A 1998-2 B-1 BBB- 1999-1 A-5 AAA 1999-1 M-1 AA 1999-1 M-2 A 1999-1 B-1 BBB- FirstPlus Home Loan Owner Trust Series Class Rating ------ ----- ------ 1997-2 A-9 AAA 1997-2 M-1 AA 1997-2 M-2 A 1997-2 B-1 BBB 1997-3 A-8 AAA 1997-3 M-1 AA 1997-3 M-2 A 1997-3 B-1 BBB 1997-4 A-8 AAA 1997-4 M-1 AA 1997-4 M-2 A 1998-1 A-8 AAA 1998-1 M-1 AA 1998-1 M-2 A 1998-4 A-8 AAA 1998-4 M-1 AA+ 1998-4 M-2 A 1998-4 B-1 BBB- 1998-5 A-9 AAA 1998-5 M-1 AA 1998-5 M-2 A 1998-5 B-1 BBB- CONGOLEUM CORP: Court Approves Third Amendment to DIP Financing --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey approved the third amendment to Congoleum Corporation and its debtor- affiliates' debtor-in-possession credit agreement with Congress Financial Corporation nka Wachovia Bank, National Association. The third amendment to the DIP financing extends the maturity of the loan to December 31, 2005. Moreover, the Debtors will pay the lenders a $125,000 amendment fee. The amended loan agreement allocates the closing fee to be reduced by the amount of the amendment fee. Headquartered in Mercerville, New Jersey, Congoleum Corporation -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Domenic Pacitti, Esq., at Saul Ewing, LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. CONTECH CONSTRUCTION: Moody's Rates $450M Credit Facilities at Ba3 ------------------------------------------------------------------ Moody's Investors Service rated CONTECH Construction Products Inc.'s $450 million senior secured credit facilities Ba3. The affirmation of the rating considers: * the company's strong operating performance; * competitive market position; and * the expectation for continued strong demand in the company's end markets. The affirmation also considers the company's high debt balances, and generally weak balance sheet. These ratings have been affirmed: * $125 million senior secured revolver, due 2009, rated Ba3; * $325 million senior secured term loan B, due 2010, rated Ba3; * Corporate Family Rating (previously called the Senior Implied rating), rated Ba3; * Senior Unsecured Issuer, rated B1. The ratings outlook remains stable. CONTECH is increasing the size of its senior secured term loan B to $325 million from $225 million in part to fund the acquisition of Con/Span Bridge Systems, Ltd. and Bridge Technologies, LLC (collectively known as ConSpan/Bridge Tek). The proceeds will also be used to refinance existing revolver debt. ConSpan/Bridge Tek are market leaders in modular pre-cast bridge system design. The acquisition is meant to further develop CONTECH's market position in the bridge construction market and expand its product offerings. The ratings benefit from CONTECH's strong position in the manufacturing and distribution of specialty construction products to the civil engineering infrastructure sector of the heavy construction industry. The company's revenue is generated from the highway, residential and commercial construction markets. Given the robust growth in residential and commercial markets and significant highway spending, CONTECH has been successful in increasing its revenue margins. In addition, the company has been able to pass through substantially all of the price increases in raw materials to buyers. The ratings are constrained by significant leverage and decline in free cash flows. The company's total debt to EBITDA coverage ratio has increased to 3.7 times from 0.9 times on June 30, 2004. Due to the acquisition of ConSpan/Bridge Tek, its free cash flow to total debt has decreased significantly. For the 11 months ended on May 31, 2005, the company's free cash flow to total debt had decreased to 10% from 46% on June 30, 2004. Given the company's acquisition track record, Moody's expects the company's growth to continue to be driven by acquisitions, further increasing the company's leverage. The company has modified its financial covenants to allow for larger acquisitions. Currently, the covenants on the company's credit facility include the largest allowable acquisition limit of $50 million and there is a sequential four quarter limit of $100 million. In addition, the covenants require that any acquired company must have had positive EBITDA for the last 12 months, and that there must be at least $15 million available on the company's revolver post an acquisition. The company's total debt to capitalization ratio increased to 94% (before the acquisition) from 28% in 2004. The increase reflects the recent $175 million dividend distribution to the company's shareholders. The dividend payment decreased shareholder equity to $16 million on May 31, 2005 from $160 million on June 30, 2004. The company's stable outlook reflects expected strong demand for company's products and slightly improving margins. However, CONTECH's performance is expected to be closely tied to general economic conditions. Approximately 60% of company's revenues are generated from private commercial and residential markets and 40% of revenues are attributable to its highway construction business. Hence, weakening economic conditions or reduction in highway spending could adversely affect the company's ratings. Moody's also notes that CONTECH's high leverage is partially the result of a $175 million dividend payment at the end of last year. Furthermore, the company's healthy appetite for debt financed acquisitions signifies the likelihood of more acquisitions to come which could lead to an increase in leverage. The company is weakly positioned in its rating category and an upgrade in the rating would take a significant improvement in the company's equity base. The outlook or ratings may improve if the company's balance sheet is strengthened significantly and its free cash flow to total debt is anticipated to be over 15% on a sustainable basis. Headquartered in Middletown, Ohio, CONTECH manufacture and market corrugated steel and plastic pipe and fabricated products for use in: * highway, * residential, and * commercial construction. CONTINENTAL AIRLINES: Seeks Mediation With Flight Attendants Union ------------------------------------------------------------------ Continental Airlines (NYSE: CAL) applied to the National Mediation Board for the immediate appointment of a federal mediator to assist the company in reaching an agreement for pay and benefit reductions with its flight attendants, represented by the International Association of Machinists. Under the Railway Labor Act, either party may apply for mediation if an agreement is not reached through direct negotiations. "All of us work on the same team," said Larry Kellner, chairman and chief executive officer of Continental Airlines. "Bringing in a federal mediator is the next step in the process of reaching an agreement that's fair to the company, fair to the flight attendants, and fair to all co-workers. It's important that our flight attendants join the rest of our co-workers in participating in pay and benefit reductions. Their share of the reductions remains necessary to help ensure our survival and success." Continental intends to work with the federal mediator to move the process along quickly. Continental Airlines said that it needs these savings as soon as possible, and flight attendants need to join their co-workers who have already taken their pay and benefit reductions. "We want to conclude our flight attendant negotiations with an agreement that's fair to the flight attendants, fair to the company, and fair to our co- workers who have already provided the reductions that enabled us to pursue our growth plan," the Company said in its employee bulletin. "The federal mediation process will enable us to do this." Continental Airlines -- http://continental.com/-- is the world's sixth-largest airline, serving 128 domestic and 111 international destinations -- more than any other airline in the world -- and serving nearly 200 additional points via codeshare partner airlines. With 42,000 mainline employees, the airline has hubs serving New York, Houston, Cleveland and Guam, and carries approximately 51 million passengers per year. FORTUNE ranks Continental one of the 100 Best Companies to Work For in America, an honor it has earned for six consecutive years. FORTUNE also ranks Continental as the top airline in its Most Admired Global Companies in 2004. * * * As reported in the Troubled Company Reporter on Apr. 25, 2005, Standard & Poor's Ratings Services lowered its ratings on selected enhanced equipment trust certificates (EETCs) of Continental Airlines Inc. (B/Negative/B-3) as part of an industrywide review of aircraft-backed debt. Those and EETC ratings that were affirmed were removed from CreditWatch, where they were placed with negative implications Feb. 24, 2005. "The rating actions reflect Standard & Poor's concern that repayment prospects for holders of aircraft-backed debt could suffer in a potential scenario of further multiple bankruptcies of large U.S. airlines weakened by high fuel prices and intense price competition," said Standard & Poor's credit analyst Philip Baggaley. "Downgrades of EETCs were focused on debt instruments that would be hurt in such a scenario, particularly debt backed by aircraft that are concentrated heavily with large U.S. airlines and junior classes that would be at greater risk in negotiated restructurings or sale of repossessed collateral," the credit analyst continued. As reported in the Troubled Company Reporter on Feb. 28, 2005, Standard & Poor's Ratings Services placed its single-B ratings on Continental Airlines Inc. equipment trust certificates and enhanced equipment trust certificates on CreditWatch with negative implications. S&P's rating action does not affect issues that are supported by bond insurance policies. "The CreditWatch review is prompted by Standard & Poor's concern that a prolonged difficult airline industry environment, characterized by high fuel prices, excess capacity, and intense price competition in the domestic market, has weakened the financial condition of almost all U.S. airlines and increased the risk of widespread simultaneous bankruptcies," said Standard & Poor's credit analyst Philip Baggaley. CONTRACTOR TECH: Court Denies Retention of Travis Law as Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas denied Contractor Technology, Ltd.'s request to retain Travis Law Firm as its counsel. On June 8, 2005, the Debtor filed a motion to employ James T. McMillen, Esq., at Travis Law, as its attorney during its chapter 11 case. The Court discovered that Travis Law failed to inform the Debtor of its rights and obligations while in chapter 11. As a result, the Debtor: a) failed to seek appropriate relief for what it later claimed as critical payroll obligations; b) failed to seek immediate authority to use its cash collateral; c) allowed $1,950,000 of cash to be paid on prepetition checks; d) voluntarily wrote $170,000 of checks postpetition for prepetition obligations; e) has not engaged in meaningful dialogue with its creditors except when ordered to do so by the Court. The Code contemplates that debtors will work with creditors to provide adequate protection for use of cash collateral. Rather than working with its creditors, the Debtor generally ignored the problem. The result has been that the Court has been required to hear contested cash collateral motions on two separate occasions and on both occasions denied the Debtor the right to use cash collateral; f) failed to file meaningful responses to motions for relief from the automatic stay; g) failed to file its schedules and statements; h) failed to comply with the Court's oral and written direction to immediately retain a financial advisor; i) has consistently failed to produce meaningful financial reports to the Court; and j) failed to provide creditors with reports as required under agreed cash collateral orders. Based on the testimony from previous hearings, it appears that the Debtor was unaware of either the necessity or the importance of its reporting obligations. The Court concludes that the Debtor must immediately retain another counsel. Headquartered in Houston, Texas, Contractor Technology, Ltd. -- http://www.ctitexas.com/-- is a producer of recycled concrete and asphalt. The Company filed for chapter 11 protection on May 13, 2005 (Bankr. S.D. Tex. Case No. 05-37623). When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. COVANTA ENERGY: Taps Struble Ragno as Ordinary Course Professional ------------------------------------------------------------------ Covanta Energy Corporation and its debtor-affiliates propose to employ Struble Ragno Petrie MacMahon & Cotroneo, P.C., as an ordinary course professional. Vincent E. Lazar, Esq., at Jenner & Block LLP, in Chicago, Illinois, informs the U.S. Bankruptcy Court for the Southern District of New York that Struble Ragno will represent the Debtors as special counsel in the arbitration for Covanta v. Oxford Township, Arb No. (950)16641-CJH. Unless objections are filed and received on or before July 5, 2005, Struble Ragno's retention will be deemed approved by the Court, nunc pro tunc to June 21, 2005. Struble Ragno will be compensated on an hourly basis at $250 to $300 per hour. Joseph V. MacMahon, a partner at Struble Ragno, assures the Court that the Firm does not perform services for any person in connection with the Debtors' bankruptcy. Struble Ragno does not have any relationship with any parties-in-interest that would be adverse to the Debtors or their estates. The Debtors do not owe Struble Ragno any fee for prepetition services. None of the Firm's professionals has agreed to share or will share any portion of the compensation to be received from the Debtors with any other person other than the principals and regular employees of the Firm. Mr. MacMahon explains that Struble Ragno is conducting further inquiries regarding its retention by any of the Debtors' creditors, and will notify the Debtors once it discovers any facts bearing on the matters regarding its employment. Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. On March 10, 2004, Covanta Energy Corporation and its core subsidiaries emerged from chapter 11 as a wholly owned subsidiary of Danielson Holding Corporation. Some of Covanta's non-core subsidiaries have liquidated under separate chapter 11 plans. (Covanta Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000) CYPRESS COMMS: Expects FCC Nod on Arcapita Merger Before July ------------------------------------------------------------- Cypress Communications Holding Co., Inc. (OTCBB: CYHI) anticipates that the Federal Communications Commission will approve the transfer of control of Cypress to an affiliate of Arcapita, Inc. by the end of June 2005. The previously announced federal regulatory review of the pending acquisition of Cypress by an affiliate of Arcapita Inc. has been concluded and the parties have filed with the FCC a petition to grant approval for the license transfer. All state regulatory approvals also have been received except one, which should be forthcoming next week. Accordingly, closing of the transaction is now expected to occur promptly following receipt of FCC approval. "I am very pleased with the efforts that have been demonstrated by all the parties working closely with the regulatory agencies to reach this agreement that will permit the FCC to grant the transfer of the license," said Gregory P. McGraw, President and Chief Executive Officer of Cypress. Arcapita Inc. Merger On November 5, 2004, Cypress reported that its Board of Directors approved a definitive Agreement and Plan of Merger with an affiliate of Arcapita, Inc. (formerly Crescent Capital Investments, Inc.). On March 15, 2005, the stockholders of Cypress approved the Agreement and Plan of Merger. The value of the transaction is approximately $40.3 million, with potential adjustments upwards or downwards, based on the achievement of certain conditions pertaining to changes in certain current assets and liabilities between the effective date of the Merger Agreement and closing date of the transaction. The Merger Agreement provides that the merger consideration will first be used to repay outstanding indebtedness. The remaining consideration, after transaction expenses, will be distributed to stockholders, with an estimated price per share of $1.70, subject to final merger consideration adjustments (The $1.70 per share cash consideration is estimated by Cypress Holding as of March 31, 2005 and is subject to adjustment upwards or downwards pursuant to the merger agreement). Arcapita -- http://arcapita.com/-- is a global investment group with offices in Atlanta, London, and Bahrain. Arcapita's main lines of business include corporate investment (private equity), real estate investment and asset-based investment. Arcapita's corporate investment business was founded in 1997 and operates out of Atlanta and London. Since 1998, Arcapita's corporate investment professionals have arranged for the investment of more than $1 billion in 17 completed or pending transactions with an aggregate enterprise value of over $2 billion. Until March 15, 2005, Arcapita's U.S. business was conducted as Crescent Capital Investments. Cypress Communications (OTCBB: CYHI) -- http://www.cypresscom.net/ -- is the preferred communication solution provider in more than 1,300 commercial office buildings in 25 major metropolitan U.S. markets. Each day, Cypress uses its fiber optic and copper broadband infrastructure to connect more than 100,000 employees for over 8,000 small- and medium-sized businesses in commercial office buildings. As a single-source provider of communication solutions, Cypress supplies advanced digital and IP phone service, unlimited local and long distance calling, business-class Internet connectivity, firewalls, security and VPN solutions, audio/web conferencing and business television solutions. The Cypress EZ Office(sm) product suite provides a premium bundled solution with one number to call for support, one simple bill and the highest level of service available. Cypress Communications Holding Company, Inc., is headquartered in Atlanta, Georgia. * * * As reported in the Troubled Company Reporter on Apr. 19, 2005, Deloitte & Touche LLP, Cypress Communications' auditors, expressed substantial doubt about the Company's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 31, 2004. The Company said its recurring losses and its unfavorable working capital and uncertain liquidity position triggered Deloitte's going concern opinion. DALLAS AEROSPACE: Ch. 7 Trustee Taps Stuart Jackson as Counsel -------------------------------------------------------------- Scott M. Seidel, the Chapter 7 Trustee for the estate of Dallas Aerospace, Inc., asks the U.S. Bankruptcy Court for the Northern District of Texas, for permission to employ Stuart A. Jackson, Esq., as his special counsel, nunc pro tunc to April 5, 2005. Mr. Jackson will serve as the Trustee's counsel on his appeal for a review of the summary judgment granted by the U.S. District Court for the Southern District of New York, in favor of CIS Air Corporation. The Appeal is pending before the U.S. Court of Appeals for the Second Circuit. The Debtor filed a lawsuit against CIS Air in October 2003, alleging breach of contract, fraudulent misrepresentation, and negligent misrepresentation, after discovering that the JT8D engine it purchased from CIS Air had been involved in a hard landing and was, therefore, not airworthy. Dallas filed the lawsuit to recover the $1.15 million it had paid for the engine. The Trustee selected Mr. Jackson as his counsel due to Mr. Jackson's experience in the underlying district court actions and previous related appeal. For this engagement, Mr. Jackson will: a) furnish legal advice to the Trustee with regard to his powers, duties and responsibilities in the appeal; b) prepare, in behalf of the Trustee, all necessary applications, motions, answers, orders, reports and other legal papers related to the appeal; c) appear, prosecute, defend and represent the Trustee's interest in the appeal; and d) perform all other legal services for the Trustee in connection with the appeal. Mr. Jackson will be paid $400 per hour for his services, up to a maximum amount of $25,000. The Trustee will also reimburse Mr. Jackson for all necessary expenses, up to a maximum amount of $2,000. The payment of legal fees and expenses will depend on: a) the merits of the New York Appeal and any subsequent appeal or remand; and b) the sale of the jet engine for more than $250,000, net of all expenses. The Trustee assures the Court that Mr. Jackson does not represent any interest materially adverse the Debtor or its estate. Headquartered in Carrollton, Texas, Dallas Aerospace, Inc., is a Texas-based aftermarket supplier of engines, engine parts, and engine management and leasing services, with facilities in Dallas, Texas, and Miami, Florida. The Company filed for chapter 11 protection on October 1, 2004 (Bankr N.D. Tex. Case No. 04-80663). When the Debtor filed for protection from its creditors, it listed estimated assets of $1 million to $10 million and estimated debts of $10 million to $50 million. On Jan. 24, 2005, the Court converted the Debtor's chapter 11 case to a chapter 7 liquidation proceeding. James F. Adams, Esq., at Passman & Jones, P.C., represents the Debtor in its chapter 7 case. DOBSON COMMS: Elects to Defer Preferred Stock Dividends ------------------------------------------------------- Dobson Communications Corporation (Nasdaq:DCEL) will not declare or pay the cash dividend due on July 15, 2005, on its outstanding 12-1/4% Senior Exchangeable Preferred Stock or the Aug. 1, 2005, cash dividend on its outstanding 13% Senior Exchangeable Preferred Stock. Unpaid dividends will accrue interest at the stated dividend rates, compounded quarterly. This is the fourth quarterly deferral on dividends for the 12-1/4% and 13% Senior Exchangeable Preferred Stocks. Holders of each of these two classes of preferred stock separately will have the right to elect two new directors to Dobson's board of directors effective July 15, 2005 and Aug. 1, 2005, respectively. Dobson previously deferred two semi-annual dividends on its Series F Convertible Preferred Stock. As a result, effective Apr. 16, 2005, holders of that series have the right to elect two new directors to Dobson's board of directors, although they have not done so to date. The board of directors currently consists of seven members, five of which directors are independent as defined by NASDAQ. Dobson Communications is a leading provider of wireless phone services to rural markets in the United States. Headquartered in Oklahoma City, Dobson Communications -- http://www.dobson.net/-- provides wireless phone services to rural markets in the United States. The Company owns wireless operations in 16 states. * * * Moody's Investors Service and Standard & Poor's assigned junk ratings to Dobson Communications': -- 8-7/8% senior notes due 2013; and -- 10-7/8% senior notes due 2010. DRY TECH: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Dry Tech, Inc. 1136 Gregory Drive Gallatin, Tennessee37066 Bankruptcy Case No.: 05-07541 Type of Business: The Debtor offers 24-hour carpet cleaning, water extraction, duct cleaning, mold remediation, and water damage restoration services. Chapter 11 Petition Date: June 23, 2005 Court: Middle District of Tennessee (Nashville) Judge: George C. Paine Debtor's Counsel: Timothy G. Niarhos, Esq. Crocker & Niarhos 611 Commerce Street, Suite 2720 Nashville, Tennessee 37203 Tel: (615) 726-3322 Fax: (615) 726-6330 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ IRS $140,934 MDP 146 801 Broadway Nashville, TN 37203 Topp National Headquarters $126,725 12 Crozerville Road Aston, PA 19014 Basic Industries $72,600 c/o Seth A. Robbins 2620 P. Street Northwest Washington, DC 20007 Albo & Oblon $63,344 2200 Clarendon Boulevard #1201 Arlington, VA 22201 Rcc & Partners $63,106 14200 F. Centreville, Square #140 Centreville, VA 20121 Sunbelt Rentals $57,080 P.O. Box 409211 Atlanta, GA 303849211 Action Catastrophe Team $43,636 c/o Lawrence Pollack 2021 - 21st Avenue South #320 Nashville, TN 37212 Florida Cleaning Systems $41,516 c/o Dawn Wilnau 111 North Orange Avenue #1800 Orlando, FL 32801 Bellsouth Advertising $39,812 c/o Mark B. Reagan 260 Cumberland Bend Nashville, TN 37228 Blackburn & McCune $39,589 201 - 4th Ave N #1700 Nashville, TN 37219 Emergency Rental & Supply $21,762 P.O. Box 607 Williamsburg, VA 23187 Burke, Dennis W. $4,580 Certified Public Accountant 114 Canfield Place #B1 Hendersonville, TN 37075 Gregory Real Estate $3,000 145 Ziegler Fort Road Gallatin, TN 37066 Truemper Hollingsworth & Titiner $2,689 1700 North Farnsworth Avenue Aurora, IL 60505 Coit $2,521 1182 Antioch Pike Nashville, TN 37211 Randstad Staffing Services $2,235 P.O. Box 2084 Carol Stream, IL 60132 Tudor Insurance $2,208 Stanley Mcdonald Insurance Agency P.O. Box 212516 Kansas City, MO 64121 Verizon Wireless $1,847 P.O. Box 660108 Dallas, TX 752660108 Fleet Services $1,841 P.O. Box 639 Portland, ME 04104 Wright Express (Wex Fueling) $1,500 P.O. Box 6293 Carol Stream, IL 60197 EMPIRE FUNDING: S&P Holds Rating on 1997-A Class B Certs. at B -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 70 classes of certificates from 18 second-lien high combined loan-to- value transactions. The certificates were issued by Cityscape Home Loan Owner Trust, Empire Funding Home Loan Owner Trust, and FirstPlus Home Loan Owner Trust. The affirmed ratings reflect the following: -- Levels of credit support are sufficient to maintain the current ratings; -- The transactions are past the peak years on their respective loss curves; -- The majority of the transactions have paid down to less than 5% of their original pool balances; and -- The majority of the securitizations have at least seven years of seasoning. As of the May 2005 remittance date, the four Cityscape Home Loan Owner Trust transactions had delinquencies ranging between 11.71% (series 1997-3) and 14.18% (1997-4). Cumulative realized losses ranged between 14.66% (1997-4) and 18.83% (1997-1). The eight Empire Funding Home Loan Owner Trust transactions had delinquencies ranging between 7.49% (1997-3) and 14.20% (1997-4). Cumulative realized losses ranged between 8.45% (1999-1) and 17.14% (1997-1). The six FirstPlus Home Loan Owner Trust transactions had delinquencies ranging between 8.52% (1997-2) and 10.70% (1998-1). Cumulative realized losses ranged between 9.81% (1998-5) and 11.58% (1997-2). Credit support for the transactions is provided by a combination of subordination, excess interest, and overcollateralization. The collateral backing these transactions originally consisted of loans originated for the purpose of debt consolidation, home improvement, or other reasons not specified by the borrower, with CLTV ratios in excess of 100%. Ratings Affirmed Cityscape Home Loan Owner Trust Series Class Rating ------ ----- ------ 1997-1 A-4 AAA 1997-1 M-1 AA 1997-1 M-2 B 1997-2 A-5, A-6 AAA 1997-2 M-1 AA 1997-2 M-2 BBB 1997-3 A-5, A-6 AAA 1997-3 M-1 AA+ 1997-3 M-2 A 1997-4 A-4, A-5 AAA 1997-4 M-1 AA+ 1997-4 M-2 A- Empire Funding Home Loan Owner Trust Series Class Rating ------ ----- ------ 1997-1 A-4, A-5 AAA 1997-1 M-1 AA 1997-1 M-2 BBB- 1997-2 A-5, A-6 AAA 1997-2 M-1 AA+ 1997-2 M-2 BBB 1997-3 A-7 AAA 1997-3 M-1 AA+ 1997-3 M-2 A 1997-3 B-1 BBB 1997-4 A-5 AAA 1997-4 M-1 AA 1997-4 M-2 A 1997-4 B-1 BB 1997-5 A-4 AAA 1997-5 M-1 AA 1997-5 M-2 A 1997-5 B-1 BBB 1997-A A-3 AAA 1997-A M-1 AA 1997-A M-2 BBB- 1997-A B B 1998-2 A-5, A-6 AAA 1998-2 M-1 AA+ 1998-2 M-2 A 1998-2 B-1 BBB- 1999-1 A-5 AAA 1999-1 M-1 AA 1999-1 M-2 A 1999-1 B-1 BBB- FirstPlus Home Loan Owner Trust Series Class Rating ------ ----- ------ 1997-2 A-9 AAA 1997-2 M-1 AA 1997-2 M-2 A 1997-2 B-1 BBB 1997-3 A-8 AAA 1997-3 M-1 AA 1997-3 M-2 A 1997-3 B-1 BBB 1997-4 A-8 AAA 1997-4 M-1 AA 1997-4 M-2 A 1998-1 A-8 AAA 1998-1 M-1 AA 1998-1 M-2 A 1998-4 A-8 AAA 1998-4 M-1 AA+ 1998-4 M-2 A 1998-4 B-1 BBB- 1998-5 A-9 AAA 1998-5 M-1 AA 1998-5 M-2 A 1998-5 B-1 BBB- EXIDE TECH: Investors Sue Officers for Violating Securities Laws ---------------------------------------------------------------- Three law firms have commenced class action lawsuits before the United States District Court for the District of New Jersey against Exide Technologies and its present and former officers: 1. Gordon A. Ulsh, Exide Technologies' President, CEO and Director; 2. Craig Muhlhauser, Exide Technologies' President and CEO from May 17, 2002 to April 1, 2005; and 3. J. Timothy Gargaro, Exide Technologies' CFO and Executive Vice President. The Class Actions charge that Exide violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the class period, which statements had the effect of artificially inflating the market price of the Company's securities. The Class Actions purport to represent all persons who purchased the securities of Exide Technologies between November 16, 2004, and May 17, 2005. The law firms are: (a) PRN Schatz & Nobel, P.C., (b) Milberg Weiss Bershad & Schulman LLP, and (c) Law Offices Of Charles J. Piven, P.A. According to the complaints, Exide violated Sections 10(b) and 20(a) of the Securities Exchange Act, and Rule 10b-5, by issuing a series of material misrepresentations to the market during the Class Period. The complaints further allege that Exide, a producer and recycler of lead-acid batteries, was heavily dependent on financing to support its operations during the Class Period, having emerged from bankruptcy protection in May 2004. The Company had negotiated a $365 million senior secured credit facility, which required the Company to comply with several financial covenants, including: (1) that the Company maintain a specified ratio of debt to equity; and (2) that the Company maintain minimum consolidated earnings before income, taxes, depreciation, amortization. Exide responded that it could maintain compliance with the Covenants because, among other things, they had reorganized Exide's business, successfully implemented cost-savings measures and increased productivity. In addition, Exide stated that they had hedged against commodity price fluctuations, including the price of lead, which was the primary material used in the production of batteries. However, on February 14, 2005, Exide revealed that it violated the Leverage Ratio Covenant. After the market closed on May 16, 2005, Exide issued another press release stating they expected the Company to violate the Covenants for the fiscal year-ended March 31, 2005, as a result of the "impact of commodity costs; the loss of overhead absorption due to an inventory-reduction initiative; other fourth-quarter inventory valuation adjustments; and costs associated with Sarbanes-Oxley compliance efforts." In reaction to this announcement, the price of Exide stock, which had closed at $11.15 per share on May 16, 2005, fell to an opening price of $5.75 per share the following trading day, representing a one-day decline of $5.40, or 48%, and closed out the day at $6.88 per share on extremely heavy volume of over nine million shares, 50 times the daily average volume. On May 17, 2005, Mr. Gargaro announced that: (1) the Company expected to report adjusted EBITDA of $100 million to $107 million for the full-year 2005, and therefore, failed to satisfy the minimum EBITDA Covenant which required minimum EBITDA of $130 million; (2) several "unanticipated and unusual items," including write-offs of obsolete and discontinued products, had resulted in a reduction of earnings of between $15 million and $20 million; (3) the Company lacked the ability to properly forecast its inventory requirements; and (4) the Company had violated the terms of a contract with a large customer and, consequently, was required to record an adjustment of $1.5 to $2 million. In reaction to this news, the price of Exide shares fell another $1.55, or 22%, from their closing price of $6.88 on May 17, 2005, to close at $5.33 on May 18, 2005. "[Exide Technologies and its present and former officers] were motivated to commit the fraud alleged herein so that Exide could complete a $350 million private placement of senior notes and floating rate convertible senior subordinated notes," said Steven G. Schulman, Esq., at Milberg Weiss Bershad & Schulman, LLP, in New York. Milberg Weiss Plaintiffs are also represented by Shalov Stone & Bonner LLP, in Morristown, New Jersey, and The Brualdi Law Firm, in New York. 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. * * * 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. EXIDE TECH: Mellon Strategies Discloses 9.9% Equity Stake --------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Mellon HBV Alternative Strategies LLC discloses that as of June 2, 2005, it is deemed to beneficially own 2,458,077 shares of Exide Technologies common stock, including a convertible bond position convertible into 417,386 shares until July 30, 2005. As of Feb. 10, 2005, 24,407,068 shares of Exide common stock were outstanding. Accordingly, Mellon has a 9.9% equity stake in Exide. 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. * * * 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. FALCON PRODUCTS: Panel Hires Morgan Keegan as Investment Banker --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Falcon Products, Inc., and its debtor-affiliates' chapter 11 cases, asks the U.S. Bankruptcy Court for the Eastern District of Missouri, Eastern Division, for authority to employ Morgan Keegan & Company, Inc., as its Investment Banker. The Committee wants to retain an investment banker to identify strategic or financial buyers who may wish to bid for the purchase of the Debtor through a sale conducted under Section 363 of the Bankruptcy Code. Morgan Keegan will: a) screen potential buyers, advise the Committee on Valuation parameters, and assist the Committee on the timing and strategy of exploring potential transactions; b) conduct financial due diligence of the Company, including but not limited to an examination of financial results and management projections; c) conduct financial due diligence of potential buyers in order to screen potential transaction partners, evaluate offers, advise in negotiating a definitive agreement (if requested by the Committee), and assist in completing any transaction; and d) assist in the preparation of a descriptive memorandum and appropriate confidentiality agreement for marketing to potential buyers. Morgan Keegan will receive a $100,000 initial retainer, to be funded from the Debtors' estate. Upon receipt of a written indication of interest from a qualified bidder, the Firm will be paid a $100,000 additional cash fee. The retainer and additional cash fee, to the extent previously paid, will be credited against a $500,000 sales fee to be paid to the Firm for any successful sales transaction approved by the Court. The Committee assures the Court that Morgan Keegan's employment and retention is in everybody's best interests. Morgan Keegan, a subsidiary of Regions Financial Corporation, is a premier regional investment firm offering full-service investment banking, securities brokerage, trust and asset management. Morgan Keegan has over 240 offices in 18 states, over 3,000 employees and $480 million in equity capital. Headquartered in Saint Louis, Missouri, Falcon Products, Inc. -- http://www.falconproducts.com/-- designs, manufactures, and markets an extensive line of furniture for the food service, hospitality and lodging, office, healthcare and education segments of the commercial furniture market. The Debtor and its eight debtor-affiliates filed for chapter 11 protection on January 31, 2005 (Bankr. E.D. Mo. Lead Case No. 05-41108). Brian Wade Hockett, Esq., and Mark V. Bossi, Esq., at Thompson Coburn LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $264,042,000 in assets and $252,027,000 in debts. FEDERAL-MOGUL: Panel Won't Hire Lobbyists Due to Objections ----------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Federal-Mogul Corporation and its debtor-affiliates' chapter 11 cases withdrew its request to the U.S. Bankruptcy Court for the District of Delaware for permission to retain The Federalist Group LLC as its congressional advocates, effective as of May 1, 2005, due to objections from the Official Committee of Asbestos Property Damage Claimants and the United States Trustee for Region 3. The Creditors Committee wanted to hire the Federalist Group for $40,000 per month to lobby the Debtors' interest in the "Fairness in Asbestos Injury Resolution Act of 2005" or Senate Bill No. 525, currently being deliberated in the United States Senate. The Federalist Group is a lobbying firm that includes some of Washington's most respected and skilled former Executive and Congressional officials and staff. Not Permissible On behalf of Kelly Beaudin Stapleton, the United States Trustee for Region 3, Richard L. Schepacarter, Esq., trial attorney of the United States Department of Justice, told the Court that hiring lobbyists is not among the permissible actions that may be undertaken by an official committee under Section 1103(c) of the Bankruptcy Code. Mr. Schepacarter said hiring a lobbyist does not constitute: (a) consulting with the trustee or debtor concerning the administration of the case; (b) investigating the acts, conduct, assets, liabilities, and financial condition of the debtor, the operation of the debtor's business and the desirability of the continuance of the business, and any other matter relevant to the case or to the formulation of a plan; (c) participating in the formulation of a plan, advising those represented by the committee of the committee's determinations as to any plan formulated, and collecting and filing with the court acceptances or rejections of a plan; or (d) requesting the appointment of a trustee or examiner under Section 1104. The only conceivable authorization for hiring a lobbyist, Mr. Schepacarter continued, is under Section 1103(c)(5), which provides that a committee may "perform such other services as are in the interest of those represented." "But even subsection 5 does not help [the Creditors' Committee], however, because that section cannot reasonably be construed in an infinitely elastic manner to authorize a broad category of action that was not contemplated by Congress and that would render absurd the specific enumeration of duties in subsections (c)(1) through (c)(4)," Mr. Schepacarter contends. Mr. Schepacarter related that In re Dow Corning Corporation, 199 B.R. 896 (Bankr. E. D. Mich. 1996), aff'd 142 F. 3d 433 (6th Cir. 1998) (Unpublished Decision) is the only reported opinion known to the U.S. Trustee regarding the retention of a lobbyist by an official committee. In that case, the bankruptcy court firmly rejected that broad interpretation of Section 1103(c)(5). Not Professionals The Asbestos Property Damage Committee asserted that The Federalist Group LLC cannot be retained because lobbyists do not qualify as "professionals" under Section 328(a) of the Bankruptcy Code. The term "professional person," as used in Section 327 and 328, "is a term of art reserved for those persons who play an intimate role in the reorganization of the debtor's estate." Theodore J. Tacconelli, Esq., at Ferry, Joseph & Pearce, P.A., in Wilmington, Delaware, pointed out that In re Johns-Manville Corp., 60 B.R. 612, 619 (Bankr. S.D.N.Y. 1986), the court held that due to their "tangential relationship" to the bankruptcy process and the fact that their role is not to assist the debtor in carrying out its duties under Chapter 11, lobbyists do not qualify as professionals under Section 327(a). "[L]obbying against the FAIR Act and other asbestos related legislation are beyond the scope of the Creditors Committee's statutory authority under Section 1103," Mr. Tacconelli said. Commercial creditors are not prohibited from engaging a lobbyist. But since lobbying is an activity "outside and independent" of the bankruptcy, the Committee is prohibited by statute and case law from using estate funds to finance those efforts, Mr. Tacconelli maintained. 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 Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. (Federal-Mogul Bankruptcy News, Issue Nos. 81 & 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIBERMARK INC: Files New Reorg. Plan & Disclosure Statement in Vt. ------------------------------------------------------------------ FiberMark, Inc. (OTC Bulletin Board: FMKIQ) filed a new Plan of Reorganization and Disclosure Statement with the United States Bankruptcy Court for the District of Vermont. The company also disclosed a number of planned steps aimed at further improving the cost structure of its North American operations. The new Plan includes many of the terms and conditions contained in the company's original plan of reorganization that were agreed to by the company's major creditors when that plan was submitted for their approval. The Plan also contains a revised capital structure, with lower debt levels at lower interest rates. It proposes to distribute among unsecured creditors, including bondholders, stock in the reorganized company and an aggregate cash distribution of $75 million. In addition, the Plan addresses the corporate governance disputes among the company's major bondholders that had prevented confirmation of the original plan. "Our new reorganization plan builds upon the fundamental soundness and substantial areas of agreement in our original plan of reorganization, including those corporate governance provisions that were agreed to by our three largest bondholders," said Alex Kwader, chairman of the board and chief executive officer. "We believe that this new Plan will attract significant creditor support and can be confirmed by the Bankruptcy Court." Mr. Kwader continued: "The new Plan also includes a revised capital structure with levels of debt that the new FiberMark can support, while building upon our important customer relationships in key markets. As an important corollary to the new Plan, we have filed a motion requesting court approval of a major cost reduction initiative that will significantly enhance the financial strength of our North American operations." Disputes among major bondholders over post-reorganization corporate governance provisions prevented confirmation of the company's prior plan of reorganization. In its new Plan, the company has adopted enhanced corporate governance provisions that it believes will provide significant protections to all shareholders. "We believe that the provisions we have proposed go much further than is required under applicable law and provide significant protections to the shareholders of the reorganized FiberMark," noted Mr. Kwader. "All parties in interest, including our bondholders, have acknowledged the need for the company to emerge from bankruptcy protection as quickly as possible. We believe that our new Plan provides the most effective framework for that outcome, and that its confirmation and implementation will allow FiberMark to emerge from Chapter 11 protection as a strong and dynamic enterprise in a timely manner," Mr. Kwader said. While the Plan of Reorganization and Disclosure Statement filed on Friday, June 24, 2005, detail the classes of creditors and equity holders and their proposed treatment under the Plan, that Plan is likely to receive further modification before the Disclosure Statement is approved, and actual recoveries by stakeholders may vary from the treatment contemplated in the new Plan. However, the Plan, as did the prior plan, specifies that existing shares will be cancelled and have no value upon emergence from chapter 11. The company currently expects a hearing to address the Disclosure Statement to take place during August 2005. Separately, FiberMark also disclosed that to ensure the company's continued competitiveness and strength over the long term, the company intends to implement several operational steps aimed at further improving the cost structure of its North American operations. The steps were outlined in a separate motion also filed with the Court on June 24. The cost reduction initiative includes the proposed closure of the company's Hughesville, N.J., operations and one of its two paper machines in Warren Glen, N.J., both of which have served strategic and non-strategic markets through the company's technical specialties product families. Certain products would be transferred to the company's modernized paper machine in Warren Glen, while others would be transferred to the company's Brownville, N.Y. and Brattleboro, Vt., operations. The transition would begin as soon as the motion receives the necessary Court approval, and the transition process is expected to be completed by the end of 2005. The initiative also includes various contemplated actions to reduce selling, general and administrative expenses. In total, we anticipate first-year net savings of $10 million and expect to take a non-cash impairment charge of approximately $17 million. Mr. Kwader said: "As part of the Chapter 11 reorganization process, we have been carefully evaluating many options available to us to optimize our production capability while continuing to support the requirements of our most valued customers. This cost reduction initiative will allow an orderly transition of business to our three most versatile paper and board machines and, at the same time, enable us to exit certain non-strategic markets that no longer provide attractive financial returns. "These steps, if granted Bankruptcy Court approval, will result in a loss of approximately 135 jobs, largely in New Jersey. While we regret the need to take these difficult steps, we must focus our resources on the attractive core businesses that represent the future of FiberMark, namely, our strategic businesses in publishing, specialty packaging, office products and technical specialties markets," Mr. Kwader concluded. Headquartered in Brattleboro, Vermont, FiberMark, Inc. -- http://www.fibermark.com/-- produces filter media for transportation applications and vacuum cleaning; cover stocks and cover materials for books, graphic design, and office supplies and base materials for specialty tapes, wall coverings and sandpaper. The Company filed for chapter 11 protection on March 30, 2004 (Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D.J. Baker, Esq., David M. Turetsky, Esq., and Rosalie Walker Gray, 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 $329,600,000 in total assets and $405,700,000 in total debts. At Mar. 31, 2005, FiberMark, Inc.'s balance sheet showed a $105,404,000 stockholders' deficit, compared to a $101,876,000 deficit at Dec. 31, 2004. FIRST DOMINION: Moody's Confirms $14.2M Class D-2 Notes Ba3 Rating ------------------------------------------------------------------ Moody's Investors Service removed these Classes of Notes issued by First Dominion Funding III, Ltd. from the Moody's Watchlist for possible downgrade and confirms the ratings: 1) U.S. $20,000,000 Class B-1 Fixed Rate Notes Due 2014 2) U.S. $47,500,000 Class B-2 Floating Rate Notes Due 2014 3) U.S. $26,250,000 Class C Floating Rate Notes Due 2014 4) U.S. $7,000,000 Class D-1 Fixed Rate Notes Due 2014 5) U.S. $14,250,000 Class D-2 Floating Rate Notes Due 2014 6) U.S. $10,000,000 Class D-3 Fixed Rate Notes Due 2014 The rating action is the result of the stable performance of the collateral and the continued amortization of the deal. Rating Action: Removal from moody's watchlist and confirmation of rating. Issuer: First Dominion Funding III, Ltd. The rating of these Classes of Notes has been removed from the Moody's Watchlist for possible downgrade and is confirmed: Class Description: U.S. $20,000,000 Class B-1 Fixed Rate Notes Due 2014 * Prior Rating: A3 (under review for downgrade) * Current Rating: A3 Class Description: U.S. $47,500,000 Class B-2 Floating Rate Notes Due 2014 * Prior Rating: A3 (under review for downgrade) * Current Rating: A3 Class Description: U.S. $26,250,000 Class C Floating Rate Notes Due 2014 * Prior Rating: Baa2 (under review for downgrade) * Current Rating: Baa2 Class Description: U.S. $7,000,000 Class D-1 Fixed Rate Notes Due 2014 * Prior Rating: Ba3 (under review for downgrade) * Current Rating: Ba3 Class Description: U.S. $14,250,000 Class D-2 Floating Rate Notes Due 2014 * Prior Rating: Ba3 (under review for downgrade) * Current Rating: Ba3 Class Description: U.S. $10,000,000 Class D-3 Fixed Rate Notes Due 2014 * Prior Rating: Ba3 (under review for downgrade) * Current Rating: Ba3 GALEY & LORD: U.S. Trustee Wants N.Y. Case Dismissed or Converted ----------------------------------------------------------------- Deirdre A. Martini, the U.S. Trustee for Region 2, asks the U.S. Bankruptcy Court for the Southern District of New York to dismiss or convert to a chapter 7 liquidation proceeding Galey & Lord's confirmed chapter 11 case commenced on February 19, 2002. Paul K. Schwartzberg, Esq., in New York, counsel for the U.S. Trustee, explains that the Court confirmed the Debtor's plan of reorganization on Feb. 9, 2004. Six months later, Galey & Lord filed a new voluntary chapter 11 petition in the Northern District of Georgia, Rome Division. Mr. Schwartzberg notes that Galey & Lord's bankruptcy proceeding in New York remains open. The bankruptcy filing in Georgia was converted to a chapter 7 liquidation proceeding on November 29, 2004. Mr. Schwartzberg believes it is proper for the Debtor's New York bankruptcy filing to be formally dismissed or converted to chapter 7 before the other filing could proceed. Headquartered in Atlanta, Georgia, Galey & Lord, Inc., a leading global manufacturer of textiles for sportswear, including denim, cotton casuals and corduroy, and its debtor-affiliates filed for chapter 11 protection on August 19, 2004 (Bankr. N.D. Ga. Case No. 04-43098). The Court converted the case to a chapter 7 proceeding on November 29, 2004. S. Gregory Hays is the Chapter 7 Trustee for the Debtors' estate. Jason H. Watson, Esq., and John C. Weitnauer, Esq., at Alston & Bird LLP, and Joel H. Levitin, Esq., at Dechert LLP, represent the Debtor. When the Debtor filed for chapter 11 protection, it listed $533,576,000 in total assets and $438,035,000 in total debts. GRANT PRIDECO: Good Performance Cues S&P to Lift Ratings to BB -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Houston, Texas-based Grant Prideco Inc. to 'BB' from 'BB-'. In addition, the company's senior unsecured rating was raised to 'BB' from 'BB-'. The outlook is stable. "The upgrade is predicated on demonstrated sequential improvement in operating performance and debt reduction, following the company's acquisition of ReedHycalog in 2002," said Standard & Poor's credit analyst Jeffrey B. Morrison. "Furthermore, the upgrade reflects improved cash flow prospects for the company, in light of strengthening backlog, improved margins across its three operating segments, and favorable industry conditions that are expected to persist in the near to intermediate term," he continued. In the longer term, performance is expected to benefit from the more durable cash flow characteristics of the company's drillbit operations that exhibit less margin volatility through the cycle when compared with the company's drillstem products and tubular technology segments. The stable outlook is predicated on improved operating performance and reduced financial leverage. In addition, the current outlook incorporates the expectation that the company will continue to fund small acquisitions in a manner consistent with the company's current financial profile. Given the recent upgrade, further positive rating actions do not appear likely. Conversely, a negative outlook revision could occur if operating performance deviates substantially from expected parameters through the cycle, or if management pursues a more sizable acquisition (which Standard & Poor's views as an unlikely event in the near term) that was funded in a manner that materially weakened the company's current credit profile. GS MORTGAGE: Fitch Assigns Low-B Ratings to 6 Cert. Classes ----------------------------------------------------------- GS Mortgage Securities Corporation II 2005-GG4, commercial mortgage pass-through certificates are rated by Fitch: -- $100,000,000 class A-1 'AAA'; -- $50,000,000 class A-1P 'AAA'; -- $166,616,000 class A-DP 'AAA'; -- $349,848,000 class A-2 'AAA'; -- $288,705,000 class A-3 'AAA'; -- $207,259,000 class A-ABA 'AAA'; -- $29,609,000 class A-ABB 'AAA'; -- $500,000,000 class A-4 'AAA'; -- $1,171,595,000 class A-4A 'AAA'; -- $167,371,000 class A-4B 'AAA'; -- $169,634,000 class A-1A 'AAA'; -- $300,060,000 class A-J 'AAA'; -- $3,831,315,000 class X-P* 'AAA'; -- $4,000,797,486 class X-C* 'AAA'; -- $65,013,000 class B 'AA'; -- $35,007,000 class C 'AA-'; -- $75,015,000 class D 'A'; -- $40,008,000 class E 'A-'; -- $55,011,000 class F 'BBB+'; -- $45,009,000 class G 'BBB'; -- $40,008,000 class H 'BBB-'; -- $20,004,000 class J 'BB+'; -- $20,004,000 class K 'BB'; -- $20,004,000 class L 'BB-' -- $10,002,000 class M 'B+' -- $10,002,000 class N 'B'; -- $10,002,000 class O 'B-'; -- $55,011,486 class P 'NR'. * Notional Amount and Interest-Only. Class P is not rated by Fitch Ratings. Classes A-1, A-1P, A-DP, A- 2, A-3, A-ABA, A-ABB, A-4, A-4A, A-4B, A-1A, A-J, B, C, D, and E are offered publicly, while classes X-P, X-C, F, G, H, J, K, L, M, N, O, and P are privately placed pursuant to Rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 189 fixed-rate loans having an aggregate principal balance of approximately $4,000,797,487, as of the cutoff date. For a detailed description of Fitch's rating analysis, please see the report titled GS Mortgage Securities Corporation II, Series 2005-GG4 dated June 2, 2005 available on the Fitch Ratings web site at http://www.fitchratings.com/ HOLLINGER INT'L: Asks Illinois Court to Dismiss Class Action ------------------------------------------------------------ Hollinger International, Inc., asked the United States District Court for the Northern District of Illinois to dismiss the amended shareholder class action filed against it and certain of its officers and directors, styled "In re Hollinger Inc. Securities Litigation, No. 04C-0834." In February and April 2004, three alleged stockholders of the Company (Teachers' Retirement System of Louisiana, Kenneth Mozingo, and Washington Area Carpenters Pension and Retirement Fund) initiated purported class actions suits against the Company, its former chief executive officer and founder Conrad Black, certain former executive officers and certain current and former directors of the Company, Hollinger Inc., Ravelston and certain affiliated entities and KPMG LLP, the Company's independent registered public accounting firm. On July 9, 2004, the Court consolidated the three actions for pretrial purposes. Plaintiffs filed an amended consolidated class action complaint on August 2, 2004, and a second consolidated amended class action complaint on November 19, 2004. The named plaintiffs in the second consolidated amended class action complaint are Teachers' Retirement System of Louisiana, Washington Area Carpenters Pension and Retirement Fund, and E. Dean Carlson. They are purporting to sue on behalf of an alleged class consisting of themselves and all other purchasers of securities of the Company between and including August 13, 1999 and December 11, 2002. The second consolidated amended class action complaint asserts claims under federal and Illinois securities laws and claims of breach of fiduciary duty and aiding and abetting in breaches of fiduciary duty in connection with misleading disclosures and omissions regarding certain "non-competition" payments, the payment of allegedly excessive management fees, allegedly inflated circulation figures at the Chicago Sun-Times, and other alleged misconduct. The complaint seeks unspecified money damages, rescission, and an injunction against future violations. The suit is styled "In Re: Hollinger Intl Securities Litigation, case no. 1:04-cv-00834," filed in the United States District Court for the Northern District of Illinois, under Judge David H. Coar. The plaintiff firms in this litigation are: (1) Cauley Geller Bowman Coates & Rudman, LLP (New York), 200 Broadhollow, Suite 406, Melville, NY, 11747, Phone: 631.367.7100, Fax: 631.367.1173, (2) Charles J. Piven, World Trade Center-Baltimore,401 East Pratt Suite 2525, Baltimore, MD, 21202, Phone: 410.332.0030, E-mail: pivenlaw@erols.com (3) Federman & Sherwood, 120 North Robinson, Suite 2720, Oklahoma City, OK, 73102, Phone: 405-235-1560, E-mail: wfederman@aol.com (4) Grant & Eisenhofer, P.A., 1201 N. Market Street, Suite 2100, Wilmington, DE, 19801, Phone: 302.622.7000, Fax: 302.622.7100, E-mail: info@gelaw.com (5) Much Shelist Freed Denenberg Ament & Rubenstein, PC, Chicago, IL, Phone: 800-470-6824, Fax: 312-621-1750, (6) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd, PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E- mail: info@sbclasslaw.com (Class Action Reporter, June 13, 2005) Hollinger International Inc. is a newspaper publisher whose assets include The Chicago Sun-Times and a large number of community newspapers in the Chicago area as well as in Canada. * * * As reported in the Troubled Company Reporter on August 6, 2004, Moody's Investors Service changed the rating outlook on Hollinger International Publishing, Inc., to positive from stable and has withdrawn other ratings. Ratings withdrawn: * $45 million Senior Secured Revolving Credit Facility, due 2008 -- Ba2 * $210 million Term Loan "B", due 2009 -- Ba2 * $300 million of 9% Senior Unsecured Notes, due 2010 -- B2 Ratings confirmed: * Senior Implied rating -- Ba3 * Issuer rating -- B2 Moody's says the outlook is changed to positive. HOLLINGER INT'L: Declares $0.05 per Share Quarterly Dividend ------------------------------------------------------------ Hollinger International Inc.'s (NYSE: HLR) Board of Directors declared a quarterly dividend of $0.05 per share on the issued and outstanding common stock of the Company to be payable July 15, 2005, to stockholders of record on July 1, 2005. Hollinger International Inc. is a newspaper publisher whose assets include The Chicago Sun-Times and a large number of community newspapers in the Chicago area as well as in Canada. * * * As reported in the Troubled Company Reporter on August 6, 2004, Moody's Investors Service changed the rating outlook on Hollinger International Publishing, Inc., to positive from stable and has withdrawn other ratings. Ratings withdrawn: * $45 million Senior Secured Revolving Credit Facility, due 2008 -- Ba2 * $210 million Term Loan "B", due 2009 -- Ba2 * $300 million of 9% Senior Unsecured Notes, due 2010 -- B2 Ratings confirmed: * Senior Implied rating -- Ba3 * Issuer rating -- B2 Moody's says the outlook is changed to positive. INNOVA: S&P Lifts Rating on $300 Million Sr. Unsec. Notes to BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Innova S. de R.L. de C.V. (Innova, better known under its commercial name "SKY") to 'BB-' from 'B+' and removed the rating from CreditWatch Positive, where it was placed on Oct. 15, 2004. The outlook is now stable. In addition, Standard & Poor's also raised its rating on Innova's $300 million senior unsecured notes due 2013 to 'BB-' from 'B+'. The rating action follows Standard & Poor's review of Innova's expenses related to the marketing and promotion efforts implemented to attract Galaxy Mexico's (dba DirecTV Mexico) subscribers, as well as the increasing importance that Innova has within Grupo Televisa S.A. (BBB/Stable/--, with $1.2 billion in senior notes rated) due to its characteristic as a 'material subsidiary' of the latter, and thus the consequences that a default on Innova's senior notes would have on the senior notes of Televisa. "Innova's operating momentum should continue strengthening its key creditratios," said Standard & Poor's credit analyst Manuel Guerena. "Its unprotected dependence on an exclusive satellite limits further ratings upside potential, while a deterioration in its improved profitability and cash flow metrics could trigger a negative rating action." INTERMET CORP: Files Plan of Reorganization in E.D. of Michigan --------------------------------------------------------------- INTERMET Corporation (INMTQ:PK) filed a proposed Plan of Reorganization with the United States Bankruptcy Court in the Eastern District of Michigan. The Debtor also entered into a commitment letter with R2 Investments, LDC and Stanfield Capital Partners, LLC to underwrite an equity investment into INTERMET in the amount of $75 million, subject to certain terms and conditions. The commitment letter and court filing represent important steps for the company in its efforts to strengthen its balance sheet, complete its restructuring and emerge from Chapter 11. "The commitment letter and the filing of our reorganization plan are major steps for us and represent the start of the final phase of INTERMET's operational and financial restructuring," Gary Ruff, the Company's Chairman and CEO, said. "Over the last eight months, we believe much has been accomplished in terms of putting the company back on track in its strategy for long-term growth. We are especially pleased that we also have continued to receive new and replacement business awards in our ferrous, light-metals and European groups during this challenging time." The proposed Plan of Reorganization provides for full payment of administrative claims, tax claims, claims pursuant to INTERMET's debtor-in- possession credit agreement, U.S. Trustee fees, consignment claims and claims of certain secured pre-petition creditors. Payment for these claims will be funded by an exit credit facility that INTERMET is currently negotiating and a new $75 million equity investment pursuant to the Plan of Reorganization. Under the Plan of Reorganization, unsecured creditors may either elect to receive shares of stock in the reorganized INTERMET in exchange for their claims or they may elect to receive cash. Reorganized INTERMET will provide 2.5 million shares of common stock to unsecured creditors in exchange for their claims. Unsecured creditors who elect to receive shares of stock in the reorganized INTERMET will also receive the opportunity to purchase up to 7.5 million additional shares of stock through the private rights offering at a price of $10 per share. To the extent that the full $75 million is not subscribed for pursuant to the private rights offering, R2 and Stanfield have agreed pursuant to the commitment letter to purchase the shares of stock not otherwise purchased in the private rights offering. Under the proposed Plan of Reorganization, all pre-petition equity interests of INTERMET Corporation will be canceled. Confirmation of the proposed Plan of Reorganization remains subject to various requirements and the approval of the Bankruptcy Court. Headquartered in Troy, Michigan, Intermet Corporation -- http://www.intermet.com/-- provides machining and tooling services for the automotive and industrial markets specializing in the design and manufacture of highly engineered, cast automotive components for the global light truck, passenger car, light vehicle and heavy-duty vehicle markets. Intermet, along with its debtor-affiliates, filed for chapter 11 protection on Sept. 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP represents the Debtors. When the Debtors filed for protection from their creditors, they listed $735,821,000 in total assets and $592,816,000 in total debts. JETSGO CORP: Unsecured Creditors Could Recover 11% of Claims ------------------------------------------------------------ RSM Richter Inc., the Court-appointed trustee of Jetsgo Corporation, said unsecured creditors could get 11 cents to 15 cents on the dollar in the liquidation of the discount airline, Sean Silcoff of the Financial Post reports. Creditors assert $271 million against Jetsgo, this is twice as much as the initial $120 million in claims filed on March 11, 2005. Yves Vincent of RSM Richter told creditors that a sale of the airline's 17 Fokker-100's aircraft could bring in about $41 million, Karine Fortin of the Canadian Press reports. So far, Jetsgo has sold six of its Fokker F-100 aircraft for $15 million. Jetsgo also faced a number of lawsuits filed by NavCanada and some Canadian airports that want the right to seize the aircraft, Ms. Fortin relates. Mr. Silcoff said that NavCanada and the airport authorities are hoping that the courts will classify them as secured creditors, giving them first crack at $11.5 million of the liquidation proceedings. Jetsgo Corporation operated a low-cost, low-fare passenger airline with approximately 1,200 employees, before ceasing all operations on March 11, 2005. At the same time, the Superior Court of Justice in Quebec, District of Montreal, entered an Initial Order providing Jetsgo Corporation protection under the Companies' Creditors Arrangement Act, and appointed RSM Richter Inc. to act as Monitor. When Jetsgo sought CCAA protection, it listed $75.8 million in total assets and $94.5 million in total liabilities. Attorneys from Ogilvy Renault LLP represent the carrier. KRAMONT REALTY: Fitch Withdraws BB- Rating on Preferred Stock ------------------------------------------------------------- Fitch Ratings withdraws the 'BB-' preferred stock rating for Kramont Realty Trust. The withdrawal follows the liquidation of KRT's two classes of preferred stock (series B-1 and series E) pursuant with its recent acquisition by Centro Watt America REIT, a private U.S. REIT. Kramont was acquired by Centro Watt America REIT, which is a joint venture between U.S.-based Watt Commercial Properties and Australia-based Centro Properties Group. Centro Watt is headquartered in Santa Monica, CA and currently has a portfolio of more than 17 million-square-feet of retail centers throughout the U.S. The acquired Kramont portfolio contained 93 properties aggregating 12.6 million square feet located primarily in the northeastern and mid-Atlantic U.S. LUIS MORALES: Case Summary & 11 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Luis Antonio Cruz & Ana Lydia Homar Morales dba Panaderia La Familia Bo. Palomas Calle M-16 Yauco, Puerto Rico 00698 Tel: (787) 856-6659 Bankruptcy Case No.: 05-05807 Chapter 11 Petition Date: June 23, 2005 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Modesto Bigas Mendez, Esq. Bigas & Bigas P.O. Box 7462 Ponce, PR 00732 Tel: (787) 844-1444 Total Assets: $1,635,940 Total Debts: $834,508 Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Banco Santander Bank loan $25,428 P.O. BOX 362589 San Juan, PR 00936-2589 Internal Revenue Service Taxes $24,000 Mercantil Plaza Ofic 914 2 Ponce De Leon, PDA 27 1/2 San Juan, PR 00918-1693 Coop A/C Sabane�a Bank loan $16,800 Calle Quilichini #22 Value of collateral: Sabana Grande, PR 00637 $13,225 Interiores Del Oeste, Inc. Commercial loan $10,500 Calle Comercio #71 Mayaguez, PR 00682 Westerbank of PR Bank loan $8,000 P.O. Box 1180 Mayaguez, PR 00681-1180 Popular Leasing Consumer credit $5,810 Tres Monjitas P.O. Box 362708 San Juan, PR 00936-2708 Banco Popular Consumer credit $5,679 P.O. Box 71375 San Juan, PR 00936-8475 CITI Cards Consumer credit $2,950 P.O. Box 6017 The Lakes, NV 89163-0001 American Express Consumer credit $2,500 P.O. Box 297879 Fort Lauderdale, FL 33329 Scotiabank of Puerto Rico Consumer credit $2,000 P.O. Box 362649 San Juan, PR 00936-2649 NCO Financial Systems of PR Consumer credit $773 654 Avenida Mu�oz Rivera San Juan, PR 00926 LY-CON INC: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Ly-Con, Inc. dba Brad's E-Zee Oil & Lube Center 17415 Livernois Detroit, Michigan 48221-2758 Bankruptcy Case No.: 05-60159 Type of Business: The Debtor offers automobile lubrication services. Chapter 11 Petition Date: June 23, 2005 Court: Eastern District of Michigan (Detroit) Judge: Phillip J. Shefferly Debtor's Counsel: Rose Mons Hooper, Esq. 17380 Livernois Avenue Detroit, Michigan 48221 Tel: (313) 861-4844 Total Assets: Unknown Total Debts: Unknown The Debtor's List of its 20 Largest Unsecured Creditors was not available at press time. MARKWEST ENERGY: Earns $3.8 Million of Net Income in 4th Quarter ---------------------------------------------------------------- MarkWest Energy Partners, L.P. (Amex: MWE) reported net income for the three months ended December 31, 2004, of $3.8 million, compared to a net loss of $800,000, for the fourth quarter of 2003. Interest expense increased significantly for the quarter, driven by the Company's late 2003 acquisitions and its July 2004 acquisition of the East Texas System. For the year ended Dec. 31, 2004, the Partnership reported net income of $10.0 million, compared to restated net income of $4.8 million, for the year ended December 31, 2003. On May 6, 2005, the Partnership announced that its financial statements for the years 2002 and 2003 and the first three quarters of 2003 and 2004 would be restated to reflect compensation expense allocated to it from the Partnership's parent company, MarkWest Hydrocarbon, Inc. for the sale of subordinated Partnership units and interests in the Partnership's general partner to certain of their employees and directors. The compensation expense affects reported earnings for these periods; however, the charge is entirely allocated to the general partner and does not affect net income attributable to the limited partners. Additionally, it is a non-cash item that did not affect management's determination of the Partnership's distributable cash flow for any period. For the year ended December 31, 2003 the restatement adjustments reduced net income by $1.0 million, from $5.8 million to $4.8 million. For the year ended December 31, 2002, the restatement adjustments reduced net income by $100,000 from $21.8 million to $21.7 million. The Partnership has recorded certain other adjustments to correct other errors in the financial statements for the first three quarters of 2004, including adjustments to accruals for revenue and purchased product costs, adjustments for costs improperly capitalized as property, plant and equipment, adjustments to record capitalized interest on major construction projects in- process, adjustments to record as a financing lease a lease agreement previously entered into by an acquired business and adjustments to accrued property taxes. Other less significant adjustments and reclassifications were identified and recorded in conjunction with the restatement process. For the nine months ended September 30, 2004, the restatement adjustments reduced net income by $700,000 from $6.8 million to $6.1 million. As a Master Limited Partnership, cash distributions to limited partners are largely determined based on Distributable Cash Flow. For the three months ended December 31, 2004, DCF was $14.2 million, compared to $4.2 million for the three months ended December 31, 2003. For the year ended December 31, 2004, DCF was $37.0 million, compared to $16.3 million for the year ended December 31, 2003. Income from operations for the fourth quarter rose significantly, increasing by $7.8 million relative to the same time period last year, reflecting the results of our late 2003 and East Texas acquisitions. Interest expense increased by $2.3 million, attributable to greater debt levels compared to 2003 and higher interest rates. Amortization and write-off of deferred financing costs increased by $1.3 million, reflecting the completion of our October financings. Net income for the year more than doubled, increasing by $5.2 million over the comparable year, driven by the same combination of factors impacting the fourth quarter comparisons. Income from operations nearly tripled, increasing by $15.6 million. On January 20, 2005, the board of directors of the general partner of MarkWest Energy Partners, L.P., declared the Partnership's quarterly cash distribution of $0.78 per common and subordinated unit for the fourth quarter of 2004. This distribution represents an increase of $0.02 per unit over the previous quarter's distribution. The fourth quarter distribution was paid February 11, 2005, to unitholders of record on February 2, 2005. "We are very pleased with our fourth quarter and full year financial results. Our core set of assets continue to perform well and the East Texas System remains on track to produce the results we anticipated," said Frank Semple, President and CEO. "We have completed a number of high quality acquisitions over the last 24 months and have done a good job of integrating and optimizing these assets from a field operations perspective. However, the complexity of integrating the back office functions required by these acquisitions resulted in a number of accounting and control weaknesses, primarily in our southwest business unit. Addressing these weaknesses, and the associated accounting issues resulted in a significant delay in the filing of our 10-K for 2004. The required remediation efforts are strengthening our processes and controls; however, these problems have caused significant concerns for our unitholders and have resulted in substantial unanticipated costs. Problems of this type are unacceptable and we are very focused on the continued improvement of our accounting and control environment. In summary, operationally and financially we had a very strong year and have improved the accounting and control processes that are so critical to our ongoing growth and performance." MarkWest Energy Partners, L.P. is a publicly traded master limited partnership with a solid core of midstream assets and growing core of natural gas transmission assets. The Company owns natural gas gathering and transportation systems and gas processing assets in the Southwest. The Company is also the largest processor of natural gas in the Appalachian Basin and the primary intrastate pipeline transporter of crude oil in Michigan. * * * As reported in the Troubled Company Reporter on May 11, 2005, Standard & Poor's Rating Services placed its 'B+' corporate credit rating on MarkWest Energy Partners L.P. on CreditWatch with negative implications after the company's announcement that its Form 10-K filing would be further delayed and that it would be required to restate its 2002 through 2004 financial statements. MWE has not filed its Form 10-K on time as a consequence of identifying material weaknesses under Section 404 of the Sarbanes- Oxley Act, primarily involving reporting processes in its Southwest business unit. In addition, both MWE and MarkWest Hydrocarbon Inc., the majority interest holder in MWE's general partner, have now determined that they must file restatements for 2002 through 2004 to reflect compensation expense for the sale of interests in MWE's general partner. "The CreditWatch listing reflects concern about repeated and protracted delays in the company's Form 10-K filing, uncertainty about the magnitude of impending restatements, the possibility that further delays could reduce the partnership's liquidity, and the risk of material weaknesses being greater in scope than expected," said Standard & Poor's credit analyst Plana Lee. MWE has obtained covenant waivers from its banks under its revolving credit facilities until June 30, 2005. The company was previously granted a waiver through April 30, 2005, which it was unable to meet. MWE has also received an extension to regain compliance from the American Stock Exchange until May 31, 2005, having missed its previous May 2 deadline. MATRIA HEALTHCARE: Moody's Withdraws $86M Sr. Sub. Notes B3 Rating ------------------------------------------------------------------ Moody's Investors Service affirmed Matria Healthcare, Inc.'s Corporate Family Rating at B1 (previously called the Sr. Implied rating) and withdrew the rating of Matria's convertible senior subordinated notes due 2024, following their conversion to equity in May 2005. The ratings outlook remains stable. Ratings affirmed: * Corporate Family Rating -- B1 * Senior Unsecured Issuer Rating -- B2 Rating withdrawn: * $86.25 Million Convertible Senior Subordinated Notes due 2024 -- B3 The outlook is stable. The ratings affirmation is based on our expectation that Matria will continue to report sales growth of at least 10% and stable EBIT margins over the near to medium term while it improves operating cash flow compared to the low levels exhibited in fiscal 2004. The affirmation also entails our expectation that the company will maintain prudent financial policies and a capital structure that is appropriate for the rating category. Positive factors reflected in the ratings include the strong growth in the disease management business and the company's good competitive position within its other business lines. In fiscal 2004 and the first fiscal quarter 2005, sales grew 16.7% and 15.4%, respectively. The EBIT margin improved to 9.9% for the twelve months ended March 31, 2005 (9.0% in fiscal 2003). Moody's notes, however, that cash generation has not been commensurate with the sales and earnings growth because of the need to fund working capital increases, and remained below our expectations. For the twelve months ended March 31, 2005, cash flow from operations was about $11 million and free cash flow was minimal. Factors affecting the ratings include: * the history of volatile operating performance; * negative long term trends in the Women's and Children's Health segment, which over the past several years has suffered from falling reimbursement rates and a decreasing patient census; * potentially increasing competition in the disease management business from major pharmacy benefit managers, and concerns over whether Matria and the disease management industry can sustain the growth experienced in recent years; * the company's limited size; * customer concentration issues at Facet Technologies; and * the qui tam action filed against the company, which alleges improper claims practices for Medicare payments by a former subsidiary. The stable outlook reflects Moody's expectation that Matria will maintain positive operating trends, with strong sales and earnings growth in disease management offsetting weaker performance in the mature Facet Technologies business (about 22% of consolidated sales in fiscal 2004) and the Women's and Children's Health segment (32% of sales). The stable ratings outlook also assumes that Matria will generate solid free cash flow in fiscal 2005 and that leverage will remain in line with the rating category, even in the likely event of potentially larger acquisitions. Moody's note that the company is currently debt free following the conversion of its convertible senior subordinated notes into equity in May 2005. The ratings could be downgraded if Matria continues to show weakness in free cash flow, or if leverage significantly rises beyond levels appropriate for the rating category, for example, as a result of a larger debt-financed acquisition. Moody's notes that it sees an increased likelihood for acquisitions in the near future because of the company's increased financial flexibility following redemption of its convertible senior subordinated notes and the company's apparent focus on the disease management portion of its business, which represented approximately 18% of fiscal 2004 sales. Over the near term, Moody's does not anticipate upside momentum for the ratings because of the risks inherent in the company's ongoing transformation into a more focused disease management player, and the aforementioned factors constraining the ratings. Moody's believes that further business disposals following the divestiture of its pharmacy and supplies operations in fiscal 2004 are likely and that proceeds may be used to fund potentially larger acquisitions in the disease management area. Thus, even if the company's performance continues to strengthen, Moody's will likely wait to get a better sense of what business model, strategy and capital structure Matria will ultimately adopt in order to better analyze the associated risks. Matria Healthcare, Inc., headquartered in Marietta, GA, is a leading provider of disease management programs to health plans and employers. The company also manufactures and distributes products for the diabetes market through Facet Technologies, and provides diabetes products, supplies and certain value-added services to patients in Germany. For the twelve months ended March 31, 2005, sales were about $284 million excluding discontinued operations. MAYTAG CORP: Inks Commitment Letter for $500M Sr. Sec. Facility --------------------------------------------------------------- Maytag Corporation (NYSE: MYG) signed a commitment letter for a $500 million five-year, senior secured revolving credit facility. The new credit facility would be fully underwritten by J.P. Morgan Chase Bank, N.A. and Citigroup Global Markets, Inc., and secured by accounts receivable and inventory for certain Maytag subsidiaries. The company also obtained an amendment to its current $300 million revolving credit facility, due March 2007. "While historically we have not drawn on this revolving credit facility, the amendment eases covenant requirements and the facility is now secured by accounts receivable and inventory for certain Maytag subsidiaries," said George Moore, Maytag's executive vice president and CFO. The announcement is the latest development in the company's previously announced plans to review its financing options. During Maytag's first quarter 2005 conference call on April 22, 2005, the company announced that it would secure a new $500 million credit agreement during the second quarter. "The new $500 million credit facility commitment and the amendment to the existing $300 million revolving credit facility provide Maytag with substantially more covenant flexibility and funding security to meet liquidity and long-term financing requirements," said Mr. Moore. The commitment letter is effective until December 30, 2005. The current $300 million credit facility would be replaced upon the issuance of the $500 million credit facility. Maytag Corporation is a $4.7 billion home and commercial appliance company focused in North America and in targeted international markets. The corporation's primary brands are Maytag(R), Hoover(R), Jenn-Air(R), Amana(R), Dixie-Narco(R) and Jade(R). At Jan. 1, 2005, Maytag's balance sheet reflected a $75,024,000 stockholders' deficit, compared to $65,811,000 of positive equity at Jan. 3, 2004. * * * As reported in the Troubled Company Reporter on June 23, 2005, Maytag Corporation's 'BB' senior unsecured debt remains on Rating Watch Negative by Fitch Ratings following the company's announcement that it has received a preliminary non-binding proposal from Bain Capital Partners LLC, Blackstone Capital Partners IV L.P. and Haier America Trading, L.L.C. to acquire all outstanding shares of Maytag for $16 per share cash. As reported in the Troubled Company Reporter on Apr. 29, 2005, Moody's Investors Service downgraded Maytag Corporation's senior unsecured ratings to Ba2 from Baa3 and the short-term rating to Not Prime from Prime-3. At the same time the Ba2 senior unsecured note rating was placed on review for possible further downgrade. Moody's also assigned a new senior implied rating of Ba2. Moody's says the outlook for the ratings remains negative. The ratings downgraded are: * Senior unsecured rating to Ba2 from Baa3; the rating is placed on review for possible further downgrade * Issuer rating to Ba2 from Baa3, * Short term rating to Not Prime from P-3. The rating assigned: * Senior implied rating of Ba2. As reported in the Troubled Company Reporter on Apr. 26, 2005, Standard & Poor's lowered its long-term corporate credit and senior unsecured debt ratings on home and commercial appliance manufacturer Maytag Corp. to 'BB+' from 'BBB-'. At the same time, the 'A-3' short-term corporate credit and commercial paper ratings on the Newton, Iowa-based company were withdrawn. The ratings were removed from CreditWatch, where they were placed Jan. 28, 2005, following weaker-than-expected fourth quarter results and Standard & Poor's ongoing concerns about Maytag's ability to improve its operation performance. S&P says the outlook is stable. Total debt outstanding at April 2, 2005, was about $970 million. MERIDIAN AUTOMOTIVE: Wants to Use Lenders' Cash Collateral ---------------------------------------------------------- To address their working capital needs and fund other costs and expenses associated with their reorganization efforts, Meridian Automotive Systems, Inc., and its debtor-affiliates require the continued use of cash collateral. The Debtors believe that the $75,000,000 Deutsche Bank Credit Facility together with the continued use of the Cash Collateral will: * provide them with sufficient capital with which to operate their businesses, maximize value for the benefit of all constituencies, and successfully reorganize under Chapter 11 protection; and * ensure the going concern value of their assets -- a value that is substantially greater than the value that would be realized from a piecemeal liquidation of those assets if the Debtors were forced to cease operations due to lack of liquidity. By this motion, the Debtors seek permission from the U.S. Bankruptcy Court for the District of Delaware to use Cash Collateral pursuant to Section 363(a) of the Bankruptcy Code. The Debtors propose to grant adequate protection to: -- the lenders under (i) the First Lien Credit Agreement dated April 28, 2004, as amended, among Meridian Automotive Systems - Composites Operations, Inc., Credit Suisse First Boston, as First Lien Administrative Agent and Collateral Agent, and Goldman Sachs Credit Partners, LP, as Syndication Agent, and (ii) the First Lien Hedge Agreement between Meridian and Goldman Sachs Capital Markets, LP; -- the lenders under (i) the Second Lien Credit Agreement dated April 28, 2004, as amended, among Meridian, Credit Suisse First Boston, as Second Lien Administrative Agent and Collateral Agent, and Goldman Sachs Credit Partners, LP, as Syndication Agent; and -- the holders of the Series B Notes under the Fourth Amended and Restated Subordinated Note Agreement, dated April 28, 2004, entered into by Meridian, as issuer, and U.S. Bank, N.A., as Collateral Agent, for any diminution in the value of the Lenders' liens and security interest in the Collateral as a result of the priming of their liens by the Deutsche Bank Facility. Specifically, the Debtors propose this protection package: (a) Adequate Protection Liens The Prepetition Agents and the Secured Creditors each will be granted replacement liens, to the extent each held valid, perfected and unavoidable security interests as of the Petition Date, on all of the collateral in each case subject and subordinate to the payment of the Carve-Out and to the security interests and liens granted to Deutsche Bank for the DIP Lenders' benefit. As among the Prepetition Agents (x) the relative priority of the replacement liens will be the same as the relative priority of the prepetition liens held by each Prepetition Agent, and (y) the replacement liens will be subjected in all respects to the provisions of, as applicable, the Senior Intercreditor Agreement and the Junior Creditor Agreement. (b) Section 507(b) Claim The Prepetition Agents and the Secured Creditors will be granted a superpriority claim pursuant to Section 507(b) of the Bankruptcy Code immediately junior to the claims under Section 364(c)(1) held by Deutsche Bank and the DIP Lenders, and (y) in each case subject to the Carve-Out's payment and (z) as among the Prepetition Agents: (i) the relative priority of their superpriority claims will be the same as the relative priority of the prepetition claims held by each Prepetition Agent; and (ii) their priority claims will be subject in all respects to the provisions of, as applicable, the Senior Intercreditor Agreement and the Junior Intercreditor Agreement. However, the Prepetition Agents and the Secured Creditors will not receive any payments, property or other amounts in respect of their superpriority claims under Section 507(b) granted under the DIP Order or under the other DIP Documents unless and until all of the Debtors' obligations under the Deutsche Bank Facility have been indefeasibly paid in cash in full and the DIP Lenders' commitments under the Deutsche Bank Facility have been terminated. (c) Interest/Fees The First Lien Administrative Agent will receive from the Debtors, for the account of the First Lien Secured Lenders, provisional cash payments of interest accruing at the non-default rate provided for under the First Lien Credit Agreement incurred prior to the Petition Date and thereafter with the interest to be paid on the first business day of each month. Reasonable fees to the extent payable under the First Lien Credit Agreement and the Second Lien Credit Agreement will also be paid to the First Lien Administrative Agent and its professionals and to the Second Lien Administrative Agent and its professionals. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Ct. OKs Appleton Sublease Over DBSI Objection ------------------------------------------------------------------ DBSI Housing, Inc., leases the warehouse space at 1100 Blake Street, in Edwardsville, Kansas, to Appleton Papers, Inc., pursuant to a lease agreement dated December 21, 1995. DBSI Housing does not consent to the Sublease Agreement. Marc S. Casarino, Esq., at White and Williams LLP, in Wilmington, Delaware, tells Judge Walrath that the proposed agreement Appleton Papers faxed to DBSI Housing was different from the Sublease Agreement presented to the U.S. Bankruptcy Court for the District of Delaware. Appleton Papers has not provided DBSI Housing with any further information about the proposed sublessee. DBSI Housing objects to the Bankruptcy Court's jurisdiction over the rights and obligations of the non-debtor third parties under the Master Lease. DBSI Housing does not: (i) submit to the Bankruptcy Court's jurisdiction over the Master Lease or any dispute arising thereunder relating to Appleton Papers' proposed subleasing of the Premises to the Debtors; and (ii) waive any, and expressly reserves all, of its rights, claims and defenses under the Master Lease, at law or in equity. Mr. Casarino says any disputes arising out of the Master Lease must be adjudicated in a non-bankruptcy proceeding or court of competent jurisdiction. * * * "Motion is granted," Judge Walrath rules. As previously reported in the Troubled Company Reporter on June 16, 2005, the Debtors seek authority from the U.S. Bankruptcy Court for the District of Delaware to enter into a sublease agreement with Appleton Papers, Inc., for 40,000 square feet of warehouse space and for the non-exclusive use of drive-in and dock doors. Appleton Papers currently leases space at a warehouse at 1100 Blake Street, Edwardsville, Kansas, pursuant to a lease agreement dated December 21, 1995, as amended, with Discovery Acquisitions, Inc. The Debtors will utilize the warehouse space for storing: (i) finished parts manufactured at the Kansas Facility and work-in-progress racks; and (ii) packaging and shipping parts to the Debtors' OEM customers. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Court Okays Mercer Human as Consultants ------------------------------------------------------------ Meridian Automotive Systems, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Mercer Human Resource Consulting, Inc., as human resource consultants in accordance with the revised Executive Compensation Services Agreement. At the hearing held on May 26, 2005, the Court sustained the U.S. Trustee's objection to the Debtors' application. Accordingly, Mercer removed the limitation of liability provision from its Engagement Letter. Consistent with past practice, Mercer intends to establish an additional independent review committee that is made up of professionals who are not part of the Meridian project team. The independent review committee will review the Debtors' retention plan proposals. Due to the increased amount of time involved in the independent review process, Mercer has increased its estimated fees for the Key Employee Retention Plan to approximately $60,000 and the Executive Compensation Review to $40,000. Responses (1) U.S. Trustee Kelly Beaudin Stapleton, the United States Trustee for Region 3, questions whether the proposed heightened level of review is reasonable in light of the Court's rejection of the limitation of liability provision, given that the Court's rejection of the liability cap is the sole basis cited for the 33% increase from the original compensation package. The U.S. Trustee is prepared to assess the reasonableness of Mercer's review process when it seeks compensation for its services. (2) Creditors Committee The Official Committee of Unsecured Creditors is disturbed by the proposed 33% increase in Mercer's estimate of fees for providing the same services to the Debtors. The Committee seeks the Court's permission to review any approved amendments to Mercer's application under Section 330 of the Bankruptcy Code. * * * Judge Walrath approves the Debtors' application. "[I]f Mercer reasonably believes that the initial fee estimates of $60,000, for providing services relating to the Key Employee Retention Plan, and $40,000, for providing services relating to the Executive Compensation Review, will increase by 100% or more, Mercer shall notify the Official Committee of Unsecured Creditors of such reasonable belief," Judge Walrath rules. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000). MILANO CONSTRUCTION: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Milano Construction Company, Inc. 6910 Maple Dearborn, Michigan 48126 Bankruptcy Case No.: 05-60133 Chapter 11 Petition Date: June 22, 2005 Court: Eastern District of Michigan (Detroit) Judge: Marci B. McIvor Debtor's Counsel: Michael L. Kalis, Esq. Michael L. Kalis & Associates, P.L.L.C. 3203 South Telegraph Dearborn, Michian 48124 Tel: (313) 277-0310 Total Assets: Unknown Total Debts: Unknown The Debtor's list of its 20 Largest Unsecured Creditors was not available at press time. MORGAN'S FOODS: Recurring Losses Trigger Going Concern Doubt ------------------------------------------------------------ Deloitte & Touche, LLP, expressed substantial doubt about Morgan's Foods, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Feb. 27, 2005. The auditing firm points to the Company's recurring losses, shareholders' capital deficiency and non- compliance with its debt agreements. Debt Agreements Beginning in the second half of fiscal 2005, the Company has engaged in discussions with its three primary lenders with the intent of securing short term, temporary reductions in its debt service payments to conserve cash and to allow the Company to execute sale/leaseback financing on a number of its owned restaurant properties. On Feb. 7, 2005, the Company reduced its debt service payments to interest only on loans with one lender representing 50.2% of the principal balance of all of the Company's loans. The Company expects to continue this reduced payment schedule until the financial restructuring is completed. Scheduled principal payments that have not been paid total approximately $110,000 per month. The Company received a letter of understanding from this lender, acknowledging the financial restructuring and confirming its intent to negotiate a formal agreement of forbearance. As of May 31, 2005, negotiation of a forbearance agreement has been initiated but not completed. Accordingly, the reduced payment schedule remains an event of default although the Company has no reason to believe that the lender intends to take actions permitted by that default. Sale Agreement On April 12, 2005, the Company signed an Agreement of Sale relating to a sale/ leaseback of ten of its restaurants; however, certain due diligence items remain before this transaction is finalized including inspections, appraisals, title work and finalization of the related leases. In addition, the prepayment penalty on the mortgage debt for these restaurants must be waived for the transaction to be financially viable for the Company. The sale-leaseback transactions, if successful, will generate proceeds to prepay a portion of the Company's debt and will result in cash flow improvement by replacing debt service with rent payments of a lesser amount. Management expects that it will be able to complete the financial restructuring successfully and is encouraged by the improved financial results generated by the previously disclosed organizational restructuring. Nonetheless, given the level of the Company's indebtedness and other demands on its cash resources, there can be no assurance that the Company's lenders will consent to the restructuring, that the restructuring will be accomplished, or that other actions might not be taken by creditors that would impede the Company's ability to satisfy its obligations. Going Concern Doubt Morgan's Foods' reduced debt payment schedule and covenant violations could result in the exercise of certain remedies available to the lender which may include calling of the debt, acceleration of payments or foreclosure on the Company's assets which secure the debt. The Company's other lenders have similar remedies available to them based on covenant violations and the cross default provisions of those debt agreements. The lenders have not initiated any of these remedies and management believes, but cannot assure, that these actions will not be taken prior to the Company completing the financial restructuring described above. However, the recurring losses from operations and shareholders' deficiency that the Company has sustained result in significant uncertainty as to the Company's ability to complete the financial restructuring if the lenders initiate these remedies. Consequently, there is substantial doubt that the Company will be able to continue as a going concern and therefore, if applicable, the Company may be unable to realize its assets and discharge its liabilities in the normal course of business. About the Company Morgan's Foods, Inc., operates through wholly owned subsidiaries KFC restaurants under franchises from KFC Corporation, Taco Bell restaurants under franchises from Taco Bell Corporation, Pizza Hut Express restaurants under licenses from Pizza Hut Corporation and an A&W restaurant under a license from A&W Restaurants, Inc. As of May 27, 2005, the Company operates 73 KFC restaurants, 7 Taco Bell restaurants, 14 KFC/Taco Bell "2n1"s under franchises from KFC Corporation and franchises or licenses from Taco Bell Corporation, 3 Taco Bell/Pizza Hut Express "2n1"s under franchises from Taco Bell Corporation and licenses from Pizza Hut Corporation, 1 KFC/Pizza Hut Express "2n1" under a franchise from KFC Corporation and a license from Pizza Hut Corporation and 1 KFC/A&W "2n1" operated under a franchise from KFC Corporation and a license from A&W Restaurants, Inc. At Feb. 27, 2005, Morgan's Foods, Inc.'s balance sheet showed a $4,574,000 stockholders' deficit, compared to a $2,716,000 deficit at Feb. 29, 2004. MYSTIC TANK: Officially Emerges From Chapter 11 ----------------------------------------------- Mystic Tank Lines Corp.'s reorganization plan to emerge from Chapter 11 was confirmed by the court and payment to creditors will be made over the next several weeks. Recognizing the responsibility associated with supporting the infrastructure of the heating oil, motor fuel, aviation fuel, asphalt and cement materials industries, the Company diligently worked to control costs and maintain operational excellence resulting in a strong, stable, financially sound organization. Mystic has solidified a strong financial relationship with Northfork Bank and has the necessary commitments to concentrate on core business competencies. "Although this has been a difficult period, I thank our dedicated employees and loyal customers for their support," Leonard Baldari, President and CEO, said. "Throughout this reorganization, Mystic's commitment and dedication to its customers has never changed. The company will continue to operate and service its customers from our existing network of four strategically placed terminal facilities. I'm confident our financial strength and official emergence from Chapter 11 will afford us the opportunity to stay focused on best practices and continuous dedication to professionally servicing the needs of the industry. Again, Mystic thanks our customers, employees, creditors and other involved parties for their cooperation and support during this difficult period." Mystic Tank Lines Corp. is one of the largest transporters of Gasoline, Jet Fuel, Oil Products, Cement and Asphalt in the Northeastern United States. Headquartered in Matawan, New Jersey, Mystic Tank Lines Corp. -- http://www.mystictanklines.com/-- is one of the largest transporters of Gasoline, Jet Fuel, Oil Products, Cement and Asphalt in the Northeastern United States. The Company filed for chapter 11 protection (Bankr. D.N.J. Case No. 04-28333) on June 1, 2004. Albert A. Ciardi, III, Esq., at Janssen Keenan & Ciardi, P.C., represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed both estimated debts and assets of over $1 million. NATIONAL CENTURY: LTC Entities Appeal Bankr. Court's Injunction --------------------------------------------------------------- Long Term Care Management, Inc., Quality Long Term Care Management, Inc., and Quality Long Term Care, Inc., will take an appeal from Judge Calhoun's Order enjoining them from taking any further action in their adversary proceeding against National Century Financial Enterprises, Inc., and its debtor-affiliates to the U.S. District Court for the Southern District of Ohio. 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. Statement of Issues Pursuant to Rule 8006 of Federal Rules of Bankruptcy Procedure, the LTC Entities ask the District Court to review six issues: (1) Whether the LTC Entities may be enjoined from seeking declaratory relief to determine their rights and the rights of NPF XII and National Century Financial Enterprises, Inc., in the exercise of post-confirmation jurisdiction by the U.S. Bankruptcy Court for the District of Nevada that presided over the LTC Entities' bankruptcy proceedings when the injunction is sought by the NPF and NCFE Debtors in the Debtors' subsequent bankruptcy proceedings in a different judicial district; (2) Whether the Ohio Bankruptcy Court committed error in interpreting the plans and confirmation orders; (3) Whether the Ohio Court committed error in interpreting the Bankruptcy Code and Rules; (4) Whether the doctrine of comity required the Ohio Court to refrain from enjoining the proceedings in the District of Nevada; (5) Whether the LTC Entities' claims against the Debtors should have been raised in the LTC Entities' bankruptcy proceedings in the District of Nevada or the Debtors' bankruptcy proceedings in the Southern District of Ohio; and (6) Whether the Ohio Court committed error in sanctioning the LTC Entities and finding them in contempt, especially when the Ohio Court acknowledged that "[t]his situation poses a unique set of circumstances." 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. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) NOBLE DREW: U.S. Trustee Picks Three-Member Creditors Committee --------------------------------------------------------------- The United States Trustee for Region 2 appointed three creditors to serve on an Official Committee of Unsecured Creditors in Noble Drew Ali Plaza Housing Corp.'s chapter 11 case: 1. Local 32BJ Service Employees International Union AFL-CIO Attn: Elizabeth A. Baker, Associate General Counsel 101 Avenue of the Americas New York, NY 10013 Tel. No. (212) 388-2060 2. S & G Building Repairs Attn: Stanley Smith 4333 White Plains Road Bronx, NY 10466 Tel. No. (718) 325-9507 3. Noble Drew Ali Tenants Association, Inc. Attn: Paulette Forbes 37 New Lots Avenue, #2G Brooklyn, NY 11233 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Headquartered in Brooklyn, New York, Noble Drew Ali Plaza Housing Corp., filed for chapter 11 protection on March 25, 2005 (Bankr. S.D.N.Y. Case No. 05-11915). Gerard R. Luckman, Esq., at Silverman Perlstein & Acampora, LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $43,500,000 and total debts of $18,639,981 NORTHERN BERKSHIRE: Recurring Losses Cue S&P to Cut Rating to BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating to 'BB-' from 'BB' on the Massachusetts Health and Educational Facilities Authority's series 2004 A and B revenue bonds issued for Northern Berkshire Health Systems Inc. and the series 1996C revenue bonds issued for North Adams Regional Hospital. The outlook is negative. "The lower rating and negative outlook reflect NBHS' persistent losses in fiscal 2004 and the first six months of fiscal 2005," said Standard & Poor's credit analyst Jennifer Soule. Management anticipates that fiscal 2005 results may cause a bond covenant violation and has proactively eliminated management positions and hired Cambio, a management-consulting firm known for hospital turnaround engagements, to help improve the system's overall financial position. Other rating factors include NBHS' highly leveraged position and utilization volumes that continued to decline during fiscal 2004 and interim 2005. NBHS' obligated group includes North Adams Regional Hospital, Northern Berkshire Community Services Inc., the Visiting Nurses Association and Hospice of Northern Berkshire, REACH Community Health Foundation Inc., and Northern Berkshire Realty Inc. Non- obligated entities are minimal. NBHS' debt is secured by the gross revenues pledge of the obligated group and by the mortgages on the North Adams Regional Hospital and Northern Berkshire Community Services Inc. facilities. The negative outlook reflects NBHS' inability to improve system performance and its anticipated debt service covenant violation. Although Standard & Poor's expects that NBHS will benefit from Cambio's overall recommendations, this remains to be proven and the potential benefits will be reevaluated when further information is available. OLD MET BBQ LLC: Case Summary & 3 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Old Met BBQ LLC 6121 Excelsior Boulevard, Unit 201 Saint Louis Park, Minnesota 55416 Bankruptcy Case No.: 05-44080 Type of Business: The Debtor owns and operates Famous Dave's BBQ Restaurant in Mall of America. The Debtor also owns franchise and licenses in an adjacent restaurant known as Kokomo's Island Cafe. Chapter 11 Petition Date: June 23, 2005 Court: District of Minnesota Judge: Robert J. Kressel Debtor's Counsel: Brian F. Leonard, Esq. Leonard, O'Brien, Spencer, Gale & Sayre, Ltd. 100 South Fifth Street, Suite 2500 Minneapolis, Minnesota 55402 Tel: (612) 332-1030 Fax: (612) 332-2740 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ MOAC Rent $178,122 National City Center 115 Washington West Indianapolis, IN 46204 Attn: Amanda Walter Tel: (317) 636-1600 MOAC Rent $126,303 National City Center 115 Washington West Indianapolis, IN 46204 Attn: Amanda Walter Tel: (317) 636-1600 US Food Service Trade Debt $106,256 2864 Egandale Boulevard Eagan, MN 55121 Attn: Larry Kouba Tel: (651) 454-6580 ORBIT BRANDS: Executes Term Sheet to Pay Professionals ------------------------------------------------------ Orbit Brands Corporation (NASDAQ:OBTV) executed a term sheet providing for an immediate infusion of $100,000 to be used for the retention and payment of professionals needed to facilitate its restructuring through a bankruptcy plan of reorganization. The Company expects to file its proposed disclosure statement and reorganization plan over the summer, and to emerge from the Chapter 11 case shortly thereafter. Orbit Brands Corporation -- http://www.orbitbrandscorp.com/-- is a publicly traded Delaware Corporation listed on the NASDAQ. The primary focus of the Company is growth via the acquisition and development of early stage high growth companies in the technology, health and fitness, and consumer goods industries. Three of Orbit Brands' creditors, represented by Simon J. Dunstan, Esq., at Hughes & Dunstan, LLP, filed an involuntary chapter 11 petition against the company on June 25, 2004 (Bankr. C.D. Calif., L.A. Div., Case No. 04-24171. On Dec. 14, 2004, the Company consented to entry of an order for relief by filing a voluntary Chapter 11 petition. Orbit Brands says that it elected to file for chapter 11 protection to bring a halt to vexatious litigation in several states and to protect the interests of shareholders and legitimate creditors. Orbit Brands has filed its Schedules of Assets and Liabilities and Statement of Financial Affairs, and a creditors committee has been appointed to represent the interests of the Company's unsecured creditors. OWENS CORNING: Court Extends Exclusive Solicitation Period ---------------------------------------------------------- Owens Corning and its debtor-affiliates' prepetition lender banks consented to the further extension of the period within which the Debtors have the exclusive right to solicit acceptances to their Fourth Amended Plan of Reorganization. Accordingly, the U.S. Bankruptcy Court for the District of Delaware extends the Solicitation Period until the date of the first regularly scheduled omnibus hearing that is at least 45 days after the Third Circuit's decides on the Banks' appeal of the District Court's October 5, 2004, order granting the Debtors' request for the substantive consolidation of their estates. As reported in the Troubled Company Reporter on Oct. 19, 2004, Credit Suisse First Boston, as Agent for a consortium of prepetition bank lenders to Owens Corning and certain of its affiliates, delivered Notices of Appeal to the U.S. Bankruptcy Court and U.S. District Court for the District of Delaware indicating its intent to take an appeal from Senior U.S. District Judge John P. Fullam's Order dated Oct. 5, 2004, directing substantive consolidation of Owens Corning's estates, to the United States Court of Appeals for the Third Circuit. Credit Suisse wants the Third Circuit to overturn Judge Fullam's order authorizing substantive consolidation now. The Plan Proponents want the Third Circuit to defer any ruling until a confirmation order for a plan of reorganization providing for substantive consolidation is entered. If, however, the Appellate Court is inclined to review Judge Fullam's interlocutory ruling, the Plan Proponents ask the Court to uphold the ruling. As previously reported in the Troubled Company Reporter, Judge Fullam delivered a non-fatal blow to the holders of Owens Corning's bank debt when he released his decision that the Debtors' estates should be substantively consolidated, meaning all rolled into one. The effect of that substantive consolidation would be to effectively eliminate any structural priority the banks obtained when they lent money to Owens Corning subsidiaries and obtained guarantees from other Owens Corning entities. The Banks say that treating them pari passu with Owens Corning's other unsecured creditors deprives them of nearly $1 billion in value. A copy of Judge Fullam's 8-page ruling is available at no charge at: http://bankrupt.com/misc/OWC_Substantive_Consolidation.pdf Judge Fullam found a substantial identity between Owens Corning entities. Judge Fullam said it was impossible for the Banks to have relied on the separate creditworthiness of any one borrower. The cross-guarantees, Judge Fullam reasoned, also militated in favor of substantive consolidation. Judge Fullam made it clear that though substantive consolidation is justified, this does not mean that the Banks must be treated pari passu with all other unsecured claims. Judge Fullam suggests there may be a middle-of-the-road approach to treating the Banks claims in the context of a consensual chapter 11 plan. Judge Fitzgerald directs the Debtors to file and serve a written motion to extend the Solicitation Period at least 25 days prior to the Exclusivity Hearing. 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. 110; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLAZA GARDENS: Wants to Hire McDowell Rice as Bankruptcy Counsel ---------------------------------------------------------------- Plaza Gardens South of Overland Park, Inc. asks the U.S. Bankruptcy Court for the District of Kansas for permission to employ McDowell Rice Smith and Buchanan as its general bankruptcy counsel. McDowell Rice is expected to: a) assist and advise the Debtor with respect to its duties and responsibilities as a debtor-in-possession in the continued operation and management of its business and property; b) take all necessary actions to protect and preserve the Debtor's estate, including the prosecution of actions on its behalf, the defense of any actions commenced against the estate, negotiations concerning litigation in which the Debtor may be involved, and objections to claims filed against the estate; c) prepare on behalf of the Debtor all necessary motions, applications, answers, orders, reports, and papers necessary to the administration of the estate; and d) perform all other legal services that are necessary or appropriate in connection. Donald G. Scott, Esq., a Member at McDowell Rice, is the lead attorney for the Debtor. Mr. Scott discloses that the Firm received a $25,000 retainer. Mr. Scott reports McDowell Rice's professionals bill: Designation Hourly Rate ----------- ----------- Shareholders $180 - $350 Associates $120 - $200 Paralegals $50 - $95 McDowell Rice assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Overland Park, Kansas, Plaza Gardens South of Overland Park, Inc. owns and operates apartments. The Company filed for chapter 11 protection on June 22, 2005 (Bankr. D. Kans. Case No. 05-22876). When the Debtor filed for protection from its creditors, it listed total assets of $24,000,000 and total debts of $23,656,284. PLAZA GARDENS: Section 341(a) Meeting Slated for July 18 -------------------------------------------------------- The U.S. Trustee for Region 20 will convene a meeting of Plaza Gardens South of Overland Park, Inc.'s creditors at 10:00 a.m., on July 18, 2005, at 161 Robert J. Dole US Courthouse, 500 State Avenue Room 173, Kansas City, Kansas 66101. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Overland Park, Kansas, Plaza Gardens South of Overland Park, Inc. owns and operates apartments. The Company filed for chapter 11 protection on June 22, 2005 (Bankr. D. Kans. Case No. 05-22876). Donald G. Scott, Esq., at McDowell Rice Smith and Buchanan represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $24,000,000 and total debts of $23,656,284. POLYAIR INTER: Wants Amendments to Financial Covenants Extended --------------------------------------------------------------- Polyair Inter Pack Inc. (TSX:PPK)(AMEX:PPK) reported a net loss of $1.6 million on sales of $58.1 million for the quarter ended April 30, 2005, compared with net income of $1.5 million on sales of $56.4 million for the second quarter of 2004. Losses incurred in the quarter have resulted in the Company not being in compliance with its debt and interest service covenants. The Company's lenders have amended these covenants as at April 30, 2005, so that the Company will not be in default. The Company is in discussions with its lenders to extend the amendments on a going forward basis to enable the Company to remain in compliance. "The accumulated losses in the pool division have resulted in the Company having had to advise its operating lender syndicate that it was not in compliance with its minimum debt and interest service covenants as at April 30, 2005," Henry Schnurbach, the Company's President and Chief Executive Officer, said. "The Company has obtained an amendment of these covenants so that it is no longer in default and it is renegotiating its financial covenants for the upcoming quarters during the term of the existing loan agreement, which is due for renewal on Nov. 1, 2005. The Company is also considering additional financing options as a means to assure the availability of capital to grow and operate its business. Polyair Inter Pack Inc. -- http://www.Polyair.com/-- in its Polyair Packaging and Cantar Pool Products divisions manufactures and distributes a wide range of protective packaging products and swimming pool products. These products are sold to distributors and retailers across North America. The company operates eleven manufacturing facilities, seven of which are in the US where it generates the majority of its sales. The shares are listed on both the Toronto Stock Exchange and the American Stock Exchange under the symbol "PPK". Q COMM: Restates Financial Reports Due to Possible Weakness ----------------------------------------------------------- Q Comm International, Inc. (Amex: QMM; QMM.WS), a provider of prepaid transaction processing and electronic point-of-sale (POS) distribution solutions, will restate the financial information presented in the Company's 2004 Annual Report on Form 10-KSB and first quarter 2005 Form 10-Q. As such, the Company's financial information in the 2004 Form 10-KSB and the first quarter 2005 Form 10-Q should no longer be relied upon. Under Public Company Accounting Oversight Board Auditing Standard No. 2, the restatement of the Company's financial statements is a strong indicator that a material weakness in internal control over financial reporting exists. The Company's management is reviewing its disclosure and internal controls over financial reporting to remediate the situation. Q Comm has determined to change its revenue recognition policy on sales of consigned PINs based on a previously announced comment letter from the Securities and Exchange Commission, in which the SEC set out its position that the revenue from sales of consigned PIN inventory should be recorded on a net basis rather than a gross basis. The Company expects the impact of this change to reduce 2004 revenue to between $18 and $20 million from $41 million, and reduce first quarter 2005 revenue to between $9 and $10 million from $15 million. There will be a corresponding reduction in operating expenses for each of the periods and therefore, as a result of this change in presentation, net loss for those periods should remain the same. This change will have no impact on the Company's assets, liabilities or equity for those periods. Additionally, on June 21, 2005, Q Comm's management determined that its former CFO, who left the Company as of May 31, 2005, acted without authorization in advancing $1,525,000 to a supplier for the supplier's purchase of telephones. This full amount remains due to Q Comm, and the Company's Dec. 31, 2004 and March 31, 2005 balance sheets erroneously reflected repayment of $925,000 of this amount in its cash and other assets accounts. The Company intends to take possession of the telephones and sell them in the open market. If the sale of these telephones does not generate sufficient funds, the Company's total assets may have been overstated by as much as $925,000 as of Dec. 31, 2004, and March 31, 2005. The Company will be required to restate and amend its 2004 Form 10-KSB and its first quarter 2005 Form 10-Q for these developments. While the Company is not aware of any other accounting issues requiring adjustment to any prior period financial statements, there can be no assurance that the Company or its independent registered public accounting firm will not find additional accounting issues requiring adjustment as the investigation and restatement process is completed. Q Comm International -- http://www.qcomm.com/-- is a prepaid transaction processor that electronically distributes prepaid products from service providers to the point of sale. Q Comm offers proprietary prepaid transaction processing platforms, support of various point-of-sale (POS) terminals, product management, merchandising, customer support and engineering. Q Comm systems replace traditional hard cards (also known as scratch cards or voucher) that are costly to distribute, and provide more comprehensive reporting and inventory management among other benefits. Q Comm's solutions are currently used by wireless carriers or mobile operators, telecom distributors, and various retailers to sell a wide range of prepaid products and services including prepaid wireless or prepaid mobile, prepaid phone cards, prepaid dial tone and prepaid bank cards, such as prepaid MasterCard. REGIONAL DIAGNOSTICS: Wants Until Plan Filing to Decide on Leases ----------------------------------------------------------------- Regional Diagnostics, L.L.C., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Ohio to extend, until the date they file a plan of reorganization, the period within which they can elect to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors explain that they are currently parties to 27 unexpired nonresidential real property leases located in Florida, Illinois, Ohio and Pennsylvania. The Debtors give the Court three reasons why the lease decision extension is warranted: 1) they are still evaluating and determining which of the businesses that they operate from the leased facilities might be sold as going concerns; 2) the requested extension will afford the Debtors more time to evaluate the 27 unexpired leases in conjunction with their businesses and any purchase offers from potential buyers, thereby maximizing the value of each unexpired lease to their estates; and 3) the requested extension will not prejudice the landlords of the unexpired leases because they are current on all post- petition rent obligations under the leases. Headquartered in Warrensville Heights, Ohio, Regional Diagnostics, L.L.C. -- http://www.regionaldiagnostic.com/-- owns and operates 27 medical clinics located in Florida, Illinois, Indiana, Ohio and Pennsylvania. The Company and its debtor-affiliates filed for chapter 11 protection on April 20, 2005 (Bankr. N.D. Ohio Case No. 05-15262). Jeffrey Baddeley, Esq., at Baker & Hostetler LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets of $10 million to $50 million and debts of $50 million to $100 million. ROYAL GROUP: Dual Class Share Structure Collapses ------------------------------------------------- Royal Group Technologies Limited (RYG.SV - TSX; RYG - NYSE) reported that following the conversion on June 22, 2005, of all outstanding multiple voting shares to subordinate voting shares, the Company has filed the articles of amendment approved by the shareholders on May 25, 2005, with the effect that the Company now has only one class of voting common shares. Delivery of subordinate voting share certificates will continue to be good delivery for settlement of trades of common shares of the TSX and NYSE. As reported in the Troubled Company Reporter on May 30, 2005, holders of all outstanding multiple voting shares, including the company's controlling shareholder, Mr. Vic De Zen, have agreed to convert all such shares to subordinate voting shares. Upon the filing of articles of amendment in accordance with the special resolution, all outstanding subordinate voting shares will be designated common shares. Delivery of subordinate voting share certificates will continue to be good delivery for settlement of trades of common shares of the TSX and NYSE. Royal Group Technologies Limited -- http://www.royalgrouptech.com/ -- manufactures innovative, polymer-based home improvement, consumer and construction products. The company has extensive vertical integration, with operations dedicated to provision of materials, machinery, tooling, real estate and transportation services to its plants producing finished products. Royal Group's manufacturing facilities are primarily located throughout North America, with international operations in South America, Europe and Asia. * * * As reported in the Troubled Company Reporter on May 11, 2005, Standard & Poor's Ratings Services lowered its long-term corporate credit and senior unsecured debt ratings on Royal Group Technologies Ltd. to 'BB' from 'BBB-'. At the same time, Standard & Poor's removed its ratings on Royal Group from CreditWatch, where they were placed with negative implications Oct. 15, 2004. The outlook is currently negative. The ratings reflect a transitioning management team, and short- term problems such as weak liquidity, weak internal controls, and near-term refinancing requirements. The ratings also reflect longer-term issues such as weakening profitability and a low return on capital. These risks are partially offset by the company's adequate annualized cash flow protection and moderate leverage. "Although the moderate debt leverage, steady free cash flow generation, and an underlying solid business profile have supported the ratings through a very difficult year, we now believe that the distractions caused by the criminal investigations and governance problems have resulted in (and exposed) both short- and long-term problems," said Standard & Poor's credit analyst Daniel Parker. "Accordingly, the overall business and financial profile do not currently support an investment-grade rating," added Mr. Parker. Despite significant improvement with regards to corporate governance, the company is still in transition as it seeks to hire a permanent chief executive officer and chief financial officer. The company has also proposed five new independent candidates to join the board following its annual general meeting. S&P believes it will take at least several quarters before new management and the board decide on any major strategic decisions, and before new management would be able to learn the business. The company has multiple business lines and requires a continued focus on efficiencies and operations to maintain its competitive position. In addition, the required initiatives to address the short-term issues could take at least several quarters. The outlook is negative. If the company does not address its weak liquidity and inefficient debt structure in the next eight months, the ratings could be lowered further. The current ratings can tolerate weak profitability and cash flow in the medium term, but only under the assumption that financial performance trends will not further deteriorate. Standard & Poor's believes profitability will be hampered by: (1) high resin prices, (2) a strong Canadian dollar, and (3) the potentially negative effects of rising interest rates on the housing and home renovation markets. SATELITES MEXICANOS: Has Until July 7 to Answer Ch. 11 Petition --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended, until July 7, 2005, the time within which Satelites Mexicanos, S.A. de C.V. must respond to an involuntary bankruptcy petition filed in May by the Company's U.S.-based noteholders. As reported by the Troubled Company Reporter on May 27, 2005, a group of secured and unsecured noteholders, holding in excess of US$379 million of the Company's outstanding notes, filed an involuntary chapter 11 petition with the U.S. Bankruptcy Court. In their Petition, the noteholders asked the Court to waive the customary exclusivity period given to the Company in order to implement a comprehensive debt-restructuring plan that is supported by creditors holding more than two-thirds in amount of the Company's debts. Headquartered in Mexico, Satelites Mexicanos, S.A. de C.V., derives over 50% of its revenues from United States business, and all of the Company's over US$500 million in debt was issued in the United States and is governed by New York law. The Company's largest shareholder, Loral Space & Communications Ltd., is a United States public company also undergoing a Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York. The Company was forced into chapter 11 by three noteholders on May 25, 2005 (Bankr. S.D.N.Y. Case No. 05-13862). The noteholders are represented by Wilmer Cutler Pickering Hale and Dorr LLP and Akin Gump Strauss Hauer & Feld LLP. SHAWN ANTLE: Case Summary & 22 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Shawn Douglas & Lisa Lauren Antle 3915 North Ridgefield Circle Shorewood, Wisconsin 53211-2451 Bankruptcy Case No.: 05-30533 Chapter 11 Petition Date: June 23, 2005 Court: Eastern District of Wisconsin (Milwaukee) Judge: Susan V. Kelley Debtor's Counsel: Leonard G. Leverson, Esq. Kravit, Hovel, Krawczyk & Leverson, S.C. 825 North Jefferson, Suite 500 Milwaukee, Wisconsin 53202-3737 Tel: (414) 271-7100 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 22 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ First Tennessee Bank $67,458 C/o Allied International Credit 2101 West Peoria, Suite 120 Phoenix, AZ 85029 Discover Bank $49,800 c/o Kohn Law Firm, SC Attn: Matthew J. Richburg, Esq. 312 East Wisconsin Avenue, Suite 501 Milwaukee, WI 53202 MBNA America $40,896 Payment Services 1000 Samoset Drive Wilmington, DE 19884 MBNA America $31,572 Carol Anderson $29,000 Harry Lohr $28,500 Citibank $25,368 Citibank $21,201 Carol Fritts $21,000 Martin Campbell $20,500 Sears $15,200 Citibank $13,814 Target/Retailers' National Bank $9,750 UW Credit Union $7,455 Westridge Agriservices $5,000 Rush Behavioral Health $4,000 Talbots $3,100 Skipper Bud's Service Center $2,800 Dr. M.A. Houghton $2,586 Dr. R. Welker $2,400 Dr. Linda Zetley $1,400 Dr. E. Frankel $1,026 SEARS HOLDINGS: Third Avenue Acquires 140,000 Shares for $2MM ------------------------------------------------------------- As previously reported in the Troubled Company Reporter on February 11, 2005, James F. Gooch, Vice President and Controller of Kmart Holding Corporation informed the Securities and Exchange Commission that on January 31, 2005, Kmart entered into an agreement with Sears Holdings Corporation, and the ESL Companies composed of ESL Partners, L.P., ESL Investors, L.L.C., ESL Institutional Partners, L.P. and CRK Partners II, L.P. The ESL Companies are controlled, directly or indirectly, by ESL Investments, Inc., which in turn is controlled by Edward S. Lampert, the Chairman of Kmart. Pursuant to the Agreement, the ESL Companies converted, in accordance with the terms of the notes, all of Kmart's outstanding 9% convertible subordinated notes into an aggregate of 6,269,998 shares of Kmart common stock, plus cash in lieu of fractional shares. In consideration of this conversion, the ESL Companies received an aggregate payment from Kmart of $3.3 million in cash. This cash payment is approximately equivalent to the discounted, after-tax cost of the future interest payments that would have otherwise been paid by Kmart to the ESL Companies in the absence of the conversion. The conversion is calculated by multiplying the present value of the interest payments by one less an assumed effective tax rate for Kmart. * * * Sears Holdings Corporation vice president and controller, William K. Phelan, discloses with the Securities and Exchange Commission that on March 25, 2005, ESL Investments, Inc., exercised an option to purchase 6.5 million shares of Sears Holdings common stock granted pursuant to an investment agreement dated January 24, 2003, between Kmart Corporation, ESL and Third Avenue Trust, on behalf of certain of its investment series. In accordance with the Investment Agreement, Sears Holdings issued shares of its common stock on the receipt of $84 million. As a result of these transactions, ESL and its affiliates do not own any more options to purchase shares of Sears Holdings pursuant to the Investment Agreement. On April 26, 2005, Third Avenue exercised options to purchase 140,000 shares of Sears Holdings common stock for a purchase price of $2 million. Third Avenue acquired the options pursuant to an assignment and assumption agreement, dated May 5, 2003, with ESL. According to Mr. Phelan, all of the options assigned to Third Avenue under the Assignment and Assumption Agreement were exercised as a result of the transaction. Sears Holdings Corporation -- http://www.searshc.com/-- is the nation's third largest broadline retailer, with approximately $55 billion in annual revenues, and with approximately 3,800 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. (Kmart Bankruptcy News, Issue No. 96; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on March 31, 2005, Moody's Investors Service affirmed the Ba1 senior implied rating of Sears Holding Corporation. Moody's said the rating outlook is stable. Ratings assigned: Sears Holdings Corporation * Senior implied rating at Ba1; * Senior unsecured issuer rating at Ba1; and * $4 billion senior secured revolving credit facility at Baa3. As reported in the Troubled Company Reporter on March 30, 2005, Fitch Ratings assigned a 'BB' rating to Sears Holdings senior unsecured debt, with a negative outlook. At the same time, Standard & Poor's assigned its 'BB+' corporate credit rating to Sears Holdings, with a negative outlook. SECURITY CAPITAL: AMEX Halts Stock Trading ------------------------------------------ The American Stock Exchange halted trading of Security Capital Corporation's (AMEX: SCC) shares on June 22, 2005, due to a marked increase in the trading price and a higher than average trading volume of the shares. The Company knows of no corporate reason for such volatility of its stock. As the Company announced on June 7, 2005, the Board of Directors, upon the recommendation of the Special Committee of the Board of Directors, has switched to a formal sale process for the Company and has retained UBS Securities LLC to conduct the process. As the Company announced on June 13, 2005, the Company received a revised offer from Robert J. Bossart, Jonathan R. Wagner, Richard T. Kurth and certain other current and former members of the senior management team of CompManagement, Inc., along with their other equity partners, to acquire all of the outstanding capital stock of the Company at a price of $13.00 per share and referred such offer to UBS Securities LLC for consideration in connection with the formal sale process. The Company said it does not intend to make any further announcements regarding the receipt of future offers. In addition, the Company does not intend to update the market with respect to any further developments relating to the formal sale process until it is appropriate to do so. Filing Delays The filing of the Company's Form 10-Q for the quarter ended Sept. 30, 2004, was delayed as a result of the Company's previously announced internal investigation. The investigation was completed, and the Third Quarter Form 10-Q was filed on March 11, 2005. As a result of the delayed filing of the Third Quarter Form 10-Q, the Company needs additional time to complete its 2004 Form 10-K. The Company had expected to file its First Quarter Form 10-Q by June 15, 2005. The delay in filing the First Quarter Form 10-Q is due to the continued delay in the filing of the 2004 Form 10-K and the Company's need to select a new independent registered public accounting firm to replace Ernst & Young LLP, the Company's principal accountant, upon the completion of the Company's 2004 audit, which declined to stand for re-appointment as the Company's principal accountant. The Company says it will not be able to retain an independent registered public accounting firm to replace Ernst & Young until immediately following the filing of the 2004 Form 10-K. Security Capital Corporation operates as a holding company and participates in the management of its subsidiaries, WC Holdings, Primrose Holdings Inc. and Pumpkin Masters Holdings Inc. WC is an 80%-owned subsidiary that provides cost-containment services relative to direct and indirect costs of corporations and their employees primarily relating to industrial health and safety, industrial medical care and workers' compensation insurance. WC's activities are primarily centered in California, Ohio, Virginia, Maryland and, to a lesser extent, in other Middle Atlantic states, Indiana and Washington. Primrose is a 98.5%- owned subsidiary involved in the franchising of educational childcare centers. Primrose schools are located throughout the United States, except in the Northeast and Northwest. Pumpkin is a wholly owned subsidiary engaged in the business of designing and distributing Halloween-oriented pumpkin carving kits and related accessories. SOLECTRON CORP: Incurs $67 Million GAAP Loss in Third Quarter ------------------------------------------------------------- Solectron Corporation (NYSE:SLR) reported sales of $2.60 billion in the third quarter of fiscal 2005. Sales in the third quarter of fiscal 2004 were $3.03 billion, and sales in the second quarter of fiscal 2005 were $2.76 billion. The company reported a GAAP loss from continuing operations in the third quarter of $67 million, or 7 cents per share, compared with a GAAP loss from continuing operations of $65 million, or 8 cents per share, in the third quarter of last year. The company had non-GAAP net income from continuing operations of $36 million, or 4 cents per share, excluding $103 million of charges. The company recorded a restructuring charge of $41 million and a charge of $45 million related to the redemption of $500 million of senior notes, which was completed on May 20. In addition, the company recorded a charge of $17 million principally related to ongoing tax audits of its Brazilian operation. The company reported sequentially lower revenues as strength in computing and storage, communications, industrial and automotive was offset by weaker demand in the networking and consumer markets. "We are pleased that in a lower revenue environment we delivered profitability within our guidance and achieved strong cash flow generation again this quarter," said Mike Cannon, president and chief executive officer. "Recent business wins demonstrate the robustness of our growing pipeline of revenue opportunities. As these wins ramp in future quarters, Solectron is well positioned for a stronger fiscal 2006." Quarterly Highlights The company made further improvements in working capital during the quarter. Days sales outstanding were 46 days and days payables outstanding improved to 50 days. Inventory turns improved to 8.1 and the company's cash conversion cycle was 41 days, an improvement of three days from the prior period. Capital expenditures were $36 million and depreciation and amortization was $45 million. Fourth-Quarter 2005 Guidance Fiscal fourth-quarter guidance is for sales of $2.4 billion to $2.6 billion, and for non-GAAP EPS from continuing operations to range from 3 cents to 5 cents, on a fully diluted basis. On April 29, 2005, the company announced a restructuring plan with associated charges estimated to range between $100-115 million (including the $41 million charge noted above) and an expected completion date in the third quarter of fiscal 2006. A portion of the estimated charges for this restructuring plan will be recorded in the fourth quarter of fiscal 2005 and is excluded in calculating non-GAAP EPS. Solectron Corporation -- http://www.solectron.com/-- provides a full range of worldwide manufacturing and integrated supply chain services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, product manufacturing, and product warranty and end-of-life support. The company is based in Milpitas, California, and had sales from continuing operations of $11.64 billion in fiscal 2004. * * * As reported in the Troubled Company Reporter on Jan. 13, 2005, Fitch Ratings affirmed Solectron Corporation's debt ratings: -- 'BB-' senior unsecured debt; -- 'BB+' senior secured bank credit facility; -- 'B' subordinated debt. Fitch says the Rating Outlook is Stable. Approximately $1.2 billion of debt is affected by Fitch's action. SOLUTIA INC: Arklow Replaces Candlewood in Equity Committee ----------------------------------------------------------- The United States Trustee for Region 2 advises the Court that Arklow Capital, LLC, is now a member of the Official Committee of Equity Security Holders of Solutia, Inc., and its debtor- affiliates. Arklow replaces Candlewood Capital Management. The Equity Committee comprises of: 1. Couchman Partners, LP 800 Third Avenue, 31st Floor New York, New York 10022 Attention: Jonathan M. Couchman Tel. No. (212) 287-0725 2. Arklow Capital, LLC 237 Park Avenue, 9th Floor New York, New York 10017 Attention: Brian O'Donoghue Tel. No. (212) 808-3781 3. Prescott Group Capital Management, LLC 1924 South Utica, Suite 1120 Tulsa, Oklahoma 74104 Attention: Jeffrey D. Watkins Tel. No. (918) 747-3412 4. Franklin Advisors, Inc. One Franklin Parkway San Mateo, California 94403 Attention: Richard L. Kuersteiner Tel. No. (650) 312-4525 5. D.C. Capital Advisors, Limited 800 3rd Avenue, 40th Floor New York, New York 10022 Attention: Douglas L. Dethy Tel. No. (212) 446-9330 Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. (Solutia Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945- 7000) SOUNDVIEW HOME: Fitch Puts Low-B Ratings on $32M Class B Certs. --------------------------------------------------------------- Soundview asset-backed certificates, series 2005-A which closed on June 23, 2005, is rated by Fitch Ratings: -- $418.6 million class A 'AAA'; -- $30.5 million class M-1 'AA+'; -- $28.2 million class M-2 'AA+'; -- $18.2 million class M-3 'AA+'; -- $17.2 million class M-4 'AA'; -- $15.6 million class M-5 'AA'; -- $15.6 million class M-6 'AA-'; -- $13.9 million class M-7 'A+'; -- $12.3 million class M-8 'A'; -- $12 million class M-9 'A-'; -- $11 million class M-10 'BBB+' (144A); -- $10.7 million class M-11 'BBB' (144A); -- $13.6 million class B-1 'BBB-' (144A); -- $11.3 million class B-2 'BB+' (144A); -- $11 million class B-3 'BB' (144A); -- $9.7 million class B-4 'BB-' (144A); The 'AAA' rating on the senior certificates reflects the 40.45% total credit enhancement provided by the 4.70% class M-1, the 4.35% class M-2, the 2.80% class M-3, the 2.65% class M-4, the 2.40% class M-5, the 2.40% class M-6, the 2.15% class M-7, the 1.90% class M-8, the 1.85% class M-9, the 1.70% class M-10, the 1.65% class M-11, the 2.10% class B-1, the 1.75% class B-2, the 1.70% class B-3, the 1.50% class B-4, and the 4.85% initial and target overcollateralization. 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 Countrywide Home Loans Servicing, LP. And GMAC Mortgage Corporation (both rated 'RPS1' by Fitch) as servicers and Deutsche Bank National Trust Company, as trustee. The mortgage pool consists of fixed-rate, second lien, fully amortizing and balloon payment mortgage loans with a cut-off date pool balance of $650,000,000. The weighted average loan rate is approximately 10.416%. The weighted average remaining term to maturity is 214 months. The average principal balance of the loans is $42,260. The weighted average combined loan-to-value ratio is 98.73% and the weighted average Fair, Isaac & Co. score is 645. The properties are primarily located in California (30.90%), Florida (9.49%) and Texas (5.22%). All of the mortgage loans were purchased by Financial Asset Securities Corp., the depositor, from Greenwich Capital Financial Products, Inc., who previously acquired the mortgage loans from Countrywide Home Loans, Inc. (54.04%), Aames Capital Corporation (20.88%), Fremont Investment & Loan (18.16%), Meritage Mortgage Corporation (5.53%), E-Loan, Inc. (0.74%) and First National Bank of Nevada (0.64%). SOUTH DAKOTA: Wants to Hire Stuart Gerry as Bankruptcy Counsel -------------------------------------------------------------- South Dakota Acceptance Corporation and its debtor-affiliate, Dan Nelson Automotive Group, Inc., ask the U.S Bankruptcy Court for District of South Dakota for permission to employ Stuart, Gerry & Schlimgen, Prof. L.L.C. as their general bankruptcy counsel. Stuart Gerry is expected to: a) advise the Debtors of their duties and responsibilities as debtors-in-possession in the continued operation and management of their businesses and property; b) assist the Debtors in preparing and filing their Schedules and Statements and other documents that the Court may require and assist in initiating or defending the Debtors from adversary proceedings and contested motions; c) assist the Debtors in the formulation of a chapter 11 plan and its accompanying disclosure statement and other related documents and in prosecuting the confirmation of that plan and approval of that disclosure statement; and d) perform all other legal services to the Debtors that are necessary and appropriate in their bankruptcy proceedings. Clair R. Gerry, Esq., and Laura L. Kulm Ask, Esq., are the lead attorneys for the Debtors. Ms. Gerry charges $200 per hour, while Ms. Ask charges $120 per hour. Stuart Gerry had not yet submitted the amount of its retainer to the Debtors when the Debtors filed their request with the Court to employ the Firm To the best of the Debtors' knowledge, Stuart Gerry is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Sioux Falls, South Dakota, South Dakota Acceptance Corporation sells automobiles and assists in obtaining automobile financing for higher risk clientele. The Company and its debtor-affiliate filed for chapter 11 protection on June 20, 2005 (Bankr. D.S.D. Case No. 05-40866). When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. SPHERE DRAKE: Section 304 Petition Summary ------------------------------------------ Petitioner: Catherine Geraldine Regan Foreign Representative Company Secretary & General Counsel Sphere Drake Insurance Limited Debtor: Sphere Drake Insurance Limited aka Odyssey Re (London) Limited Park Gate 161-163 Preston Road Brighton, East Sussex BN1 6AU ENGLAND Case No.: 05-14610 Type of Business: Sphere Drake Insurance Limited's business comprises policies, reinsurance, liabilities and assets for Marine and Aviation Pool Business and the Non-Marine Pool Business. The Marine and Aviation Pool Business and the Non-Marine Pool Business consist of: (a) direct insurance business where policyholders are almost entirely U.S. companies and reinsurance and retrocession business where the policyholders are almost entirely U.S. insurers and reinsurers; and (b) reinsurance placed through brokers where policyholders are London Market insurers and reinsurers. The U.K. Scheme provides for an expeditious payment in full to all creditors covered by the U.K. Scheme. The High Court of England and Wales, in London, England sanctioned the U.K. Scheme on April 27, 2005, the U.K. Scheme became effective on May 6, 2005. The Scheme Business has been in solvent run-off since 1968. To shorten SDI's run-off period, the U.K. Scheme, as an estimation scheme of arrangement under which SDI's liabilities will be valued as of Dec. 31, 2004, set on Sept. 5, 2005, at 5:00 p.m. (London time) as the Final Claims Submission Date. Section 304 Petition Date: June 24, 2005 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Petitioner's Counsel: Dina Gielchinsky, Esq. Karen Ostad, Esq. Lovells 900 Third Avenue, 16th Floor New York, New York 10022 Tel: (212) 909-0600 Fax: (212) 909 0666 -- and -- Norman N. Kinel, Esq. Jonathan F. Linker, Esq. Dreier LLP 499 Park Avenue New York, NY 10022 Tel: (212) 328-6100 Fax: (212) 328-6101 The Financial Condition of the Debtor is not known as of press time. Sphere Drake Insurance Limited's List of U.S. parties-in-interest is available for a fee at: http://www.researcharchives.com/bin/download?id=050420025337 SUPERIOR WHOLESALE: Fitch Puts BB+ Rating on $53M Class D Certs. ---------------------------------------------------------------- Fitch Ratings has rated Superior Wholesale Inventory Financing Trust XII's floating-rate asset-backed term notes, series 2005-A: -- $1,250,000,000 class A 'AAA'; -- $127,583,000 class B 'A'; -- $53,160,000 class C 'BBB+'; -- $53,160,000 class D 'BB+'. Like prior SWIFT trusts, the securitization is backed by a pool of loans made by General Motors Acceptance Corp. to retail automotive dealers franchised by General Motors Corp. to finance new and used vehicles inventories. The class A, B, and C term notes are issued publicly, while the class D notes and certificates are initially retained by the seller. The certificates are not rated. SWIFT XII also issues one series of floating-rate asset-backed revolving notes (not rated by Fitch) that have equal priority with class A term notes. The ratings on the notes are based on the quality of the underlying pool of receivables, the strength of GMAC as originator and servicer, available credit enhancement, sound legal and cash flow structures including early amortization triggers, and dealer and asset concentration limits. Credit enhancement in SWIFT XI increased 100 basis points across the capital structure, compared with the SWIFT XI transaction: -- 10.50% for the class A term notes; -- 7.50% for the class B term notes; -- 6.25% for the class C term notes; -- 5.00% for the class D term notes. The reserve fund is fully funded at closing at 1.50%, up 100 bps from SWIFT XI. If certain MPR triggers are hit, the reserve fund steps up 75 bps to 2.25% of the maximum pool balance, or an additional 125 bps to 3.50% of the maximum pool balance. Noteholders and certificate holders receive interest payments monthly on the 15th day, commencing Aug. 15, 2005. Following the revolving period and a payment period of one to six months, principal is expected to be paid in full on the June 2008 distribution date (the targeted final payment date for both the term notes and the certificates) but no later than June 2010 (stated final distribution date). Failure to pay each class of the 2005-A term notes in full by the stated final distribution date will result in an event of default. The certificates are subordinate to the four classes of term notes and the revolving notes, and receive principal only after the trust has paid or provided for in full each series of term notes and the revolving notes. Contrary to early amortization events where collections are accumulated into cash accumulation accounts, rapid amortization events result in principal collections and amounts on deposit in cash accumulation accounts being passed through to the bondholders, sequentially, on a monthly basis. Rapid amortization events include the insolvency of GM, GMAC, the seller or the servicer, the trust or the seller being required to register as an investment company, or the balances in the cash accumulation reserve funds declining below their specified floors. Fitch ran a variety of cash flow stresses to simulate the performance impact of multiple dealer bankruptcies, a bankruptcy of GM and GMAC, a servicing transfer, and other events that could negatively affect sales and Sold Out of Trust frequency. One of the most severe 'AAA' runs reduced MPR more than 60% from current levels, increased annualized defaults more than 15%, and dropped the purchase rate to 0% throughout the payment period. The class B notes were able to sustain an MPR reduction of 50%, annualized defaults in excess of 13%, and no new receivable purchases. The class C notes absorbed a 45% drop in MPR, annualized defaults of over 12%, and a 0% purchase rate. Finally, the class D notes survived an MPR reduction of 35%, annualized defaults of 11%, and no new receivable purchases. Under each relevant scenario, full and timely payment of principal and interest in accordance with the terms of the transaction's documents were made on the notes. SYL-SU REALTY: Case Summary & 18 Known Creditors ------------------------------------------------ Debtor: SYL-SU Realty, Inc. dba Horseheads Motel 2671 Corning Road Horseheads, New York 14845 Bankruptcy Case No.: 05-23197 Type of Business: The Debtor operates a motel in Horseheads, New York. Chapter 11 Petition Date: June 23, 2005 Court: Western District of New York (Rochester) Debtor's Counsel: David D. MacKnight, Esq. Lacy Katzen LLP 130 East Main Street Rochester, New York 14604 Tel: (585) 454-5650 Fax: (585) 454-6525 Total Assets: $800,000 Total Debts: $1,247,202 Debtor's 18 Known Creditors: Entity Claim Amount ------ ------------ Castro & Kardin Unknown 444 Madison Avenue New York, NY Chemung County Treasurer Unknown 320 East Market Street Elmira, NY 14901 Finger Lakes HVAC&R Unknown 3162 State Route 352, Suite 2 Big Flats, NY 14814 GE Capital Unknown P.O. Box 3083 Cedar Rapids, IA 52406 Harbachan Singh Unknown 16015 Hillside Avenue Jamiaca, NY 11432 Horseheads Motor Lodge, Inc. Unknown c/o Sales Evans One West Church Street Elmira, NY 14902 Howard Johnson Unknown One Pasapany Selyan, NJ Internal Revenue Service Unknown P.O. Box 266 Niagara Square Station Bankruptcy Sub. Station, Room 22 Buffalo, NY 14201 John Walshe, Esq. Unknown 60 East 42nd Street, Room 1201 New York, NY 10165 Kevin & Kevin Management Unknown 2671 Corning Road Horseheads, NY 14845 Magnuson Hotels Unknown 605 East Holland, Suite 206 Stoaane, WA 99218 New York State Department of Labor Unknown P.O. Box 4119 Binghamton, NY 13902 New York State Department of Unknown Taxation & Finance Bankruptcy Unit P.O. Box 5300 Albany, NY 12205 NYSEG Unknown One Corporate Drive Binghamton, NY 13904 Praveen Saxema Unknown 19 Parc Lane Hicksville, NY 11801 Robert Matthews Unknown 2671 Corning Road Horseheads, NY 14845 Time Warner Unknown P.O. Box 4117 Buffalo, NY 14240 Viacom Unknown P.O. Box 33074 Newark, NJ 07188 TELVUE CORP: Majority Shareholder Agrees to Certain Concessions --------------------------------------------------------------- At TelVue Corporation's (OTC Bulletin Board: TEVE) June 16, 2005, Board of Directors meeting, the independent members of the Board and H. F. (Gerry) Lenfest agreed to a series of transactions which positively impact the Company's balance sheet. First, the Board of Directors and Mr. Lenfest agreed to terminate a Warrant Agreement between Mr. Lenfest and the Company. Pursuant to the Warrant Agreement, Mr. Lenfest had the right to purchase up to 29,915,160 shares of the Company's Common Stock for $.01 per share, the fair market value of the Common Stock on the grant date. The Warrant Agreement was entered into on March 15, 1991, in connection with a prior line of credit to the Company provided by Mr. Lenfest. This transaction effectively reduces the number of potential shares outstanding. Second, Mr. Lenfest informed the Company of his intent to convert all of his 3,518,694 shares of Redeemable Convertible Preferred Stock, with a par value of $1 per share, into the Company's Common Stock, with a par value of $0.01 per share. Each share of Preferred Stock is convertible into 6.667 shares of Common Stock. As a result of the conversion, the Company will be required to issue 23,459,133 shares of Common Stock to Mr. Lenfest. Upon Conversion of the Preferred Stock, Mr. Lenfest will own approximately 77% of the Company's outstanding Common Stock on a fully diluted basis, measured as of June 16, 2005. Upon conversion of the Preferred Stock, the Company's stockholders' equity will be increased to include $3,518,694. The Preferred Stock provides for a cumulative 6 percent semiannual dividend. The dividend was payable in cash or additional shares of Preferred Stock at $1 per share, at the option of the Company. The Company has accrued dividends on the Preferred Stock since the beginning of 1998, but no dividends have been paid. Mr. Lenfest has agreed to relinquish his right to all accrued but unpaid dividends attributable to the Preferred Stock and the $3,061,269 reflected on the balance sheet as accrued dividends will be reversed and included in stockholders' equity as a decrease to the Company's accumulated deficit. Finally, the independent members of the Board of Directors and Mr. Lenfest extended the maturity date of a promissory note in the principal amount of $541,000 issued by the Company and currently held by Mr. Lenfest to January 1, 2011. The Note was originally issued by the Company to Science Dynamics Corporation and was payable December 31, 1996. In January 1995, Mr. Lenfest purchased the Note from Science Dynamics; and the maturity date had been extended by the Company and Mr. Lenfest on a yearly basis. The Note is non-interest bearing. As a result of this transaction, the Note will be categorized as long-term debt as opposed to current debt on the Company's balance sheet. "The recent transactions between the Company and Mr. Lenfest significantly improve our balance sheet," said Joseph M. Murphy, President and CEO of TelVue Corporation. "As we continue to build our TVTN programming business, it is important to have an improved financial foundation. We thank Mr. Lenfest for his continued support in our growth efforts." TelVue Corporation, a Delaware corporation, was incorporated on November 26, 1986. Until December 30, 1988, TelVue was a wholly owned subsidiary of Science Dynamics Corporation. On that date, TelVue's shares of Common Stock were distributed to Science's shareholders of record as of December 30, 1988, on the basis of three shares of TelVue's Common Stock for each share of Science's Common Stock then outstanding. TelVue operated two business segments. One segment is a marketing and service company which sells automatic number identification telecommunications services to the cable television industry for the automated ordering of pay-per-view features and events. TelVue has also developed and is marketing a new product and service called the TelVue Virtual Television Networks. The other business segment operated under the name, Source Communications Group, and functioned as a communications solution provider and network integrator serving clients mainly in the Mid-Atlantic States. In the second quarter of 2004, TelVue made a decision to discontinue the Source segment operations. At Mar. 31, 2005, TelVue Corporation's balance sheet showed a $5,620,077 stockholders' deficit, compared to a $5,301,857 deficit at Dec. 31, 2004. TEMBEC INC: Spruce Falls Unit Gets $190M Working Capital Loan ------------------------------------------------------------- Tembec Inc. reported that its wholly owned subsidiary Spruce Falls Inc. has put in place a new working capital loan facility with a group of lenders effective June 29, 2005. The Toronto-Dominion Bank will act as administrative agent and TD Securities as Lead Arranger and Book Manager for the syndicate of lenders. The loan facility is a three-year committed revolving line of $190 million and will help ensure that Tembec will continue to have the financial resources and liquidity it requires. The syndicate includes several Canadian banks that have supported Tembec in the past as well as a new lender from the US. The new facility replaces a $100 million operating line that had been renewed annually since 2002. Tembec Inc. -- http://www.tembec.com/-- is a leading integrated forest products company well established in North America and France, with sales of approximately $4 billion and some 11,000 employees. Tembec's common shares are listed on the Toronto Stock Exchange under the symbol TBC. * * * As reported in the Troubled Company Reporter on May 5, 2005, Standard & Poor's Ratings Services revised its outlook on pulp and lumber producer Tembec Inc. and its subsidiary, Tembec Industries Inc., to negative from stable following the release of the company's second-quarter 2005 results. At the same time, Standard & Poor's affirmed its 'B' long-term corporate credit rating on Tembec and its subsidiary. "Liquidity is adequate, but Tembec's earnings and guidance for the remainder of the year continue to be exceptionally weak," said Standard & Poor's credit analyst Daniel Parker. Excluding a negative C$126 million seasonal change in working capital, Tembec had negative free cash flow of about C$12 million in the quarter. "We expect the working capital to turn positive in the next two quarters and with more than C$225 million in current availability, the company has enough liquidity to ride out multiple quarters of weak cash generation. We believe they will maintain full access to their bank lines, as we do not expect them to have difficulty complying with the covenants," Mr. Parker added. THE COOPER: Moody's Affirms $750 Million Debts' Ba3 Rating ---------------------------------------------------------- Moody's Investors Service affirmed the Ba3 Corporate Family (previously called the Sr. Implied), SGL-2 and other ratings of The Cooper Companies, Inc., but changed the rating outlook to negative from stable. The outlook change is based on the fact that Cooper's financial performance is below the expectations set by Moody's in October 2004 when the rating agency evaluated the forecast for the proposed combination of Ocular Science and Cooper. Ratings affirmed: * Corporate Family Rating -- Ba3 * $275 Million 5 Year Senior Secured Revolving Credit Facility -- Ba3 * $225 Million 5 Year Senior Secured Term Loan A -- Ba3 * $250 Million 7 Year Senior Secured Term Loan B -- Ba3 * Senior Unsecured Issuer Rating -- B1 * Speculative Grade Liquidity Rating -- SGL-2 The change in the ratings outlook to negative from stable primarily reflects Moody's concern that near term debt reduction and free cash flow to debt metrics will remain behind targets set when we assigned the ratings in October 2004. For fiscal 2005, Cooper currently anticipates free cash flow (defined as cash flow from operations less capital expenditures) of about $40 million to $50 million, which would be at least $20 million lower than what we had conservatively projected at rating assignment. In addition, free cash flow will likely be minimal in the second half of fiscal 2005 because of significant investments in manufacturing lines (primarily for Ocular daily wear lenses), and should remain modest or negative in the seasonally weak first quarter of fiscal 2006. The affirmation of Moody's long term ratings reflects: * the healthy fundamentals of the global soft contact lens market; * the company's good competitive position as the global number three soft contact lens manufacturer; * its favorable product mix, which is weighted toward higher margin specialty lenses; and * its ample liquidity. Factors affecting the rating include: * the company's high leverage resulting from the Ocular acquisition; * ongoing integration risk as partly highlighted by the recent reductions in sales guidance; and * the company's continued interest in acquisitions in the surgical business. The ratings further reflect: * the highly competitive environment in the soft contact lens industry; * the company's limited size and financial resources relative to its larger competitors; and * its primary focus on a single line of business. Moody's does not anticipate a significant debt reduction and improvement in cash flow to debt metrics before the second half of fiscal 2006. For fiscal 2005, we currently expect Cooper to achieve free cash flow plus 2/3rds rent to adjusted debt of about 6% (debt adjusted for operating leases and unfunded pensions). Cooper's long term ratings could be downgraded if it becomes apparent that the company will be unable to sufficiently improve free cash flow, such that it can achieve free cash flow plus 2/3rds rent to adjusted debt of at least 10% on a sustainable basis as it enters the second half of fiscal 2006. Lower than currently expected merger synergies, decelerating sales growth or operating performance, or larger acquisitions that use up financial flexibility or require a disproportionate amount of management attention could also trigger a downgrade. The affirmation of the SGL-2 liquidity rating reflects our expectation that Cooper will maintain solid liquidity over the next four quarters ending April 30, 2006, generating sufficient cash flow from operations to fund capital expenditures, debt service and common dividends. However, as noted above, free cash flow will remain minimal over the next three quarters and should only recover beginning in the second quarter of fiscal 2006. The SGL rating also takes into consideration the committed source of external funding provided by a $275 million, 5 year revolving credit facility that expires in January 2010. As of April 30, 2005, the company had access to $143 million under its revolver (after opened letters of credit), providing ample liquidity to cover incremental cash needs. Moody's expects the company to be in compliance with its covenants over the next four fiscal quarters but notes that effective availability could fall in the first quarter of 2006 because of a step down in certain leverage covenants under its credit agreement. The financial covenants include maximum total leverage, maximum senior leverage, minimum fixed charge coverage and maximum debt to total capitalization ratios. Cooper Companies, Inc., headquartered in Pleasanton, California, manufactures and markets soft contact lenses worldwide. The company also manufactures: * diagnostic products, * surgical instruments, and * accessories for women's healthcare. For the twelve months ended April 30, 2005, the company generated approximately $624 million of revenues. THERMA-WAVE: Delays Annual Report Filing Due to Material Weakness ----------------------------------------------------------------- Therma-Wave, Inc. (NASDAQ:TWAV) disclosed that it will require additional time to file its 2005 Annual Report on Form 10-K for the year ended April 3, 2005. The Company has filed a Form 12b-25 with the Securities & Exchange Commission, extending until July 5, 2005, the time to file its Form 10-K. The delay in filing of the 10-K is a result of the Company needing more time to finalize its financial statements and related disclosures for inclusion in the Form 10-K and the assessment of its internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. The Company continues to dedicate significant resources to finalizing its financial statements and its assessment of internal control over financial reporting, and currently anticipates filing the Form 10-K on or before the end of the extended deadline. However, there could be further delays if the Company is unable to complete its assessment of the effectiveness of its internal controls by such time. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. While management's evaluation of internal control over financial reporting has not yet been completed, the Company's management has identified, as of June 17, 2005, two material weaknesses in the Company's controls over the preparation, review and timely analysis of the Company's consolidated financial statements in connection with its financial close process. Specifically: (1) inter-company accounts between the Company's U.S. operations and its branches and subsidiaries are not reconciled; and (2) the Company's customer service and support organization expense allocation between selling, general and administrative expense and cost of revenue is recorded in consolidation without supporting documentation for such entry. Each of these control deficiencies could result in a misstatement of account balances or disclosures that would result in a material misstatement in the annual or interim financial statements that would not be prevented or detected. Accordingly, management has determined that each of these control deficiencies constitutes a material weakness. As a result of the material weaknesses identified, the Company's management will conclude, in "Management's Report on Internal Control over Financial Reporting" in the Form 10-K, that the Company's internal control over financial reporting was not effective as of the end of the Company's fiscal year. Also, as a result of the material weaknesses, the report of the Company's independent registered public accounting firm will contain an adverse opinion with respect to the effectiveness of the Company's internal control over financial reporting as of April 3, 2005. The Company intends to disclose a more detailed description of these material weaknesses, including its plan for remediation, in the Form 10-K. Since management has not completed its testing and evaluation of the Company's internal control over financial reporting and the control deficiencies identified to date, the Company's management may ultimately identify additional control deficiencies as being material weaknesses in "Management's Report on Internal Control over Financial Reporting." Since 1982, Therma-Wave, Inc. -- http://www.thermawave.com/-- has been revolutionizing process control metrology systems through innovative proprietary products and technologies. The company is a worldwide leader in the development, manufacture, marketing and service of process control metrology systems used in the manufacture of semiconductors. Therma-Wave currently offers leading-edge products to the semiconductor manufacturing industry for the measurement of transparent and semi-transparent thin films; for the measurement of critical dimensions and profile of IC features; for the monitoring of ion implantation; and for the integration of metrology into semiconductor processing systems. TOYS 'R' US: 98% of Stockholders Approve Merger Agreement --------------------------------------------------------- Toys "R" Us, Inc. (NYSE: TOY) reported that the stockholders of the Company voted to adopt the merger agreement providing for the acquisition of the Company by an investment group consisting of entities advised by or affiliated with Bain Capital Partners LLC, Kohlberg Kravis Roberts & Co., L.P. and Vornado Realty Trust (NYSE: VNO) at a special meeting of the stockholders held today in New York, NY. Approximately 98% of stockholders present and voting adopted the merger agreement. The number of shares voting to adopt the merger agreement represents approximately 61% of the total number of shares outstanding and entitled to vote. In addition, on June 22, 2005, the Court of Chancery in the State of Delaware in and for New Castle County denied the request of the Iron Workers of Western Pennsylvania Pension & Profit Plans and Jolly Roger Fund LP for a preliminary injunction and delay of the closing of the merger. The proposed merger was announced on March 17, 2005 and is expected to close by the end of July 2005, pending the satisfaction or waiver of all the closing conditions set forth in the merger agreement. Under the terms of the merger agreement, Company stockholders will receive $26.75 per share in cash, without interest. 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. TRANSTECHNOLOGY CORP: March 31 Balance Sheet Upside-Down by $6.4MM ------------------------------------------------------------------ TransTechnology Corporation (OTC:TTLG) reported that fiscal fourth-quarter 2005 sales of $15.9 million were up 3% from $15.5 million in the fourth quarter a year ago. Operating income increased 13% to $2.8 million for the quarter from $2.5 million in the prior-year period. The net loss for the fourth quarter of fiscal 2005, which included a $1.2 million pre-tax charge associated with the settlement of the U.S. government's investigation of the Company's Breeze- Eastern overhaul and repair operation, was $400,000 compared to a net loss for the fourth quarter of fiscal 2004 of $100,000. For the full fiscal year ended March 31, 2005, sales decreased 3% to $62.9 million from $64.6 million in the prior fiscal year. Interest expense, the largest non-operating expense, increased to $10.5 million in fiscal 2005 from $10.4 million in fiscal 2004. The net loss for fiscal 2005, after recognizing the fourth quarter $1.2 million pre-tax charge resulting from the settlement of the U.S. government's investigation of Breeze-Eastern's overhaul and repair operation and a third quarter pre-tax charge of $2.2 million from charges related to the November refinancing of the Company's debt, was $2.8 million. For the prior fiscal year, the Company reported net income of $1.7 million, which included a $900,000 pre-tax gain, from the sale of the Company's remaining 19% interest in its UK operation. "During the fourth quarter, our operations continued to show improvement from early fiscal 2005, when the implementation of new operating procedures and policies resulted in inefficiencies in our overhaul and repair operation," Robert L. G. White, Chief Executive Officer of the Company, said. "Sales increased 3.0% during the fourth quarter and operating income increased 13% as compared to the fourth quarter of fiscal 2004. Driving this improvement was the continued expansion of our gross margin, which improved for the third consecutive quarter to 47.3% from 41.8% in the third quarter, 40.7% in the second quarter, and 40.1% in the first quarter. While our margin is heavily influenced by the mix of products shipped during a period, we believe that our manufacturing processes are improving and that a return to our historical gross margins of 42-45% is achievable." Mr. White said, "At the end of last year we identified the Chinese market as one of the most important developing helicopter markets in the world. We were very pleased that during this fiscal year we accomplished one of our long term objectives by becoming the sole-source supplier of rescue hoists on the Chinese Z-9 and Z-11 helicopters. We believe that this accomplishment positions us well for further expansion and sales growth in the Chinese market." Mr. White continued, "Corporate office expenses for the fourth quarter were $1.5 million, down slightly from the same period last year. Fourth quarter business unit general, administrative and selling expenses increased $0.2 million from the prior year, primarily due to expenses associated with the implementation of our new enterprise resource planning (ERP) system. For the full fiscal year, expenses at the business unit level increased $1.8 million, which included $500,000 of pre-settlement costs associated with the investigation, $600,000 of costs associated with the implementation of our new ERP system and $500,000 associated with higher engineering development costs and changes in operating procedures. This was offset partially by corporate office expenses which were down $700,000 million, primarily due to the refinancing of the Company's debt." Joseph F. Spanier, Vice President and Chief Financial Officer, said, "It was very important to us to have completed the refinancing of our former credit facility in November. As a result of this refinancing, we have lowered our current effective interest rate to 14.4% from 19.5%. Interest expense in the fourth quarter of fiscal 2005 fell to $2.3 million from $2.7 million in last year's fourth quarter. While there appears to have been only a small change in our interest expense, the amount of borrowings outstanding are up slightly from last year's fourth quarter and interest rates are more than 100 basis points higher than last year as the result of increases in rates by the Federal Reserve. We do expect fiscal 2006's interest expense to be less than that of fiscal 2005, although such reductions will continue to be subject to future changes in the Prime Rate. As a result of the refinancing, in the third quarter we recognized a $2.2 million pre-tax charge associated with the termination of the old credit facility and we incurred approximately $2.2 million of capitalized costs relative to the new facility, which are being amortized over the forty-two month life of the new facility. We finished fiscal 2005 with a current ratio of 2.3 compared to last year's 2.6, and we had $16.8 million of working capital at year end, down from $22.2 million a year ago and $18.9 million at the end of the third quarter. We recognize that our effective interest rate is heavily weighed by the 21.75% rate on our $9.1 million Term Loan C, and we will focus on refinancing this piece of debt during fiscal 2006, which presents us the opportunity for continued improvements in our cost structure and profitability. Restatement of Financials During the completion of the Company's audit for fiscal 2005, the Company determined that its statement of cash flows for fiscal 2003 incorrectly reported the refinancing of its debt in that period. As a result, the Company's Form 10-K for fiscal 2005 will include a restatement of the statement of cash flows for 2003. The primary impact of the restatement is to increase net cash provided by operating activities by $2.2 million and increase the amount of net cash used in financing activities by the same amount. A similar reclassification for $700,000 will be reflected in the fiscal 2005 Form 10-K to correct the amounts reported in the Form 10-Q for the third quarter ended December 26, 2004 and will have the effect of reducing the net cash provided by operating activities and net cash used in financing activities by the same amount. These restatements have no impact upon the statement of operations, balance sheet, or any earnings per share amounts reported for any period. Resolution of U.S. Attorney's Office Investigation As previously reported, the Company was advised in March by the United States Attorney's Office in Newark that, after reviewing the matter of its investigation of the Company's overhaul and repair operation, it will not be proceeding with any criminal investigation or charges against the Company or its Breeze-Eastern division. Earlier this month the Company reported that it had reached an agreement in principle with the Department of Justice relative to any civil and contractual issues in which the Company agreed to pay the government $1,000,000 in cash over a fifteen month period and to rebuild, at no cost to the government, several pieces of equipment that had been disassembled during the government's investigative process. As a result of this settlement, the Company reported a $1.2 million pre-tax charge in the fourth quarter of fiscal 2005. TransTechnology Corporation -- http://www.transtechnology.com/-- operating as Breeze-Eastern -- http://www.breeze-eastern.com/-- designs and manufactures sophisticated lifting devices for military and civilian aircraft, including rescue hoists, cargo hooks, and weapons-lifting systems. The company, which employs approximately 180 people at its facility in Union, New Jersey, reported sales from continuing operations of $64.6 million in the fiscal year ended March 31, 2004. At March 31, 2005, TransTechnology Corporation's balance sheet showed a $6,359,000 stockholders' deficit, compared to a $3,787,000 deficit at March 31, 2004. UNITED SUBCONTRACTOR: S&P Rates $305 Million Bank Loans at B+ ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Minneapolis, Minnesota-based United Subcontractors Inc, an installer of insulation. At the same time, Standard & Poor's assigned its 'B+' bank loan rating and '4' recovery rating to the company's proposed $40 million secured revolving credit facility due in 2011 and to its $265 million secured term loan B due in 2012. The bank loan rating and the '4' recovery rating indicate our view that recovery for first-lien lenders would be marginal (25%-50%). The outlook is stable. The bank loan and recovery ratings are based on preliminary terms and conditions. The ratings on the existing bank debt will be withdrawn when the proposed deal closes. Proceeds from the facilities, along with $12 million of cash, will be used to purchase shell contractor Construction Services & Consultants Inc. for $43 million (excluding potential future earn- out payments), refinance United Subcontractor's existing debt of $214 million, and pay a $20 million dividend to shareholders. "The ratings on USI reflect the company's modest revenue base and relatively narrow product focus within cyclical end markets, its high supplier concentration risk, some geographic concentration, and a highly leveraged financial profile," said Standard & Poor's credit analyst Lisa Wright. These risks are tempered by healthy operating margins, a variable cost structure, fairly good prospects for residential construction and insulation demand, and favorable competitive dynamics within this segment. Privately held USI was formed in 1998 through the merger of 16 leading regional insulation installers and has grown via numerous small acquisitions. The company's primary line of business is the installation of insulation, a service primarily sold to local, regional, and national homebuilders. Together, the three largest insulation installers in the U.S., including USI, have about a 60% share of the $3.3 billion market, with the leader, Masco Corp. (BBB+/Stable/--), accounting for approximately 50%. USI's meaningful size allows it to negotiate purchasing discounts and makes it less likely to experience shortages than its smaller competitors. With the acquisition of CSCI, insulation installation will account for about 60% of pro forma sales. One of USI's key considerations for the acquisition was to expand its breadth of offerings with CSCI's shell contracting services while becoming a more integral part of the homebuilders' construction process. Homebuilders are increasingly looking to outsource construction while concurrently looking to shorten construction times. Shell contracting services, which include foundation, exterior wall, wood flooring, and roof truss construction, will now constitute about 25% of USI's sales. However, compared to insulation installation, shell contracting is a more complicated business that involves the coordination of many different trades. In addition, homebuilders pay relatively low fees for shell contracting than they do for insulation installation, plumbing, or other later-stage construction services. USEC INC: Moody's Downgrades Sr. Unsec. Debt Rating to B2 from Ba3 ------------------------------------------------------------------ Moody's Investors Service downgraded the senior unsecured debt rating of USEC Inc. to B2 from Ba3. In a related rating action, Moody's downgraded the Corporate Family Rating (previously known as the Senior Implied) to B1 from Ba2. The ratings downgrade is due to: 1) Moody's expectation that earnings and cash generation from the company's core enrichment operation will remain constrained over the near to intermediate term; 2) the exposure to potentially higher energy costs as a major fixed price power purchase agreement expires in 2006; 3) uncertainty over plans for refinancing existing bank facilities and for debt maturing in January 2006; 4) risks and uncertainty associated with the company's plans to build the American Centrifuge project, estimated to cost at least $1.5 billion; and 5) a very high dividend payout in comparison to earnings and cash generation. The outlook is stable Ratings downgraded are: * USEC Inc. Corporate Family Rating: to B1 from Ba2, Senior Unsecured Notes to B2 from Ba3 The B1 Corporate Family Rating considers that USEC will continue to be challenged in the level of earnings it can generate reflective of its higher cost production process and the ongoing expenditures for the American Centrifuge. Additional factors considered in the B1 rating include the weak debt protection metrics based on EBIT and EBITDA measurements, the construction and financing risk related to commercial development of American Centrifuge and the level of dividends paid given financing requirements and debt maturities over the next several years. The rating is supported by: * USEC's position in both the domestic and global uranium enrichment market (51% and 28% market share respectively); * its position as the exclusive agent for the United States under the Megatons to Megawatts program with Russia; * the improved price fundamentals in the SWU market, which should help boost average portfolio realizations going forward; and * the company's cash generating ability. However, Moody's notes that an important proportion of operating cash flow generated is derived from the sales from inventory of uranium transferred to the company from DOE at the time of USEC's privatization and that such inventory is mostly exhausted by the end of 2007. While USEC can supplement its uranium inventory by underfeeding, this is dependent upon the differential between uranium prices and electricity prices, which may not always be economic. As such, Moody's views this as a potential enhancement to revenue and ultimately cash flow but not an assured earnings or cash flow source. The stable outlook reflects Moody's expectations that the company will continue to improve its price realizations as SWU contracts are renewed at or entered into at higher market prices and will continue to focus on cash preservation given its funding requirements over the next 2 years. The outlook also assumes that the company will be able to complete the renewal of its bank facility by the September 2005 expiry date. Ratings could be upgraded should the company reduce the level of debt employed, given its earnings constriction, and maintain leverage, as measured by the debt/EBITDA ratio, of no more than 3.5x. However, Moody's does not anticipate any positive movement in the ratings or outlook until after the company has detailed a specific workable plan for financing the American Centrifuge project. The outlook or rating could be adversely impacted should USEC incur further debt to fund the American Centrifuge plant construction or experience further margin squeeze from increased costs, particularly given its sensitivity to energy prices and the May 2006 expiry of its fixed price power purchase agreement with TVA. Although USEC benefits from a solid customer base and market position, its performance over a number of years has been negatively impacted by compressed revenues due to depressed SWU prices and increasing costs due to its use of the gaseous diffusion process, an energy intensive production process. Energy costs in recent years have run at the $300 million level. In order to regain a more competitive footing and lower cost production process, which is expected to enhance the level of earnings that can be achieved, USEC is working to replace its gaseous diffusion process with centrifuge technology and is currently doing testing of centrifuges at its Oak Ridge facility. Construction on a plant for commercial production would begin in 2007 with an initial production capacity of 3.5 million SWU being reached by 2010. Estimated capital costs are in the $1.5 billion range. While Moody's acknowledges that all milestones to date have been met and operations of the demonstration plant are anticipated to begin in late 2005 on the ability of the centrifuges through the Lead Cascade to produce enriched uranium, Moody's believe that the construction and start-up risks remain important considerations in USEC's rating, The B2 rating on the senior unsecured notes reflects the structural subordination of their position in the capital structure to the asset backed bank credit facility, which expires in September 2005. This facility is at the operating company level, United States Enrichment Corporation, is guaranteed by USEC and is secured by receivables and inventory as well as certain other assets. Headquartered in Bethesda, Maryland, USEC had revenues of $1.4 billion in 2004. WASTE CONNECTIONS: Good Credit Measures Cue S&P's Positive Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Waste Connections Inc. to positive from stable. At the same time, Standard & Poor's affirmed its existing ratings, including the 'BB+' corporate credit rating, on the company. Folsom, California-based Waste Connections had total debt outstanding of about $509 million at March 31, 2005. The outlook revision incorporates the trend of improving credit measures over the past year. The redemption of the company's $150 million convertible subordinated notes in April 2004 accelerated improvement in the capital structure. Credit protection measures have since remained at levels well above expectations for the rating with funds from operations to total debt (adjusted for capitalized operating leases) at about 32% for the 12 months ended March 31, 2005. "Although free cash generation is expected to be used for share repurchases and acquisition-driven growth in 2005 and onwards, earnings growth should allow credit measures to remain at levels sufficient to potentially support an upgrade to investment-grade within the next two years," said Standard & Poor's credit analyst Liley Mehta. The ratings on Waste Connections are based on its: * satisfactory business position as a major regional solid waste management company, * efficient operations, and * generally favorable industry characteristics. These factors are partially offset by its: * aggressive debt leverage, and * risks associated with an active growth strategy. With annual revenues of $646 million, Waste Connections provides collection, recycling, transfer, and disposal services in secondary (nonurban) markets, primarily in the western and southeastern U.S. The company serves more than one million residential, commercial, and industrial customers in 23 states. Waste Connections' demonstrated operating strength benefits from its unique business strategy, including a focus on secondary markets, and significant operations under exclusive franchisee contracts. WILLIAMS SCOTSMAN: Launches Tender Offer for 9-7/8% Senior Notes ---------------------------------------------------------------- Williams Scotsman, Inc., has commenced a tender offer and consent solicitation for any and all of its outstanding 9-7/8% Senior Notes due 2007 and for any and all of its outstanding 10% Senior Secured Notes due 2008. The total consideration in connection with the offers is $1,005.00 per $1,000 principal amount for the 9-7/8% Notes and $1,105.13 per $1,000 principal amount for the 10% Notes, plus, in each case, accrued and unpaid interest to, but not including, the applicable payment date. As of June 23, 2005, $550 million principal amount of the 9-7/8% Notes are outstanding and $150 million principal amount of the 10% Notes are outstanding. The terms and conditions of the tender offer are set forth in an Offer to Purchase and Consent Solicitation Statement dated June 23, 2005. The total consideration for the 9-7/8% Notes was determined by adding 50 basis points to the current redemption price for the 9-/8% Notes, which is 100% of their principal amount. The total consideration for the 10% Notes was determined by assuming that 35% of the 10% Notes were redeemed at the "equity clawback" redemption price of 110% of their principal amount and that the remainder were repurchased at 100% of their principal amount plus a make-whole premium based on the yield of a U.S. treasury security maturing on or near the first redemption date for such notes (which is Aug. 15, 2006) plus 50 basis points. In conjunction with the tender offers, the company is soliciting the consent of holders of Notes to eliminate substantially all of the restrictive covenants and certain events of default under the indentures for the Notes. The consent payment of $20.00 per $1,000 principal amount of the 9-7/8% Notes and the consent payment of $20.00 per $1,000 principal amount of the 10% Notes will be paid only for the Notes validly tendered and not withdrawn prior to the Consent Date, which will be 5:00 p.m., New York City time, on July 7, 2005, unless extended. Holders who tender their Notes into the tender offer after the Consent Date will receive the total consideration described above less the consent payment amount, which would be $985.00 per $1,000 principal amount of the 9-7/8% Notes and $1,085.13 per $1,000 principal amount of the 10% Notes. The tender offers commenced June 23 will expire at 5:00 P.M., New York City time, on Aug. 2, 2005, unless extended. Closing of the tender offers is subject to: (i) the company having available funds sufficient to pay the total consideration with respect to all Notes tendered from the proceeds of the initial public offering of the common stock of Williams Scotsman International, Inc., the parent of the company, a new notes offering of the company and/or the borrowings under its credit facility; (ii) the tender of a majority in principal amount of each class of Notes by the holders; (iii) the execution of supplemental indentures relating to the indentures that govern the Notes; and (iv) certain other customary conditions. Deutsche Bank Securities Inc. is the Dealer Manager and Solicitation Agent for the tender offers and consent solicitation. Questions concerning the tender offers or consent solicitation may be directed to Alexandra Barth, Deutsche Bank Securities Inc. collect, at (212) 250-5655. The Information Agent is MacKenzie Partners, Inc. Copies of documents may be obtained from MacKenzie Partners, Inc., at (212) 929-5500 (collect) or toll-free at (800) 322-2885. This news release is neither an offer to purchase nor a solicitation of an offer to sell the Notes. The offer is being made only by reference to the Offer to Purchase and Consent Solicitation Statement and related applicable Consent and Letter of Transmittal dated June 23, 2005. Williams Scotsman, Inc., headquartered in Baltimore, Maryland, is a provider of modular space solutions for the construction, education, commercial and industrial, and government markets. The company serves over 25,000 customers, operating a fleet of approximately 96,000 modular space and portable storage units that are leased through a network of 85 branches. Williams Scotsman provides delivery, installation, and other services to its leasing customers, and sells new and used modular space products and services. * * * As reported in the Troubled Company Reporter on May 19, 2005, Standard & Poor's Ratings Services assigned its 'B+' bank loan rating and a recovery rating of '1' to Williams Scotsman Inc.'s proposed five-year, $650 million secured bank facility, based on preliminary terms and conditions. This senior secured rating is also placed on CreditWatch with positive implications. When the terms of the bank facility are finalized and the existing facility is redeemed, Standard & Poor's will withdraw its ratings on the company's existing credit facility. Standard & Poor's ratings on the Baltimore, Maryland-based mobile storage and modular building lessor, including the 'B' corporate credit rating, remain on CreditWatch with positive implications, where they were placed on May 2, 2005. The CreditWatch placement followed the S-1 filing by parent company Scotsman Holdings Inc. for an IPO of up to $250 million. The proceeds from the IPO, along with a new unsecured debt offering and $650 million bank facility, is expected to be used to redeem the company's outstanding notes and borrowings under its existing bank agreement. At March 31, 2005, the company had approximately $1.0 billion in lease-adjusted debt outstanding. "Ratings on Williams Scotsman Inc. reflect its weak financial profile, substantial debt burden, and concerns regarding potential covenant violations on the existing credit facility," said Standard & Poor's credit analyst Kenneth L. Farer. Positive credit factors include the company's large (approximately 25%) market share of the modular space leasing market and fairly stable cash flow despite weak earnings. WINN-DIXIE: Court Okays Deloitte Consulting as Consultants ---------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates sought and obtained authority from the U.S. Bankruptcy Court for the Middle District of Florida to employ Deloitte Consulting LLP, nunc pro tunc to May 16, 2005, to provide in-store operational consulting services. D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, relates that improving in-store operations is a vital component of the Debtors' ongoing efforts to enhance their business performance. To further these efforts, the Debtors intend to pursue operational incentives related to direct to store delivery and store ordering practices. The DSD Initiatives are intended to increase sales through better in-stock conditions, reduce labor costs through higher stocking productivity, and reduce non-productive backroom inventory. The Debtors also intend to pursue operational initiatives related to improving in-store cash office and other front end practices. The Front End Initiatives are intended to increase the profitability of the Debtors' stores through improved utilization, higher service expectations, improved management processes, and increased productivity. The Debtors believe that, if properly developed and successfully implemented, the Initiatives will significantly enhance their in- store performance and, by extension, their overall business. As consultants, Deloitte will assist the Debtors in developing and implementing the Initiatives. Specifically, Deloitte will: (1) DSD Initiatives: a. assist in the development of an improved backroom/stocking package; b. jointly developed the backroom/stocking package implementation plan; c. assist with the development of related training package content; d. assist with the selection of stores for the initial pilot and subsequent roll-out waves; e. assist with store employee and Winn-Dixie district training coordinators training; f. assist with the implementation of new direct store delivery and ordering processes in stores; g. assist with design of performance management reporting and follow-up processes; h. assist with design and implementation of shrink reduction activities; i. assist with development of store compliance certification process; j. assist with assessment and refinement of program initiatives based on district pilot; and k. assist with chain-wide implementation of DSD Initiatives. (2) Front End Initiatives: a. assist with the development of expected services and process changes; b. assist with the development of refinements to front end resource scheduling; c. assist with redesign of cash office procedures; d. assist with the development of revisions to the cashier counseling process; e. assist with development and conduct training; f. assist with implementation or process changes in stores; g. assist with design of exception reporting and follow up activities; and h. assist with design of program refinements and enhancements. The Debtors believe that employing Deloitte is critical to the successful development and implementation of the Initiatives. Mr. Baker reports that the operational improvement opportunities that the Initiatives are intended to exploit were identified by Deloitte during a separate engagement in November 2004. Thus, Deloitte is uniquely positioned to develop and assist in implementing the Initiatives. Moreover, Deloitte has the necessary expertise to assist the Debtors in developing and implementing the Initiatives. Deloitte has a strong record of helping the Debtors improve their in-store operations during past engagements, and has become familiar with those operations. In addition, Deloitte's professionals have experience in assisting over 30 grocery chains with respect to direct store delivery and front end operations. The Debtors will pay Deloitte pursuant to these current hourly rates: Designation Hourly Rate ----------- ----------- Principals and Directors $475 to $530 Senior Managers $400 to $425 Managers $360 to $380 Senior Consultants $280 to $295 Staff Consultants $175 to $210 Deloitte has estimated that professional fees will be $3 million based on the work-plan that has been agreed upon with the Debtors. The Court rules that payments to Deloitte should not exceed $3,375,000 for fees on a time and materials basis. As of the Petition Date, the Debtors owe Deloitte $209,411. Subsequent to the Petition Date but before May 16, 2005, Deloitte provided services to the Debtors totaling $95,842 and incurred $18,003 in expenses, each in support of certain initiatives relating to the Debtors' perishable trading network. Deloitte has indicated that it will not seek any recovery with respect to these amounts. Anthony D. Forcum, a member of Deloitte, tells Judge Funk that the firm does not hold or represent any interest adverse to the Debtors. "I believe that Deloitte Consulting and the Deloitte Consulting Principals/Directors are 'disinterested persons' as that term is defined in Section 101(14) of the Bankruptcy Code," Mr. Forcum says. 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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Wants to Reject Madison Grocery Store Lease ------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates want to walk away from a non-residential real property lease dated April 16, 1992, with American KB Properties I Limited Partnership, effective as of the earlier of: (a) October 1, 2005; and (b) the date on which the Debtors surrender possession of the premises by providing written notice to KB. The Lease relates to one of the Debtors' grocery stores in Madison, North Carolina. The Debtors have determined that the Lease is neither essential nor profitable. As part of their restructuring plans, the Debtors sought to sell, sublet, negotiate buyouts with landlords, or otherwise reduce or eliminate their liability under certain leases, including this one. After marketing the Lease, the Debtors have determined that they are unable to sell, sublet, negotiate acceptable buyouts with KB, or otherwise reduce or eliminate their liability under the Lease. Rejecting the Lease will save the Debtors' estates $25,625 per month, plus costs for administrative expenses including rent, taxes, insurance premiums, and other charges under the Lease. To the extent that any personal property remains in the premises on the Effective Date, the Debtors believe it will be of little or no value to their estates. Accordingly, the Debtors ask the U.S. Bankruptcy Court for the Middle District of Florida to deem any of their interest in any personal property abandoned pursuant to Section 554(a) of the Bankruptcy Code. 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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Wants to Reject Pewter Partner Agreement ---------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Middle District of Florida to reject a Pewter Partner Agreement with Buccaneers Limited Partnership, effective as of June 30, 2005. Pursuant to the Contract, Winn-Dixie Stores, Inc., is a sponsor of the Tampa Bay Buccaneers NFL football team. Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, tells the Court that the cost to the Debtors of continuing to perform for the remaining term of the Contract is estimated at over $12 million. By rejecting the Contract, the Debtors will avoid unnecessary expense and burdensome obligations that provide no tangible benefit to the Debtors' estates or creditors, Ms. Jackson says. To the extent that Buccaneers Limited Partnership asserts rejection damages as a result of the rejection, the Debtors ask the Court to set the deadline for filing rejection damage claims as the later of 30 days after the date of entry of the order approving the request or the August 1, 2005 bar date for filing proofs of claim. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000). WISTON XIV: Sapient Capital Opposes Amended Request for DIP Loan ---------------------------------------------------------------- Sapient Capital, LLC, a secured creditor of Wiston XIV Limited Partnership filed an objection on June 17, 2005, with the U.S. Bankruptcy Court for the District of Nebraska to the Debtor's amended and restated request for authority to secure post-petition financing from Hillcrest Bank. Sapient Capital is the holder of a claim amounting to approximately $11,100,000, which is secured by a first and perfected security interest and lien in all of the Debtor's assets. Wiston XIV's Requests to Secure Post-Petition Financing The Debtor owns and operates Candletree Apartments, a 408-unit apartment complex located at 10535 Ellison Plaza in Omaha, Nebraska. The Debtor says it will use the proceeds of the DIP loan to repair and renovate the damaged units of that apartment complex. The Debtor filed its first request to secure $1,500,000 of post- petition financing from Candletree Partners Limited with the Bankruptcy Court on March 29, 2005. On May 16, 2005, the Court denied the Debtor's request, citing lack of information and the dispute over whether the amount being borrowed is sufficient for the renovation as based on an objection filed by Sapient Capital on April 11, 2005. The Debtor filed an amended and restated request on June 8, 2005, to secure $1,500,000 of post-petition financing from Hillcrest Bank. The Debtor's amended request has substantially the same terms as contained in the Debtor's first request. Sapient Capital's Second Objection In its latest objection to the Debtor's amended request to obtain post-petition financing, Sapient cited that its interests will not be adequately protected if Hillcrest Bank is granted a security interest that is superior to Sapient's security interest. Sapient tells the Court that according to the Debtor's Schedules, its assets amount to $10,354,295 but it has no equity in those assets. Furthermore, the Debtor does not provide adequate and accurate information in its amended request as to how the renovations for the apartment complex that will be funded by the proposed financing will affect the value of the property, and Sapient believes that any value added by the renovations will not be sufficient to adequately protect its interests. While Sapient agrees that there is a need to address the damaged units of the apartment complex, there is a substantial amount of deferred maintenance on the Debtor's property that also needs to be addressed. As a result, repairing the damaged units without addressing the deferred maintenance issues will not increase the value of the property to the extent suggested by the Debtor, and placing the additional debt ahead of Sapient's lien will result in a lack of adequate protection of its interest in its cash collateral. Sapient believes that based on these reasons, the Court should deny the Debtor's latest request to obtain post-petition financing. Headquartered in Stilwell, Kansas, Wiston XIV Limited Partnership filed for chapter 11 protection on Jan. 5, 2005 (Bankr. D. Nebr. Case No. 05-80037). Robert V. Ginn, Esq., at Brashear & Ginn, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets between $10 million and $50 million and estimated debts from $10 million to $50 million. YUKOS OIL: Manager of Yukos Unit Detained by Russian Authorities ---------------------------------------------------------------- It has come to YUKOS Oil Company's attention that Antonio Valdes Garcia, former general manager of Fargoil, a wholly owned subsidiary of YUKOS Oil Company, has been detained and is being interrogated in Moscow by the General Prosecutor's Office of the Russian Federation. This follows the most recent allegations from the Russian tax authorities and the General Prosecutor's Office against YUKOS that Fargoil and Ratibor, two YUKOS associated trading companies consolidated in YUKOS' US GAAP consolidated financial statements, are under investigation for inappropriate distribution of funds. YUKOS strongly asserts that those allegations are completely unfounded. At the root of these allegations and those previously disputed by YUKOS is a lack of understanding or the unwillingness of the Russian tax authorities to comprehend consolidated accounting. YUKOS has followed US generally accepted accounting principles, US GAAP, since 1999 and has openly operated this system consistently for over five years. Under these GAAP principles, YUKOS accounts have been audited by independent auditors PricewaterhouseCoopers, the results of which have been made available in Russia and to all of the company's approximately 60,000 domestic and international shareholders. Antonio Valdez Garcia, a native Russian, was general manager of the subsidiary company until 2004. The Company is anxious for his health and well being and remains aware of the tremendous stress he must be experiencing during his forced incarceration. Headquartered in Houston, Texas, Yukos Oil Company is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. On Feb. 24, 2005, Judge Letitia Z. Clark dismissed the Chapter 11 case. (Yukos Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Marshall & Stevens Adds Alfred King & Robert Kleeman to Firm -------------------------------------------------------------- Mark Santarsiero, president of Marshall & Stevens, disclosed that two recognized leaders in the valuation industry have joined Marshall & Stevens and have assumed prominent roles within the firm: Alfred M. King, CMA, and Robert E. Kleeman, Jr., CPA, ABV, ASA, CVA. Mr. King will serve as the firm's vice chairman and national technical manager, financial valuation and consulting. Mr. Kleeman is the new executive vice president, national practice leader for financial valuation and consulting. Both men bring more than 35 years of valuation experience with mergers, acquisitions, divestitures, financings and litigation to their roles at Marshall & Stevens. Mr. King will consult on the valuation of intangible assets, complex allocations-of-purchase-price, business combinations, and analyses relating to domestic and international taxes and financial reporting. He has provided litigation support specific to trademark infringement and business valuation issues, and testified in bankruptcy court. Four years ago, through the AICPA, Mr. King spearheaded the Appraisal Issues Task Force for the SEC in which he is still actively involved. A former managing director of the Institute of Management Accountants, King currently serves on its Financial Reporting Committee. Mr. King has authored numerous books and articles related to valuation. Several of his editorials have been awarded certificates of merit by the Institute for Management Accountants. His most recent book, "Valuation: What Assets Are Really Worth," was published in 2002. Robert Kleeman's primary focus at Marshall & Stevens will be the issuance of fairness and solvency opinions, complex financial valuations, and litigation support. His litigation support experience includes assignments for U.S. Department of Justice, FDIC, the IRS, and the RTC. In addition, his experience includes consulting with major law firms in numerous states. A member of the AICPA, Mr. Kleeman has served on its Business Valuation Subcommittee and chaired its Business Valuation Conference, along with serving on the ABV Credential Subcommittee. He has also served three years on the Education Board of NACVA (National Association of Certified Valuation Analysts). Mr. Kleeman has taught continuing professional education courses on valuation and expert testimony. He has served on numerous committees within the state CPA societies of Colorado and Illinois. Marshall & Stevens is one of the premier, independent, multidisciplinary valuation firms in the world. Its professionals provide fairness and solvency opinions, and the valuation of businesses and business assets, both tangible and intangible, to public and private corporations. Headquartered in Los Angeles, Calif., Marshall & Stevens has offices in Atlanta, Chicago, Denver, Houston, New York, Philadelphia, San Francisco, St. Louis, and Tampa. * The Garden City Group Promotes Jennifer M. Keough to Senior VP ---------------------------------------------------------------- David A. Isaac, president of The Garden City Group, Inc., reported the promotion of Jennifer M. Keough to senior vice president and managing director of the company's west coast operations. Ms. Keough previously held the title of vice president and managing director, west coast operations. "Since joining the firm two years ago, Jennifer has made significant contributions to the extraordinary success of our west coast operations," said Mr. Isaac. "She brings to our organization an extensive background in managing class action administration that will continue to serve our clients well." As a former GCG client and class action business analyst, Keough has an insider's experience of the class action processes. She was responsible for managing the settlement implementation and administration process for large class action settlements at the Perkins Coie law firm and prior to that, she gained her legal expertise while working for a highly regarded civil litigation firm in Seattle. "Our west coast operations complement our regional offices throughout the country, and enable us to provide high quality, cost-effective service to clients and claimants coast-to-coast," said Keough. "Since I joined GCG, we have successfully expanded our west coast operations team -- a team comprised of people who stand behind their work, keep their word, and meet their deadlines. These are the same qualities that impressed me when I was a GCG client," added Ms. Keough. "I am proud to be part of the GCG team." Ms. Keough did her undergraduate and business graduate work at Seattle University Albers School of Business, where she graduated cum laude with a B.A. in Business Management and a Masters in Finance and Valuation. She received her J.D. from Seattle University, where she authored the article "Navigating the Ethical Challenges of Representing Older Clients." The Garden City Group, Inc., -- http://www.gardencitygroup.com/-- is a subsidiary of Crawford & Company. It administers class action settlements, designs legal notice programs, manages Chapter 11 administrations, and provides expert consultation services. Based in Atlanta, Georgia, Crawford & Company -- http://www.crawfordandcompany.com/-- is the world's largest independent provider of claims management solutions to insurance companies and self-insured entities, with a global network of more than 700 offices in 63 countries. Major service lines include workers' compensation claims administration and healthcare management services, property and casualty claims management, and risk management information services. The Company's shares are traded on the NYSE under the symbols CRDA and CRDB. * BOND PRICING: For the week of June 20 - June 24, 2005 ------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- AAIPharma Inc. 11.000% 04/01/10 49 ABC Rail Product 10.500% 01/15/04 0 ABC Rail Product 10.500% 12/31/04 0 Adelphia Comm. 3.250% 05/01/21 5 Adelphia Comm. 6.000% 02/15/06 5 Aetna Industries 11.875% 10/01/06 7 Allegiance Tel. 11.750% 02/15/08 28 Allegiance Tel. 12.875% 05/15/08 1 Allied Holdings 8.625% 10/01/07 47 Amer. Color Graph. 10.000% 06/15/10 72 Amer. Restaurant 11.500% 11/01/06 65 Amer. Tissue Inc. 12.500% 07/15/06 2 American Airline 7.377% 05/23/19 70 American Airline 7.379% 05/23/16 71 American Airline 10.180% 01/02/13 71 American Airline 10.600% 03/04/09 66 American Airline 10.680% 03/04/13 65 AMR Corp. 9.200% 01/30/12 70 AMR Corp. 9.750% 08/15/21 70 AMR Corp. 9.800% 10/01/21 66 AMR Corp. 9.880% 06/15/20 74 AMR Corp. 10.000% 04/15/21 74 AMR Corp. 10.125% 06/01/21 68 AMR Corp. 10.200% 03/15/20 66 AMR Corp. 10.400% 03/15/11 62 AMR Corp. 10.450% 11/15/11 63 Anchor Glass 11.000% 02/15/13 74 Anvil Knitwear 10.875% 03/15/07 58 Apple South Inc. 9.750% 06/01/06 10 Archibald Candy 10.000% 11/01/07 2 Armstrong World 6.500% 08/15/05 75 AT Home Corp. 0.525% 12/28/18 7 AT Home Corp. 4.750% 12/15/06 32 ATA Holdings 12.125% 06/15/10 21 ATA Holdings 13.000% 02/01/09 40 Atlantic Coast 6.000% 02/15/34 16 Atlas Air Inc. 8.770% 01/02/11 29 Autocam Corp. 10.875% 06/15/14 71 B&G Foods Holding 12.000% 10/30/16 8 Bank New England 8.750% 04/01/99 10 Bank New England 9.500% 02/15/96 9 BBN Corp. 6.000% 04/01/12 0 Broadband Tech. 5.000% 05/15/01 0 Burlington Northern 3.200% 01/01/45 63 Burlington Inds. 7.250% 08/01/27 4 Calpine Corp. 4.750% 11/15/23 75 Calpine Corp. 7.750% 04/15/09 67 Calpine Corp. 7.875% 04/01/08 67 Calpine Corp. 8.500% 02/15/11 68 Calpine Corp. 8.625% 08/15/10 67 Calpine Corp. 8.750% 07/15/13 73 Charter Comm Hld. 8.625% 04/01/09 75 Charter Comm Hld. 9.625% 11/15/09 75 Charter Comm Hld. 10.000% 05/15/11 73 Charter Comm Hld. 10.250% 01/15/10 74 Charter Comm Hld. 11.125% 01/15/11 74 Charter Comm Inc. 5.875% 11/16/09 65 Ciphergen 4.500% 09/01/08 72 Coeur D'Alene 1.250% 01/15/24 72 Collins & Aikman 10.750% 12/31/11 41 Color Tile Inc. 10.750% 12/15/01 0 Comcast Corp. 2.000% 10/15/29 43 Comdisco Inc. 7.230% 08/16/01 0 Comprehens Care 7.500% 04/15/10 0 Covad Communication 3.000% 03/15/24 70 Covanta Energy 7.500% 03/15/12 69 Cray Research 6.125% 02/01/11 51 Curagen Corp. 4.000% 02/15/11 72 Curagen Corp. 4.000% 02/15/11 69 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 51 Delta Air Lines 7.779% 01/02/12 57 Delta Air Lines 7.900% 12/15/09 36 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 60 Delta Air Lines 8.540% 01/02/07 33 Delta Air Lines 8.540% 01/02/07 45 Delta Air Lines 9.000% 05/15/16 30 Delta Air Lines 9.200% 09/23/14 31 Delta Air Lines 9.250% 03/15/22 27 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 22 Delta Air Lines 9.875% 04/30/08 60 Delta Air Lines 10.000% 08/15/08 39 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 44 Delta Air Lines 10.140% 08/26/12 47 Delta Air Lines 10.375% 02/01/11 38 Delta Air Lines 10.375% 12/15/22 30 Delta Air Lines 10.430% 01/02/11 53 Delta Air Lines 10.790% 09/26/13 36 Delta Air Lines 10.790% 09/26/13 37 Delta Air Lines 10.790% 03/26/14 30 Delphi Auto System 7.125% 05/01/29 70 Delphi Trust II 6.197% 11/15/33 55 Diva Systems 12.625% 03/01/08 0 Dura Operating 9.000% 05/01/09 73 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 70 Eagle Food Center 11.000% 04/15/05 0 Emergent Group 10.750% 09/15/04 0 Empire Gas Corp. 9.000% 12/31/07 4 Epix Medical Inc. 3.000% 06/15/24 68 Evergreen Intl. Avi. 12.000% 05/15/10 73 Exodus Comm. Inc. 5.250% 02/15/08 0 Fedders North Am. 9.875% 03/01/14 61 Federal-Mogul Co. 7.375% 01/15/06 23 Federal-Mogul Co. 7.500% 01/15/09 26 Federal-Mogul Co. 8.160% 03/06/03 24 Federal-Mogul Co. 8.370% 11/15/01 24 Federal-Mogul Co. 8.800% 04/15/07 25 Fibermark Inc. 10.750% 04/15/11 74 Finisar Corp. 2.500% 10/15/10 74 Finisar Corp. 2.500% 10/15/10 75 Finisar Corp. 5.250% 10/15/08 72 Finova Group 7.500% 11/15/09 43 Firstworld Comm 13.000% 04/15/08 0 Foamex L.P. 9.875% 06/15/07 63 Gateway Inc. 2.000% 12/31/11 72 GMAC 5.850% 06/15/13 71 GMAC 5.900% 01/15/19 73 GMAC 6.000% 02/15/19 73 GMAC 6.000% 02/15/19 73 GMAC 6.000% 02/15/19 74 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 74 GMAC 6.000% 03/15/19 74 GMAC 6.000% 09/15/19 73 GMAC 6.050% 08/15/19 73 GMAC 6.050% 10/15/19 73 GMAC 6.100% 09/15/19 74 GMAC 6.125% 10/15/19 74 GMAC 6.150% 08/15/19 75 GMAC 6.250% 04/15/19 74 Golden Books Pub 10.750% 12/31/04 0 Graftech Int'l 1.625% 01/15/24 66 Graftech Int'l 1.625% 01/15/24 61 Guilford Pharma 5.000% 07/01/08 75 Gulf States STL 13.500% 04/15/03 0 Home Interiors 10.125% 06/01/08 68 Icos Corp. 2.000% 07/01/23 72 Idine Rewards 3.250% 10/15/23 74 Imperial Credit 9.875% 01/15/07 0 Impsat Fiber 6.000% 03/15/11 70 Inland Fiber 9.625% 11/15/07 44 Integrated Elec. Sv 9.375% 02/01/09 75 Integrated Elec. Sv 9.375% 02/01/09 74 Intermet Corp. 9.750% 06/15/09 41 Intermune Inc. 0.250% 03/01/11 74 Iridium LLC/CAP 10.875% 07/15/05 15 Iridium LLC/CAP 11.250% 07/15/05 16 Iridium LLC/CAP 13.000% 07/15/05 16 Iridium LLC/CAP 14.000% 07/15/05 14 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 Kmart Corp. 9.780% 01/05/20 68 Kulicke & Soffa 0.500% 11/30/08 74 Level 3 Comm. Inc. 2.875% 07/15/10 54 Level 3 Comm. Inc. 6.000% 09/15/09 56 Level 3 Comm. Inc. 6.000% 03/15/10 53 Liberty Media 3.750% 02/15/30 59 Liberty Media 4.000% 11/15/29 62 Lukens Inc. 7.625% 08/01/04 0 LTV Corp. 8.200% 09/15/07 0 Metaldyne Corp. 11.000% 06/15/12 72 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 44 MSX Intl. Inc. 11.375% 01/15/08 61 Natl Steel Corp. 8.375% 08/01/06 1 North Atl Trading 9.250% 03/01/12 73 Northern Pacific Railway 3.000% 01/01/47 62 Northwest Airlines 7.248% 01/02/12 55 Northwest Airlines 7.360% 02/01/20 55 Northwest Airlines 7.626% 04/01/10 65 Northwest Airlines 7.691% 04/01/17 71 Northwest Airlines 7.875% 03/15/08 46 Northwest Airlines 8.070% 01/02/15 48 Northwest Airlines 8.130% 02/01/14 49 Northwest Airlines 8.700% 03/15/07 51 Northwest Airlines 8.875% 06/01/06 66 Northwest Airlines 8.970% 01/02/15 62 Northwest Airlines 9.875% 03/15/07 58 Northwest Airlines 10.000% 02/01/09 46 Northwest Airlines 10.500% 04/01/09 50 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 16 Oscient Pharm 3.500% 04/15/11 68 O'Sullivan Ind. 13.375% 10/15/09 35 Orion Network 11.250% 01/15/07 54 Outboard Marine 9.125% 04/15/17 0 Owens Corning 7.000% 03/15/09 72 Pegasus Satellite 9.625% 10/15/05 58 Pegasus Satellite 9.750% 12/01/06 54 Pegasus Satellite 12.375% 08/01/06 54 Pegasus Satellite 12.500% 08/01/07 54 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings Inc. 9.875% 06/15/08 62 Pixelworks Inc. 1.750% 05/15/24 72 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 70 Primedex Health 11.500% 06/30/08 44 Primus Telecom 3.750% 09/15/10 25 Primus Telecom 5.750% 02/15/07 32 Primus Telecom 8.000% 01/15/14 53 Primus Telecom 12.750% 10/15/09 46 Psinet Inc 11.500% 11/01/08 0 Railworks Corp. 11.500% 04/15/09 0 Radnor Holdings 11.000% 03/15/10 70 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 25 Reliance Group Holdings 9.750% 11/15/03 3 RJ Tower Corp. 12.000% 06/01/13 66 Salton Inc. 10.750% 12/15/05 51 Salton Inc. 12.250% 04/15/08 42 Scotia Pac Co. 6.550% 01/20/07 75 Scotia Pac Co. 7.110% 01/20/14 74 Specialty Paperb. 9.375% 10/15/06 69 Syratech Corp. 11.000% 04/15/07 26 Tekni-Plex Inc. 12.750% 06/15/10 66 Tops Appliance 6.500% 11/30/03 0 Tower Automotive 5.750% 05/15/24 21 Trans Mfg Oper 11.250% 05/01/09 52 Triton PCS Inc. 8.750% 11/15/11 70 Triton PCS Inc. 9.375% 02/01/11 72 Tropical SportsW 11.000% 06/15/08 41 Twin Labs Inc. 10.250% 05/15/06 14 United Air Lines 6.831% 09/01/08 34 United Air Lines 6.932% 09/01/11 65 United Air Lines 7.270% 01/30/13 43 United Air Lines 7.762% 10/01/05 19 United Air Lines 7.811% 10/01/09 54 United Air Lines 8.030% 07/01/11 30 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 50 United Air Lines 9.000% 12/15/03 13 United Air Lines 9.020% 04/19/12 36 United Air Lines 9.060% 09/26/14 45 United Air Lines 9.125% 01/15/12 14 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 39 United Air Lines 9.750% 08/15/21 14 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 47 United Air Lines 10.250% 07/15/21 13 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 15 Univ. Health Services 0.426% 06/23/20 64 Uromed Corp. 6.000% 10/15/03 0 US Air Inc. 10.250% 01/15/07 2 US Air Inc. 10.250% 01/15/07 4 US Air Inc. 10.610% 06/27/07 0 US Air Inc. 10.610% 06/27/07 2 US Air Inc. 10.900% 01/01/08 2 US Airways Inc. 7.960% 01/20/18 48 Utstarcom 0.875% 03/01/08 65 Venture Hldgs 9.500% 07/01/05 0 Venture Hldgs 11.000% 06/01/07 0 WCI Steel Inc. 10.000% 12/01/04 67 Werner Holdings 10.000% 11/15/07 69 Wheeling-Pitt St. 5.000% 08/01/11 65 Wheeling-Pitt St. 6.000% 08/01/10 65 Winn-Dixie Store 8.875% 04/01/08 55 Winsloew Furniture 12.750% 08/15/07 28 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 36 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Pinili, Jr., and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***