/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050704.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, July 4, 2005, Vol. 9, No. 156 Headlines ACANDS INC: Wants Exclusive Plan Filing Period Extended to Oct. 18 ACANDS INC: Wants Until Nov. 4 to File Notices of Removal ALLMERICA FINANCIAL: Good Performance Cues S&P's Positive Outlook ALOHA AIRLINES: Court Approves Settlement with Christchurch AMCAST INDUSTRIAL: Inks Premium Financing Agreement with AFCO AMERICAN WOOD: Case Summary & 20 Largest Unsecured Creditors AMERIQUEST MORTGAGE: Moody's Reviews Class B Cert. & May Downgrade ARIZANT INC: S&P Rates $140 Million Senior Secured Facility at B+ ASHLAND INC: Moody's Cuts Corporate Family Rating to Ba1 AT&T CORP: Shareholders Approve $16 Billion SBC Merger ATA AIRLINES: Balks at John Hancock's Administrative Claim ATLANTIC HEALTH: Case Summary & 19 Largest Unsecured Creditors ATRIUM IV: Moody's Rates $8M Class D-1 Floating Rate Notes at Ba2 BANC OF AMERICA: Fitch Puts B Rating on $1.4MM Mortgage Certs. BANC OF AMERICA: S&P Lifts Ratings on Three Certificate Classes BEALS MANAGEMENT: Case Summary & 10 Largest Unsecured Creditors BILL WATSON: Case Summary & 36 Largest Unsecured Creditors BOMBARDIER INC: Closes $1.1 Billion Unsecured Credit Facility BOSTON EQUIPMENT: Case Summary & 20 Largest Unsecured Creditors BOYD GAMING: Can Access Up to $250 Million From Bank Loan Facility BRANDON BELL: Voluntary Chapter 11 Case Summary CAMPBELL RESOURCES: Obtains CCAA Protection in Quebec CATHOLIC CHURCH: Tucson Wants to Assume Equipment & Office Leases CATHOLIC CHURCH: Court Rules on Tucson's Estimation Protocol CONSTELLATION BRANDS: Earns $71.2 Million of Net Income in Q1 CREDIT SUISSE: Moody's Junks $6.76 Million Class N Certificate CWMBS INC: Fitch Places Low-B Ratings on 4 Cert. Classes DEEP RIVER: Wants to Hire Ravin Greenberg as Bankruptcy Counsel DEL MONTE: Buys 12MM Shares from Goldman Sachs in Private Tender DELPHI CORP: Completes Financial Restatements & Audit Probe DELTA FUNDING: S&P's Rating on Class B Notes Tumbles to D DELTAGEN INC: Wants Until Oct. 18 to File Plan of Reorganization ENVIRONMENTAL ELEMENTS: Files Chapter 11 Petition in Maryland ENVIRONMENTAL ELEMENTS: Case Summary & 20 Largest Creditors EXIDE TECH: PwC Expresses Going Concern Doubt in Annual Report FLAGSHIP CLO: Moody's Rates $13.2MM Class D Rate Notes at Ba2 FRESENIUS AG: Moody's Downgrades EU300 Million Senior Notes to Ba2 FRESENIUS AG: $4B Renal Care Buy Cues S&P's to Maintain Watch FRESENIUS MEDICAL: Moody's Cuts Bank Debt to Ba2 & Sub. Debt to B1 GENERAL ELECTRIC: Moody's Rates $17.83MM Class D Certs. at Ba2 GRANITE VENTURES: Moody's Rates $9.5MM Class D Sub. Notes at Ba2 GREYHOUND LINES: Effects Covenant Defeasance on 11.5% Senior Notes HOLMES GROUP: $625MM Jarden Deal Prompts S&P's Positive Watch HOLMES GROUP: Moody's Affirms Corporate Family Rating at B1 ISECURETRAC CORP: Closes $11 Million Mykonos Financing ISECURETRAC CORP: Retires $4.2 Million of Long-Term Notes Payable J.P. MORGAN: Moody's Junks $20.8M Class J Pass-Through Certs. J/Z CBO: Credit Enhancement Prompts S&P's Positive Watch JARDEN CORP: Moody's Rates Proposed $350M Loan Tack-On at B1 JARDEN CORP: S&P Rates Proposed $350 Million Bank Loan at B+ JERNBERG INDUSTRIES: Taps Jenner & Block as Lead Bankr. Counsel JERNBERG INDUSTRIES: Taps Carson Fischer as Local Counsel JUNO LIGHTING: $610 Mil. Schneider Deal Cues S&P's Positive Watch KAISER ALUMINUM: Summary & Overview of Joint Reorganization Plan L-3 COMMS: Buying Titan's 8% Senior Subordinated Notes for Cash LAIDLAW INT'L: Inks New $600 Million Credit Facility LEAP WIRELESS: Judge Adler Formally Closes Chapter 11 Cases MERIDIAN AUTOMOTIVE: Can Pay Additional $600K for Shipping Claims MERIDIAN AUTOMOTIVE: Ct. Okays Winston & Strawn as Panel's Counsel MERRILL LYNCH: Fitch Assigns BB+ Rating to $8.51MM Class B Certs. METABOLIFE INT'L: Files for Chapter 11 Protection in S.D. Calif. METABOLIFE INT'L: Case Summary & 20 Largest Unsecured Creditors MIRANT CORP: Deutsche Bank Says Chapter 11 Plan is Unconfirmable MORGAN STANLEY: Fitch Puts BB Rating on $7.8 MM Private Certs. MPOWER HOLDING: Wants Until Oct. 20 To Object to Proofs of Claim NAKOMA LAND: Creditors' Meeting Continues on July 11 NAKOMA LAND: Look for Bankruptcy Schedules Tomorrow NORTHWESTERN: Montana Cities Offer $1.17 Bil. for Utility Systems NORTHWESTERN CORP: Moody's Rates $200M Sr. Unsec. Facility at Ba2 NORTHWESTERN CORP: Fitch Lifts Sr. Debt Rating One Notch to BBB- NORTHWESTERN CORP: Good Performance Prompts S&P to Lift Ratings O'CHARLEY'S INC: Good Performance Prompts S&P's Stable Outlook OLENTANGY COMMERCE: Receiver Retains Control at Lenders' Behest OLENTANGY COMMERCE: Receiver Hires Kohrman Jackson as Counsel ORBIT BRANDS: Plans to Spin Off Two Subsidiaries in Reorganization OZARK AIR: Chapter 7 Trustee Hires Four Professionals PARKER DRILLING: $180MM Debt Reduction Cues S&P's Stable Outlook PARKWAY HOSPITAL: Files Chapter 11 Petition in S.D. New York PARKWAY HOSPITAL: Case Summary & 20 Largest Unsecured Creditors PIER ONE: Case Summary & 4 Largest Unsecured Creditors PRIME MORTGAGE: Fitch Puts Low-B Rating on 2 Certificate Classes QUIKSILVER INC: S&P Rates Proposed $350 Million Notes at BB- REHOBOTH MCKINLEY: Material Losses Cue Fitch to Lower Ratings RESIDENTIAL ACCREDIT: Fitch Puts BB & B Ratings on Class B Certs. RESIDENTIAL ACCREDIT: Fitch Puts Low-B Rating on Class B Certs. RESIDENTIAL ACCREDIT: Fitch Rates 2 Class B Certs. at Low-B RLC INDUSTRIES: Moody's Upgrades $600MM Bank & Bond Ratings to Ba3 SALTON INC: Angelo Gordon Inks Pact for Private Debt Exchange SALTON INC: SunTrust Replaces Wells Fargo as Indentures Trustee SALTON INC: Restating Financial Reports to Reclassify Pref. Stock SBC COMMUNICATIONS: Applauds Stockholder Vote on AT&T Merger SHAW GROUP: Moody's Rates $450 Mil. Sr. Secured Facility at Ba2 SHOPKO STORES: Buying Back $100 Million of 9-1/4% Senior Notes SIGNATURE POINTE: Case Summary & 20 Largest Unsecured Creditors SLIDELL INC.: Wants New Trial on $4.2 Million Millennium Verdict STONE TOWER: Moody's Places $4.87M Class D-2 Notes on Watchlist STRUCTURED ASSET: Fitch Puts Low-B Ratings on $14.5MM Certs. STRUCTURED ASSET: Fitch Places Low-B Rating on Two Cert. Classes TARGET GRAPHICS: Case Summary & 20 Largest Unsecured Creditors TELEGLOBE COMMS: Doesn't Want Any Reserve for Duplicate Claims TEXAS PETROCHEMICAL: Huff Names H. Cohn as New Liquidating Trustee TOM'S FOODS: Moody's Withdraws Junk Rating on $60M Sr. Sec. Notes TOYS 'R' US: Post-Merger Debt Burden Prompts S&P to Pare Ratings UAL CORP: Filing Chapter 11 Plan & Disclosure Statement by Aug. 1 US AIRWAYS: Can Use ATSB Lenders' Cash Collateral Until July 29 VISTEON CORPORATION: Moody's Raises Corporate Family Rating to B2 W.R. GRACE: Gets Court Nod to Pay $38.2 Mil. to Retirement Plans WACHOVIA BANK: Fitch Places Low-B Ratings on Six Cert. Classes WELLS FARGO: Fitch Places Low B Rating on $14M Class M Certs. WESTPOINT STEVENS: Court Okays $703 Mil. Asset Sale to Carl Icahn WHITE FOODS: Case Summary & 15 Largest Known Creditors WILFRED CHAN: Case Summary & 20 Largest Unsecured Creditors WINN-DIXIE: Sarria Wants Stay Lifted to Recover Leased Premises WINROCK GRASS: U.S. Trustee Wants Case Converted or Dismissed * BOND PRICING: For the week of June 27 - July 1, 2005 ********* ACANDS INC: Wants Exclusive Plan Filing Period Extended to Oct. 18 ------------------------------------------------------------------ ACandS, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to further extend, through and including the earlier of the effective date of its chapter 11 plan and Oct. 18, 2005, the time within which it alone can file a chapter 11 plan. The Debtor also asks the Court for more time to solicit acceptances of that plan from its creditors, through the earlier of the effective date of that plan and Dec. 22, 2005. The Bankruptcy Court approved the adequacy of the Debtor's Amended Disclosure Statement explaining their proposed Plan of Reorganization on Oct. 3, 2003. On Jan. 26, 2004, the Bankruptcy Court entered its Proposed Findings of Fact and Conclusions of Law Re Chapter 11 Plan Confirmation (Docket No. 979), recommending denial of confirmation of the Debtor's Plan. The Debtor reminds the Bankruptcy Court that its Proposed Findings do not constitute an order of the Bankruptcy Court, but are proposed findings subject to de novo review by the U.S. District Court for the District of Delaware pursuant to Rule 9033 of the Federal Rules of Bankruptcy Procedure. On Feb. 5, 2004, the Debtor and the Official Committee of Asbestos Personal Injury Claimants jointly filed with the District Court an objection to the Bankruptcy Court's Proposed Findings. In that filing, the Debtor and the Committee ask the District Court to reject the Bankruptcy Court's Findings and Conclusions and confirm the proposed chapter 11 plan. On Feb. 3, 2004, the Debtor also delivered a notice to the Bankruptcy Court indicating its intention to ask the District Court to find that the Bankruptcy Court's rulings were wrong and that the plan should be confirmed. The appeal is a precautionary measure given the Rule 9033 objection procedure being used by the Debtor. The Debtor gives the Bankruptcy Court three reasons in support of the requested extension: a) it is still in active negotiations with the Asbestos Claimants Committee and the Futures Representative for Asbestos Claimants in reaching a consensus on the terms of an amended Plan; b) the Debtor intends to ask the District Court to defer a hearing scheduled on July 13, 2005, to consider the appeal and the Debtor and the Asbestos Claimants Committee's joint objection; and c) the requested extension will not prejudice the Debtor's creditors and other parties-in-interest because it is not seeking the extension to delay administration of its case or pressure the creditors into accepting unsatisfactory plan. The Bankruptcy Court will convene a hearing at 2:00 p.m., on Aug. 26, 2005, to consider the Debtor's request to extend its exclusive periods. Headquartered in Lancaster, Pennsylvania, ACandS, Inc., was an insulation contracting company, primarily engaged in the installation of thermal and mechanical insulation. In later years, the Debtor also performed a significant amount of asbestos abatement and other environmental remediation work. The Company filed for chapter 11 protection on September 16, 2002, (Bankr. Del. Case No. 02-12687). Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, P.C., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $100 million. ACANDS INC: Wants Until Nov. 4 to File Notices of Removal --------------------------------------------------------- ACandS, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to further extend, through and including the earlier of Nov. 4, 2005, and the effective date of a chapter 11 plan, the time within which it can file notices of removal with respect to pre-petition Civil Actions pursuant to Rule 9027 of the Federal Rules of Bankruptcy Procedure. The Debtor gives the Bankruptcy Court four reasons in support of the requested extension: a) the Debtor and its professionals have spent the majority of their time and effort focusing on various litigation matters and compiling the massive amount of information necessary to complete the Schedules and Statements dealing with approximately 300,000 asbestos claims; b) the Debtor is still in the process of cooperating and negotiating with the Official Committee of Asbestos Personal Injury Claimants and the Futures Representative for Asbestos Claimants over the terms of an amended and consensual chapter 11 Plan; and c) the requested extension will give the Debtor and its professionals more opportunity to make fully-informed decisions concerning the removal of each pre-petition Civil Action and will assure that the Debtor does not forfeit valuable rights under 28 U.S.C. Sec. 1452; and d) the requested extension will not prejudice the Debtor's adversaries in any pre-petition Civil Action as any party to a Civil Action that is removed may have to seek it remanded to the appropriate State Court pursuant to 28 U.S.C. Section 1452(b). The Bankruptcy Court will convene a hearing at 2:00 p.m., on Aug. 26, 2005, to consider the Debtor's request. Headquartered in Lancaster, Pennsylvania, ACandS, Inc., was an insulation contracting company, primarily engaged in the installation of thermal and mechanical insulation. In later years, the Debtor also performed a significant amount of asbestos abatement and other environmental remediation work. The Company filed for chapter 11 protection on September 16, 2002, (Bankr. Del. Case No. 02-12687). Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, P.C., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $100 million. ALLMERICA FINANCIAL: Good Performance Cues S&P's Positive Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Allmerica Financial Corp. (NYSE:AFC) to positive from stable and affirmed its 'BB' counterparty credit, senior unsecured debt, and preferred stock ratings on the company. At the same time, Standard & Poor's revised its outlook on Allmerica Financial Life Insurance & Annuity Co. and First Allmerica Financial Life Insurance Co. to positive from stable and affirmed its 'BB' counterparty credit and financial strength ratings on these companies. At the same time, Standard & Poor's affirmed its 'BBB+' counterparty credit and financial strength ratings on: * Hanover Insurance Co., * Citizens Insurance Co. of America, and * other rated property/casualty affiliates. The outlook remains stable. "The outlook revision on AFL reflects the stabilization of operating performance of the life operations and our diminished concern that AFL, which is in runoff, will require additional capital support," explained Standard & Poor's credit analyst John Iten. In the past two years, AFL has been marginally profitable on a GAAP basis, but on a statutory basis has generated significant earnings. This has allowed AFL to pay dividends to AFC while still growing its own capital base and improving its risk-adjusted capitalization. "The outlook revision on AFC reflects its conservative usage of financial leverage and improving fixed-charge coverage as the operating performance of its P/C affiliates improves," Mr. Iten added. Financial leverage, including hybrids, is conservative for the rating category at 19% as of year-end 2004. GAAP fixed-charge coverage, including the dividends on the trust preferred securities, improved to 4.9x in 2004 from 2.4x in 2003 and is expected to remain at or above this level in 2005. Statutory fixed-charge coverage, which is based on the ordinary dividend capacity of Hanover and is a better measure of the amount of cash available to AFC for its obligations, improved to 2.5x from 2.0x. However, this measure excludes special dividends from the life affiliates. In 2003 and 2004, AFLIAC received permission from the Massachusetts insurance commissioner to pay special dividends to AFC of $25 million and $75 million, respectively, which along with existing cash and investments has more than covered the holding company's cash requirements. This has allowed the P/C operations to retain their earnings and continue to build surplus for the past two years. Standard & Poor's time horizon for taking any ratings action on AFC and AFL based on the positive outlook is 12-18 months. The ratings on Allmerica P/C reflect: * its established market position in certain states, * a more focused business strategy, * diminished concern about the financial condition of the life companies, and * strong capital position relative to the current rating. These strengths are offset, to some degree, by: * the geographic concentration of the P/C business in states that have been problematic for personal lines carriers, * a lack of premium growth in the recent hard market, and * an increased expense structure that is adversely impacting underwriting performance at the current volume of business. In addition, although Allmerica P/C's underwriting results have improved, performance has lagged that of many of its competitors, particularly other personal lines writers. Personal lines constitute about two-thirds of total net premiums in 2004. Standard & Poor's expects Allmerica P/C's underwriting performance to improve modestly in 2005, reflecting primarily a return to more normal catastrophe loss experience. Excluding the effect of catastrophes and prior-year loss development, Standard & Poor's expects underwriting results to be flat or down slightly, reflecting more competitive market conditions in both personal and commercial lines. Net premium written is expected to be flat as growth in commercial lines is offset by lower premiums in personal lines. Capitalization should improve because dividend requirements of parent AFC should be fully met from the life operations, allowing Allmerica P/C to retain its earnings. Barring any unforeseen deterioration, AFL is expected to continue generating modest GAAP earnings, but substantial statutory earnings, as its liabilities run off. For the past 18 months the company has had in place a dynamic hedging program to offset the investment risk associated with the guaranteed minimum death benefit feature of its variable annuity liabilities. Though this program appears to be operating effectively, Standard & Poor's feels that a longer period of time is needed to evaluate the effectiveness of this hedging strategy. Standard & Poor's expects that AFL will generate GAAP cash flow of about $100 million in 2005 and a somewhat smaller amount in 2006. Standard & Poor's also expects the company to receive regulatory approval to pay dividends of $50 million-$75 million annually in 2005 and 2006, which will be more than enough to cover AFC's annual $40 million interest expense pretax. Capitalization, as measured by Standard & Poor's capital adequacy model, is expected to remain at more than 175%. Should the company meet these expectations, it is likely that the ratings on AFL would be raised by one notch. Financial leverage for AFC, including hybrids, is conservative at 19% and is not expected to rise in 2005. GAAP fixed-charge coverage, including the dividends on the trust preferred securities, improved to 4.9x in 2004 and is expected to remain at or above this level in 2005. If Standard & Poor's expectations for these measures are met, and the expectations for Allmerica P/C and AFL are met, it is likely that the ratings on AFC would be raised by one notch. ALOHA AIRLINES: Court Approves Settlement with Christchurch ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Hawaii approved a settlement agreement between Aloha Airlines Inc. and Pratt & Whitney Air New Zealand Services dba Christchurch Engine Centre. As reported in the Troubled Company Reporter on June 2, 2005, Christchurch Engine Centre operates a facility located in Christchurch, New Zealand, which maintains, repairs and overhauls aircraft engines. Aloha, prior to its bankruptcy filing, owed CEC $940,987 for engine repairs. CEC refused to continue repair work on two of Aloha's engines absent payment. The settlement agreement requires Aloha Air to pay CEC $464,000 on account of its $940,987 prepetition obligation. The balance will be treated as an unsecured, non-priority claim. CEC will immediately resume repair work on Aloha's two engines. Upon completion of the work, Aloha will pay CEC the invoiced price of repairs, estimated at $498,000. Headquartered in Honolulu, Hawaii, Aloha Airgroup, Inc. -- http://www.alohaairlines.com/-- provides air carrier service connecting the five major airports in the State of Hawaii. Aloha Airgroup and its subsidiary Aloha Airlines, Inc., filed for chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., and Simon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevansky represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors it listed more than $50 million in estimated assets and debts. AMCAST INDUSTRIAL: Inks Premium Financing Agreement with AFCO ------------------------------------------------------------- Amcast Industrial Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division at Dayton, to approve a commercial premium financing agreement with AFCO Premium Credit LLC. The premium financing agreement will enable the Debtors to pay four insurance premiums beginning July 1, 2005: -- property, -- general liability, -- excess workers' compensation, and -- an umbrella policy. The total premium under the four insurance policies is $940,281, of which AFCO proposes to finance $644,411. The financing pact carries a 5.742% annual interest. The Debtors propose to grant AFCO a security interest in the gross unearned premiums. The unearned premiums will be payable in case the insurance policies will be cancelled. The DIP lender doesn't object to the proposed terms of the financing. The unearned premiums would become a part of the postpetition collateral subject to the DIP lender's lien. Headquartered in Dayton, Ohio, Amcast Industrial Corporation -- http://www.amcast.com/-- is a manufacturer and distributor of technology-intensive metal products to end-users and supplier in the automotive and plumbing industry. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 30, 2004 (Bankr. S.D. Ohio Case No. 04-40504). Jennifer L. Maffett, Esq., at Thompson Hine LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $104,968,000 and total debts of $165,221,000. AMERICAN WOOD: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: American Wood Corp. fka American Wood Products Inc. 1515 Masters Avenue Ashland, Ohio 44805 Bankruptcy Case No.: 05-63719 Type of Business: The Debtor makes and sells pallets. The company has 50 employees, four sawmills and a fleet of trucks. See http://www.american-wood.com/ Chapter 11 Petition Date: June 29, 2005 Court: Northern District of Ohio (Canton) Judge: Russ Kendig Debtor's Counsel: Michael J. Moran, Esq. Gibson & Lowry P.O. Box 535 234 Portage Trail Cuyahoga Falls, Ohio 44222 Tel: (330) 929-0507 Fax: (330) 929-6605 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Irwin Financial Association Trade debt $35,500 2025 Claremont Avenue Ashland, OH 44805 National City Visa Misc. credit $28,476 P.O. Box 856176 purchases Louisville, KY 40285 Truck Sales Leasing, Ltd. Semi-truck lease $25,694 P.O. Box 262 3429 Brightwood Road Midvale, OH 44653 Scenic Wood Products Trade debt $23,329 Bureau of Worker's Workers' compensation $17,946 Compensation claims Superior Pallet Wood Trade debt $15,488 BP Products of North America Trade debt $13,224 Santmyer Oil Co. Trade debt $13,160 R&D Hilltop Lumber, Inc. Trade debt $10,329 Gilco Lumber, Inc. Trade debt $9,910 J Fink Equipment, Inc. Trade debt $9,050 Allen, Kuehnle & Stoval Professional services $8,016 Facemyer Lumber Trade debt $7,503 Bank of America Trade debt $7,446 Knisley Lumber Company Trade debt $7,340 John L. Hershberger Trade debt $6,813 Meeks & Tuthill Saw Co. Trade debt $6,713 Millwood Logging Co. Trade debt $6,645 Grange Mutual Casualty Insurance premiums $6,484 Stanley Fastening Trade debt $6,392 AMERIQUEST MORTGAGE: Moody's Reviews Class B Cert. & May Downgrade ------------------------------------------------------------------ Moody's Investors Service has upgraded twenty five certificates from eleven deals originated by Ameriquest Mortgage Company. In addition, it has confirmed two certificates previously put on watch for possible downgrade. Finally, Moody's has put two classes on review for possible upgrade, two classes on review for possible downgrade, and has left one class on review for possible downgrade. The transactions, issued in 2001- 2002, are backed by first lien adjustable- and fixed-rate subprime mortgage loans. The rating actions were based on the analysis of current credit enhancement levels provided by: * excess spread; * overcollateralization; * subordination; and * in some cases, PMI relative to the projected pipeline losses. Also, for newer deals that have not yet reached the step down date, the impact of the step down provision was considered in order to take into account the potential of overcollateralization being released. The most subordinate classes from both fixed- and adjustable-rate pools of Chase Funding Loan Acquisition Trust, Series 2002-C1 deal are being reviewed for possible upgrade based on the level of credit enhancement provided by the excess spread, overcollateralization and subordination. The projected pipeline losses are not expected to significantly affect the credit support for these certificates. The seasoning of the loans and low pool factor reduces loss volatility. The two most subordinate tranches from ABFC 2001-AQ1 transaction have been placed on review for downgrade because existing credit enhancement levels are low given the current projected losses on the underlying pools. The transaction has taken losses and pipeline loss could cause eventual erosion of the overcollateralization. Additionally, the most subordinate class from Ameriquest Mortgage Securities, Inc., Series 2002-3 deal remains on review for possible downgrade. High loss severities on properties held for resale could have further negative impact on the credit quality of M-4 certificate. Moody's complete rating actions are: Upgrade: Issuer: Ameriquest Mortgage Securities, Inc * Series 2000-1; Class M2, upgraded from A2 to Aaa * Series 2000-1; Class M3, upgraded from Baa2 to Baa1 * Series 2000-2; Class M2, upgraded from A2 to Aaa * Series 2000-2; Class M3, upgraded from Baa2 to Baa1 * Series 2002-1; Class M1, upgraded from Aa2 to Aaa * Series 2002-1; Class M2, upgraded from A2 to Aa2 * Series 2002-1; Class M3, upgraded from Baa2 to A2 * Series 2002-2; Class M1, upgraded from Aa2 to Aaa * Series 2002-2; Class M2, upgraded from A2 to Aa3 * Series 2002-3; Class M1, upgraded from Aa2 to Aaa * Series 2002-3; Class M2, upgraded from A2 to Aa2 * Series 2002-4; Class M1, upgraded from Aa2 to Aaa * Series 2002-4; Class M2, upgraded from A2 to Aa2 * Series 2002-4; Class M3, upgraded from Baa2 to A3 * Series 2002-5; Class M1, upgraded from Aa2 to Aaa * Series 2002-5; Class M2, upgraded from A2 to Aa2 * Series 2002-AR1; Class M1, upgraded from Aa2 to Aaa * Series 2002-AR1; Class M2, upgraded from A2 to A1 Issuer: Ace Securities Corporation Home Equity Loan Trust * Series 2001-AQ1; Class M1, upgraded from Aa2 to Aaa Issuer: Chase Funding Loan Acquisition Trust * Series 2002-C1; Class 1M1, upgraded from Aa2 to Aaa * Series 2002-C1; Class 1M2, upgraded from A2 to Aa2 * Series 2002-C1; Class 2M1, upgraded from Aa2 to Aaa * Series 2002-C1; Class 2M2, upgraded from A2 to Aa2 Issuer: SAND Trust 2001-1 Asset Backed Certificates * Series 2001-1; Class M2, upgraded from Baa2 to A1 * Series 2001-1; Class B, upgraded from Ba2 to Baa3 Confirmed: Issuer: Ameriquest Mortgage Securities, Inc. * Series 2002-2; Class M3, confirmed at Baa2 * Series 2002-AR1; Class M3, confirmed at Baa2 Review for upgrade: Issuer: Chase Funding Loan Acquisition Trust * Series 2002-C1; Class IB, current rating Baa2, under review for possible upgrade * Series 2002-C1; Class IIB, current rating Baa2, under review for possible upgrade Review for downgrade: Issuer: Ameriquest Mortgage Securities, Inc. * Series 2002-3; Class M4, current rating Baa3, under review for possible downgrade Issuer: ABFC Mortgage Loan Asset-Backed Certificates * Series 2001-AQ1, Class M2, current rating Baa3, under review for possible downgrade * Series 2001-AQ1, Class B, current rating B2, under review for possible downgrade ARIZANT INC: S&P Rates $140 Million Senior Secured Facility at B+ ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' bank loan rating to medical products maker Arizant Inc.'s $140 million senior secured credit facility. A recovery rating of '4' also was assigned to the loan, indicating the expectation for marginal (25%-50%) recovery of principal in the event of a payment default. The facility is being issued to refinance higher cost subordinated debt. The company will have approximately $130 million of debt outstanding at the close of the transaction. The 'B+' corporate credit rating on Arizant was affirmed. The outlook is stable. "The speculative-grade ratings reflect Arizant's limited size and resources, its operation within a niche market, and its highly leveraged capital structure," said Standard & Poor's credit analyst Jordan Grant. "These factors overshadow the company's leading position in the temperature management market and its consistent growth." Minneapolis, Minnesota-based Arizant is the leading manufacturer of perioperative temperature management products. Its three product lines include disposable warming blankets used during surgery, fluid warming devices, and disposable hospital warming gowns. The company generates largely recurring revenue because disposable products, which account for more than 90% of its sales, are used with its growing installed base of fixed warming units. Although Arizant has a dominant position in warming blankets, it must compete against larger companies with greater financial resources in both of its key markets. While the company has protected its product innovations with patents, it is subject to risks associated with changes in technology. Arizant will also have to employ a substantial amount of its cash flow to service debt. Pro forma for the transaction, total lease-adjusted debt to EBITDA will be slightly above 4x, which is somewhat aggressive. Still, relatively stable cash flows from a high percentage of recurring revenues should help the company achieve funds from operations to lease-adjusted debt of 12% and EBITDA interest coverage of 3x -- measures that are consistent with the rating. Standard & Poor's also expects the company to reduce leverage to below 4x debt to EBITDA within the next year through measured debt reduction. ASHLAND INC: Moody's Cuts Corporate Family Rating to Ba1 -------------------------------------------------------- Moody's Investors Service downgraded the senior unsecured debt of Ashland Inc. to Ba1 following Ashland's shareholder approval of the sale of its 38% equity interest in Marathon Ashland Petroleum LLC to Marathon Oil Corporation. Moody's also downgraded Ashland's issuer rating to Ba1 from Baa2, lowered the company's rating for CP to Not-Prime from Prime-3, and assigned a corporate family rating of Ba1. Ashland will likely repay roughly $1 billion of its rated debt with the proceeds of from the MAP transaction. Moody's also lowered the ratings on tax exempt pollution control revenue bonds that are supported by Ashland to Ba1. The outlook for Ashland is stable. Ashland Inc.: Ratings assigned: * Corporate family rating -- Ba1 Ratings downgraded: * Issuer rating to Ba1 from Baa2 * Senior unsecured notes and debentures to Ba1 from Baa2 * Rating for commercial paper to Not-Prime from Prime-3 * Pollution control revenue bonds supported by Ashland to Ba1 from Baa2 * Shelf registration for senior unsecured debt to (P)Ba1 from (P)Baa2 * subordinated debt to (P)Ba2 from (P)Baa3 * preferred stock to (P)Ba3 from (P)Ba1 Ashland's Ba1 corporate family rating reflects: * the size of the company's large cash balance (estimated at $1 billion subsequent to this transaction); * the company's substantial size with roughly $9 billion in sales, the significant diversity in its businesses; and * the moderate improvement to financial performance since fiscal 2003. The ratings are tempered by weak operating margins, Moody's belief that the company will remain free cash flow negative in 2005, and the willingness of management to re-lever the balance sheet over time to a targeted 30% debt to capital or 2-3 times debt to EBITDA level. The stable outlook reflects Moody's expectation that free cash flow will be negative by less than $200 million in 2005, excluding the impact of the MAP transaction and related extraordinary items, and that operating performance will improve significantly (operating margins will rise above 4%) in fiscal 2006 enabling positive free cash flow generation. The ratings could be lowered if free cash flow is negative by more than $100 million in 2006, or there is a significant reduction in the company's cash balance due to an acquisition or other event. There would be positive pressure on the ratings if operating margins rise meaningfully above 5%, and the company is able to demonstrate sustainable free cash flow generation of $100-150 million per year. Over the past two years, Ashland has been working to improve the performance of its wholly-owned businesses. The profitability of its Distribution and Specialty Chemical segments has increased significantly, but they remain below industry medians for this point in the cycle, in Moody's opinion. Additionally, improving the profitability of the paving and construction business has been an ongoing challenge due to adverse weather conditions and elevated fuel, concrete and asphalt costs. Finally, Valvoline has continued to be a solid contributor to earnings, but the high level of Ashland's corporate expenses offsets the earnings from this business. On a consolidated LTM basis, the company's operating margins are roughly 2% and have been below 3.5% for the past three years. Moreover, the company's cumulative free cash flow over the past three calendar years, excluding the after-tax value of MAP dividends and certain one-time items, has been negative by over $400 million. Year-to-date free cash flow as of March 31, 2005 remains negative by an additional $400 million but has been negatively impacted by the seasonal working capital build, expenses related to the MAP divestiture, the repurchase of assets coming off lease. Ashland is expected to complete the sale of their 38% minority interest in MAP and two other businesses (the maleic anhydride business and 61 Valvoline Instant Oil Change centers) to Marathon on June 30, 2005. The company should receive $2.8 billion in cash and accounts receivables, and Ashland's shareholders will receive $915 million in Marathon common stock. In addition upon closing, Ashland would receive its share of deferred distributions from MAP, estimated at $350-425 million; this excludes the $267 million already received by Ashland in May 2005. The revised transaction will result in some Section 355(e) taxes liability; however, Marathon has agreed to pay the initial $200 million of taxes. It is unlikely that Ashland will be required to pay any taxes since its share price has remained below $74.50 per share. Ashland Inc., headquartered in Covington, Kentucky, owns a 38% equity interest in Marathon Ashland Petroleum. Ashland through its four wholly-owned businesses is a: * leading North American distributor of chemicals and plastics; * one of the largest transportation construction contractors in the United States; * a global supplier of specialty chemicals; and * a leading marketer, distributor and producer of branded automotive and industrial products and services. Ashland reported sales of $8.8 billion for the 12-month period ending March 31, 2005. AT&T CORP: Shareholders Approve $16 Billion SBC Merger ------------------------------------------------------ Shareholders of AT&T Corp. (NYSE: T) approve a proposed merger agreement with SBC Communications (NYSE: SBC) at the conclusion of its 120th annual meeting on June 30, 2005. Approximately 97.9% of the shares that were voted, representing more than 70.7% of the outstanding shares, approved the merger. "The positive vote is an important step forward on the road to creating a leading U.S.-based global communications company for the 21st Century," said AT&T Chairman and CEO David W. Dorman. "Together, SBC and AT&T will create one of the world's premier communications companies in terms of global reach, innovation and service quality." Dorman expressed confidence that the merger will close, as expected, in late 2005 or early 2006, pending necessary regulatory approvals and other customary closing requirements. "This combination will reinforce America's role as a global communications leader and is also an important step toward a healthier telecom industry," Mr. Dorman added. "The complementary assets of AT&T and SBC will benefit customers of all types and enhance competition across this country and beyond." The proposed transaction will combine highly complementary world- class assets and industry-leading capabilities. SBC is a leader in local phone and broadband DSL service, and offers wireless services nationwide through its 60 percent ownership stake in Cingular Wireless. AT&T has the world's most advanced communications network, portfolio and technologies to meet the sophisticated Internet Protocol communication needs of large businesses and multinational companies. As a global provider of networked business services and solutions, AT&T serves leading enterprises worldwide. Under terms of the merger agreement announced Jan. 30, AT&T shareholders will receive 0.77942 shares of SBC common stock for each share of AT&T common stock. In addition, AT&T shareholders will receive a one-time special dividend of $1.30 per share. In total, the transaction valued AT&T at roughly $16 billion at the time it was announced. "AT&T shareholders will own a significant stake in a company with a much broader services portfolio," Mr. Dorman said. "We are gratified that shareholders, by strongly supporting the merger, recognized the economic benefits of this transaction as well as the strategic benefits that will arise from pairing such complementary assets and skill sets. This combination will be well positioned to deliver meaningful benefits to shareholders, customers and employees." The preliminary results of AT&T's 2005 proxy voting are: * Proposal 1 -- Adopt the Merger Agreement among SBC, AT&T and the Merger Sub -- approved with 566.4 million or about 70.7% of outstanding shares. Approval of the merger agreement required a positive vote of a majority of outstanding shares. * Proposal 1a -- Adjourn the meeting, if necessary, to permit further solicitation of proxies, in the event that there are not sufficient votes at the time of the meeting to adopt the merger agreement -- approved with 589.8 million, or about 86.1% of the shares voted. * Proposal 2 -- Election of Directors -- all Director nominees were elected, receiving in excess of 575.8 million, or approximately 83.1% of shares voted. * Proposal 3 -- Ratification of PricewaterhouseCoopers as Auditors -- ratified with approximately 662.8 million, or about 96.6% of shares voted. Preliminary results for voting on shareowner proposals were: * Proposal 4 -- No future stock options -- shares voted "for" were 42.1 million, or approximately 7.4%, while shares voted "against" were 527.2 million, or approximately 92.6%. * Proposal 5 -- Link restricted stock unit vesting to performance -- shares voted "for" were 111.3 million, or approximately 19.5%, while shares voted "against" were 457.9 million, or approximately 80.5 %. * Proposal 6 -- Executive compensation -- shares voted "for" were 57.3 million, or approximately 10.1%, while shares voted "against" were 507.9 million, or approximately 89.9%. * Proposal 7 -- Poison pill -- shares voted "for" were 343.6 million, or approximately 60.6%, while shares voted "against" were 223.8 million, or approximately 39.4%. * Proposal 8 -- Shareholder approval of future SERPs -- shares voted "for" were 165.8 million, or approximately 29.4%, while shares voted "against" were 398.5 million, or approximately 70.6%. * Proposal 9 - Shareholder ratification of severance agreements -- shares voted "for" were 379.2 million, or approximately 66.6%, while shares voted "against" were 190.2 million, or approximately 33.4%. SBC Communications Inc. -- http://www.sbc.com/-- is a Fortune 50 company whose subsidiaries, operating under the SBC brand, provide a full range of voice, data, networking, e-business, directory publishing and advertising, and related services to businesses, consumers and other telecommunications providers. SBC holds a 60 percent ownership interest in Cingular Wireless, which serves more than 50.4 million wireless customers. SBC companies provide high- speed DSL Internet access lines to more American consumers than any other provider and are among the nation's leading providers of Internet services. SBC companies also now offer satellite TV service. For more than 125 years, AT&T (NYSE: T) has been known for unparalleled quality and reliability in communications. Backed by he research and development capabilities of AT&T Labs, the company is a global leader in local, long distance, Internet and transaction-based voice and data services. * * * As reported in the Troubled Company Reporter on Feb. 18, 2005, Standard & Poor's Ratings Services placed its ratings on various AT&T Corp.-related synthetic transactions on CreditWatch with positive implications. The rating actions follow the Feb. 1, 2005 placement of the long- term corporate credit and senior unsecured debt ratings assigned to AT&T Corp. on CreditWatch with positive implications. Moody's, S&P and Fitch have assigned their single-B and double-B ratings to AT&T's outstanding public debt. ATA AIRLINES: Balks at John Hancock's Administrative Claim ---------------------------------------------------------- As previously reported, the U.S. Bankruptcy Court for the Southern District of Indiana approved ATA Airlines, Inc. and its debtor- affiliates' request to reject a Boeing 727-290 Lease entered into between ATA Airlines, Inc., and John Hancock Leasing Corporation. The Rejection Order provided that the rejection is effective as of the later of: (i) date of the order; and (ii) the date of actual surrender and return of the Leased Aircraft, Leased Engines and other rejected aircraft equipment. Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, relates that ATA Airlines has not flown the Aircraft for several years. It has been parked in the desert at AAR Aircraft Services in Roswell, New Mexico, since October 20, 2001. The Debtors advised John Hancock on the rejection and the location of the Aircraft on or before November 30, 2004. After inspection of the Aircraft, John Hancock complained, among others, that the engines were not properly installed, defective parts were attached, and appropriate documentations, including the "current manuals" were absent. John Hancock insisted that the Debtors have not consummated the rejection and are bound to administrative expenses until they complied with the Federal Aviation Administration "installation" regulations. At the May 3, 2005 Hearing, the Court made two legal determinations: (1) the return of the Current Manuals and reinstallation of the Leased Engines were not conditions precedent to the occurrence of the Rejection Effective Date, but rather it occurred when the Debtors surrendered possession and returned the Aircraft; and (2) John Hancock is entitled to an administrative expense claim pursuant to Section 365(d)(10) of the Bankruptcy Code for all of the Debtors' Lease obligations first arising from or after December 24, 2004, through the Rejection Effective Date. Mr. Nelson notes, however, that a number of legal and factual issues have yet to be decided, including: -- The date on which the Debtors surrendered and returned the Aircraft to John Hancock. -- The serviceability of parts attached to the Leased Engines and the serviceability of the Leased Engines both before and after reinstallation. -- The facts as to any benefit to the Debtors' estates of the Debtors' "use" of the Aircraft during the first 59 days following the Petition Date. -- The completeness of the reinstallation of the Leased Engines. According to Mr. Nelson, those issues cannot be resolved until the parties have been afforded an opportunity to conduct the discovery in accordance with Rule 9014 of the Federal Rules of Bankruptcy Procedure. Hence, the Debtors asked the Court to set John Hancock's Motion for an evidentiary hearing and enter a scheduling order providing a timeline for the parties to conduct appropriate discovery. The Debtors proposed that motions for summary judgment be filed by August 1, 2005, and discovery be completed by August 21, 2005. John Hancock Responds John Hancock Leasing Corporation asked the Court to clarify that the Debtors must: (a) surrender and return all documents and records relating to the Rejected Aircraft Equipment; and (b) reinstall the Leased Engines in the Leased Aircraft at the Debtors' own expense, in a manner that the Leased Engines, following reinstallation, are in either: -- in proper working condition; or -- installed in accordance with applicable FAA standards. John Hancock asserts that the Debtors' failure to do so entitles it to administrative expenses under Section 503(b)(1)(A) of the Bankruptcy Code in the amount necessary to bring the Debtors into compliance with their obligations. Debtors Oppose John Hancock Admin. Claim Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, relates that at the Petition Date, the Boeing 757-290 aircraft leased from John Hancock Leasing Corporation was "mothballed" in the New Mexico desert and its related engines were crated and sitting in the Debtors' facility in Indianapolis, Indiana. According to Mr. Nelson, any deficiencies in the condition of the Aircraft for which John Hancock may have a damage claim against the Debtors arose prior to the Petition Date. Hence, John Hancock cannot claim that the damages it suffered, if any, because of deficiencies in the condition of the Leased Engines or purported failure to return the aircraft documentation, are entitled to administrative priority. The agreed upon Rejection does not prove otherwise. "By agreeing to the Rejection Order the Debtors did not agree, and had no reason to agree, to elevate [John] Hancock's claims to priority status in exchange for nothing in return from [John] Hancock," Mr. Nelson says. The intent of the Rejection Order, Mr. Nelson explains, was not to provide a windfall to John Hancock to the detriment of the Debtors and the Debtors' other creditors. The intent was simply to provide a framework for the orderly return of the Aircraft. The Debtors do not believe the Court issued a ruling converting John Hancock's claims related to the alleged improper reinstallation of the Leased Engines or alleged failure to return the aircraft documentation into administrative priority claims. There is certainly no basis for John Hancock's contention that the Court ruled the Rejection Order required the Debtors to reinstall the Leased Engines in accordance with FAA Regulations or in "proper working condition," Mr. Nelson says. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATLANTIC HEALTH: Case Summary & 19 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Atlantic Health Care Corporation P.O. Box 3057 Yauco, Puerto Rico 00698 Tel: (787) 856-1105 Bankruptcy Case No.: 05-05998 Type of Business: The Debtor sells and leases medical equipment and accessories. Chapter 11 Petition Date: June 29, 2005 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Modesto Bigas Mendez, Esq. Bigas & Bigas P.O. Box 7462 Ponce, Puerto Rico 00732 Tel: (787) 844-1444 Total Assets: $601,572 Total Debts: $1,299,442 Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Departamento De Hacienda Taxes $735,587 Sec. De Quiebras Ofic 424-B P.O. Box 9024140 San Juan, PR 00902-4140 CRIM Taxes $230,864 P.O. Box 195387 San Juan, PR 00919-5387 Internal Revenue Service Taxes $69,791 Mercantil Plaza Ofic 914 2 Ponce De Leon, PDA 27 1/2 San Juan, PR 00918-1693 Banco Popular Commercial Loan $48,877 P.O. Box 71375 San Juan, PR 00936-8475 Departamento Del Trabajo Taxes $32,926 Y Rec Hum Negociado Seguridad Empleo P.O. Box 1020 San Juan, PR 00936-1020 Supercare Medical Co. Trade Debt $8,675 P.O. Box 195543 San Juan, PR 00919-5543 Ed Distributors, Inc. Trade Debt $4,022 P.O. Box 343 Yauco, PR 00698-0343 Luis Armando Laboy Trade Debt $3,675 Calle 25 De Julio, Suite 36 Yauco, PR 00698 Servicios Diabeticos Trade Debt $3,200 URB Country Club Calle Xevell 794 San Juan, PR 00924 Jasvi Sales & Services, Inc. Trade Debt $2,742 P.O. Box 4985 PMB 281 Caguas, PR 00726-4985 Borschow Hospital Trade Debt $2,173 P.O. Box 366211 San Juan, PR 00936-6211 Verizon Information Trade Debt $1,776 P.O. Box 70373 San Juan, PR 00936-8373 Azga Medical Distributors Trade Debt $1,400 HC 1 Box 8565 Hormigueros, PR 00660-9749 Aga Linde Healthcare Trade Debt $1,045 P.O. Box 364727 San Juan, PR 00936-4727 International Medical Trade Debt $1,025 PMB 490 P.O. Box 60761 Bayamon, PR 00960 Medical Logistics Trade Debt $809 Extencion Parkville Za-21 Guaynabo, PR 00969 Umeco, Inc. Trade Debt $230 P.O. Box 21536 San Juan, PR 00928-1536 Island Pharmaceutical Trade Debt $131 PMB 222 Ponce, PR 00732 Tri-Quality, Inc. Trade Debt $126 8590 Younger Creek Drive Sacramento, CA 95828-1000 ATRIUM IV: Moody's Rates $8M Class D-1 Floating Rate Notes at Ba2 ----------------------------------------------------------------- Moody's Investors Service assigned ratings to eight classes of Notes issued by Atrium IV, a collateralized loan obligation issuance offered by Credit Suisse First Boston LLC. Moody's assigned these ratings to the Notes: * Aaa to the U.S.$387,000,000 Class A-1a Floating Rate Notes Due 2019; * Aaa to the U.S.$7,000,000 Class A-1b Fixed Rate Notes Due 2019; * Aaa to the U.S.$100,000,000 Class A-2 Delayed Draw Floating Rate Notes Due 2019; * Aa2 to the U.S. $28,000,000 Class A-3 Deferrable Floating Rate Notes Due 2019; * A2 to the U.S.$35,000,000 Class B Deferrable Floating Rate Notes Due 2019; * Baa2 to the U.S. $27,500,000 Class C Floating Rate Notes Due 2019; * Ba2 to the U.S. $8,000,000 Class D-1 Floating Rate Notes Due 2019; and * Ba2 to the U.S. $3,500,000 Class D-2 Fixed Rate Notes Due 2019. The Notes will be secured primarily by a portfolio of senior secured bank loans to non-investment grade entities and high yield debt securities issued by non-investment grade entities. CSFB Alternative Capital. Inc. will act as Collateral Manager for the Issuer. BANC OF AMERICA: Fitch Puts B Rating on $1.4MM Mortgage Certs. -------------------------------------------------------------- Banc of America Alternative Loan Trust 2005-6 mortgage pass- through certificates are rated by Fitch Ratings as follows: -- $686,734,964 classes CB-1 through CB-10, CB-R, 2-CB-1 through 2-CB-3, 3-CB-1, 4-CB-1, CB-IO, 5-A-1 through 5-A- 6, 5-IO, 6-A-1, 7-A-1, 15-IO, and A-PO 'AAA' (senior certificates); -- $13,273,000 class B-1 'AA'; -- $5,738,000 class B-2 'A'; -- $4,303,000 class B-3 'BBB'; -- $2,869,000 class B-4 'BB'; -- $1,435,000 class B-5 'B'. The 'AAA' ratings on the senior certificates reflect the 4.25% subordination provided by the 1.85% class B-1, 0.80% class B-2, 0.60% class B-3, 0.40% privately offered class B-4, 0.20% privately offered class B-5, and 0.40% privately offered class B- 6. Classes B-1, B-2, B-3, and the privately offered classes B-4 and B-5 are rated 'AA', 'A', 'BBB', 'BB', and 'B', respectively, based on their respective subordination. Class B-6 is not rated by Fitch. The ratings also reflect the quality of the underlying collateral, the primary servicing capabilities of Bank of America Mortgage, Inc. (rated 'RPS1-' by Fitch), and Fitch's confidence in the integrity of the legal and financial structure of the transaction. The transaction is secured by seven pools of mortgage loans. Loan groups 1, 2, 3, 4, 5, 6, and 7 are cross-collateralized and supported by the B-1 through B-6 subordinate certificates. Approximately 32.02%, 13.81%, 47.68%, 15.58%, 58.61%, 52.91%, and 25.46% of the mortgage loans in groups 1, 2, 3, 4, 5, 6, and 7, respectively, were underwritten using Bank of America's Alternative A guidelines. These guidelines are less stringent than Bank of America's general underwriting guidelines and could include limited documentation or higher maximum loan-to-value ratios. Mortgage loans underwritten to Alternative A guidelines could experience higher rates of default and losses than loans underwritten using Bank of America's general underwriting guidelines. Loan groups 1, 2, 3, 4, 5, 6, and 7 in the aggregate consist of 3,947 recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans with original terms to stated maturity ranging from 120 to 360 months. The aggregate outstanding balance of the pool as of June 1, 2005 (the cut-off date) is $717,221,881, with an average balance of $181,713 and a weighted average coupon of 6.126%. The weighted average original loan-to-value ratio for the mortgage loans in the pool is approximately 71.45%. The weighted average FICO credit score is 736. Second homes and investor-occupied properties constitute 5.44% and 37.50% of the loans in the group, respectively. Rate/term and cash-out refinances account for 13.40% and 33.81% of the loans in the group, respectively. The states that represent the largest geographic concentration of mortgaged properties are California (28.89%), Florida (15.21%), and Texas (5.84%). All other states represent less than 5% of the aggregate pool balance as of the cut-off date. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com/ Banc of America Mortgage Securities, Inc. deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, elections will be made to treat the trust as three separate real estate mortgage investment conduits. Wells Fargo Bank, National Association will act as trustee. BANC OF AMERICA: S&P Lifts Ratings on Three Certificate Classes --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on classes B, C, D, E, F, G, H, J, K, and L of Banc of America Commercial Mortgage Inc.'s commercial mortgage pass-through certificates series 2003-1. Concurrently, all other outstanding ratings on this transaction are affirmed. The raised and affirmed ratings reflect the recent defeasance of the Sotheby's Building loan and the improved performance of the collateral, as well as credit enhancement levels that provide adequate support through various stress scenarios. As of June 2005, the trust collateral consisted of 112 commercial mortgages with an outstanding balance of $1.105 billion, paid down from $1.132 billion at issuance due to amortization. There are no delinquent or specially serviced loans in the pool. The master servicer, Bank of America N.A., reported either full- or partial- year 2004 net cash flow debt service coverage ratios for 97.65% of the pool. Two loans totaling $132.8 million, or 12% of the pool, have been defeased. Based on this information, and excluding defeasance, Standard & Poor's calculated a DSCR for the pool of 1.82x, up from 1.68x at issuance. The current weighted average DSCR for the top 10 loans, which constitute 38.6% of the pool, improved to 2.33x, from 2.15x at issuance. This calculation excludes defeasance, the subordinate components of the Emerald Square loan, and the B note portions of the Wellbridge Portfolio loan. The senior component of the Emerald Square loan and the A note of the Wellbridge Portfolio loan continue to exhibit credit characteristics consistent with a loan rated 'AAA'. The Rogue Valley Mall, with an improvement in NCF, now exhibits credit characteristics consistent with a loan rated 'AAA'. The servicer's watchlist includes 10 loans totaling $72.2 million, or 6.54% of the pool. All of the loans on the watchlist appear there due to DSCRs below 1.10x, and were stressed accordingly by Standard & Poor's. Standard & Poor's stressed various loans in the mortgage pool, paying closer attention to the watchlisted loans and those loans not on the watchlist but with DSCRs below 1.10x or with no DSCR data for the past two years. The expected losses and resultant credit enhancement levels adequately support the current rating actions. Ratings Raised Banc of America Commercial Mortgage Inc. Commercial mortgage pass-thru certs series 2003-1 Rating ------ Class To From Credit enhancement(%) ----- -- ---- --------------------- B AAA AA 15.12 C AAA AA- 13.84 D AA+ A 11.40 E AA A- 10.25 F A+ BBB+ 9.10 G A BBB 7.94 H BBB+ BBB- 6.92 J BBB- BB+ 4.74 K BB+ BB 3.97 L BB BB- 3.33 Ratings Affirmed Banc of America Commercial Mortgage Inc. Commercial mortgage pass-thru certs series 2003-1 Class Rating Credit enhancement(%) ----- ------ --------------------- A-1 AAA 18.58 A-2 AAA 18.58 ES-A AA N/A ES-B AA- N/A ES-C A+ N/A ES-D A N/A ES-E A- N/A ES-F BBB+ N/A ES-G BBB N/A ES-H BBB- N/A SB-A AAA N/A SB-B AAA N/A SB-C AAA N/A SB-D AAA N/A SB-E AAA N/A WB-A AAA N/A WB-B AA N/A WB-C AA- N/A WB-D A+ N/A XC AAA N/A XP-1 AAA N/A XP-2 AAA N/A N/A - Not applicable. BEALS MANAGEMENT: Case Summary & 10 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Beals Management 2190 Oil Well Road Glasogow, Kentucky 42141 Bankruptcy Case No.: 05-11292 Chapter 11 Petition Date: June 30, 2005 Court: Western District of Kentucky (Bowling Green) Debtor's Counsel: Stephanie L. McGehee-Shacklette, Esq. 324 East 10th Avenue P.O Box 1270 Bowling Green, Kentucky 42102-1270 Tel: (270) 782-3938 Fax: (270) 781-4737 Estimated Assets: Unknown Estimated Debts: $1 Million to $10 Million Debtor's 10 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ CIT Technology Financing Services $8,791 P.O. Box 550599 Jacksonville, FL 32255-0599 Branch Banking and Trust $8,617 P.O. Box 580363 Charlotte, NC 28258-0363 Linda and Robert Hassur $6,696 1201 Diplomat Parkway Hollywood, FL 33019 Continental Commercial Group $6,412 US Bank $5,024 US Bank $4,497 Westfield Group $2,183 Nextel Partners $1,714 Pitney Bowes $1,566 Rapidforms, Inc. $505 BILL WATSON: Case Summary & 36 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Bill Watson Farms, Inc. P.O. Box 306 Quincy, Washington 98848 Bankruptcy Case No.: 05-05256 Debtor affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- William M. & Norma J. Watson 05-05254 Type of Business: The Debtor grows and sells farm produce, including onions, potatoes, sweet corn, green peas, and wheat. Mr. Watson serves as a Director of the Quincy Columbia Basin Irrigation District -- see http://www.efcom.com/wswra/director.htm-- and is a past president of The National Onion Association. The Debtor's mailing address is also used by Watson Orchard. See http://ResearchArchives.com/t/s?48 Chapter 11 Petition Date: June 29, 2005 Court: Eastern District of Washington (Spokane/Yakima) Judge: John A. Rossmeissl Debtor's Counsel: Dan O'Rourke, Esq. Southwell & O'Rourke, P.S. 421 West Riverside Avenue, Suite 960 Spokane, Washington 99201 Tel: (509) 624-0159 Fax: (509) 624-9231 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million A) Lead Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ R & W Farms, Inc. $680,704 P.O. Box 306 Quincy, WA 98848 William Watson Family Trust $220,000 P.O. Box 306 Quincy, WA 98848 Norma Watson Family Trust $114,000 P.O. Box 306 Quincy, WA 98848 Jody Watson Lund $48,181 John Stetner $34,596 Billie J. Watson $23,181 Christine Watson $23,181 C.L. Watson $20,000 J.S. Lund $20,000 BJ Watson $20,000 Watson Family Trust $16,000 John Stetner $15,000 Richard Johnson $13,600 D.H. Guthrie $12,775 Ralph Johnson $10,000 Leslie Patton $8,050 Fireman's Fund Ins. Co. $7,374 John Stetner $850 Carol Simpson $750 B) William M. & Norma J. Watson's 16 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ William Watson Family Trust $220,000 P.O. 306 Quincy, WA 98848 Norma Watson Family Trust $114,000 P.O. Box 306 Quincy, WA 98848 Washington Trust Bank $77,503 Attn: Dick Jones P.O. Box 1099 Moses Lake, WA 98837 Quincy Columbia Basin Irrigation Di $51,099 Jody Watson Lund $48,181 Internal Revenue Service $41,000 Grant County $37,847 John Stetner $34,596 Billie J. Watson $23,181 Christine Watson $23,181 Watson Family Trust $16,000 Billie J. Watson $10,000 Christine Watson $10,000 Jody W. Lund $10,000 Public Utility District No. 2 $8,539 Federal Home Life Insurance Co. $2,375 BOMBARDIER INC: Closes $1.1 Billion Unsecured Credit Facility ------------------------------------------------------------- Bombardier Inc. (TSX:BBD.MV.A) (TSX:BBD.SV.B) successfully closed a $1.1 billion unsecured credit facility through a syndicate of banks. The maturity date for this facility is July 10, 2007. The $1.0 billion target amount was increased as a result of oversubscription. A syndicate of sixteen financial institutions is providing this facility with National Bank Financial and Citigroup Global Markets Inc. acting as lead arrangers and joint bookrunners. This facility will replace Bombardier's existing North American credit facility and provide Bombardier with maximum flexibility in issuing letters of credit and letters of guarantee. The new credit facility contains typical covenants such as the maintenance of certain liquidity and fixed charge coverage ratios as well as a leverage ratio similar to the debt-to-equity ratio maintenance covenant contained in Bombardier's existing credit facility. The covenants also include customary limitations for facilities of similar nature. "As expected, this successful transaction builds on the Corporation's healthy liquidity position and demonstrates the banking syndicates' continued confidence in our business plan and our recovery," said Francois Lemarchand, Bombardier's Senior Vice President and Treasurer. Bombardier Inc. -- http://www.bombardier.com/-- is a world- leading manufacturer of innovative transportation solutions, from regional aircraft and business jets to rail transportation equipment. Bombardier Inc. is a global corporation headquartered in Canada. Its revenues for the fiscal year ended Jan. 31, 2005 were $15.8 billion US and its shares are traded on the Toronto Stock Exchange. * * * As reported in the Troubled Company Reporter on Apr. 20, 2005, Standard & Poor's Ratings Services affirmed its ratings, including its 'BB' long-term corporate credit rating, on Bombardier Inc. and its subsidiaries. At the same time, Standard & Poor's removed the ratings on Bombardier from CreditWatch, where they were placed Dec. 13, 2004. The outlook is negative. The affirmation follows a review of Bombardier's fiscal 2005 results, a review of financial prospects for the next few years, and recent discussions with senior management regarding financial and strategic priorities. BOSTON EQUIPMENT: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Boston Equipment & Supply Company, Inc. 142 Main Street Salem, New Hampshire 03079 Bankruptcy Case No.: 05-12593 Type of Business: The Debtor sells and leases construction and mining equipment. Chapter 11 Petition Date: June 29, 2005 Court: District of New Hampshire (Manchester) Debtor's Counsel: Jason M. Craven, Esq. Craven Law Firm 799 Mammoth Road Manchester, New Hampshire 03104 Tel: (603) 296-0800 Fax: (603) 626-0046 Total Assets: $3,853,642 Total Debts: $7,414,303 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Frank and June Rich Note $1,200,000 62 Sandy Pond Lane Bedford, NH 03110 Commonwealth of Job cost $200,000 Massachusetts Department of Revenue P.O. Box 7039 Boston, MA 02204 Multiquip Corp. Trade debt $132,999 P.O. Box 54449 Los Angeles, CA 90054 Davidson Mang Group Trade debt $67,555 Crown Construction Products Trade debt $63,720 Wacker Corp. Trade debt $58,000 North American Sales Trade debt $50,899 United Rentals Trade debt $46,125 Sentry Insurance Trade debt $28,370 Stone Construction Trade debt $22,885 American Equipment Rentals Trade debt $21,477 Drakes Appleton Trade debt $18,582 Daimler/Chrysler Trade debt $9,956 Berry Insurance Insurance $8,931 Gehl Company Parts Account Trade debt $8,204 Northeast Stihl Trade debt $7,377 Mitsui Machinery Trade debt $6,891 Marineau's Garage Trade debt $5,361 Jack Young Trade debt $4,978 Highlift Equipment Co., Inc. Trade debt $4,619 BOYD GAMING: Can Access Up to $250 Million From Bank Loan Facility ------------------------------------------------------------------ Boyd Gaming Corporation (NYSE: BYD) disclosed that several improvements to its bank credit facility are now in place with Thursday's completion of the first amendment to the Company's credit agreement. The most significant improvements are: -- a 0.25% reduction in the interest rate, -- a one-year extension of the maturity of the revolving portion of the loan; and -- an increase in the commitments by $250 million. In addition, the Company can seek up to $500 million of additional commitments without amendment to this credit facility. The Company will use a substantial portion of the $250 million increase for the early redemption of its $200 million principal amount of 9.25% senior notes on Aug. 1, announced by the Company on June 29. The substitution of bank debt for the outstanding notes will create meaningful interest savings for the Company. "I am pleased that our Company is now borrowing under one of the most favorable credit arrangements in the gaming industry today," William S. Boyd, Chairman and Chief Executive Officer of Boyd Gaming, said. "It is gratifying that our lenders and the credit markets in general have recognized through this amendment our Company's excellent financial performance in the year since our current bank facility was completed. We thank them for that recognition and their excellent support of Boyd Gaming." Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) -- http://www.boydgaming.com/-- is a leading diversified owner and operator of 18 gaming entertainment properties, plus one under development, located in Nevada, New Jersey, Mississippi, Illinois, Indiana and Louisiana. * * * As reported in the Troubled Company Reporter on June 16, 2005, Standard & Poor's Ratings Services revised its rating outlook on casino operator Boyd Gaming Corp. to positive from stable. At the same time, Standard & Poor's affirmed its ratings on the Las Vegas, Nevada-based company, including its 'BB' corporate credit rating. Total debt outstanding was approximately $2.26 billion at March 31, 2005. "The outlook revision reflects Boyd's solid operating performance over the past several quarters, which has resulted in pro forma credit measures that have exceeded our previous expectations," said Standard & Poor's credit analyst Michael Scerbo. BRANDON BELL: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Brandon M. & Karen Bell 80 North Main Street P.O. Box 21 Greer, Arizona 85927 Bankruptcy Case No.: 05-11922 Chapter 11 Petition Date: June 30, 2005 Court: District of Arizona (Phoenix) Judge: Chief Judge Redfield T. Baum Sr. Debtor's Counsel: Kent A. Lang, Esq. Suzanne K. Weathermon, Esq. Lang & Baker, PLC 8233 Via Paseo Del Norte, Suite C-100 Scottsdale, Arizona 85258 Tel: (480) 947-1911 Fax: (480) 970-5034 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million The Debtors did not file a list of their 20 Largest Unsecured Creditors. CAMPBELL RESOURCES: Obtains CCAA Protection in Quebec ----------------------------------------------------- The Superior Court of Quebec (Commercial Division) granted Campbell Resources Inc. (TSX: CCH, OTC Bulletin Board: CBLRF) an initial order under the Companies' Creditors Arrangement Act. The Company's previously disclosed convertible notes financing would not be concluded due to the petition. Campbell previously disclosed that subject to receipt of regulatory approval, it will be concluding a private placement of convertible unsecured promissory notes to RAB Special Situations (Master) Fund Limited, a Cayman Islands registered hedge fund managed by RAB Capital plc for aggregate gross proceeds of $5,000,000. Campbell intends to avail itself of the provisions of the CCAA to prepare and present a plan of arrangement to its stakeholders. Difficulties in the start-up of the Copper Rand mine and a shortage of capital have combined to create a situation where the operations cannot generate enough cash to allow the Company to carry on without a financial restructuring under the Act. Difficulties encountered at Copper Rand in the last year include: -- unstable ground conditions in the development of a critical ventilation raise; -- reduced ore and waste hoisting capacity during repairs to a section of the shaft; and -- mine equipment problems. These difficulties have resulted in development of stopes and workplaces below planned levels and, consequently, lower levels of production. During the restructuring period, the Company intends to continue operations at the Joe Mann and Copper Rand mines. Some 250 employees currently work at these two locations. In May, these operations produced more than 4,500 ounces of gold and 700,000 pounds of copper, compared to 3,500 ounces and 890,000 pounds in April. Campbell Resources Inc. is a mining company focusing mainly in the Chibougamau region of Quebec, holding interests in gold and gold- copper exploration and mining properties. CATHOLIC CHURCH: Tucson Wants to Assume Equipment & Office Leases ----------------------------------------------------------------- Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, in Tucson, Arizona, tells the U.S. Bankruptcy Court for the District of Arizona that these leases are necessary to the ministry and operations of the Diocese of Tucson: Non-debtor Party Subject Matter of Agreement ---------------- --------------------------- GE Capital Canon Image Runner 400 Copier - Serial # NNV13407 Savin 2555 Copier - Serial # J5330200533 Savin 2522 Copier - Serial # J0122302071 Savin 2513F - Serial # H9238600271 Gestetner 5455 Serial # F2320900123 Danka Office Imaging Maintenance Agreement Customer # 169448 Arizona Office Equipment Maintenance Agreement - Customer # 141554 Xspedius Communications Telephone Service Agreement - Customer # 9021809 Pitney Bowes Credit Corp. Postage Equipment - Scale Model # N300 - Serial # 0206878; Meter Model # 65L4 - Serial # 6792824 Maintenance Agreement - Mailing Machine - Serial # 0000033548; Customer # 2529- 9480-20-9 Precision Toyota of Tucson 2002 Toyota Camry Account # 03 0682 77707 2002 Toyota Camry Account # 03 0682 77708 Diocese of Tucson Charity Nonresidential Real Property - & Ministry Fund Square Feet - 576 Catholic Relief Services - Nonresidential Real Property - Mexico Square Feet - 390 Catholic Tuition Support Nonresidential Real Property - Organization, Inc. Square Feet - 288 By this motion, the Diocese seeks Judge Marlar's authority to assume the equipment leases, vehicle leases and office subleases. Tucson has determined that replacing the vehicles, sublease tenants, equipment and maintenance contracts is unlikely to result in more favorable terms or significant savings to the estate. Any conceivable benefit is vastly outweighed by the additional cost and business disruption to the Diocese that would result from terminating the Leases. Mr. Nye points out that the Diocese has never defaulted under the Lease. Accordingly, no cure is required. Emergence from Chapter 11 will also provide sufficient adequate assurance of future performance. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Court Rules on Tucson's Estimation Protocol ------------------------------------------------------------ As previously reported in the Troubled Company Reporter on May 19, 2005, Warren J. Stapleton, Esq., at Stinson Morrison Hecker LLP, in Phoenix, Arizona, reminds the U.S. Bankruptcy Court for the District of Arizona that all of the Tort Claimants' claims in the Diocese of Tucson's Chapter 11 case are currently unliquidated and, therefore, are not "allowed claims" under Section 502 of the Bankruptcy Code. As a result, the Tort Claimants' votes to accept or reject the Diocese's Plan of Reorganization will not be counted even if they are not otherwise objected to. To avoid conducting lengthy, acrimonious, and unwieldy sealed proceedings to estimate claims, the Official Tort Claimants' Committee proposes a mechanism for the efficient estimation and temporary allowance of the Tort Claimants' claims, for voting purposes only. The Committee suggests that each Tort Claimant with an allowed claim will have one vote, regardless of which tier the Tort Claim is placed in, and regardless of whether the Tort Claimant elects to be treated as holding a Tort Convenience Claim or his claim is otherwise settled. Since it is impossible to establish actual dollar values of any of the Tort Claimants' claims, the Tort Committee proposes that the Court make its estimations based on the tier structure under the proposed Plan. The Court can account for the differences in value of the various claims by assigning a dollar value to each vote of an allowed Tort Claim based on the tier to which the claim is assigned -- or other amount as the Plan provides for spouses, parents, and Tort Convenience Claims. Mr. Stapleton asserts that the Tort Claimants are the central body of claimants in the Diocese's Chapter 11 case. Hence, they should be given an opportunity to establish their right to vote for or against the Plan. * * * The U.S. Bankruptcy Court for the District of Arizona rules that the Tort Claimants' voting rights on the Diocese of Tucson's Third Amended Plan of Reorganization will be estimated based on this Tier structure: (a) Each Tort Claimant with an Allowed or Estimated Tort Claim will have one vote, regardless of which tier the Tort Claim is placed in, and regardless of whether the Tort Claimant elects to be treated as holding a Tort Compromise Claim, or whether the Tort Claimant's claim is otherwise settled; (b) Each Tort Claimant whose Tort Claim has been Allowed or Estimated by order of the Bankruptcy Court will have his or her claim estimated, for purposes of voting on the Plan only, at these values: Dollar Value Assigned Tier for Voting Purposes Only ---- ------------------------ 4 $600,000 3 425,000 California 300,000 2 200,000 1 100,000 Parent/Spouse Claim %5 of tier amount of one underlying claim Tort Compromise Claim 15,000 Other Settlement agreed amount between Diocese and claimant (c) If the Court has approved a settlement stipulation providing for the provisional allowance of a Tort Claim in one of the tiers, or as a Tort Compromise Claim, or by giving it some other agreed treatment, that Tort Claim will be estimated as a claim and receive the voting rights applicable to that tier, Tort Compromise Claim, or other agreed treatment; (d) If the Court has not yet approved a settlement, but (i) the Diocese and the Tort Claimant have executed a settlement stipulation, and (ii) the Committee has agreed to the settlement, that Tort Claim will also be estimated as a claim in the tier the parties have stipulated to, or as a Tort Compromise Claim, or by giving it some other agreed treatment, and will receive the voting rights applicable to that tier, Tort Compromise Claim, or other agreed treatment; (e) If no settlement has been reached, the Diocese may, with the approval of the Committee, propose to any Tort Claimant that its claim be estimated by temporarily assigning it to a particular tier or treating it as a Tort Compromise Claim. If the Tort Claimant accepts the estimate, the claim will be estimated as and receive the voting rights applicable to that tier or Tort Compromise Claim; (f) The Diocese will advise each Tort Claimant, by means of a notice attached to the Ballot provided to the Tort Claimant, of the voting rights, if any, which the Diocese proposes that the Tort Claimant will receive. The notice will also provide the Tort Claimant the opportunity to request the Court to estimate the claim; and (g) Unless the Tort Claimant requests the Court to establish different voting rights for the Tort Claim on or before the deadline for filing ballots accepting or rejecting the Plan, the Tort Claimant's voting rights will be those proposed by the Diocese. This procedure is for temporary allowance of claims to establish voting rights only and is not binding on any party for any other purpose, Judge Marlar says. The Court may estimate a claim upon request if the estimation is necessary or desirable for Plan confirmation purposes. Additionally, Pacific Employers Insurance Company's objection, to the extent not withdrawn, is overruled. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000) CONSTELLATION BRANDS: Earns $71.2 Million of Net Income in Q1 ------------------------------------------------------------- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR) reported net sales at $1.1 billion, up 18% over prior year, and reported net income of 47% for the first quarter ended May 31, 2005. "Constellation Brands' true growth momentum continues to accelerate and deliver increasing shareholder value as we employ our business model to achieve our strategic vision," stated Richard Sands, Constellation Brands chairman and chief executive officer. "We hit our stride in fiscal 2005, and used that momentum to set the pace for a strong first quarter of performance to kick off fiscal 2006. "Our base business delivered top-line growth of seven percent, which was complemented by our acquisitions for an overall growth rate of 18 percent," explained Sands. "We're particularly encouraged by healthy operating margin expansion in the quarter, which reflects the continued consumer shift to higher margin wine products and the benefits of the Robert Mondavi acquisition." Fiscal 2006 First Quarter Results First quarter net sales, as reported under generally accepted accounting principles, totaled $1.1 billion, up 18%, driven by growth in the company's branded wine and imported beers businesses. Net sales included $89.6 million of sales of brands from the Dec. 22, 2004 acquisition of The Robert Mondavi Corporation and $13.4 million from sales of Ruffino brands. On Dec. 3, 2004, the company purchased a 40% interest in Ruffino S.r.l. and on Feb. 1, 2005, the company began distributing Ruffino's products in the United States. Excluding Robert Mondavi and Ruffino brands, net sales grew 7%. Currency also contributed 2% of the net sales increases. Reported operating income was $139.8 million or 12.8% of net sales, compared with $110.4 million or 11.9% of net sales in the first quarter of fiscal 2005. Both reported net income of $75.7 million set records for a first quarter, and were up 47% over the prior year first quarter. First quarter fiscal 2006 and 2005 reported results include acquisition- related integration costs, restructuring and related charges and unusual items. Net income exclude these costs, charges and items. First quarter operating income on a comparable basis, was $157.7 million or 14.4% of net sales, compared with $123.6 million or 13.3% in the prior year period. First quarter net income increased 19% to $71.2 million. "The strength of our portfolio, distribution reach, as well as our marketing and sales capabilities, combined with our strategic vision, consumer insights, new product development and disciplined approach to expanding our offerings, continue to fuel our momentum along the path of true growth," Sands stated. Constellation Brands, Inc. -- http://www.cbrands.com/-- is a leading international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Corona Extra, Corona Light, Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl, Tsingtao, Black Velvet, Fleischmann's, Mr. Boston, Paul Masson Grande Amber Brandy, Chi- Chi's, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Stowells, Blackthorn, Almaden, Arbor Mist, Vendange, Woodbridge by Robert Mondavi, Hardys, Nobilo, Alice White, Ruffino, Robert Mondavi Private Selection, Blackstone, Ravenswood, Estancia, Franciscan Oakville Estate, Simi and Robert Mondavi Winery brands. * * * As reported in the Troubled Company Reporter on June 23, 2005, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating and other ratings on alcoholic beverage producer and distributor Constellation Brands Inc. At the same time, ratings were removed from CreditWatch where they were placed with negative implications on April 28, 2005. The CreditWatch listings followed the company's confirmation that it was part of a consortium considering a potential takeover of Allied Domecq PLC (BBB+/Watch Neg/A-2). The ratings affirmation and removal from CreditWatch follows Constellation's recent announcement that it is no longer planning to pursue an offer for Allied Domecq. S&P said the outlook is negative. At Feb. 28, 2005, Fairport, New York-based Constellation had about $3.29 billion of total debt outstanding. CREDIT SUISSE: Moody's Junks $6.76 Million Class N Certificate -------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes, downgraded the ratings of two classes and affirmed the ratings of nine classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2001- CK3 as: -- Class A-1, $4,191,152, Fixed, affirmed at Aaa -- Class A-2, $105,500,000, Fixed, affirmed at Aaa -- Class A-3, $127,040,000, Fixed, affirmed at Aaa -- Class A-4, $582,406,000, Fixed, affirmed at Aaa -- Class A-X, Notional, affirmed at Aaa -- Class B, $42,262,000, Fixed, upgraded to Aaa from Aa2 -- Class C, $56,348,000, WAC Cap, upgraded to Aa3 from A2 -- Class D, $11,268,000, WAC Cap, upgraded to A1 from A3 -- Class E, $14,088,000, WAC Cap, upgraded to A2 from Baa1 -- Class F, $25,357,000, WAC Cap, upgraded to Baa1 from Baa2 -- Class G-1, $8,000,000, WAC Cap, affirmed at Baa3 -- Class G-2, $11,722,000, WAC, affirmed at Baa3 -- Class H, $14,088,000, Fixed, affirmed at Ba1 -- Class J, $24,793,000, Fixed, affirmed at Ba2 -- Class K, $9,016,000, Fixed, downgraded to B1 from Ba3 -- Class N, $6,762,000, Fixed, downgraded to Caa2 from B3 As of the June 17, 2005 distribution date, the transaction's aggregate balance has decreased by approximately 5.0% to $1.07 billion from $1.13 billion at securitization. The Certificates are collateralized by 167 mortgage loans. The loans range in size from less than 1.0% to 9.8% of the pool, with the top ten loans representing 36.7% of the pool. The pool consists of three shadow rated loans, representing 18.5% of the pool, and a conduit component, representing 81.5% of the pool. Seven loans, representing 10.6% of the pool, have defeased and have been replaced with U.S. Government securities. The defeased loans include three of the top ten loans -- Alliance GT 5 ($41.0 million - 3.8%); -- Alliance GT 6 ($33.5 million - 3.1%); and -- Metropolitan Apartments ($23.6 million - 2.2%). Three loans, representing 2.2% of the pool, are in special servicing. Moody's has estimated aggregate losses of approximately $4.0 million for all of the specially serviced loans. Forty-three loans, representing 16.3% of the pool, are on the master servicer's watchlist. Two loans have been liquidated from the trust, resulting in realized losses of approximately $10.4 million. Moody's was provided with partial or full year 2004 operating results for 99.5% of the performing loans. Moody's loan to value ratio for the conduit component is 87.0%, compared to 89.1% at securitization. The upgrade of Classes B, C, D, E and F is due to increased subordination levels, a significant percentage of defeased loans and overall improved performance. The downgrade of Classes K and N is due to realized and anticipated losses from the specially serviced loans and LTV dispersion. Based on Moody's analysis, 13.9% of the conduit pool has a LTV greater than 100.0%, compared to 2.0% at securitization. Approximately 55.0% of the loans with a LTV over 100.0% are secured by older multifamily properties. Thirteen loans, representing 6.5% of the pool, have debt service coverage of 0.9x or less based on the borrowers' reported operating performance and the actual loan constant. The largest shadow rated loan is the 888 Seventh Avenue Loan ($105.0 million - 9.8%), which is secured by a leasehold mortgage on a 880,000 square foot office building located in the Columbus Circle office submarket of New York City. The property is 98.6% occupied, compared to 93.0% at securitization. Major tenants include: * New Line Realty (14.7% NRA; lease expiration June 2007); * Hearst Communications (9.1% NRA; lease expirations in 2006 and 2008); and * Soros Fund Management (3.7% NRA; lease expiration June 2015). The loan sponsor is Vornado Realty Trust (Moody's preferred shelf rating Baa3), a publicly traded REIT. The loan is interest only for its five year term. The loan is shadow rated A3, compared to Baa1 at securitization. The second shadow rated loan is the Atrium Mall Loan ($47.0 million -- 4.4%), which is secured by a 214,800 square foot enclosed shopping center located approximately nine miles west of downtown Boston in Chestnut Hill, Massachusetts. The center is 92.0% occupied, the same as at securitization. Major tenants include: * Borders Books (13.3% GLA; lease expiration May 2010); * The Gap (9.4% GLA; lease expiration February 2009); and * Anthropologie (7.0% GLA; lease expiration January 2009). Loan sponsors include Simon Property Group, New York State Teachers Retirement System, TIAA- CREF and J.P. Morgan. The loan is shadow rated A1, the same as at securitization. The third shadow rated loan is the Almaden Plaza Loan ($46.4 million - 4.3%), which is secured by a 544,900 square foot power/community center located in San Jose, California. The center is 96.3% occupied, compared to 99.0% at securitization. Major tenants include: * Costco Wholesale (24.3% GLA; lease expiration February 2017); * Bed Bath & Beyond (11.1% GLA; lease expiration January 2010); and * TJ Maxx (9.6% GLA; lease expiration April 2012). The loan is shadow rated Ba1, the same as at securitization. The top three conduit loans represent 6.9% of the outstanding pool balance. The largest conduit loan is the Rambus, Inc. Loan ($28.2 million -- 2.6%), which is secured by a 96,600 square foot office building located approximately ten miles northwest of San Jose in Los Altos, California. The property was built in 2000 and serves as the corporate headquarters of Rambus, Inc. (100.0% NRA; lease expiration December 2010). The San Jose market has experienced significant declines in both occupancy and rental levels since securitization. The current submarket rent is estimated at $25.00 per square foot, compared to the in-place rent of $44.00 per square foot. Moody's LTV is in excess of 100.0%, compared to 97.5% at securitization. The second largest conduit loan is the Foothill Village Shopping Center Loan ($24.3 million - 2.3%), which is secured by a 275,000 square foot community shopping center located in Salt Lake City, Utah. The property is 96.0% occupied, compared to 87.0% at securitization. Major tenants include: * Dan's Foods (15.0% GLA; lease expiration October 2013); * Stein Mart (12.0% GLA; lease expiration October 2015); and * Sports Den (7.0% GLA; lease expiration October 2016). Moody's LTV is 84.6%, compared to 91.3% at securitization. The third largest conduit loan is the Plaza Antonio Loan ($21.9 million - 2.0%), which is secured by a 106,000 square foot neighborhood shopping center located in Rancho Santa Margarita (Orange County), California. The property is anchored by Pavilions grocery store, which is not part of the collateral. The property is 96.7% occupied, compared to 100.0% at securitization. Major tenants include: * CVS (11.9% GLA; lease expiration August 2028); and * Ruby's Diner (6.1% GLA; lease expiration July 2012). Moody's LTV is 83.4%, compared to 95.6% at securitization. The pool's collateral is a mix of: * retail (29.3%), * office and mixed use (28.1%), * multifamily (22.8%), * U.S. Government securities (10.6%), * industrial and self storage (5.3%), * lodging (3.4%), and * credit tenant lease (0.5%). The collateral properties are located in 30 states plus Washington, D.C. The highest state concentrations are: * California (27.8%), * New York (14.0%), * Massachusetts (6.8%), * Texas (6.2%), and * Georgia (4.8%). All of the loans are fixed rate. CWMBS INC: Fitch Places Low-B Ratings on 4 Cert. Classes -------------------------------------------------------- Fitch rates CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage Pass-Through Trust 2005-J2: Group 1 Certificates: -- $153.2 million classes 1-A-1 through 1-A-4 and A-R certificates (senior certificates) 'AAA'; -- $619,300 class I-M certificates 'AA'; -- $309,600 class I-B-1 certificates 'A'; -- $232,200 class I-B-2 certificates 'BBB'; -- $154,800 class I-B-3 certificates 'BB'; -- $77,400 class I-B-4 certificates 'B'. Groups 2 & 3 Certificates: -- $632.5 million classes 2-A-1 through 2-A-5, 2-X, 3-A-1 through 3-A-17, 3-X, PO and A-R certificates (senior certificates) 'AAA'; -- $13.4 million class II-M certificates 'AA'; -- $3.9 million class II-B-1 certificates 'A'; -- $2.0 million class II-B-2 certificates 'BBB'; -- $1.3 million class II-B-3 certificates 'BB'; -- $983,100 class II-B-4 certificates 'B'. The 'AAA' rating on the Group 1 senior certificates reflects the 1.00% subordination provided by the 0.40% class I-M, the 0.20% class I-B-1, the 0.15% class I-B-2, the 0.10% class I-B-3, the 0.05% class I-B-4, and the 0.10% class I-B-5 (not rated by Fitch). The 'AAA' rating on the Group 2 and 3 senior certificates reflects the 3.50% subordination provided by the 2.05% class II-M, the 0.60% class II-B-1, the 0.30% class II-B-2, the 0.20% class II-B- 3, the 0.15% class II-B-4, and the 0.20% class II-B-5 (not rated by Fitch). Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP (Countrywide Servicing), a direct wholly owned subsidiary of Countrywide Home Loans, Inc. Countrywide Servicing is rated an 'RMS2+' for master servicing and 'RPS1' for primary servicing by Fitch. The 'Group 1' senior certificates are collateralized by a pool (loan group 1) primarily consisting of conventional 15-year fixed- rate, mortgage loans secured by first liens on one-to four-family residential properties. The 'Group 2 and 3' senior certificates are cross-collateralized by two pools (loan groups 2 and 3) primarily consisting of conventional, fully amortizing, 30-year fixed-rate, mortgage loans secured by first liens on one- to four- family residential properties. In loan group 1, as of the cut-off date (June 1, 2005), the aggregate pool balance totaled $154,751,073. The weighted-average original loan-to-value ratio was 58.41%. Cash-out and rate/term refinance loans represent 15.78% and 73.60% of the mortgage pool. Second homes account for 6.30% of the pool. The average loan balance is $459,202. The weighted average FICO credit score is approximately 759. The three states that represent the largest portion of mortgage loans are California (38.60 %), Illinois (9.83%) and Florida (6.20%). In loan group 2, as of the cut-off date, the aggregate pool balance totaled $180,926,591. The weighted-average OLTV was 71.22%. Cash-out and rate/term refinance loans represent 32.07% and 22.18% of the mortgage pool, respectively. Second homes account for 8.03% of the pool. The average loan balance is $540,079. The weighted average FICO credit score is approximately 738. The three states that represent the largest portion of mortgage loans are California (50.09%), New York (6.94%) and New Jersey (4.64%). In loan group 3, as of the cut-off date, the aggregate pool balance totaled $449,576,572. The weighted-average OLTV was 71.46%. Cash-out and rate/term refinance loans represent 16.11% and 17.40% of the mortgage pool, respectively. Second homes account for 6.13% of the pool. The average loan balance is $525,821. The weighted average FICO credit score is approximately 749. The four states that represent the largest portion of mortgage loans are California (46.93%), New Jersey (4.42%), Florida (4.39%), and New York (4.39%). Although there is cross-collateralization between loan group 2 and loan group 3, there is no cross-collateralization between loan group 1 and any other loan group. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation', available on the Fitch Ratings web site at http://www.fitchratings.com/ Its is expected that Countrywide Home Loans Servicing LP, National City Mortgage Co., and SunTrust Mortgage Incorporated, will direct service approximately 98.51%, 0.70%, 0.40%, and 0.80%, respectively, of the mortgage loans in Group 1. Its is expected that Countrywide Home Loans Servicing LP (Countrywide Servicing), IndyMac Bank, FSB, Third Federal Savings and Loan Association, GMAC Mortgage Corporation, and Wachovia Mortgage Corporation, will direct service approximately 90.69%, 7.08%, 1.50%, 0.23%, and 0.50%, respectively, of the mortgage loans in Group 2. Its is expected that Countrywide Home Loans Servicing LP (Countrywide Servicing), IndyMac Bank, FSB, Third Federal Savings and Loan Association, GMAC Mortgage Corporation, and National City Mortgage Co., will direct service approximately 97.37%, 0.45%, 1.20%, 0.79%, and 0.19%, respectively, of the mortgage loans in Group 3. CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits. The Bank of New York will act as trustee. DEEP RIVER: Wants to Hire Ravin Greenberg as Bankruptcy Counsel --------------------------------------------------------------- Deep River Development Group, L.L.C., asks the U.S. Bankruptcy Court for the District of New Jersey for permission to employ Ravin Greenberg PC as its general bankruptcy counsel. Ravin Greenberg will: 1) assist and advise the Debtor of its duties and powers as a debtor-in-possession in the continued operation and management of its business and property; 2) prepare on behalf of the Debtor, all necessary motions, applications, answers, orders, reports, and other legal documents required by the Court in the Debtor's chapter 11 case; 3) attend Bankruptcy Court hearings and represent and protect the Debtor's interests before that Court; and 4) perform all other legal services to the Debtor that are appropriate and necessary in its bankruptcy case. Morris S. Bauer, Esq., a Partner at Ravin Greenberg, is one of the lead attorneys for the Debtor. Mr. Bauer charges $380 per hour for his services. Mr. Bauer reports Ravin Greenberg's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Nathan Ravin Partner $450 Howard S. Greenberg Partner $540 Stephen B. Ravin Partner $420 Bruce J. Wisotsky Partner $400 Larry Lesnik Partner $390 Brian L. Baker Associate $290 Sheryll S. Tahiri Associate $255 Chad B. Friedman Associate $255 Ravin Greenberg had not yet submitted its retainer amount to the Debtor when the Debtor filed its request with the Court to employ the Firm as its bankruptcy counsel. Ravin Greenberg assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Chester, New Jersey, Deep River Development Group, L.L.C., filed for chapter 11 protection on June 29, 2005 (Bankr. D.N.J. Case No. 05-31279). When the Debtor filed for protection from its creditors, it estimated assets of $10 million to $50 million and debts of $1 million to $10 million. DEL MONTE: Buys 12MM Shares from Goldman Sachs in Private Tender ---------------------------------------------------------------- Del Monte Foods Co. disclosed in a regulatory filing that it bought 12 million of its company's shares for $125 million in cash, or $10.42 per share, in a private transaction with Goldman Sachs International. The company's tender offer is aimed to enhance shareholder return and spur earnings growth for the company. As part of the strategy, the company could sell off the baby food and private-label soup businesses acquired in late 2002 from H.J. Heinz Co. as it focuses on its higher-margin branded products. "We are pleased to have executed on the stock repurchase program we announced last week," said Richard G. Wolford, Chairman and CEO of Del Monte Foods. "Repurchasing shares is consistent with our confidence in Del Monte's long-term growth prospects. As we evaluated our alternatives, we concluded that an accelerated stock buyback program was an effective avenue to return value to shareholders." About Del Monte Del Monte Foods is one of the United States' largest and most well-known producers, distributors and marketers of premium quality, branded and private label food and pet products for the U.S. retail market, generating over $3 billion in net sales in fiscal 2005. With a powerful portfolio of brands including Del Monter, Contadinar, StarKistr, S&Wr, Nature's Goodness, College Innr, 9Livesr, Kibbles 'n Bitsr, Pup-Peronir, Snausagesr, and NawSomes! r, Del Monte products are found in nine out of ten American households. As reported in the Troubled Company Reporter on Jan. 28 2005, Fitch Ratings assigns a 'BB-' rating to Del Monte Foods Company's new $250 million 6-3/4% privately placed senior subordinated notes due Feb. 15, 2015. Fitch also expects to rate Del Monte's new secured credit facility, projected to close in early February 2005. Fitch currently rates Del Monte's debt: -- Senior secured bank facility 'BB+'; -- Senior subordinated notes 'BB-'. -- Rating Outlook Stable. Del Monte's total debt as of October 31, 2004 was $1.5 billion. Moody's currently rates Del Monte's $150,000,000 Term Loan Tranche A at Ba3. DELPHI CORP: Completes Financial Restatements & Audit Probe ----------------------------------------------------------- Delphi Corp. (NYSE: DPH) completed its financial restatement, and has become current in its periodic filings with the Securities and Exchange Commission. In conjunction with the restatement, the audit committee of the company's Board of Directors has concluded its internal investigation of certain accounting transactions over the past five years. "The audit committee has conducted a thorough and intensive internal investigation over these past nine months and the Delphi team has worked extremely hard to complete this restatement process by the self-imposed deadline of June 30," said Robert H. Brust, chairman of Delphi's Audit Committee and executive vice president and CFO of Eastman Kodak Company. "And while it is regrettable to have had to undergo this process, the Board and the entire team at Delphi are poised to integrate the lessons learned into the company's internal controls and channel all efforts and resources toward Delphi's transformation." The effects of the restatement reduce retained earnings as of Dec. 31, 2001 by $265 million, reduce 2002 net income by $24 million, and improve 2003 net loss by $46 million. Delphi is the subject of an ongoing investigation by the Staff of the Securities Exchange Commission and other federal authorities involving Delphi's accounting for and disclosure of a number of transactions. The transactions include: -- rebates or other lump-sum payments received from suppliers, -- certain off-balance sheet financings of indirect materials and inventory and the payment in 2000 of $237 million in cash; and -- the subsequent receipt in 2001 of $85 million in credits, as a result of certain settlements between Delphi and its former parent company, General Motors. Accounting Irregularities As reported in the Troubled Company Reporter on June 13, 2005, the recent findings by the Board's audit committee concluded that the Company did not accurately disclose to credit ratings agencies, analysts or the Board of Directors the amount of sales of European accounts receivable or factoring arrangements from the date of its separation from General Motors until year-end 2004. The Audit Committee conducted the investigation with PricewaterhouseCoopers LLP. Following its review, the audit committee accepted the resignations of the Company's current Treasurer, Pam Geller and John Blahnik, its former Vice President of Treasury, Mergers & Acquisitions. John Arle, 57, has been named Vice President and Treasurer, effective immediately, and will report to John Sheehan, Delphi's Acting Chief Financial Officer. The Board of Directors of Delphi Corp. named Robert S. "Steve" Miller as the company's new chairman and chief executive officer, effective July 1, 2005. CY 2004 Financials Delphi reported CY 2004 revenue of $28.6 billion and a net loss of $4.8 billion. As previously reported on May 13, 2005, Delphi's CY 2004 net loss includes a $4.7 billion valuation allowance against its U.S. deferred tax assets. This non-cash charge was unrelated to the internal accounting investigation, and was recorded through the normal course of evaluating deferred tax assets for recoverability. There was no impact to Delphi's liquidity position due to this valuation allowance. Delphi continues to maintain the underlying tax benefits to offset future taxable income and will evaluate the continued need for a valuation allowance based upon the profitability of its U.S. operations. Delphi Corp. -- http://www.delphi.com/-- is the world's largest automotive component supplier with annual revenues topping $25 billion. Delphi is a world leader in mobile electronics and transportation components and systems technology. Multi-national Delphi conducts its business operations through various subsidiaries and has headquarters in Troy, Michigan, USA, Paris, Tokyo and Sao Paulo, Brazil. Delphi's two business sectors -- Dynamics, Propulsion, Thermal & Interior Sector and Electrical, Electronics & Safety Sector -- provide comprehensive product solutions to complex customer needs. Delphi has approximately 186,500 employees and operates 171 wholly owned manufacturing sites, 42 joint ventures, 53 customer centers and sales offices and 34 technical centers in 41 countries. At March 31, 2005, Delphi Corporation's balance sheet showed a $4.09 billion stockholders' deficit, compared to a $3.54 billion deficit at Dec. 31, 2004. * * * As reported in the Troubled Company Reporter on June 15, 2005, Moody's Investors Service has affirmed the ratings of Delphi Corporation, Senior Implied at B2 and Senior Secured Bank Facilities at B1. Moody's said the rating outlook is Negative. The bank loan rating was initially assigned on May 19, 2005, as part of the company's refinancing plan. The affirmation follows the disclosure by the company in its 8-K filing with the SEC on June 9, 2005 that its Audit Committee had concluded that Delphi "did not accurately disclose to credit rating agencies, analysts, or the Board of Directors the amount of sales of accounts receivable or factoring arrangements from the date of its separation from General Motors until year-end 2004." DELTA FUNDING: S&P's Rating on Class B Notes Tumbles to D --------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class B from Delta Funding Home Equity Loan Trust 1999-3 to 'D' from 'CCC'. Concurrently, ratings on five other classes from the same transaction are affirmed. The rating on class B was lowered as a result of the $32,642.55 principal write-down realized by the class during the June 2005 remittance period. Originally rated 'BBB-', the class is supported by excess spread and overcollateralization, which were completely exhausted during this period. Monthly net realized losses exceeded monthly excess interest cash flow for most of the past 12 months, thereby steadily depleting overcollateralization. While the mortgage pool has paid down to approximately 14% of its original balance, substantial losses from high delinquencies have contributed to the complete erosion of the overcollateralization to $0.00 from its original target of $9.8 million. As of the June 2005 distribution date, cumulative realized losses were $34.089 million, 4.87% of the original pool balance, while total delinquencies were 34.36%. Serious delinquencies (90-plus days, foreclosure, and REO) were 22.24%. The affirmations of the ratings on the five remaining classes from this transaction reflect adequate actual and projected credit support provided by subordination and, to a lesser extent, monthly excess interest. Given the current delinquency status and pattern of losses, along with minimal excess cash flow amounts, collateral performance is likely to continue to result in losses that will further exhaust credit support to the transaction. Standard & Poor's will continue to monitor the transaction closely, and the ratings will be adjusted accordingly. The collateral consists of 15- to 30-year, fixed- and adjustable- rate, first- and second-lien subprime mortgage loans secured by one- to four-family residential properties. Rating Lowered Delta Funding Home Equity Loan Trust 1999-3 Rating ------ Class To From ----- -- ---- B D CCC Ratings Affirmed Delta Funding Home Equity Loan Trust 1999-3 Class Rating ----- ------ A-1F AAA A-2F AAA A-1A AAA M-1 AA+ M-2 A DELTAGEN INC: Wants Until Oct. 18 to File Plan of Reorganization ---------------------------------------------------------------- Deltagen, Inc., and Deltagen Proteomics, Inc., ask the U.S. Bankruptcy Court for the Northern District of California to extend the period within which they have the exclusive right to file a chapter 11 plan to October 18, 2005. They also want the period within which they have the exclusive right to solicit acceptances of that chapter 11 plan extended to December 13, 2005. Ramon M. Naguiat, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., tells the Court that over the last few months, the Debtors have made significant progress in moving their cases to conclusion. The Debtors have: * commenced the claims administration process, * filed two omnibus objections to claims, and * asserted various additional "one off" claims objections. The Debtors also continued dealing with their various contractual and licensing relationships by: * modifying, assuming, and rejecting existing contracts, * resolving the Debtor's licensing disputes with Lexicon Incorporated, and * entering into new licensing arrangements. Mr. Naguiat reports that the Debtors have begun the process of drafting a plan of reorganization and disclosure statement in support of the plan, which the Debtors intend to file within the next few months. To allow the Debtor to complete the formulation and negotiation of a plan of reorganization and to address certain remaining operational and claims issues in their cases in advance of exiting bankruptcy, the Debtors ask the Court to approve the extension. Committee Shares Exclusive Periods Mr. Naguiat tells the Court that although the Debtors will endeavor to propose a plan that has the support of the Committee, the Debtors are willing to continue to share the proposed extended Exclusive Periods with the Committee in the event that the Committee is dissatisfied with the contours of the plan formulated by the Debtors. The Debtors may file and solicit acceptances of a plan, provided that the plan has the Committee's support, or the Committee may file and solicit acceptances of a plan, provided that the plan has the Debtors' support. Deltagen Inc. provides essential data on the in vivo mammalian functional role of newly discovered genes. The Company and its debtor-affiliates filed for chapter 11 protection on June 27, 2003 (Bankr. N.D. Calif. Case No. 03-31906). Alan Talkington, Esq., and Frederick D. Holden, Esq., at Orrick, Herrington and Sutcliffe, and Henry C. Kevane, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. ENVIRONMENTAL ELEMENTS: Files Chapter 11 Petition in Maryland ------------------------------------------------------------- Environmental Elements Corporation (OTC: EECP) filed a chapter 11 petition in the U.S. Bankruptcy Court for the District of Maryland. According to Lisa Poulin, EEC's recently hired Chief Restructuring Officer, the filing is in response to changes in the industry, increased competition and increases in prices for steel and other raw materials resulting in sustained operating losses in North America. EEC's European operation, which has had significant growth and is profitable, is not included in the Chapter 11 filing. The Company intends to use the Chapter 11 case as a vehicle for a sale of all of its business operations including its European operation. It has retained FTI Capital Advisors, LLC, as its marketing and sales agent. Mercantile Safe-Deposit & Trust Company has agreed to extend debtor-in-possession financing to the Company during the Chapter 11 case. Mercantile was the Company's working capital lender before the case was filed. Headquartered in Baltimore, Maryland, Environmental Elements Corporation is a solutions-oriented provider of innovative technology for plant maintenance services, air pollution control equipment and complementary products. The company has served a broad range of customers in the power generation, pulp and paper, waste-to-energy, rock products, metal and petrochemical industries for over 55 years. The Company filed for chapter 11 protection on July 1, 2005 (Bankr. Md. Case No. 05-25073). Lawrence Coppel, Esq., at Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated $1 million to $10 million in total assets and $10 million to $50 million in total debts. At Dec. 31, 2004, Environmental Elements' balance sheet showed a $12,095,000 stockholders' deficit, compared to a $10,965,000 deficit at March 31, 2004. ENVIRONMENTAL ELEMENTS: Case Summary & 20 Largest Creditors ----------------------------------------------------------- Debtor: Environmental Elements Corporation 3700 Koppers Street Baltimore, Maryland 21227 Bankruptcy Case No.: 05-25073 Type of Business: The Debtor provides innovations for plant maintenance services, air pollution control equipment and complementary products. See http://www.eec1.com/ Chapter 11 Petition Date: July 1, 2005 Court: District of Maryland (Baltimore) Judge: Duncan W. Keir Debtor's Counsel: Lawrence Coppel, Esq. Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC The Garrett Building, 233 East Redwood Street Baltimore, Maryland 21202 Tel: (410) 576-4000 Fax: (410) 576-4246 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Vandiver Steel Fabrication Trade $599,119 2272 Highway 50 West P.O. Box 128 Vandiver, AL 35176 DOVCO Industrial Trade $418,539 Fabricators, Inc. 1700 Ridgely Street Baltimore, MD 21230 EFFOX, Inc. Trade $178,047 9759 InterOcean Drive Cincinnati, OH 45246 NWL Transformers, Inc. Trade $170,390 TECO Industries of Trade $150,651 Maryland, Inc. Riggs, Counselman, Michaels Deferred insurance $135,696 & Downes, Inc. premium Nicholson & Hall Corporation Trade $88,970 Motion Indutries, Inc. Trade $80,065 Energy and Environmental Commissions $78,802 Phillips Getschow Company Lawsuit settlement $74,000 PIP's Iron Works, Inc. Trade $70,716 M&M Machine Services, Inc. Trade $68,912 Applied Industrial Trade $57,026 Technologies Watlow Electric Mfg., Inc. Trade $43,764 ACS Valves Trade $39,665 Redkoh Datatest Trade $29,770 Service Machine & Welding Trade $29,381 Thermal Devices, Inc. Trade $23,651 Kissick, Inc. Commissions $18,524 A&A Bolt & Screw Company Trade $17,483 Inc. EXIDE TECH: PwC Expresses Going Concern Doubt in Annual Report -------------------------------------------------------------- Exide Technologies (NASDAQ: XIDE) was advised by its independent auditor, PricewaterhouseCoopers LLC, that its report on Exide's consolidated financial statements as of and for the fiscal year ended March 31, 2005 will contain a going-concern qualification. The Company understands that this qualification will be expressed due to concern about its ability to meet the financial covenants for the 2006 fiscal year in its Credit Agreement, as amended. Exide also stated that its Form 10-K Annual Report, which will be filed shortly with the U.S. Securities and Exchange Commission, will report that the Company has concluded that as a result of its review of internal controls under Section 404 of the Sarbanes- Oxley Act as of fiscal year-end that there were two material weaknesses in the controls relating to the period-end financial reporting processes and the period-end accounting for income taxes. Credit Agreement in Default The going-concern qualification in the Company's audit report will result in a default under the Company's Credit Agreement. The Company is working with the agent for its bank group to obtain a waiver of this default, but there can be no assurance that it will be able to obtain the waiver. The Company will not be able to make further borrowings under its Credit Agreement until the waiver is obtained. * * * In Exide Technologies' regulatory filing with the Securities and Exchange Commission, PricewaterhouseCoopers LLP, the Company's independent registered public accounting firm, states that Exide Technologies did not maintain effective internal control over financial reporting as of March 31, 2005, as the Company did not maintain effective controls over: (i) period-end account reconciliations, reviews and analyses and (ii) period-end accounting for income taxes, based on criteria established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. PwC points out that the Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Because of Exide's inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 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. Two material weaknesses have been identified and included in management's assessment. 1. Ineffective controls over period-end account reconciliations, reviews and analyses. At March 31, 2005, Exide did not maintain effective controls over period-end account reconciliations, reviews and analyses. Specifically, Exide's account reconciliations, reviews and analyses procedures were ineffective as they relate to: (a) independent and timely review of certain account reconciliations and analyses, including those over cost of sales, inventories, accrued expenses and operating expenses; (b) review and approval of journal entries; and (c) timely business performance reviews of financial results. These control deficiencies resulted in audit adjustments to the accounts in the Company's fiscal 2005 consolidated financial statements. 2. Ineffective controls over period-end accounting for income taxes. At March 31, 2005, Exide did not maintain effective controls over the period-end accounting for income taxes. Specifically, Exide's processes, procedures and controls related to the preparation and review of the quarterly and annual tax provisions were not adequate to ensure that the deferred tax provision and deferred tax asset and liability balances were accurate and determined in accordance with generally accepted accounting principles. This control deficiency resulted in audit adjustments to the Company's fiscal 2005 consolidated financial statements. PwC said its opinion regarding the effectiveness of the Company's internal control over financial reporting does not affect its opinion on those consolidated financial statements. 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. FLAGSHIP CLO: Moody's Rates $13.2MM Class D Rate Notes at Ba2 ------------------------------------------------------------- Moody's Investors Service assigned ratings to seven Classes of Notes issued by Flagship CLO IV and brought to market by Banc of America Securities LLC. Moody's assigned these ratings to the Notes issued: * Aaa to the U.S.$40,400,000 Class A Senior Secured Floating Rate Revolving Notes Due 2017; * Aaa to the U.S.$269,600,000 Class A Senior Secured Floating Rate Funded Notes Due 2017; * Aaa to the U.S. $4,000,000 Class X Notes due 2010; * A2 to the U.S.$27,900,000 Class B Second Priority Deferrable Floating Rate Notes Due 2017; * Baa2 to the U.S. $17,900,000 Class C Third Priority Deferrable Floating Rate Notes Due 2017; and * Ba2 to the U.S. $13,200,000 Class D Fourth Priority Deferrable Floating Rate Notes Due 2017. In addition Moody's assigned Ba1 to the U.S. $24,700,000 Combination Notes Due 2017. The rating on the Combination Note will not be monitored and will not be in effect after the closing date. Proceeds from the issuance will be used to purchase a diversified pool consisting primarily of U.S. Dollar denominated loans which will be managed by Flagship Capital Management, Inc., a wholly owned subsidiary of Bank of America Corporation. FRESENIUS AG: Moody's Downgrades EU300 Million Senior Notes to Ba2 ------------------------------------------------------------------ Moody's Investors Service lowered ratings of Fresenius AG as a result of the announced debt-funded acquisition of Renal Care Group, Inc. by Fresenius' subsidiary, Fresenius Medical Care AG. This concludes Moody's review initiated on May 4, 2005. Fresenius is a holding company whose major assets are investments in group companies and inter-company financing arrangements. The group is organized into three business divisions: * FME including RCG (71% of FY04 sales); * Fresenius Kabi (18% of FY04 sales); and * Fresenius ProServe (10% of FY04 sales). Moody's ratings reflect the high reliance of Fresenius on distributions from FME, which is its largest subsidiary and accounted for approximately 73% of FY04 consolidated operating cash flow. As a result of its acquisition of RCG, FME's leverage profile will increase materially, thereby increasing the leverage profile of Fresenius. Moody's expects Fresenius' pro forma FY05 lease adjusted leverage to be close to 5.0x compared to 3.7x in FY04. Fresenius' ratings continue to be supported by the group's global scale and strong market shares commanded by each of its operating subsidiaries and diversification of its revenue streams through its other two principal subsidiaries, Kabi and ProServe. Kabi is the leader in infusion and nutrition therapy in Europe with strong market positions in certain emerging markets such as China. Kabi has delivered solid profitability improvements over the past three years which provides further support to the Fresenius corporate family rating. Moody's expects the relative weighting of Kabi in Fresenius' portfolio to increase over the medium term. ProServe is still transitioning through a turnaround phase, however losses at the division have been stemmed from a low point in 2003 . As of March 31, 2005 Fresenius had Euro 2.8 billion of total debt outstanding, of which approximately Euro 1 billion was located at the parent company level. All debt at the parent, including the rated Euro 300 million senior notes, ranks pari-passu and as a consequence the senior notes have not been notched down from the corporate family rating. The senior notes benefit from senior unsecured guarantees from Kabi and ProServe but not FME. The stable outlook incorporates Moody's view that ProServe's turnaround will continue such that the division's operating cash flows should strengthen in FY05. Fresenius is expected to continue to make bolt-on acquisitions totalling Euro 100 million to Euro 150 million per annum. Fresenius' ratings are closely aligned to that of FME and therefore will be impacted by the progress of the RCG integration as well as developments at ProServe and Kabi. Ratings could rise if lease adjusted leverage falls below 4.0x, adjusted RCF/net adjusted debt returns to the high teens and ProServe demonstrates a sustainable cash contribution to the group. Fresenius' metrics are considered strained for the rating category but prospectively factor expected de-leveraging. Ratings could fall if leverage does not fall to c. 4.5x in FY06 and if adjusted RCF/net adjusted debt falls below 11% indicating that integration has not proceeded as planned, heightened pricing pressure across either of the three divisions or operational performance issues at Kabi or ProServe. These ratings have been affected: * Corporate family rating (previously called Senior Implied Rating) downgraded to Ba2 from Ba1 * Euro 300 million of senior notes downgraded to Ba2 from Ba1 * Issuer rating withdrawn Fresenius AG is a global health care company with products and services for dialysis (through Fresenius Medical Care), international healthcare services and facilities management (Fresenius ProServe) and nutrition and infusion therapies (Fresenius Kabi). For the fiscal year ended 31 December 2004, Fresenius AG generated consolidated sales of Euro 7,271 million. FRESENIUS AG: $4B Renal Care Buy Cues S&P's to Maintain Watch ------------------------------------------------------------- Standard & Poor's Ratings Services 'BB+' long-term corporate credit ratings on the world's leading dialysis services provider, Germany-based Fresenius Medical Care AG, and its parent, Fresenius AG, remain on CreditWatch with negative implications, where they were placed on May 4, 2005, following FME's announcement that it had agreed to acquire North America's third-largest dialysis services provider Renal Care Group Inc. (RCG; BB-/Positive/--). Standard & Poor's plans to lower the corporate credit ratings on both entities to 'BB' on completion of the $4 billion (including $500 million of assumed debt) debt-financed acquisition. The outlook will be negative. At the same time, the subordinated debt rating on the trust preferred securities issued by various FME subsidiaries will be lowered to 'B+' from 'BB-'. The acquisition is likely to be completed during the fourth quarter of 2005 once approvals have been received from RCG's shareholders and the antitrust authorities. "The downgrade will primarily reflect the substantial deterioration in the group's debt measures on completion of the acquisition," said Standard & Poor's credit analyst Omar Saeed. This is despite FME's intention to raise potentially about EUR300 million ($400 million) of proceeds from a voluntary scheme under which its preference shareholders are able to convert their holdings into ordinary shares during the current year. FME also anticipates divestitures worth between $200 million and $250 million, reflecting disposals necessary to satisfy regulatory authorities and the optimization of its dialysis clinics portfolio. Pro forma for the anticipated divestitures and potential share conversion, Standard & Poor's estimates FME's net debt to EBITDA adjusted for leases, pensions, and litigation-related-provisions (after exceptional cash costs) and adjusted funds from operations (FFO) to net debt at about 4.7x and 13%, respectively, for the 12 months to March 31, 2005. This reflects a substantial deterioration from the current 2.9x and 25%. Fresenius' debt measures are also likely to fall broadly in line with those of FME. The negative outlook will reflect both entities' below-par pro forma debt protection measures for the 'BB' ratings. "Standard & Poor's notes FME's and Fresenius' unexpected shift to a significantly more aggressive financial posture, particularly as the group had been in the process of deleveraging its balance sheet for the past three to four years," said Mr. Saeed. "We are therefore concerned that the group might not be able to sustain the required rapid deleveraging over the next two years if acquisition spending is significant," he added. "The 'BB' ratings could be lowered in the next 12 months if the group fails to demonstrate the ability to achieve and sustain ratios consistent with the rating level by year-end 2007." From a business risk perspective, Standard & Poor's considers the acquisition as mildly positive in the long run, reflecting the enlarged group's solidified market position, its ability to further improve payment terms with private payors, and improved operating margin. FRESENIUS MEDICAL: Moody's Cuts Bank Debt to Ba2 & Sub. Debt to B1 ------------------------------------------------------------------ Moody's Investors Service downgraded ratings of Fresenius Medical Care AG as a result of the company's planned debt-funded acquisition of Renal Care Group. Concurrently, Moody's assigned a Ba2 rating to FME's new Euro 5 billion senior credit facility put in place to finance the transaction. This concludes the review initiated on 4 May 2005. Moody's ratings reflect the agency's assumption that FME's proposed acquisition of RCG will be completed as expected and considers the enlarged company's ability to service its significantly higher debt burden as a result of the transaction as well as integration risks resulting from the acquisition. Consideration for RCG is c. US$3.5 billion for the equity plus the assumption of c. US$500 million of RCG debt, which represents an acquisition multiple of approximately 12.8x RCG EBITDA of US$312 million. RCG's debt will be repaid upon transaction close. FME is funding the transaction through a new US$5 billion senior credit facility, and as a result substantially increases its leverage profile. Pro forma for the acquisition, FME's FY05 lease adjusted leverage is expected to be greater than 5.0x compared with 3.9x as of FY04 and is considered aggressive by Moody's. However, the Ba2 rating reflects the agency's expectation that the company's solid cash flow generation should enable it to de-leverage over the next 12 to 18 months from the FY05 peak to levels more consistent with a Ba2 rating. FME's ratings continue to reflect risks from the company's pure- play focus on the dialysis market albeit ameliorated by: * its position as a provider of both products and services; * high proportion of Epogen related revenues; * the company's exposure to regulatory changes; * government investigations; and * pricing pressure from governments and healthcare organizations worldwide. FME's Trust Preferred securities and subordinated securities have been downgraded by two notches from Ba2 to B1 to reflect their structural subordination in the capital structure and position relative to the senior credit facility, which has increased from US$1.2billion to US$5 billion. Positively, the ratings are supported by: * FME's strong cash flow generation underpinned by the recurring nature of its revenues; * global market leadership; * its position as a vertically integrated product and service provider; * geographic diversification of its revenues; and * continued favorable industry growth trends. Further, the ratings are supported by: * the strategic nature of the RCG acquisition; * benefits from increased scale; and * the assumption that the combination will yield material margin uplift over the medium term. Separately, FME announced the transformation of its corporate structure from an AG to a Kgaa and converting its preference shares into ordinary shares. The conversion of FME's shares into one class of equity simplifies its equity structure, however, the fact that through this structure, FME could issue equity in the future without jeopardizing the ability of Fresenius AG to consolidate and control FME, signals the potential for future equity-financed acquisitions. The stable outlook incorporates Moody's view of the stability of the dialysis market and favorable demographic demand drivers. Moody's expects FME to continue to make small, bolt-on acquisitions in the range of US$100 million to US$150 million in total per annum over the medium term, but notes that any further large acquisitions may negatively impact the rating. Further, the company, in line with its peers in the ESRD market, remains exposed to potential government investigations, however, the stable outlook reflects Moody's view that the company has put robust compliance policies and procedures in place to safeguard against potential violations. Ratings could rise if lease adjusted leverage falls below 4.0x, adjusted RCF/net adjusted debt returns to pre-transaction levels of more than 17% and the acquisition demonstrates material uplift to FME's operating margins beyond its standalone FY04 EBIT margin of 13.7%. The Ba2 rating is based on the premise that leverage will fall from the peak in FY05. However, ratings could fall should leverage not fall to c. 4.5x by the end of FY06 and if adjusted RCF/net adjusted debt falls below 11% indicating that integration has not proceeded as planned or the impact of heightened pricing pressure. The ratings of RCG remain under review until the acquisition by FME is completed and RCG's debt is repaid, at which time RCG's standalone ratings will be withdrawn. Completion of the acquisition will be subject to RCG's shareholders' approval and expiration of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act. Completion of the preference share conversion and legal transformation will require FME board approval later this year. Fresenius Medical Care AG: * Corporate Family Rating (previously called Senior Implied Rating) downgraded to Ba2 from Ba1 * US$5 billion senior credit facilities rated Ba2 * Issuer rating withdrawn FMC Trust Finance Sarl: * US$225 million senior subordinated notes due 2011 downgraded to B1 from Ba2 * US$450 million subordinated notes due 2008 downgraded to B1 from Ba2 Fresenius Medical Care Capital Trust II: * US$450 million Trust Preferred Securities due 2008 downgraded to B1 from Ba2 * Fresenius Medical Care Capital Trust III: * DM 300 million Trust Preferred Securities due 2008 downgraded to B1 from Ba2 Fresenius Medical Care Capital Trust IV: * US$ 225 million Trust Preferred Securities due 2011 downgraded to B1 from Ba2 Fresenius Medical Care Capital Trust V: * Euro 300 million Trust Preferred Securities due 2011 downgraded to B1 from Ba2 Please also see Moody's related press release on Fresenius AG dated 30 June 2005. Fresenius Medical Care AG is the world's leading provider of dialysis products and services. For the fiscal year ended 31 December 2004, Fresenius Medical Care AG generated net revenues of US$ 6,228 million. Renal Care Group, Inc. is a specialized dialysis services company that provides care to patients with kidney disease. Renal Care Group serves over 30,400 patients at more than 425 owned outpatient dialysis facilities, in addition to providing acute dialysis services at more than 210 hospitals. Renal Care Group reported revenues of approximately $1.3 billion for the year ended December 31, 2004 GENERAL ELECTRIC: Moody's Rates $17.83MM Class D Certs. at Ba2 -------------------------------------------------------------- Moody's Investors Service assigned ratings of Aaa to Class A-1, A- 2, A-3, and Class IO certificates, A2 to Class B certificates, Baa2 to Class C certificates, and Ba2 to Class D certificates issued in a business loan securitization sponsored by General Electric Capital Corporation. This is GECC's fifth term securitization of business loans. The complete rating actions are: Issuer: GE Business Loan Trust 2005-1 Business Loan Pass-Through Certificates, Series 2005-1 * Class IO Certificates, rated Aaa; * $178,936,000 Class A-1 Certificates, rated Aaa; * $100,000,000 Class A-2 Certificates, rated Aaa; * $348,575,863 Class A-3 Certificates, rated Aaa; * $49,915,716 Class B Certificates, rated A2; * $17,827,042 Class C Certificates, rated Baa2; * $17,827,042 Class D Certificates, rated Ba2. The ratings of the class A-1, A-2, A-3, B, C, and D certificates are based on: * the quality of the collateral, which consists of loans secured by first liens on commercial real estate with an average LTV of 71.7%, subordination protecting the Class A, B and C certificates, which totals 12%, 5% and 2.5% protection, respectively; * approximately 1.8% excess spread per year available to absorb losses; and * the experience of GECC as servicer. In addition to the above factors, the rating of the IO certificates, which promise a fixed dollar amount per month for four years after deal closing, is based on the substantial cash flow available to make payments and the placement of payments to the IO class at the top of the payment priority, pro-rata with Class A interest. Approximately 69% of the loan pool was originated by General Electric Commercial Finance Business Property Corporation and 31% from General Electric Capital Corporation, through its small business finance lending division. BPF provides middle-market U.S. public and private companies business loans that are secured by single-tenant or owner-occupied commercial real estate. SBF is a provider of small business commercial real estate loans primarily through the SBA 504 and "piggyback" lending programs. The loan pool consists of 354 loans with an average principal balance of $2 million and a maximum loan size of $12.25 million. The weighted average seasoning of the pool is 6 months, with a weighted average original term of 177 months. Approximately 57% of the loan pool is comprised of balloon loans, with the remainder fully-amortizing. The average LTV at maturity for the balloon loans is 56.9%. Single-tenant properties represent 50% of the pool by principal balance with the remainder consisting of owner- occupied loans. The loan pool is reasonably diversified from industry and geographic perspectives; loans are spread out over 146 different SIC Codes with the hotel sector comprising 10.1% of the pool by principal balance, followed by grocery stores, 4.8%, and offices of clinics of doctors of medicine, 4.8%. California comprises 16.5% of the pool by principal balance, followed by Texas, 10%, Florida, 7.7%, and Washington, 5.5%. With $567 billion in assets as of December 31, 2004, GECC (Aaa, P-1) is the largest diversified, non-captive finance company in the U.S. The certificates were sold in privately negotiated transactions without registration under the Securities Act of 1933. The issuance has been designed to permit resale under Rule 144A. GRANITE VENTURES: Moody's Rates $9.5MM Class D Sub. Notes at Ba2 ---------------------------------------------------------------- Moody's Investors Service issued these ratings to the notes issued by Granite Ventures I Ltd.: * Aaa to the U.S. $273,000,000 Class A-1 Floating Rate Senior Notes Due 2015; * Aa2 to the U.S. $22,000,000 Class A-2 Floating Rate Senior Notes Due 2015; * A2 to the U.S. $15,000,000 Class B Deferrable Floating Rate Senior Subordinate Notes Due 2015; * Baa2 to the U.S. $12,000,000 Class C Deferrable Floating Rate Subordinate Notes Due 2015; and * Ba2 to the U.S. $9,500,000 Class D Deferrable Floating Rate Subordinate Notes Due 2015. According to Moody's, the ratings assigned to the notes address the ultimate cash receipt of all interest and principal payments required by the notes' governing documents, and are based on the expected loss posed to holders of the notes relative to the promise of receiving the present value of such payments. The ratings are also based upon the transaction's legal structure, the characteristics of the collateral pool, which consists primarily of high yield loans, and the experience of the Collateral Advisor -- Stone Tower Debt Advisors, LLC. GREYHOUND LINES: Effects Covenant Defeasance on 11.5% Senior Notes ------------------------------------------------------------------ Greyhound Lines, Inc., a wholly owned subsidiary of Laidlaw International, Inc. (NYSE: LI) deposited funds in the amount of $155,079,166.67 with JPMorgan Trust Company, N.A., as Trustee under the indenture for its 11.5% senior notes due 2007 to effect a covenant defeasance, which will remove substantially all of the restrictive covenants on the notes. The covenant defeasance was commenced in conjunction with Laidlaw International's comprehensive plan to recapitalize its balance sheet. The Company's 11.5% Senior Notes due 2007 bear interest at the rate of 11.5% per annum, payable each April 15 and October 15. The 11.5% Senior Notes are redeemable at the option of the Company in whole or in part, at a redemption price of 101.917% until April 15, 2005 at which time they are redeemable at their $150 million par value, plus accrued but unpaid interest. The 11.5% Senior Note indenture contains certain covenants that, among other things, limit the ability of the Company to incur additional indebtedness, pay dividends or make other distributions, repurchase equity interests or subordinated indebtedness, create certain liens, sell assets or enter into certain mergers or consolidations. As of Dec. 31, 2004, the Company was in compliance with all such covenants. Greyhound Lines, Inc. -- http://www.greyhound.com/and http://www.greyhound.ca/-- is the largest North American provider of intercity bus transportation, providing 19,000 daily departures across the continent. The company also provides Greyhound PackageXpress in the United States and Greyhound Courier Service in Canada, as well as Greyhound Travel Services including: vacation packages, charters, sightseeing and shore services. * * * As reported in the Troubled Company Reporter on June 3, 2005, Standard & Poor's Ratings Services placed its ratings on Greyhound Lines Inc., including the 'CCC+' corporate credit rating, on CreditWatch with positive implications. The rating action follows Standard & Poor's review of the ratings on Laidlaw International Inc., Greyhound's parent company, and reflects the likelihood of rating actions on Greyhound upon completion of refinancing activities currently under way at Laidlaw. Laidlaw has launched a tender offer for publicly rated debt at Greyhound. If the debt tender is successfully completed, Greyhound ratings are likely to be withdrawn. If debt remains outstanding at Greyhound, Standard & Poor's will reassess its ratings on Greyhound in light of the proposed easing of restrictions on Laidlaw's ability to financially support Greyhound. In that event, ratings would likely be raised. "Ratings reflect Greyhound's very weak financial profile and vulnerability to competitive pressures," said Standard & Poor's credit analyst Lisa Jenkins. Greyhound, the nation's largest intercity bus company, provides service to more than 2,200 destinations, with a fleet of approximately 2,700 buses. It faces intense competition from airlines offering low fares, automobile travel and, in certain markets, trains and lower-cost regional bus lines. Management acknowledges the need to improve the financial performance of the company and has undertaken a number of initiatives to achieve better results. These restructuring efforts should lead to higher margins and a better return on assets. However, the magnitude of the improvement may be constrained by continuing challenging industry conditions, continuing high fuel prices, and capital requirements. HOLMES GROUP: $625MM Jarden Deal Prompts S&P's Positive Watch ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit and 'B-' subordinated debt ratings on Rye, New York-based Jarden Corp. The affirmation follows Jarden's announcement that it has signed a definitive agreement to acquire small appliance manufacturer and marketer The Holmes Group for $625 million, or about 6.5x EBITDA. At the same time, Standard & Poor's assigned its 'B+' rating to Jarden's proposed $350 million tack-on term loan facility, with a '3' recovery rating, indicating that the asset values provide lenders with the expectation of meaningful recovery of principal (50%-80%) in a payment default scenario. The outlook is stable. Standard & Poor's has also placed its 'B' corporate credit rating and other ratings on The Holmes Group on CreditWatch with positive implications. Pro forma for the transaction, about $1.5 billion in total debt will be outstanding. "The ratings on Jarden reflect the highly competitive and challenging operating environment in the company's Consumer Solutions segment and low barriers to entry with limited growth potential in several of the firm's product lines. The ratings also reflect the company's aggressive acquisition orientation and its high debt leverage," said Standard & Poor's credit analyst Martin S. Kounitz. HOLMES GROUP: Moody's Affirms Corporate Family Rating at B1 ----------------------------------------------------------- Moody's Investors Service affirmed the ratings of Jarden Corporation and The Holmes Group following the announcement of the proposed acquisition of The Holmes Group by Jarden Corporation. At the same time, Moody's assigned a (P)B1 rating to Jarden's proposed $350 million tack-on to its senior secured term loan which will partially fund the acquisition. The rating affirmation of Jarden reflects: * the company's moderate operating margins, * niche brands, and * moderate leverage. The ratings are constrained by: * potential integration risk that has resulted from the company's recent large acquisitions; * limited opportunities for organic growth; * the increasing exposure to the highly competitive home appliance sector; and * the possibility of additional debt financed acquisitions. The rating affirmation of The Holmes Group reflect: * its portfolio of stable and diverse products for the home; * the company's well known brand names; * the leading market positions for many of the products it sells; * its well established relationships with growing mass retailers; * the stability of its operating margin; and * the moderate decline in its leverage since the May 2004 recap and special dividend. On June 28, 2005, Jarden signed a definitive agreement to acquire The Holmes Group for a total acquisition price of approximately $625 million. The Holmes Group is a manufacturer and marketer of small home appliances. Its major brands include Rival, Crock Pot, Bionaire, Holmes, Seal-a-Meal, and Family Care. The acquisition will be funded by the proposed term loan together with cash on hand and roughly $200 million of common equity and is expected to close during July 2005. The ratings of The Holmes Group will be withdrawn if the acquisition closes under its current terms. Jarden is a holding company whose subsidiaries operate primarily in the consumer non-durable and appliance sectors. Key subsidiaries include: * the United States Playing Card Company, American Household, Inc., the maker of: -- Sunbeam and Mr. Coffee appliances, and -- Coleman branded camping equipment; and * Tilia, the maker of the FoodSaver food preservation system. Jarden has grown rapidly as it pursues a strategy of acquiring consumer products companies with niche products that have a dominant market share. Jarden's ratings are supported by moderate operating margins which are expected to approximate 10% or more going forward, the strength and diversification of Jarden's brands, and the relatively moderate leverage levels. The ratings are constrained by: * the considerable integration risk associated with the acquisition of The Holmes Group and purchase of AHI (in January 2005); * the possibility of additional acquisitions that could limit the opportunity to delever; * the intense competition in the home appliance sector; and * limited organic growth in the company's existing products. Following the transaction, the company anticipates pro forma leverage (debt/EBITDA), to be approximately 3.5x. Moody's expects pro forma adjusted leverage (adjusted debt/EBITDAR), including only realized synergies from the AHI acquisition and other analytical adjustments, to be around 3.9x in 2005 and interest coverage (EBITDA/cash interest) of 4.9x in 2005. Debt is adjusted to capitalize operating leases and for the underfunded portion of the company's pension plan. The negative outlook reflects the significant integration risk associated with recent acquisitions within a relatively short period of time and Moody's belief that Jarden will continue to pursue acquisitions and possibly not delever as quickly as expected. Upward ratings pressure could occur upon evidence of successful integrations of both AHI's and Holmes' operations with operating margins remaining above 10% and interest coverage maintained at or close to its current levels. Negative rating action could ensue if Jarden engages in additional material leveraged transactions or encounters integration problems that preclude the realization of synergies and impair its operating and credit metrics. The new proposed $350 million tack term loan matures in 2012 and is guaranteed by all subsidiaries and secured on a first lien basis by all of the assets and capital stock of Jarden and its subsidiaries (65% of the capital stock of foreign subsidiaries). The senior secured credit facility, following amendments to its terms, will retain certain financial covenants including total leverage, maximum senior leverage, maximum capex, and minimum fixed charge coverage, for which Moody's projects continued compliance. These rating was assigned for Jarden: * $350 million guaranteed senior secured proposed tack-on term loan of (P) B1, These ratings were affirmed: Jarden: * Corporate family rating (formerly senior implied) at B1; * Guaranteed senior secured term loan at B1; * $200.0 million guaranteed senior secured revolving credit facility at B1; * $179.9 million senior secured subordinated notes at B1; * Long term issuer rating at B2, The Holmes Group: * Corporate family rating (formerly senior implied) at B1; * Senior secured bank credit facility at B1; * Long term issuer rating at B3, Headquartered in Rye, New York, Jarden Corporation is a global provider of market branded consumer products used in and around the home marketed under well-known brands including: * Ball(R) Bee(R), * Bicycle(R), * Campingaz(R), * Coleman(R), * Crawford(R), * Diamond(R), * First Alert(R), * FoodSaver(R), * Forster(R), * Health o meter(R), * Hoyle(R), * Kerr(R), * Lehigh(R), * Leslie-Locke(R), * Loew-Cornell(R), * Mr. Coffee(R), * Oster(R), * Sunbeam(R), and * VillaWare(R). Jarden operates through four business segments: * Branded Consumables, * Consumer Solutions, * Outdoor Solutions, and * Other. The Holmes Group, with headquarters in Milford, MA, is a manufacturer and marketing company of branded consumer products. The Holmes Group reported sales of approximately $700 million for the LTM ended March 2005. ISECURETRAC CORP: Closes $11 Million Mykonos Financing ------------------------------------------------------ iSECUREtrac(tm) Corp. (OTCBB:ISRE) received $11 million in funding from Mykonos 6420 LP, an affiliate of Sponsor Investments, LLC of Dallas, Texas on June 27, 2005. The Company issued 1,000,000 shares of its newly created Series C 8% Cumulative, Compounding Exchangeable Preferred Stock plus warrants to acquire 32,342,315 shares of the Company's common stock at exercise prices ranging from $0.23 to $1.65 per share. Each share of Preferred Stock is exchangeable for approximately 47.8 shares of the Company's common stock plus a warrant to purchase approximately 62.9 shares of common stock at $0.23 per share. If Mykonos exchanges its Preferred Stock for shares of the Company's common stock and exercises all of its warrants to purchase shares of the Company's common stock, Mykonos would own approximately 57% of the issued and outstanding shares of the Company's common stock. The total purchase price paid by Mykonos for the Preferred Stock and the warrants was $11,000,000, which was paid in cash, less $90,000 retained by Mykonos as reimbursement of expenses incurred by it in connection with the transaction. In addition, approximately $1.75 million of the purchase price was paid at closing to Opus 5949 LLC, an affiliate of Mykonos, in repayment of three short-term loans made by Opus to the Company, and $654,000 was paid in connection with previously announced debt retirements. Board Changes In connection with the financing, long-time directors Ronald Muhlbauer, Robert Badding and Martin Halbur resigned from the Company's Board of Directors and four new directors nominated by Mykonos were appointed to the Board. The new directors are: * Robert W. Korba, * Joseph A. Ethridge, * Bruce Leadbetter, and * Goh Yong Siang, all of whom are executive officers of companies affiliated with Mykonos. "This investment further enhances our ability to win large GPS monitoring contract opportunities that are developing throughout the United States and the world," said Tom Wharton, CEO of iSECUREtrac. "With this investment we have completed the fourth and final phase of the restructuring plan that we adopted in 2004. We have now eliminated all but a small amount of non-lease debt obligations while supplying the Company with the capital it needs to maintain its leadership position in offender monitoring," said David Vana, CFO of iSECUREtrac. "This investment establishes a solid financial foundation for us to pursue additional business opportunities that were not previously available to us." iSECUREtrac Corp. -- http://www.isecuretrac.com/-- is a technology and information services company providing advanced GPS tracking solutions for the remote tracking and monitoring of individuals, including real time data collection, secure remote reporting, data mapping and warehousing, and event correlation systems. iSECUREtrac is currently focused in the area of Law Enforcement, Corrections, and Homeland Security for monitoring offenders in community release programs, such as sex offenders and other persons requiring community supervision. iSECUREtrac's GPS monitoring systems are designed to improve public safety, enhance the management of monitoring information, provide the fastest analysis and response, and reduce the financial cost of incarceration. At Mar. 31, 2005, iSECUREtrac Corp.'s balance sheet showed a $2,973,593 stockholders' deficit, compared to a $2,228,350 deficit at Dec. 31, 2004. ISECURETRAC CORP: Retires $4.2 Million of Long-Term Notes Payable ----------------------------------------------------------------- iSECUREtrac(tm) Corp. (OTCBB:ISRE) retired $4.2 million of long- term notes payable. The Company prepaid the notes with $600,000 in cash and the balance in common stock at $0.23 per share. These retirements will reduce quarterly debt service by $240,000. "These latest transactions mark the completion of our debt restructuring," said David Vana, CFO of iSECUREtrac. "In the last nine months, we have retired over $7 million of debt, reducing our non-lease notes payable to $736,000. Not only has our balance sheet been significantly strengthened, our monthly cash flow is markedly improved." iSECUREtrac Corp. -- http://www.isecuretrac.com/-- is a technology and information services company providing advanced GPS tracking solutions for the remote tracking and monitoring of individuals, including real time data collection, secure remote reporting, data mapping and warehousing, and event correlation systems. iSECUREtrac is currently focused in the area of Law Enforcement, Corrections, and Homeland Security for monitoring offenders in community release programs, such as sex offenders and other persons requiring community supervision. iSECUREtrac's GPS monitoring systems are designed to improve public safety, enhance the management of monitoring information, provide the fastest analysis and response, and reduce the financial cost of incarceration. At Mar. 31, 2005, iSECUREtrac Corp.'s balance sheet showed a $2,973,593 stockholders' deficit, compared to a $2,228,350 deficit at Dec. 31, 2004. J.P. MORGAN: Moody's Junks $20.8M Class J Pass-Through Certs. ------------------------------------------------------------- Moody's Investors Service upgraded the ratings of three classes, downgraded the rating of one class and affirmed the ratings of seven classes of J.P. Morgan Commercial Mortgage Finance Corp., Mortgage Pass-Through Certificates, Series 1999-C8 as: -- Class A1, $55,078,434, Fixed, affirmed at Aaa -- Class A2, $357,019,000, Fixed, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $36,575,000, WAC, upgraded to Aaa from Aa2 -- Class C, $32,918,000, WAC, upgraded to A1 from A2 -- Class D, $14,630,000, WAC, upgraded to A2 from A3 -- Class E, $25,603,000, WAC, affirmed at Baa2 -- Class F, $10,972,000, WAC, affirmed at Baa3 -- Class G, $16,459,000, Fixed, affirmed at Ba3 -- Class H, $20,116,000, Fixed, affirmed at B3 -- Class J, $20,803,000, Fixed, downgraded to C from Ca As of the June 15, 2005 distribution date, the transaction's aggregate balance has decreased by approximately 19.3% to $590.2 million from $731.5 million at securitization. The Certificates are collateralized by 110 mortgage loans. The loans range in size from less than 1.0% to 9.2% of the pool, with the top ten loans representing 36.9% of the pool. Three loans, representing 12.7% of the pool, have defeased and have been replaced with U.S. Government securities. The defeased loans include two of the top ten loans: -- Mills Corp Pool I ($54.5 million - 9.2%); and -- Northfield Office Park I & II ($16.5 million - 2.8%). Four loans, including the pool's second largest loan, Ridgewood County Club Apartments (discussed below), are in special servicing. These loans represent 6.8% of the pool. Moody's has estimated aggregate losses of approximately $7.9 million for all of the specially serviced loans. Six loans have been liquidated, resulting in realized losses of approximately $25.0 million. Twenty-one loans, representing 17.2% of the pool, are on the master servicer's watchlist. Moody's was provided with partial or full year 2004 operating results for 90.2% of the performing loans. Moody's loan to value ratio is 87.8%, compared to 89.7% at Moody's last full review in March 2004 and compared to 87.5% at securitization. The upgrade of Classes B, C and D is due primarily to a high percentage of defeased loans and increased subordination levels. The downgrade of Class J is due to realized and anticipated losses from the specially serviced loans and interest shortfalls. Based on Moody's analysis, 11.4% of the pool has a LTV greater than 100.0%, compared to 19.5% at last review and compared to 3.4% at securitization. Based on the most recent distribution statement, accrued but unpaid interest for Class J totals approximately $66,000. The three largest loans represent 12.1% of the outstanding pool balance. The largest loan is the Ridgewood County Club Apartments Loan ($28.7 million - 4.9%), which is secured by a 35-year old, 862-unit multifamily property located in suburban Madison, Wisconsin. The loan was transferred to special servicing in January 2005 due to imminent payment default. The property has numerous life safety issues and occupancy has declined to 65.0% from 76.6% at Moody's last review. The special servicer has engaged a receiver that is making progress on resolving various property issues. A loan sale agreement has been executed with the borrower and the sale is expected to close within the next several months. The special servicer anticipates only a nominal loss if the sale is consummated. Moody's LTV is in excess of 100.0%, the same as at Moody's last review. The second largest loan is the Woodfield Gardens Apartments Loan ($22.8 million - 3.9%), which is secured by a 38-year old, 692- unit apartment complex located in suburban Chicago, Illinois. Moody's LTV is 95.9%, compared to 99.1% at Moody's last review. The third largest loan is the Madison Concourse Hotel Loan ($19.6 million - 3.3%), which is secured by a 356-room full service hotel located in Madison, Wisconsin. Occupancy and RevPAR for calendar year 2004 are 64.4% and $65.46 respectively, compared to 66.9% and $74.30 at Moody's last review. Moody's LTV is 86.3%, compared to 89.3% at Moody's last review. The pool's collateral is a mix of: * office and mixed use (26.0%), * multifamily (25.7%), * retail (14.0%), * U.S. Government securities (12.7%), * lodging (9.8%), * industrial and self storage (6.1%), and * healthcare (5.7%). The collateral properties are located in 26 states and Ontario, Canada. The highest state concentrations are: * California (12.8%), * Florida (12.6%), * Wisconsin (12.3%), * Washington (7.7%), and * Illinois (7.1%). All of the loans are fixed rate. J/Z CBO: Credit Enhancement Prompts S&P's Positive Watch -------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class A, B, and C notes issued by J/Z CBO (Delaware) LLC, an arbitrage CBO transaction managed by Babson Capital Management LLC, on CreditWatch with positive implications. The CreditWatch placements reflect factors that have positively affected the level of credit enhancement available to support the notes since the last rating action was taken in October 2004. On the May 2005 payment date, the transaction paid down the class A notes by $10 million, improving the overcollateralization ratios for all of the classes in the transaction. Standard & Poor's will be reviewing the results of current cash flow runs generated for J/Z CBO (Delaware) LLC to determine the level of future defaults the rated class can withstand under various stressed default timing and interest rate scenarios while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the performing assets in the collateral pool to determine whether the ratings currently assigned to the notes remain consistent with the credit enhancement available. Ratings Placed On Creditwatch Positive J/Z CBO (Delaware) LLC Rating ------ Class To From Balance ----- -- ---- ------- A AA-/Watch Pos AA- $55,210,000 B B+/Watch Pos B+ $23,970,000 C CC/Watch Pos CC $26,060,000 JARDEN CORP: Moody's Rates Proposed $350M Loan Tack-On at B1 ------------------------------------------------------------ Moody's Investors Service affirmed the ratings of Jarden Corporation and The Holmes Group following the announcement of the proposed acquisition of The Holmes Group by Jarden Corporation. At the same time, Moody's assigned a (P)B1 rating to Jarden's proposed $350 million tack-on to its senior secured term loan which will partially fund the acquisition. The rating affirmation of Jarden reflects: * the company's moderate operating margins, * niche brands, and * moderate leverage. The ratings are constrained by: * potential integration risk that has resulted from the company's recent large acquisitions; * limited opportunities for organic growth; * the increasing exposure to the highly competitive home appliance sector; and * the possibility of additional debt financed acquisitions. The rating affirmation of The Holmes Group reflect: * its portfolio of stable and diverse products for the home; * the company's well known brand names; * the leading market positions for many of the products it sells; * its well established relationships with growing mass retailers; * the stability of its operating margin; and * the moderate decline in its leverage since the May 2004 recap and special dividend. On June 28, 2005, Jarden signed a definitive agreement to acquire The Holmes Group for a total acquisition price of approximately $625 million. The Holmes Group is a manufacturer and marketer of small home appliances. Its major brands include Rival, Crock Pot, Bionaire, Holmes, Seal-a-Meal, and Family Care. The acquisition will be funded by the proposed term loan together with cash on hand and roughly $200 million of common equity and is expected to close during July 2005. The ratings of The Holmes Group will be withdrawn if the acquisition closes under its current terms. Jarden is a holding company whose subsidiaries operate primarily in the consumer non-durable and appliance sectors. Key subsidiaries include: * the United States Playing Card Company, American Household, Inc., the maker of: -- Sunbeam and Mr. Coffee appliances, and -- Coleman branded camping equipment; and * Tilia, the maker of the FoodSaver food preservation system. Jarden has grown rapidly as it pursues a strategy of acquiring consumer products companies with niche products that have a dominant market share. Jarden's ratings are supported by moderate operating margins which are expected to approximate 10% or more going forward, the strength and diversification of Jarden's brands, and the relatively moderate leverage levels. The ratings are constrained by: * the considerable integration risk associated with the acquisition of The Holmes Group and purchase of AHI (in January 2005); * the possibility of additional acquisitions that could limit the opportunity to delever; * the intense competition in the home appliance sector; and * limited organic growth in the company's existing products. Following the transaction, the company anticipates pro forma leverage (debt/EBITDA), to be approximately 3.5x. Moody's expects pro forma adjusted leverage (adjusted debt/EBITDAR), including only realized synergies from the AHI acquisition and other analytical adjustments, to be around 3.9x in 2005 and interest coverage (EBITDA/cash interest) of 4.9x in 2005. Debt is adjusted to capitalize operating leases and for the underfunded portion of the company's pension plan. The negative outlook reflects the significant integration risk associated with recent acquisitions within a relatively short period of time and Moody's belief that Jarden will continue to pursue acquisitions and possibly not delever as quickly as expected. Upward ratings pressure could occur upon evidence of successful integrations of both AHI's and Holmes' operations with operating margins remaining above 10% and interest coverage maintained at or close to its current levels. Negative rating action could ensue if Jarden engages in additional material leveraged transactions or encounters integration problems that preclude the realization of synergies and impair its operating and credit metrics. The new proposed $350 million tack term loan matures in 2012 and is guaranteed by all subsidiaries and secured on a first lien basis by all of the assets and capital stock of Jarden and its subsidiaries (65% of the capital stock of foreign subsidiaries). The senior secured credit facility, following amendments to its terms, will retain certain financial covenants including total leverage, maximum senior leverage, maximum capex, and minimum fixed charge coverage, for which Moody's projects continued compliance. These rating was assigned for Jarden: * $350 million guaranteed senior secured proposed tack-on term loan of (P) B1, These ratings were affirmed: Jarden: * Corporate family rating (formerly senior implied) at B1; * Guaranteed senior secured term loan at B1; * $200.0 million guaranteed senior secured revolving credit facility at B1; * $179.9 million senior secured subordinated notes at B1; * Long term issuer rating at B2, The Holmes Group: * Corporate family rating (formerly senior implied) at B1; * Senior secured bank credit facility at B1; * Long term issuer rating at B3, Headquartered in Rye, New York, Jarden Corporation is a global provider of market branded consumer products used in and around the home marketed under well-known brands including: * Ball(R) Bee(R), * Bicycle(R), * Campingaz(R), * Coleman(R), * Crawford(R), * Diamond(R), * First Alert(R), * FoodSaver(R), * Forster(R), * Health o meter(R), * Hoyle(R), * Kerr(R), * Lehigh(R), * Leslie-Locke(R), * Loew-Cornell(R), * Mr. Coffee(R), * Oster(R), * Sunbeam(R), and * VillaWare(R). Jarden operates through four business segments: * Branded Consumables, * Consumer Solutions, * Outdoor Solutions, and * Other. The Holmes Group, with headquarters in Milford, MA, is a manufacturer and marketing company of branded consumer products. The Holmes Group reported sales of approximately $700 million for the LTM ended March 2005. JARDEN CORP: S&P Rates Proposed $350 Million Bank Loan at B+ ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B+' corporate credit and 'B-' subordinated debt ratings on Rye, New York-based Jarden Corp. The affirmation follows Jarden's announcement that it has signed a definitive agreement to acquire small appliance manufacturer and marketer The Holmes Group for $625 million, or about 6.5x EBITDA. At the same time, Standard & Poor's assigned its 'B+' rating to Jarden's proposed $350 million tack-on term loan facility, with a '3' recovery rating, indicating that the asset values provide lenders with the expectation of meaningful recovery of principal (50%-80%) in a payment default scenario. The outlook is stable. Standard & Poor's has also placed its 'B' corporate credit rating and other ratings on The Holmes Group on CreditWatch with positive implications. Pro forma for the transaction, about $1.5 billion in total debt will be outstanding. "The ratings on Jarden reflect the highly competitive and challenging operating environment in the company's Consumer Solutions segment and low barriers to entry with limited growth potential in several of the firm's product lines. The ratings also reflect the company's aggressive acquisition orientation and its high debt leverage," said Standard & Poor's credit analyst Martin S. Kounitz. JERNBERG INDUSTRIES: Taps Jenner & Block as Lead Bankr. Counsel --------------------------------------------------------------- Jernberg Industries, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois for permission to employ Jenner & Block LLP as their general bankruptcy counsel. Jenner & Block is expected to: a) advise the Debtors of their powers and duties as debtors-in- possession in the continued operation of their businesses and management of their property; b) prepare, on behalf of the Debtors, all necessary motions, applications, answers, orders, reports, and papers in connection with the administration of the bankruptcy estates or as required by the Court or as necessary pursuant to the Bankruptcy Code, the Bankruptcy Rules and the Local Bankruptcy Rules; c) assist, advise and represent the Debtors concerning the confirmation of any proposed plan of reorganization and solicitation of any acceptances or responding to rejections of that plan; d) provide assistance, advice and representation concerning the possible sale of the Debtors' assets, and in the further investigation of the assets, liabilities and financial condition of the Debtors that may be required under local, state or federal law e) provide counseling and representation with respect to the assumption or rejection of executory contracts and leases, sales of assets and other bankruptcy-related matters arising from these cases; f) render legal advice with respect to general labor, corporate and litigation issues relating to the Debtors' chapter 11 cases, including collective bargaining, securities, corporate finance, tax, real estate, environmental, employee benefits, state regulatory and commercial matters; and g) perform all other legal services to the Debtors that are necessary and appropriate for the efficient and economical administration of the Debtors' chapter 11 cases. Mark K. Thomas, Esq., a Partner at Jenner & Block, is one of the lead attorneys for the Debtors. Mr. Thomas discloses that the Firm received a $480,000 retainer. Mr. Thomas charges $625 per hour for his services. Mr. Thomas reports Jenner & Block's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Michael S. Terrien Partner $495 Jerry L. Switzer, Jr. Partner $465 Brian I. Swett Partner $475 Edward J. Neveril Partner $425 Elizabeth A. Davidson Partner $410 Michael C. Rupe Partner $410 Peter J. Young Associate $275 David M. Kavanaugh Associate $215 Andrew J. Olejnik Associate $215 Michael H. Matlock Paralegal $210 Designation Hourly Rate ----------- ----------- Partners $410 - $750 Associates $215 - $390 Paralegals $150 - $210 Project Assistants $110 Jenner & Block assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Chicago, Illinois, Jernberg Industries, Inc., -- http://www.jernberg.com/-- is a press forging company that manufactures formed and machined products. The Company and its debtor-affiliates filed for chapter 11 protection on June 29, 2005 (Bankr. N.D. Ill. Case No. 05-25909). When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. JERNBERG INDUSTRIES: Taps Carson Fischer as Local Counsel --------------------------------------------------------- Jernberg Industries, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois for permission to employ Carson Fischer, P.L.C., as their local bankruptcy counsel. Carson Fischer will: a) advise the Debtors with respect to their powers and duties as debtors in possession in the continued management and operation of their business and property; b) advise the Debtors regarding matters related to their customers, including issues concerning possible customer accommodations to the Debtors, possible access and security issues, potential resourcing issues and all other customer matters and negotiate and deal with the Debtors' customers regarding those same issues; d) advise the Debtors regarding their various relationships with vendors, existing supply contracts, continuity of supply issues and related matters, and negotiate and deal with vendors regarding those same issues; e) advise the Debtors on matters relating to the evaluation of the assumption, rejection or assignment of unexpired leases and executory contracts; f) take all necessary action to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, defending any action commenced against the Debtors and representing the Debtors' interests in Negotiations concerning all litigation in which the Debtors are involved, including objections to claims filed against the estates; g) prepare, on the Debtors' behalf, all motions, applications, answers, orders, reports, and papers necessary to the administration of the Debtors' estates; h) take any necessary action on behalf of the Debtors to obtain confirmation of a plan of reorganization, represent the Debtors in connection with obtaining post-petition loans, and advise the Debtors in connection with any potential sale of assets; and i) perform all other necessary legal services and advice to the Debtors in connection with their chapter 11 cases. Joseph M. Fischer, Esq., at Partner at Carson Fischer, discloses that the Firm received a $100,000 retainer. Mr. Fischer charges $595 per hour for his services. Mr. Fischer reports Carson Fischer's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Robert A. Weisberg Partner $475 William C. Edmunds Partner $475 Lawrence A. Lichtman Partner $425 Christopher A Grossman Associate $275 Patrick J. Kukla Associate $175 Law Clerks $110 Carson Fischer assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Chicago, Illinois, Jernberg Industries, Inc., -- http://www.jernberg.com/-- is a press forging company that manufactures formed and machined products. The Company and its debtor-affiliates filed for chapter 11 protection on June 29, 2005 (Bankr. N.D. Ill. Case No. 05-25909). Jerry L. Switzer, Jr., Esq., at Jenner & Block LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. JUNO LIGHTING: $610 Mil. Schneider Deal Cues S&P's Positive Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch listing on the ratings of lighting fixture manufacturer Juno Lighting Inc. The ratings, including the 'B+' corporate credit rating, are now on CreditWatch with positive implications, a revision from CreditWatch developing. The change follows the announcement that Juno will be acquired by higher rated Schneider Electric S.A. (A/Stable/A-1) in a transaction valued at $610 million, including the assumption of debt. The original CreditWatch listing on May 13, 2005, was prompted by the company's announcement that it would pursue various alternatives, which eventually led to the company's decision to sell to strategic buyer Schneider. It is expected that the debt of Juno will be repaid and the ratings on the existing bank loan will be withdrawn when the deal closes. Des Plaines, Illinois-based Juno currently has about $200 million in debt outstanding. "Standard & Poor's will wait until the transaction is completed before taking any rating action," said Standard & Poor's credit analyst John R. Sico. KAISER ALUMINUM: Summary & Overview of Joint Reorganization Plan ---------------------------------------------------------------- Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, tells the U.S. Bankruptcy Court for the District of Delaware that Kaiser Aluminum Corporation and its debtor-affiliates' Joint Plan of Reorganization provides for the resolution of outstanding claims against equity interests in the Debtors, in accordance with the issuance of the Asbestos Personal Injury Channeling Injunctions and Channeled PI Insurance Entity Injunction. The Plan's primary objectives are to: (a) alter the Debtors' debt and capital structures to permit them to emerge from their reorganization cases with viable capital structures; (b) maximize the value of the ultimate recoveries to all creditor groups on a fair and equitable basis; and (c) settle, compromise or otherwise dispose of certain claims and interests on terms that the Debtors believe to be fair and reasonable and in the best interests of their estates and creditors, including holders of claims relating to asbestos and certain other personal injuries. In furtherance of those objectives, the Plan provides for, among other things: -- the classification and treatment of claims and interests; -- the creation of the PI Trusts and the related Funding Vehicle Trust and the entry of the PI Channeling Injunctions; -- the cancellation of the currently outstanding common stock of Kaiser Aluminum Corporation; -- the contribution of New Common Stock and Cash to the Union VEBA Trust and the Retired Salaried Employee VEBA Trust; and -- the distribution of New Common Stock to the PBGC and other holders of Allowed General Unsecured Claims. Plan Implementation The Plan assumes a September 30, 2005 effective date. As of the Plan Effective Date, after giving effect to the restructuring transactions, the Certificate of Incorporation and the By-laws of Reorganized KAC will prohibit the issuance of non- voting equity securities to the extent required by Section 1123(a) of the Bankruptcy Code and will authorize the issuance of New Common Stock in amounts not less than the amounts necessary to permit the distributions thereof required or contemplated by the Plan. After the Effective Date, Reorganized KAC may amend and restate its Certificate of Incorporation or By-laws as permitted by the General Corporation Law of the State of Delaware, subject to the terms and conditions of the constituent documents. On the Effective Date, these provisions will be deemed authorized, in all respects and for all purposes without any requirement of further action by stockholders or directors of any of the Debtors or the Reorganized Debtors: (1) The implementation of the Restructuring Transactions; (2) The adoption of new or amended and restated Certificates of Incorporation and By-laws for the Reorganized Debtors; (3) The initial selection of directors and officers for the Reorganized Debtors; (4) The entry into a $200,000,000 revolving credit facility, including: a $60,000,000 letter of credit sub-facility; a $17,500,000 swingline loan sub-facility; and a term loan for $50,000,000, which will be entered into by Reorganized KAC as "Borrower," certain of the other Reorganized Debtors or their successors as "Borrowers" or as "Guarantors," the JPMorgan Chase Bank, National Association, as "Administrative Agent" and other financial institutions; (5) The entry into the Funding Vehicle Trust Agreement, the Asbestos PI Trust Agreement and the Coal Tar Pitch Volatiles, Noise Induced Hearing Loss, and Silica PI Trust Agreements; (6) The distribution of Cash pursuant to the Plan; (7) The issuance and distribution of New Common Stock pursuant to the Plan; (8) The issuance or transfer of the PI Trust Assets to the Asbestos PI Trust and the CTPV, NIHL and Silica PI Trust, as the case may be; (9) The transfer of the remaining PI Trust Assets to the Funding Vehicle Trust; (10) The adoption, execution, delivery and implementation of all other contracts, leases, instruments, releases and other agreements or documents contemplated by the Plan, including the Director Designation Agreement, the Registration Rights Agreement and Stock Transfer Restriction Agreement; (11) The adoption, execution and implementation of the plans and agreements, including the Equity Incentive Plan; and (12) The other matters provided for under the Plan involving the corporate structure of any Debtor or Reorganized Debtor or corporate action to be taken by, or required of, any Debtor or Reorganized Debtor. $405,000,000 Reorganization Value Lazard Freres & Co. LLC, the Debtors' financial advisors and investment bankers, estimates the Reorganized Debtors' reorganization value to be between $360 million and $450 million, with a midpoint of $405 million. Reorganization Value consists of the theoretical enterprise value of the Reorganized Debtors, plus excess cash and other non-operating cash flows and assets. Mr. DeFranceschi relates that Lazard estimated the Reorganization Value as of June 30, 2005, under the assumption that the Reorganization Value will not change materially through the assumed Effective Date. Lazard estimates the imputed reorganization equity value of the Reorganized Debtors, which takes into account estimated debt balances and other obligations as of the assumed Effective Date, to range from $305 million to $400 million, with a midpoint of $355 million. Based on the imputed range of Equity Values and the issuance of 20 million shares of New Common Stock pursuant to the Plan on the Effective Date, the Equity Value per share of New Common Stock is estimated to be $15.25 to $20.00, with a midpoint of $17.75. Sources and Uses of Cash The Debtors disclose the principal sources and uses of Cash expected to be available to the Reorganized Debtors on the Effective Date: Sources of Cash Cash on hand as of the Effective Date $59,000,000 Cash available for borrowing under Exit Financing Facility 50,000,000 ------------ Total Sources $109,000,000 Uses of Cash Cash distributions on account of: Priority Tax Claims $3,000,000 Convenience Class (Class 2) 1,000,000 Secured Claims (Class 3) 5,000,000 Canadian Debtor PBGC Claims (Class 4) 3,000,000 Cash to make Initial VEBA Contributions to the Union VEBA Trust and the Retired Salaried Employee VEBA Trust 4,000,000 Cash to pay Admin Claims, Exit Financing costs and other reorganization expenses 54,000,000 Minimum Cash used by business operations 5,000,000 Excess Cash 34,000,000 ------------ Total Uses $109,000,000 ============ The PI Trusts Mr. DeFranceschi explains that if the Plan is confirmed and consummated, the PI Trusts will be established for the benefit of the holders of Channeled Personal Injury Claims, and certain PI Trust Assets will be transferred to the Asbestos PI Trust and the Silica PI Trust. The Channeled Personal Injury Claims are the asbestos personal injury claims, the PI claims related to coal tar pitch volatile, the PI claims related to noise induced hearing loss and the silica-related PI claims. The Funding Vehicle Trust will be established to hold and manage the remaining PI Trust Assets -- the PI Insurance Assets, including rights to proceeds of insurance, and $13 million in cash -- and make payments to the PI Trusts in accordance with the PI Trust Funding Agreement. In exchange for the PI Trust Assets to be transferred to the Asbestos PI Trust and the Silica PI Trust pursuant to the Plan and the PI Trust Funding Agreement, the PI Trusts will assume all liability and responsibility for Channeled Personal Injury Claims. Channeled Personal Injury Claims will be determined and paid in accordance with the terms, provisions and procedures of the applicable PI Trust Agreement and PI Trust Distribution Procedures. Holders of Channeled Personal Injury Claims will be permanently enjoined from pursuing their claims against the Reorganized Debtors and other protected parties. In conjunction with its confirmation of the Plan, the Bankruptcy Court will also confirm the appointment of individuals selected as contemplated by the Funding Vehicle Trust Agreement to serve as the initial Funding Vehicle Trustee and as the initial members of the Funding Vehicle Trust Advisory Committee effective as of the Plan Effective Date. The Union VEBA Trust The Union VEBA Trust is the trust established in accordance with the Trust Agreement entered into as of June 1, 2004, by and among Thomas Duzak, James Woodward, John Barneson and James McAuliffe, as the then-Board of Trustees, and National City Bank as Trustee, which Agreement was established pursuant to the final order approving the modification of Collective Bargaining Agreements and Retiree Benefits pursuant to Sections 1113 and 1114 of the Bankruptcy Code. If the Plan is confirmed, the Union VEBA Trust will receive 11,439,900 shares of New Common Stock and Cash amount equal to the Initial VEBA Contribution payable to the Union VEBA Trust, if any. Also, the Retired Salaried Employee VEBA Trust will receive 1,940,100 shares of New Common Stock and cash equal to the Initial VEBA Contribution payable to the Retiree Salaried Employee VEBA Trust, if any. The Retired Salaried Employee VEBA Trust was established in accordance with the Trust Agreement for the Kaiser Aluminum Salaried Retirees voluntary employees beneficiary association, entered into as of May 31, 2004, by and among David L. Perry, James B. Hobby and Douglas G. Allen, as the Board of Trustees, and Union Bank of California, N.A., as Corporate Trustee. The Initial VEBA Contribution is composed of 85.5% in the case of the Union VEBA Trust and 14.5% in the case of the Retired Salaried Employee VEBA Trust times the excess of the Initial Availability Amount above $50,000,000, but in no event more than $36,000,000, less the aggregate of all amounts contributed to the Union VEBA Trust and Retired Salaried Employee VEBA Trust prior to the Effective Date of the Plan -- other than the one-time payment of $1,000,000 made to the Union VEBA Trust on March 31, 2005. Following the Effective Date, depending on the financial performance of Reorganized KAC, the Union VEBA Trust and the Retired Salaried Employee VEBA Trust may receive additional Cash Contributions. General Unsecured Claims and PBGC Claims Mr. DeFranceschi also tells the Court that if the Plan is confirmed, each holder of an Allowed General Unsecured Claim will receive its pro rata share of 4,460,000 shares of New Common Stock. In accordance with the contractual subordination provisions of the Senior Subordinated Note Indenture and the 7-3/4% SWD Revenue Bond Settlement, the aggregate amount of consideration that would otherwise be payable to the holders of Senior Subordinated Note Claims in the absence of the contractual subordination provisions of the Senior Subordinated Note Indenture will be distributed to holders of Allowed Senior Note Claims and holders of Allowed 7-3/4% SWD Revenue Bond Claims on a pro rata basis. It is anticipated that the Asbestos PI Trust and the Silica PI Trust will together receive an aggregate of approximately 1,275,700 shares of New Common Stock on account of their 75% of the KFC Claim, with the Asbestos PI Trust receiving 1,199,158 of those shares and the Silica PI Trust receiving 76,542 of those shares. The Pension Benefit Guaranty Corporation is expected to receive 1,080,000 shares of New Common Stock for its Allowed General Unsecured Claim (Class 9). The PBGC will also receive 2,160,000 shares of New Common Stock and $2.5 million in cash for its Canadian Debtor PBGC Claims (Class 4). Accordingly, it is anticipated that the PBGC will receive an aggregate of approximately 3,240,000 shares of New Common Stock on account of its Class 9 Claim and its Claims 4 Claims. Each holder of a Claim that would otherwise be a General Unsecured Claim -- except that the allowed amount of that Claim is equal to or less than $30,000 -- will receive cash equal to 2.7% of the allowed amount of that Claim. Effectiveness of the Plan Mr. DeFranceschi says that before the Plan can become effective, certain conditions, aside from the Court's Order confirming the Plan, must be satisfied or waived. These conditions, include: (1) The documents effectuating the Exit Financing Facility must have been executed and delivered by Reorganized KAC, JPMorgan Chase Bank, National Association, as Exit Financing Facility Agent Bank, and the financial institutions; (2) The shares of New Common Stock to be issued pursuant to the Plan must have been registered under the Securities Exchange Act; (3) The New Common Stock must have been designated as NASDAQ National Market or NASDAQ SmallCap Market securities by The Nasdaq Stock Market, Inc., or authorized for listing on or accepted for quotation through any exchange registered pursuant to Section 6(a) of the Exchange Act, subject to official notice of issuance; (4) The Bankruptcy Court and the U.S. District Court for the District of Delaware, as required, must have entered each of the PI Channeling Injunctions, with each containing terms satisfactory to the Debtors, the Official Committee of Unsecured Creditors, the Asbestos Claimants' Committee, the Future Asbestos Claimants' Representative and the Future Silica and CTPV Claimants' Representative; (5) The PI Channeling Injunctions must be in full force and effect; (6) The Funding Vehicle Trust Agreement and each PI Trust Agreement must have been executed by the parties; (7) Concurrently with the Effective Date, 70.5% of the KFC Claim must have been transferred to the Asbestos PI Trust and 4.5% of the KFC Claim must have been transferred to the Silica PI Trust; (8) The Canadian Proceeding must have been dismissed or terminated; and (9) All other actions, documents, consents and agreements necessary to implement the Plan must have been effected, obtained and executed. Substantive Consolidation In connection with the Confirmation, the Debtors will seek Bankruptcy Court approval of the substantive consolidation of all the Debtors excluding Kaiser Aluminum & Chemical Canada Investment Limited or Texada Mines Ltd., for the purpose of implementing the Plan, including for purposes of voting, Confirmation and distributions to be made under the Plan. Pursuant to the relevant Bankruptcy Court order: (a) all assets and liabilities of the Substantively Consolidated Debtors will be deemed merged; (b) all guarantees by, or co-obligations of, one Substantively Consolidated Debtor in respect of the obligations of any other Substantively Consolidated Debtor will be deemed eliminated so that any Claim against any Substantively Consolidated Debtor and any guarantee by, or co-obligation of, any other Consolidated Debtor and any joint or several liability will be deemed to be one consolidated obligation; and (c) each and every Claim filed or to be filed in the Substantively Consolidated Debtors' reorganization case will be deemed filed against the Consolidated Debtors and will be deemed one Claim against and a single obligation of the Consolidated Debtors. That substantive consolidation will not affect the Consolidated Debtors' legal and corporate structures, nor will it affect or be deemed to affect any intercompany claim in any manner contrary to the settlement and release agreement among all the Debtors and the Official Committee of Unsecured Creditors. The substantive consolidation will also not affect Kaiser Bauxite Company or the Alumina Subsidiary Debtor, which consist of Alpart Jamaica, Inc., Kaiser Jamaica Corp., Kaiser Alumina Australia Corp., or Kaiser Finance Corp. Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) L-3 COMMS: Buying Titan's 8% Senior Subordinated Notes for Cash --------------------------------------------------------------- L-3 Communications (NYSE: LLL) commenced a cash tender offer for any and all outstanding $200,000,000 aggregate principal amount of the 8% Senior Subordinated Notes due 2011 of The Titan Corporation (NYSE: TTN) and a consent solicitation to amend the related indenture. The tender offer and consent solicitation are subject to the terms and conditions set forth in L-3's Offer to Purchase and Consent Solicitation Statement dated June 30, 2005. The tender offer and consent solicitation will expire at 12:01 a.m., New York City time, on July 29, 2005, unless extended. As reported in the Troubled Company Reporter on June 7, 2005, L-3 Communications signed a definitive agreement to acquire The Titan Corporation under which Titan's shareholders would receive $23.10 in cash per share of Titan common stock. The total transaction value on the completion date of the acquisition is expected to be approximately $2.65 billion, including assumed debt. Titan's Board of Directors is unanimously recommending that Titan's shareholders approve the transaction. Holders tendering their Notes will be required to consent to certain proposed amendments to the Notes and to the Indenture, which will release Titan's subsidiaries from their guarantees of Titan's obligations under the Notes and eliminate substantially all of the restrictive covenants and events of default and other related provisions from the Indenture. The tender offer and consent solicitation are conditioned on: (1) the consummation of L-3's acquisition of all of Titan's outstanding shares of common stock and (2) the receipt of consents from the holders of a majority of the aggregate principal amount of Notes outstanding, among other conditions. Holders may not tender their Notes without also delivering consents or deliver consents without also tendering their Notes. The "Total Consideration" to be paid for each $1,000 principal amount of Notes validly tendered prior to 5:00 p.m., New York City time, on July 14, 2005, will be a price equal to: (i) the present value (determined in accordance with standard market practice) on a date promptly following the Expiration Date, of $1,040 per $1,000 principal amount of the Notes (the amount payable on May 15, 2007, the first date on which the Notes are redeemable), and all future interest payments payable up to May 15, 2007, determined on the basis of a yield to May 15, 2007 equal to the sum of: (a) the yield on the 3.125% U.S. Treasury Note due May 15, 2007, as calculated by the Dealer Manager and Solicitation Agent in accordance with standard market practice, based on the bid price for such reference security as of 2:00 p.m., New York City time, on the second business day immediately preceding the Expiration Date, as displayed on the Bloomberg Government Pricing Monitor on "Page PX4" or any recognized quotation source selected by the Dealer Manager and Solicitation Agent in their sole discretion, plus: (b) 75 basis points, minus (ii) accrued and unpaid interest on such $1,000 principal amount to, but not including, the Payment Date. All holders whose Notes are accepted for purchase will also be paid accrued and unpaid interest to, but not including, the Payment Date. A consent payment of $30.00 will be paid for each $1,000 in principal amount of the Notes to holders who validly tender their Notes and deliver their consents to the proposed Indenture amendments prior to the Consent Date. The Consent Payment is included in the Total Consideration. Holders who validly tender their Notes after the Consent Date but prior to the Expiration Date will be eligible to receive only the Tender Offer Consideration, which equals the Total Consideration less the Consent Payment. L-3 may amend, extend or terminate the tender offer and consent solicitation at any time. Lehman Brothers Inc. is the Dealer Manager and Solicitation Agent for the tender offer and the consent solicitation. The depositary and information agent is Georgeson Shareholder. Questions or requests for assistance may be directed to Lehman Brothers Inc. (telephone: (212) 528-7581 (collect) or (800) 438- 3242 (toll free)). Requests for documentation may be directed to Georgeson Shareholder, the Information Agent (telephone: (212) 440-9800 (call collect for banks and brokers only) and (866) 729- 6814 (for all others toll free)). Headquartered in San Diego, The Titan Corporation -- http://www.titan.com/-- is a leading provider of comprehensive information and communications systems solutions and services to the Department of Defense, intelligence agencies, and other federal government customers. As a provider of national security solutions, the company has approximately 12,000 employees and expected revenues for the full calendar year 2005 of approximately $2.4 billion. Headquartered in New York City, L-3 Communications -- http://www.L-3Com.com/-- is a leading provider of Intelligence, Surveillance and Reconnaissance systems, secure communications systems, aircraft modernization, training and government services and is a merchant supplier of a broad array of high technology products. Its customers include the Department of Defense, Department of Homeland Security, selected U.S. Government intelligence agencies and aerospace prime contractors. * * * As reported in the Troubled Company Reporter on June 7, 2005, Moody's Investors Service placed the debt ratings of L-3 Communications Corporation ("L-3", senior implied Ba2) under review for possible downgrade, and lowered the company's Speculative Grade Liquidity rating to SGL-2 from SGL-1. In a related action, Moody's placed the B2 rating on the senior subordinated notes of Titan Corporation under review for possible downgrade and affirmed all the remaining debt ratings of Titan. These rating actions were prompted by the announcement that L-3 had agreed to purchase Titan for $2.65 billion including assumed debt. The cash portion of acquisition is expected to be financed with approximately $2 billion in new debt, cash on hand. These ratings have been placed on review for possible downgrade: L-3 Communications Corporation: * Senior subordinated notes due 2012-2015, rated Ba3 * Senior implied rating of Ba2 * Senior unsecured issuer rating of Ba3 Titan Corporation: * Senior subordinated notes due 2011, rated B2 These ratings have been affirmed: Titan Corporation: * Senior secured revolving credit facility due 2008, rated Ba3; * Senior secured term loan B due 2009, rated Ba3; * Senior implied rating of Ba3; and * Senior unsecured issuer rating of B1. These rating has been downgraded: L-3 Communications Corporation: * Speculative Grade Liquidity Rating, to SGL-2 from SGL-1. LAIDLAW INT'L: Inks New $600 Million Credit Facility ---------------------------------------------------- Laidlaw International, Inc. (NYSE:LI), a holding company for North America's largest provider of school and inter-city transport, entered into a new five year $600 million senior credit facility comprised of a $300 million revolving credit facility and a $300 million amortizing term loan. "This financing is an important element in the improvement of our balance sheet," said Kevin Benson, President and Chief Executive Officer. "It enables us to use the proceeds from the sale of the healthcare assets to significantly reduce total borrowings, the costs of which benefit from the recent upgrade of our credit rating to investment grade." The new revolving facility is intended to be used primarily to issue letters of credit on behalf of Laidlaw International, Inc., and all of its subsidiaries including Greyhound Lines Inc. It will also provide liquidity, if needed, for seasonal and interim borrowings. The $300 million amortizing term loan combined with cash on hand will be used in the tender and consent solicitation of Laidlaw's 10.75% senior notes and for the redemption of Greyhound's 11.5% notes and 8.5% debentures. Under Laidlaw's current credit rating, borrowing costs on the new revolver and term loan are priced at LIBOR plus 125 basis points. Through June 29, 2005, $391 million of principal amount of the $403.5 million 10.75% senior notes due 2011 had been repurchased under the tender offer. The tender offer was scheduled to expire on July 1, 2005. Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc. -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. * * * As reported in the Troubled Company Reporter on June 6, 2005, Moody's Investors Service has upgraded the ratings of Laidlaw International Inc. senior implied to Ba2 from B1. In a related action, Moody's assigned Ba2 ratings to the company's proposed $300 million Term Loan and $300 million Revolving Credit facility. Moody's said the rating outlook is stable. This completes the ratings review opened on December 22, 2004. LEAP WIRELESS: Judge Adler Formally Closes Chapter 11 Cases ----------------------------------------------------------- The Honorable Louise DeCarl Adler of the U.S. Bankruptcy Court for the Southern District of California entered a final decree and order formally closing the chapter 11 cases filed by Leap Wireless International, Inc., Cricket Communications, Inc., and certain of their debtor-affiliates and subsidiaries, nunc pro tunc to March 21, 2005. Judge Adler entered her closure order on June 3, 2005. Judge Adler confirmed the Debtors' Fifth Amended Joint Plan of Reorganization on Oct. 22, 2003, and the Plan took effect on Aug. 16, 2004. Judge Adler concludes that: 1) deposits required by the confirmed Plan have been distributed and the property transfers required by the Plan have been made; 2) the Reorganized Debtors have assumed the management of the businesses as contemplated by the Plan and those Debtors have made all payments required under the Plan to creditors; and 3) any outstanding adversary proceeding and claim objections relating to the Reorganized Debtors have been resolved. Headquartered in San Diego, California, Leap Wireless International Inc. -- http://www.leapwireless.com/-- is a customer-focused company providing innovative communications services for the mass market. Leap pioneered the Cricket Comfortable Wireless(R) service that lets customers make all of their local calls from within their local calling area and receive calls from anywhere for one low, flat rate. As of December 31, 2004, the company's consolidated assets show $2,090,482,000 and consolidated liabilities show $620,632,000. The Company filed for chapter 11 protection on April 13, 2003 (Bankr. S.D. Calif. Case No. 03-03470). The Honorable Louise DeCarl Adler entered an order confirming the Company's Fifth Amended Plan on October 22, 2003, and the Plan took effect on Aug. 16, 2004. Robert A. Klyman, Esq., Michael S. Lurey, Esq., and Eric D. Brown, Esq., at Latham and Watkins LLP, represent the Debtors. MERIDIAN AUTOMOTIVE: Can Pay Additional $600K for Shipping Claims ----------------------------------------------------------------- Judge Walrath authorizes Meridian Automotive Systems, Inc., and its debtor-affiliates to pay up to $600,000 for Additional Shipping and Warehousing Claims. The Debtors are also authorized to pay up to $400,000 for additional Lien Claimant Claims, including the prepetition claims of Tool Makers. 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. Okays Winston & Strawn as Panel's Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware gave the Official Committee of Unsecured Creditors authority to retain Winston & Strawn LLP, as its counsel in Meridian Automotive Systems, Inc., and its debtor-affiliates' Chapter 11 cases, nunc pro tunc to May 9, 2005. As previously reported in the Troubled Company Reporter on June 15, 2005, the Debtors will pay Winston & Strawn LLP's customary hourly rates, plus reimbursement of actual and necessary expenses: Designation Hourly Rate ----------- ----------- Partners $360 - $765 Associates $225 - $470 Legal Assistants $105 - $230 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). MERRILL LYNCH: Fitch Assigns BB+ Rating to $8.51MM Class B Certs. ----------------------------------------------------------------- Fitch has rated the Merrill Lynch Mortgage Investors Trust, mortgage loan asset-backed certificates, series 2005-SL2, which closed on June 28, 2005: -- $318.68 million, classes A-1A, A-1B 'AAA'; -- $44.7 million class M-1 'AA+'; -- $39.02 million class M-2 'A+'; -- $23.65 million class B-1 'A-'; -- $9.46 million class B-2 'BBB+'; -- $9.22 million class B-3 'BBB'; -- $8.51 million class B-4 'BBB-'; -- $8.51 million class B-5 'BB+'; The 'AAA' rating on the senior certificates reflects the 37.35% initial credit enhancement provided by 9.45% class M-1, the 8.25% class M-2, the 5.00% class B-1, the 2.00% class B-2, the 1.95% class B-3, the privately offered 1.80% class B-4, the privately offered 1.80% class B-5, along with overcollateralization. The initial OC is 2.38% with a target OC of 7.10%. All certificates have the benefit of excess interest. In addition, the ratings reflect the quality of the loans, the soundness of the legal and financial structures, and the capabilities of Wilshire Credit Corporation and PHH Mortgage Corporation as servicers. Wells Fargo Bank, N.A. will act as master servicer and Deutsche Bank National Trust Company will act as trustee. The collateral pool consists of fixed, second lien mortgage loans and totals $473,028,788 as of the cut-off date. The weighted average combined loan to value ratio is 98.85%. The average outstanding principal balance is $41,072, the weighted average coupon is 10.164% and the weighted average remaining term to maturity is 238 months. 41.79% of the loans have prepayment penalties. The loans are geographically concentrated in California (29.44%), Florida (6.85%), and Texas (5.65%). All of the mortgage loans were originated or acquired by one of the originators and subsequently purchased by Merrill Lynch Mortgage Capital, Inc. Approximately 16.31%, 14.66%, 14.22%, 13.09%, 11.19% and 10.65% of the Mortgage Loans were underwritten in accordance with the underwriting guidelines of Option One, Decision One, Fremont, MILA, Michigan Fidelity and FMC, respectively. The remaining Mortgage Loans were originated by eleven different originators, none of which originated mortgage loans representing more than approximately 10% of the mortgage loans. METABOLIFE INT'L: Files for Chapter 11 Protection in S.D. Calif. ---------------------------------------------------------------- Metabolife International Inc., a San Diego-based manufacturer of herbal-based dietary supplements used for weight control, and its subsidiary, Alpine Health Products, LLC, filed chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of California, San Diego Division, in the face of hundreds of lawsuits involving ephedra, the now-banned diet pill. The Debtors filed for bankruptcy protection to maximize the value of their assets through the bankruptcy sale process and to utilize bankruptcy procedures to determine the validity and amount of tort claims asserted by past users of weight-loss products containing ephedra. Ephedra was the primary ingredient in what once was Metabolife's flagship product, Metabolife 356. Metabolife successfully transitioned its business to ephedra-free products by December 2003, but has had to commit inordinately large resources and time to defending lawsuits filed by ephedra product users, which costs have been a substantial burden on the company's operations. Although Metabolife has been largely successful in avoiding significant adverse judgments, the costs of the litigation process and the uncertainty surrounding the large number of remaining lawsuits makes bankruptcy a suitable mechanism for obtaining a prompt, fair and cost effective resolution of these disputed claims. 363 Sale Metabolife has a $23.5 million offer in hand for its non-Ephedra assets from IdeaSphere Inc., a health and wellness concern. IdeaSphere's offer is subject to competitive bidding at an auction proposed for September 2005. The key assets being acquired include: -- the company's core non-ephedra brands, Metabolife Ultra, Metabolife Complete, Metabolife Ultra Caffeine Free and Metabolife Green Tea Formula; -- a state-of-the-art powder and tablet manufacturing facility located in Orem, Utah; and -- a distribution center in Memphis. The products will continue to be marketed under the Metabolife brand, which will operate as a separate division within ISI. Metabolife's proposes to sell its non-Ephedra assets under Section 363 of the Bankruptcy Code, which allows sales to be free and clear of liens, encumbrances and claims, including liabilities related to the pending litigation. A public auction will be held to determine if higher bids emerge, currently proposed for September 2005, with a sale closing shortly thereafter. New York-based Carl Marks Advisory Group LLC has been retained as financial advisor to Metabolife, and to promote the auction opportunity and solicit overbidding. Interested purchasers for Metabolife's assets may contact Warren Feder, Partner, Carl Marks Advisory Group LLC (212) 909-8459 or Christopher Wu, Director, (212) 909-8447. Metabolife anticipates using all of the proceeds from the Section 363 sale to satisfy creditor claims and resolve pending litigation. Christopher R. Barclay of Mack | Barclay, an experienced insolvency and turnaround expert, has been retained to lead the company through the Chapter 11 process. Ideasphere, Inc., was launched in 2001 to create a company that offers consumers "a one-stop wellness solution" through an integrated combination of nutritional products, science-based content and information, and healthy lifestyle programs and services. Headquartered in San Diego, California, Metabolife International, Inc. -- http://www.metabolife.com/-- sells dietary supplements and management products in grocery, drug and mass retail locations nationwide. The Company and its subsidiary, Alpine Health Products, LLC, filed for chapter 11 protection on June 30, 2005 (Jointly Administrated Under Bankr. S.D. Calif. Case No. 05- 06040). David L. Osias, Esq., and Deb Riley, Esq., at Allen Matkins Leck Gamble & Mallory LLP, represent the Debtors in their chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $23,983,112 in total assets and $12,214,304 in total debts. METABOLIFE INT'L: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Metabolife International, Inc. dba W.R.B. Management, Inc. 5643 Copley Drive San Diego, California 92111 Bankruptcy Case No.: 05-06040 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Alpine Health Products, LLC 05-06041 Type of Business: Metabolife International, Inc., manufactures and sells herbal-based dietary supplements used for weight control. See http://metabolife.com/ Chapter 11 Petition Date: June 30, 2005 Court: Southern District of California (San Diego) Judge: Chief Judge John J. Hargrove Debtor's Counsel: David L. Osias, Esq. Allen Matkins Leck Gamble & Mallory LLP 501 West Broadway, 9th Floor San Diego, California 92101 Tel: (619) 235-1526 Fax: (619) 233-1158 Total Assets Total Debts ------------ ----------- Metabolife International, Inc. $18,266,984 $12,021,683 Alpine Health Products, LLC $5,716,128 $192,621 Metabolife International, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ McAllister, Rhea Tort Claim $2,686,000 c/o Fibich, Hampton 1401 McKinney #1800 Houston, TX 77002 Internal Revenue Service Taxes for years $979,000 880 Front Street 1997-1998 San Diego, CA 92101 estimate $339,000 Plus penalties & Interest estimate $640,000 Riley, Patricia & Hillis Settled Tort Claim $500,000 c/o Blizzard, McCarthy 440 Louisiana Street #1710 Houston, TX 77002 California Creative Enterprise Advertising Services $355,253 12463 Rancho Bernardo Road San Diego, CA 92128 Wiggins, Belinda Settled Tort Claim $300,000 c/o Blizzard McCarthy 440 Louisiana St. #1710 Houston, TX 77002 Longs Drug Stores Customer $210,317 3402 North Blackstone #165 Escheatment Fresno, CA 93726 Albertsons Corporation Customer $176,275 P.O. Box 20 Escheatment Boise, ID 83726 Akin Gump Strauss Legal Services $174,729 Hauer Feld LLP 2029 Century Park East #2400 Los Angeles, CA 90067 Lewis Brisbois Legal Services $148,495 Bisgaard & Smith LLP 221 North Figueroa #1200 Los Angeles, CA 90012 Banowsky, Betz & Levine PC Legal Services $132,720 12001 North Central Expressway 790 Coit Central Tower Dallas, TX 75243 Hartline, Dacus, Barger Legal Services $124,048 Dreyer & Kern, LLP 6688 North Central Expressway #10 Dallas, TX 75206 DLA Piper Rudnick Legal Services $122,044 Gray Cary US LLP 401 B Street, Suite 2000 San Diego, CA 92101 Hogan & Hartson LLP Legal Services $108,063 555 13th Street Northwest Washington, DC 20004 NYCA Trade $99,640 1010 South Coast Highway #101 Encinitas, CA 92024 Advanced Marketing and Sales Trade $81,937 200 Fairway Drive, Suite 180 Vernon Hills, IL 60061 Ochoa, Mario Settled Tort Claim $75,000 c/o Blizzard McCarthy 440 Louisiana Street #1710 Houston, TX 77002 Burroughs, Hepler, Broom, Legal Services $49,716 MacDonald, Hebrank & True, LLP P.O. Box 510 Edwardsville, IL 62025 Villareal, Teresa Settled Tort Claim $35,000 c/o Blizzard McCarthy 440 Louisiana Street #1710 Houston, TX 77002 Sutter, O'Connell Legal Services $30,255 3600 Erieview Tower 1301 East 9th Street Cleveland, OH 44114 BJ's Wholesale Club Customer $28,892 P.O. Box 9607 Escheatment Natick, MA 01760 MIRANT CORP: Deutsche Bank Says Chapter 11 Plan is Unconfirmable ---------------------------------------------------------------- Deutsche Bank Securities, Inc., supplements its previous objection to Mirant Corporation and its debtor-affiliates' Disclosure Statement with "extensive and compelling" documentary evidence conclusively establishing that the Debtors' disclosure with respect to substantive consolidation is both deficient and misleading and cannot be considered "adequate information" under any circumstance. Susheel Kirpalani, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, related that Deutsche Bank Securities will present evidence at the Disclosure Statement Hearing demonstrating that the Plan cannot be confirmed, making solicitation of the related Disclosure Statement a needless waste of estate assets. Mr. Kirpalani notes that Deutsche Bank Securities has discovered that the Debtors not only have "stand-alone" financial information for MAI, but also performed an analysis demonstrating creditor recoveries for Mirant Americas, Inc., absent substantive consolidation. Considering the deficiencies of the Debtors' arguments in favor of substantive consolidation, it is not surprising that the Disclosure Statement fails to adequately describe any hopeless entanglement or overlap in identity. Among others, Deutsche Bank Securities, Inc., asserts that: a. the operations, business functions, assets and liabilities of Mirant Americas, Inc., were regularly maintained separately from the Mirant Consolidated Debtors; b. MAI's debt is separate and senior to that of Mirant Corp.'s; and c. MAI's operations and business functions were more intertwined with its principal subsidiary, Mirant Americas Generation, LLC, than its shareholder, Mirant Corp. The Debtors disclose that they have difficulty of "disentangling the prior transactions of the individual Debtor entities," Mr. Kirpalani notes that the disclosure is contradicted by: 1. observance of corporate formalities at MAI through board resolutions, minutes of board meetings, other adequate documentation; 2. internal operating manuals and procedures with respect to corporate governance, cash management and global risk management; and 3. extensive documentation of capital contributions and intercompany transactions11 among MAI and other entities. Disclosure on consolidated tax returns and financial statements is contradicted by separate tax returns filed for MAI and by separate financials prepared and maintained for MAI recording assets and liabilities on a stand-alone basis. Indeed, Deutsche Bank Securities will show the "one-size-fits- all" disclosure with respect to several issues not only is inadequate, but also misleading when applied to MAI. Additionally, Deutsche Bank Securities is severely prejudiced by the Plan because the Plan: (1) pays MAI creditors on a parity with creditors of MAI's shareholder, Mirant Corp.; and (2) eliminates Deutsche Bank Securities' guaranty claims against Mirant Corp. Deutsche Bank Securities insists that the Debtors must include a Recovery Analysis, together with its assumptions of asset and liability amounts, in the Disclosure Statement. There is simply no burden at all -- let alone a "significant" burden -- in providing that material information to MAI creditors, and the Debtors are required to disclose stand-alone assets and liabilities on a corporation-by-corporation basis, not on an enterprise basis. Mr. Kirpalani adds that the Official Committee of Unsecured Creditors of Mirant Americas Generation LLC has introduced evidence in connection with the valuation aspects of the Disclosure Statement, pertaining to MAI's overall asset base and solvency. The evidence, according to Mr. Kirpalani, demonstrates that Deutsche Bank Securities' original estimates of MAI's assets and liabilities closely resemble those deduced by the MAGi Committee. "Indeed, the MAGi Committee's estimates corroborate [Deutsche Bank Securities'] assertion that [MAI's] creditors stand to receive far more absent substantive consolidation (100%, plus interest) than with substantive consolidation (60%)." Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) MORGAN STANLEY: Fitch Puts BB Rating on $7.8 MM Private Certs. -------------------------------------------------------------- Fitch rates Morgan Stanley Mortgage Loan Trust mortgage pass- through certificates, series 2005-3AR: -- $760,679,100 classes 1-A, 2-A-1, 2-A-2, 2-A-3, 3-A, 4-A, 5-A, and A-R 'AAA'; -- $28,112,000 class B-1 'AA'; -- $12,403,000 class B-2 'A'; -- $7,441,000 class B-3 'BBB'; -- $7,855,000 privately offered class B-4 'BB'. The privately offered B-5 and B-6 certificates are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 8.00% subordination provided by the 3.40% class B-1, the 1.50% class B- 2, the 0.90% class B-3, the 0.95% privately offered class B-4, the 0.75% privately offered class B-5, and the 0.50% privately offered class B-6 certificates. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud, and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the master servicing capabilities of Wells Fargo Bank Minnesota, N.A., which is rated 'RMS1' by Fitch. The trust will consist of five asset groups. The certificates whose class designation begins with 1 through 5 correspond to groups 1 through 5, respectively. The class A-R certificates represent interest in loan group 1. In aggregate, the pool consists of 2,485 conventional, fully amortizing adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. The aggregate principal balance of this pool is $826,825,947. The average unpaid principal balance of the aggregate pool as of the cut-off date (June 1, 2005) is $332,727. The weighted average original loan-to-value ratio (OLTV) is 75.36%. The weighted average credit score of the borrowers is 716. Rate/term and cash-out refinance loans account for 16.55% and 25.20% of the pool, respectively. Second home and investor-occupied properties constitute 3.09% and 7.57% of the loans, respectively. The weighted average mortgage interest rate is 5.667%, and the weighted average remaining term to maturity is 357 months. The state that represents the largest portion of the aggregate mortgage loans are California (56.89%). All other states represent less than 5% of the aggregate pool balance as of the cut-off date. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com/ Morgan Stanley Mortgage Capital I Inc., a special purpose corporation, deposited the loans into the trust, which issued the certificates. Deutsche Bank National Trust Company will act as trustee. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits. MPOWER HOLDING: Wants Until Oct. 20 To Object to Proofs of Claim ---------------------------------------------------------------- MPower Holding Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend, until Oct. 20, 2005, the deadline by which they can object to proofs of claim filed against their estates. The Court confirmed the Debtors' First Amended Joint Plan of Reorganization on July 17, 2002, and the Plan took effect on July 30, 2002. The Debtors give the Court three reasons why the extension is warranted: a) although they have filed four omnibus objections to claims along with other individual objections, the Debtors are still continuing to evaluate all remaining claims to determine if filing objections are necessary for those claims; b) negotiations for the consensual resolution or withdrawal of a number of additional claims are still ongoing, including the claims filed by One Source Teleservices; and c) the requested extension will give the Debtors more opportunity to evaluate all remaining claims, prepare and file any additional objections to claims if necessary and consensually resolve disputed claims. Headquartered in Pittsford, New York, Mpower Holding Corporation -- http://www.mpowercom.com/-- is the parent company of Mpower Communications Corp., a leading facilities-based broadband communications provider offering a full range of data, telephony, Internet access and Web hosting services for small and medium-size business customers. The Company and its debtor-affiliates filed for chapter 11 protection on April 8, 2002 (Bankr. D. Del. Case No. 02-11046). Pauline K. Morgan, Esq., and M. Blake Cleary, Esq., at Young Conaway Stargatt & Taylor, LLP represents the Debtors. When the Company filed for protection from its creditors, it listed total assets of $490,000,000 and total debts of $627,000,000. NAKOMA LAND: Creditors' Meeting Continues on July 11 ---------------------------------------------------- The U.S. Trustee for Region 17 will convene a meeting of Nakoma Land, Inc., and its debtor-affiliates' creditors at 2:00 p.m., on July 11, 2005, at 300 Booth Street, Room 2110, in Reno, Nevada. This is the continuation of 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 Reno, Nevada, Nakoma Land, Inc., and its debtor- affiliates filed for chapter 11 protection on May 19, 2005 (Bankr. D. Nev. Case No. 05-51556). Alan R. Smith, Esq., at Law Offices of Alan R. Smith represents the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed total assets of $18,000,000 and total debts of $15,252,580. NAKOMA LAND: Look for Bankruptcy Schedules Tomorrow --------------------------------------------------- Nakoma Land, Inc., tells the U.S. Bankruptcy Court for the District of Nevada that it intends to file its Schedules of Assets and Liabilities and Statements of Financial Affairs tomorrow, July 5, 2005, as required by 11 U.S.C. Sec. 521(1). The Debtor told the Court that it couldn't gather all of the necessary information in order to accurately file those documents by the deadline imposed under Rule 1007 of the Federal Rules of Bankruptcy Procedure. Part of the delay stems from Nakoma's need to obtain information from its four debtor-affiliates. Headquartered in Reno, Nevada, Nakoma Land, Inc., and its debtor- affiliates filed for chapter 11 protection on May 19, 2005 (Bankr. D. Nev. Case No. 05-51556). Alan R. Smith, Esq., at Law Offices of Alan R. Smith represents the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed total assets of $18,000,000 and total debts of $15,252,580. NORTHWESTERN: Montana Cities Offer $1.17 Bil. for Utility Systems ----------------------------------------------------------------- Montana Public Power Inc. offers to buy the utility transmission and distribution systems of Northwestern Corp. located in Montana, Nebraska and South Dakota, the Associated Press reports. MPPI is offering $32.50 per share in cash for a total transaction value of approximately $2 billion, which includes the assumption of $825 million of NorthWestern debt. The deal will be funded through a debt financing provided by Citigroup Global Markets Inc. The AP relates that if the offer is approved by Northwestern's major creditors and various state and federal regulators, the cities of Bozeman, Butt-Silver Bow, Great Falls, Helena and Missoula will take over the utility's electric and natural gas operations this year. MPPI's offer, which was unanimously approved by its Board of Directors, represents: -- a 17% premium to NorthWestern's unaffected closing stock price on April 28, 2005, the day before MPPI's intentions to purchase NorthWestern were made public; -- 22.4 times NorthWestern's projected earnings per share for 2005, based on Wall Street consensus forecasts (source: IBES); and -- a very significant premium to the value of $17.61- $22.39 per share ascribed to NorthWestern by its own financial advisor in Northwestern's Second Amended and Restated Disclosure Statement dated Aug. 18, 2004. "Bringing NorthWestern's utility operations under local control is necessary to ensure that our communities will have the highest quality utility services at reasonable prices," Mike Kadas, Missoula mayor and chairman of MPP, said. "Our plan to achieve this includes investing in the utility's infrastructure to help ensure the reliability of the system, an area that we feel NorthWestern has neglected in recent years due to its limited financial resources. MPPI is committed to serving the best interests of all of the citizens of Montana: for NorthWestern employees, MPPI intends to retain the current NorthWestern workforce; for customers, MPPI's plan ensures that the same people who serve customers today will serve them tomorrow; and for our local communities, MPPI will continue to pay property taxes. "In addition to serving the best interest of our citizens, this offer provides compelling value to NorthWestern's shareholders. We would like to enter into constructive and good-faith discussions with NorthWestern immediately, with the goal of finalizing an acquisition agreement as soon as possible," Mayor Kadas added. In a prepared statement, Northwestern's CEO and President Michael J. Hanson said the proposal isn't in the best interest of the company and its shareholders. He added that the company's long- term commitment remains to be a reliable and affordable provider of energy services to some 617,000 customers while providing competitive return to shareholders. The offer is subject to customary due diligence, satisfaction of conditions precedent to the financing, as well as regulatory approvals by federal and state energy authorities, including the Montana Public Service Commission, the South Dakota Public Utilities Commission and the Federal Energy Regulatory Commission. S&P currently rates Northwestern Corp.'s 5-7/8% $225,000,000 notes at BB+ while Moody's rates the notes at Ba1. Headquartered in Sioux Falls, South Dakota, NorthWestern Corporation (Pink Sheets: NTHWQ) -- http://www.northwestern.com/ -- provides electricity and natural gas in the Upper Midwest and Northwest, serving approximately 608,000 customers in Montana, South Dakota and Nebraska. The Debtors filed for chapter 11 protection on September 14, 2003 (Bankr. Del. Case No. 03-12872). Scott D. Cousins, Esq., Victoria Watson Counihan, Esq., and William E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, and Jesse H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul, Hastings, Janofsky & Walker, LLP, represent the Debtors in their restructuring efforts. On the Petition Date, the Debtors reported $2,624,886,000 in assets and liabilities totaling $2,758,578,000. The Court entered a written order confirming the Debtors' Second Amended and Restated Plan of Reorganization, which took effect on Nov. 1, 2004. NORTHWESTERN CORP: Moody's Rates $200M Sr. Unsec. Facility at Ba2 ----------------------------------------------------------------- Moody's Investors Service assigned a rating of Ba2 to NorthWestern Corporation's $200 million senior unsecured revolving credit facility. This syndicated bank credit facility will replace the company's $125 million senior secured revolving credit facility and $100 million secured term loan. These credit facilities were rated Ba1, reflecting first mortgage bond collateral. The changes in the company's bank credit arrangements are being documented in the form of an amended and restated credit agreement. These changes include more favorable pricing and an easing of financial covenants, in addition to the release of collateral. With the release of collateral, NOR will have available net bondable capacity of approximately $468 million. The Ba2 rating of the amended and restated revolving credit facility reflects the senior unsecured claim of borrowings under the facility, and is one-notch lower than the rating of NOR's Ba1 senior secured debt. Moody's affirmed NOR's other ratings, including its senior secured debt at Ba1, its Corporate Family Rating (previously called the Senior Implied rating) at Ba1, and its SGL-2 liquidity rating. Concurrently, Moody's changed the rating outlook for NOR to positive from stable. The change in NOR's rating outlook takes into consideration these factors: 1) the company's good progress in advancing its back to basics strategy, which focuses on relatively low risk regulated electric and gas utility operations since emerging from bankruptcy November 1, 2004; 2) higher than expected free cash flow has allowed for a modestly faster than anticipated reduction in debt and expectations for further debt reduction later this year, even if remaining non-core asset sales are delayed; 3) improving regulatory relationships in Montana, evidenced by a settlement related to recovery of natural gas costs that had been disputed; and 4) prospects for possible near term settlement of certain disputed claims with PPL Montana and Netexit, Inc., f/k/a Expanets, Inc. The company still faces an assortment of challenges, which include 1) various lawsuits and an investigation being conducted by the Securities and Exchange Commission; 2) renegotiating contracts with qualifying facilities, which form part of the default supply portfolio in NOR's Montana service territory; 3) solidifying the improving working relationship with regulators in Montana, where the company will be subject to a rate review filing in September 2006; 4) completing non-utility asset sales, proceeds from which we now believe could be used to renegotiate some of the larger, more-costly QF contracts; and 5) cash funding needs to shore up the pension fund. NOR's ratings continue to reflect the significant improvement in its capital structure that followed the debt-for-equity exchange in its plan of reorganization, whereby $1.3 billion of senior unsecured and subordinated debt was extinguished and exchanged for $710 million of equity. Since emerging from bankruptcy on November 1, 2004, NOR has also used free cash flow to further reduce debt by about another $50 million. NOR's ratings could be upgraded if the company continues to demonstrate a good track record with respect to its near term financial goals and demonstrates material progress in resolving the aforementioned challenges. Moody's expects substantial improvement in credit metrics over the next several years, including higher funds from operations and lower debt. Positive free cash flow from operations is expected to be used to bring NOR to its targeted (unadjusted) capital structure of 50% debt and 50% common equity in the near term. Demonstrated ability to achieve FFO to adjusted debt above 15% on a sustainable basis, while reducing debt, could lead to an upgrade in the absence of negative surprises with respect to litigation issues. While a downgrade is considered to be unlikely in the near term, the rating outlook could be revised to stable if the company does not continue to improve its financial profile while reducing business risk. NorthWestern Corporation, headquartered in Sioux Falls, South Dakota, conducts regulated electric and gas utility operations in Montana, South Dakota, and Nebraska through its NorthWestern Energy division. The company also has other non-regulated business investments, some of which are in the process of being sold. NORTHWESTERN CORP: Fitch Lifts Sr. Debt Rating One Notch to BBB- ---------------------------------------------------------------- NorthWestern Corp.'s outstanding senior secured debt obligations are upgraded to 'BBB-' from 'BB+' by Fitch Ratings. In addition, Fitch assigned its 'BB+' rating to NOR's $200 million senior unsecured revolving credit facility due Nov. 1, 2009. The Rating Outlook for NOR remains Positive. Thursday's announcement that Montana Public Power, Inc. has submitted an unsolicited offer to acquire 100% of NOR's common stock in a transaction valued at $2 billion has no immediate effect on NOR's ratings and/or Rating Outlook. Fitch will continue to monitor the situation and will consider future rating action in the event a definitive agreement is ultimately reached between NOR and MPPI. The upgrade of NOR's outstanding senior secured debt obligations reflects the structural enhancement resulting from the refinancing of NOR's existing revolving credit and term loan facilities on an unsecured basis. Specifically, NOR's amended and restated unsecured revolving credit facility will replace a $125 million secured facility and will initially be utilized to permanently retire NOR's $74.8 million secured term loan B due November 2011. The rating action also reflects the continued stable performance of NOR's core electric and gas utility business and the company's progress in reducing debt leverage and increasing financial flexibility since its exit from bankruptcy in November 2004. NOR's non-core asset sale program is nearing completion. Since November 2004, NOR has sold all remaining Blue Dot HVAC locations and received approximately $15 million from the monetization of a secured claim against Cornerstone Propane Partners, L.P. Pending items include the wind-down and liquidation of Netexit, Inc. and the sale of equipment related to the uncompleted Montana First Megawatts power project. If successful, remaining divestitures could provide up to $60 million of residual cash proceeds which would be utilized to further reduce debt leverage at NOR. On June 28, 2005, NOR announced that it had reached an agreement in principle with the creditors committee of Netexit under which NOR would receive an initial cash distribution of $20 million to satisfy a portion of its allowed claims. NOR's core regulated electric and gas utility operations, which serve approximately 608,000 customers located primarily in Montana and South Dakota, continue to perform in line with expectations. For the 12-month period ended March 31, 2005, NOR generated consolidated operating EBITDA (adjusted to excluded impairment charges and non-recurring gains) of $203.2 million. Prospectively, NOR should continue to generate operating EBITDA in excess of $200 million absent the legal and administrative costs associated with NOR's bankruptcy and outstanding litigation, although this amount could fluctuate moderately depending on weather conditions. In addition, the pending 2006 rate review in NOR's Montana jurisdiction could affect future utility financial performance. If NOR succeeds in divesting its remaining non-utility interests as described above, NOR will have the opportunity to further improve its credit profile by year-end 2005. Specifically, FFO/Interest could exceed 3.5 times (x) by year-end 2005 with total debt/EBITDA in the low 3.0x range. A further upgrade of NOR's ratings will depend upon the amount and use of proceeds from asset divestitures and demonstration of the ability to further reduce legal and administrative expenses. Fitch notes that management has made good progress toward settling various pre-petition litigation and shareholder class action suits, but certain items remain ongoing, including a formal SEC investigation into NOR's year-end 2002 financial restatement and litigation related to the alleged fraudulent conveyance of NOR's Montana Power assets. None of these are expected to materially affect NOR's ongoing credit profile. Fitch upgrades the following outstanding debt securities to 'BBB-' from 'BB+': -- $55 million 7.00% general mortgage bonds due 8/15/2023; -- $60 million 7.10% general mortgage bonds due 8/1/2005; -- $150 million 7.30% first mortgage bonds due 12/1/2006; -- $0.365 million 8.25% first mortgage bonds due 12/1/2007; -- $90.2 million 6.125% secured pollution control bonds (issued by Forsyth, MT Pollution Control Revenue) due 5/1/2023; -- $225 million 5.875% senior secured notes due 11/1/2014. NORTHWESTERN CORP: Good Performance Prompts S&P to Lift Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term corporate credit rating on multi-utility NorthWestern Corp. to 'BB' from 'BB-' because the new management has taken positive steps to improve regulatory relations, resolve litigation, and strengthen the company. In addition, certain senior secured debt ratings were raised to 'BB+' from 'BB' and others raised to 'BB' from 'BB-'. The outlook is positive. Sioux Falls, South Dakota-based NorthWestern had about $825 million of unadjusted total debt as of March 31, 2005. The ratings on NorthWestern reflect the company's mostly low-risk electric and gas utility with a satisfactory business profile and a weak, but improving, financial profile. "The low-risk nature of NorthWestern's utility is weakened by its short track record after emerging from bankruptcy, lower-growth service territories, and historically unsupportive regulation in Montana," said Standard & Poor's credit analyst Gerrit Jepsen. Management's continued ability to favorably resolve outstanding litigation and no adverse outcome from a pending U.S. SEC investigation, along with Standard & Poor's expectation that the financial performance projections will be achieved, all factor heavily into the ratings. Due to NorthWestern's limited ability to expand in Montana and South Dakota, there is a greater importance on cost-cutting and other revenues sources to improve profitability and cash flow. Because a large majority of NorthWestern's operating income and cash flow is from the company's Montana operations, an unfavorable Montana Public Service Commission ruling such as a rate reduction after a required September 2006 rate review filing could restrict cash flow. O'CHARLEY'S INC: Good Performance Prompts S&P's Stable Outlook -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on casual dining restaurant operator O'Charley's Inc. to stable from negative and affirmed its ratings, including the 'BB-' corporate credit rating. "The outlook revision is based on the company's stable operating performance, good credit measures for the rating category, and our expectation that O'Charley's will fund its growth largely through internally generated funds," said Standard & Poor's credit analyst Robert Lichtenstein. The ratings on Nashville, Tennessee-based O'Charley's Inc. reflect: * the company's relatively small market position in the highly competitive casual dining sector, * the increased business risk of operating multiple concepts, and * a highly leveraged capital structure. These factors are partly offset by: * favorable growth prospects for casual dining, and * good credit measures for the rating category. The company operates O'Charley's, Ninety Nine, and Stoney River restaurants. Although the O'Charley's chain has a large presence in its markets, it maintains a relatively small (2.2%) market share among casual dining chains, compared with Applebee's (15%), Chili's (10.6%), Outback (10.4%), and Red Lobster (9.8%). Many of the company's competitors have substantially greater financial and marketing resources and continue to expand rapidly. Still, growth prospects for the varied-menu casual dining sector are favorable, with the adoption of dining out as a lifestyle in the U.S. driving growth. This sector has experienced a compound annual growth rate of 10% in the past five years. O'Charley's operating performance improved over the past year due to same-store sales gains, unit growth, and better operating margins. Same-store sales at O'Charley's restaurants gained 1.4% in the first quarter of 2005 and 3.1% in all of 2004, after declining 2.5% in all of 2003, as customers responded to promotions implemented to increase traffic. Operating margins for the 12 months ended April 17, 2005, expanded to 12.2% from 11.4% a year earlier, as commodity costs moderated. OLENTANGY COMMERCE: Receiver Retains Control at Lenders' Behest --------------------------------------------------------------- On October 19, 2004, the Franklin County Common Pleas Court issued an Agreed Order appointing Mark E. Dottore as the custodian and Receiver of certain real property titled in the name of Olentangy Commerce Center Limited Partnership on which Olentangy operated a warehouse and office complex. Mr. Dottore swore his Oath of Receiver and posted a $30,000 bond pursuant to the terms of the State Court Order. On May 27, 2005, Olentangy Commerce Center Limited Partnership filed for chapter 11 protection. CIGNA Realty Investors, the Debtors' secured creditor asked the Bankruptcy Court to order that Mr. Dottore continue the Receivership duties assigned to him by the Franklin County Common Pleas Court. On June 8, 2005, with the agreement of the parties, the Bankruptcy Court indicated that it will authorize the continuation of the custodianship and Mr. Dottore will continue to serve as the Receiver. Olentangy's property is comprised of 55 acres of land, and these improvements: -- Warehouse No. 1, housing 500,000 square feet; -- five 30,000 square foot office buildings (known as "pods"); -- Warehouse No. 2, housing 55,000 square feet; -- 11 acres of paved parking lots; and -- a total of 5 acres "under roof." About Olentangy Commerce Headquartered in Grandview Heights, Ohio, Olentangy Commerce Center Limited Partnership owns a warehouse and office site in Grandview Heights. The Debtor filed for bankruptcy protection (Bankr. S.D. Ohio Case No. 05-59249) on May 27, 2005 after defaulting on a $11.5 million mortgage held by Connecticut General Life Insurance Co., a major subsidiary of Cigna Corp. Richard T. Ricketts, Esq., and Michael Bornstein, Esq., at Ricketts Co., LPA represents the Debtor in its chapter 11 proceedings. When the Debtor filed for protection from its creditors, it listed $10 to $50 million in assets and $10 to $50 million in debts. OLENTANGY COMMERCE: Receiver Hires Kohrman Jackson as Counsel ------------------------------------------------------------- Mark E. Dottore, the court-appointed Receiver of certain real property titled in the name of Olentangy Commerce Center Limited Partnership, asks the U.S. Bankruptcy Court for the Southern District of Ohio, Eastern Division, for permission to employ Mary K. Whitmer, Esq., and the law firm of Kohrman, Jackson & Krantz, PLL, as his counsel. Mr. Dottore tells the Court that he needs the assistance of Ms. Whitmer and her firm to address complex real estate issues concerning the Debtor's warehouse and office complex in Ohio. These issues include: a) eviction of a delinquent tenant to give way to Accel, Inc., which intends to sign a 6-month lease with the Debtor. b) MindLeaders.com's intention to vacate its leased premises that the Receiver says is in violation of its lease terms with the Debtor. c) The Fixture Connection, Inc.'s failure to pay rent and the Receiver's intention to file a forcible entry lawsuit in order to obtain possession of the premises; and d) various environmental issues including the leaking of fuel from an unknown source into one of the buildings within the compound. In this engagement, Ms. Whitmer and Kohrman Jackson will: a) provide routine attorney services including assistance regarding compliance with state and local statutes and common law, attention to court and governmental reporting issues, tenant relations and advice on meeting the requirements of leases in place, the retention and dismissal of disinterested real estate brokers and other miscellaneous services which may from time to time be required; b) assist with leasing transactions, including negotiations and drafting of new leasing opportunities, including the Accel lease, and renegotiation and revision of existing leasing transactions such as MindLeaders and The Fixture Connection, Inc.; c) assist with a sale or liquidation of the Premises or any section or part of the Premises, if any, including negotiation and documentation of the sale transaction and the obtaining of Court approvals; d) investigate and review of the lien priorities attaching to the Premises, if necessary; e) assist with environmental issues, including compliance with state and local statutes and other liability issues; f) give assistance of any other kind or any other manner in which Mr. Dottore, in his sound business judgment determines is benefit the estate, including any assistance required by him in carrying out his duties and obligations. Ms. Whitmer will charge $285 per hour for her services. Kohrman Jackson's professionals expected to work on this case and their hourly rates are: Professional Hourly Rate ------------ ----------- Shareholders $235 - $400 Associates 165 - 195 Legal Assistants 115 - 140 Ms. Whitmer tells the Court that she does not hold any interest materially adverse to the Debtor or its estate. About Kohrman Jackson Kohrman, Jackson & Krantz, PLL is a Cleveland-based law firm representing individuals and companies throughout the United States. Founded in 1969, Kohrman Jackson is dedicated to providing clients with the resources and knowledge needed to solve their legal issues, including the most sophisticated business transactions and complex litigation. About Olentangy Commerce Headquartered in Grandview Heights, Ohio, Olentangy Commerce Center Limited Partnership owns a warehouse and office site in Grandview Heights. The Debtor filed for bankruptcy protection (Bankr. S.D. Ohio Case No. 05-59249) on May 27, 2005 after defaulting on a $11.5 million mortgage held by Connecticut General Life Insurance Co., a major subsidiary of Cigna Corp. Richard T. Ricketts, Esq., and Michael Bornstein, Esq., at Ricketts Co., LPA represents the Debtor in its chapter 11 proceedings. When the Debtor filed for protection from its creditors, it listed $10 to $50 million in assets and $10 to $50 million in debts. ORBIT BRANDS: Plans to Spin Off Two Subsidiaries in Reorganization ------------------------------------------------------------------ Orbit Brands Corporation is planning to spin off subsidiaries Malibu Beach Beverage Company and SmartVoice Telecommunications, Inc., as part of its reorganization strategy in its pending chapter 11 bankruptcy case. The Company will retain its Malibu Entertainment Group subsidiary. The Company plans to pay a stock dividend to its shareholders in the subsidiaries that it proposes to spin off. The Company intends to focus its strengths as a pure play media company with new projects "BBKO" ("Beats, Bouts and Knockouts") and "Supermodels of the Rainforest" as near term emerging growth opportunities. As the Company plans to procure debtor-in-possession interim financing in the coming weeks, it is turning its attention to the preparation of its bankruptcy disclosure statement and plan of reorganization, which it anticipates filing during the summer of 2005. 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 said 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. OZARK AIR: Chapter 7 Trustee Hires Four Professionals ----------------------------------------------------- The Honorable Judge Dana L. Rasure of the U.S. Bankruptcy Court for the Northern District of Okalahoma authorized Patrick J. Malloy, III, Esq., the Chapter 7 Trustee overseeing the liquidation of Ozark Air Lines, Inc., dba Great Plains Airlines, to employ four professionals to count inventory, appraise and correlate specialized aircraft parts with FAA Certifications. The Four Professionals are: a. Kathy Healy b. Gerald Healy c. Suzanne Metcalf d. Michael Metcalf Patrick J. Malloy, III, Esq., at Malloy Law Firm, P.C., in Tulsa, Oklahoma, tells the Court that the specialized aircraft parts have an estimated value in excess of $50,000. The correlation of the parts with FAA Certifications will greatly enhance their value. Mr. Malloy said that the four experts are competent and qualified to provide the services. He also added that the parts inventory is extensive. Utilizing all four experts to prepare the inventory and appraisal will result in a substantial savings in time and cost to the Estate. These professionals have agreed to accept $500 each for the inventory and appraisal. The Chapter 7 Trustee believes that the four professionals are disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Tulsa, Oklahoma, Ozark Air Lines, Inc. -- http://www.gpair.com/-- owned an air carrier that served Colorado Springs, Albuquerque, Tulsa, Oklahoma City and Nashville. The Company filed for chapter 11 protection on January 23, 2004 (Bankr. N.D. Okla. Case No. 04-10361). The case converted to a chapter 7 liquidation proceeding on March 11, 2005. Sidney K. Swinson, Esq., Jeffrey D. Hassell, Esq., and John D. Dale, Esq., at Gable & Gotwals represent the Debtor. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $10 million. Patrick J. Malloy, III, Esq., is the Chapter 7 Trustee overseeing the carrier's liquidation. Patrick J. Malloy, III, Esq., at Malloy Law Firm, P.C., represents the Chapter 7 Trustee. PARKER DRILLING: $180MM Debt Reduction Cues S&P's Stable Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on oil and gas contract driller Parker Drilling Co. and revised its outlook on the company to stable from negative. Houston, Texas-based Parker had total debt of about $456 million as of March 31, 2005. "The outlook revision reflects the fact that Parker is nearing the completion of its debt reduction goal, with about $180 million of its $200 million debt reduction accomplished to date primarily from proceeds of its planned assets sales," said Standard & Poor's credit analyst Brian Janiak. Moreover, Standard & Poor's expects current favorable drilling market fundamentals to continue through the remainder of 2005, which should result in the continuing gradual improvement in Parker's credit protection measures, liquidity, and overall financial profile and further support the outlook revision to stable. The ratings on Parker reflect: * the company's high debt leverage despite its recent debt reduction and participation in the highly competitive, cyclical, and * volatile oil and gas contract drilling industry in areas of high political risk. These weaknesses are slightly mitigated by a diversified rig fleet and adequate near-term liquidity for capital spending and debt service. PARKWAY HOSPITAL: Files Chapter 11 Petition in S.D. New York ------------------------------------------------------------ (JazeL) Parkway Hospital, Inc., filed for chapter 11 protection in the United States Bankruptcy Court for the Southern District of New York, Manhattan Division, on July 1, 2005, in order to restructure its balance sheet. Although several efforts have been made in order to make the hospital more profitable, the Debtor is still experiencing liquidity problems and operating at a loss. GE HFS Holdings, Inc., holds a first-priority lien against the Debtor's accounts receivable and certain other assets. The lien secures $8.7 million of indebtedness pursuant to a credit agreement with Heller Healthcare Financial, Inc., as predecessor in interest to GE. DIP Financing The Debtor anticipates obtaining an $8.5 million senior debtor-in- possession financing from CapitalSource Finance LLC, and a $7.7 million junior DIP loan from Robert J. Aquino, M.D., the Debtor's current President, CEO & Chairman. The senior DIP loan will be secured by a lien on all of the Debtor's assets, including its accounts receivable, a junior mortgage on a real property, and a limited personal guaranty of Dr. Aquino. The proceeds of the senior DIP loan will be used to satisfy, in part, the Debtor's obligations to GE and to fund its postpetition working capital. Dr. Aquino's Interest The Debtor owed $250,000 in wages to Dr. Aquino pursuant to an employment agreement dated June 25, 2005. In addition, Dr. Aquino is the sole owner of Capitol Health Management, Inc., which provides certain billing and administrative services to the Debtor, and Lifeco Medical, P.C., which provides certain emergency room-related services to the Debtor. Both companies hold substantial unsecured claims against the Debtor. Dr. Aquino does not own an equity interest in the Debtor. Dr. Aquino obtained the funds for the junior DIP loan from a separate and independent entity, Parkway Hospital Associates. PHA owns a real property mortgaged to Parkway Equities, LLC, to secure a $3.6 million loan. Dr. Aquino gave a personal guarantee to that loan. Headquartered in Forest Hills, New York, Parkway Hospital, Inc., operates a 251-bed proprietary, acute care community hospital located in Forest Hills, New York. The Company filed for chapter 11 protection on July 1, 2005 (Bankr. S.D.N.Y. Case No. 05-14876). Timothy W. Walsh, Esq., at DLA Piper Rudnick Gray Cary US LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $28,859,000 in total assets and $47,566,000 in total debts. PARKWAY HOSPITAL: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: The Parkway Hospital, Inc. 70-35 113th Street Forest Hills, New York 11375 Bankruptcy Case No.: 05-14876 Type of Business: The Debtor operates a 251-bed proprietary, acute care community hospital located in Forest Hills, New York. Chapter 11 Petition Date: July 1, 2005 Court: Southern District of New York (Manhattan) Judge: Prudence Carter Beatty Debtor's Counsel: Timothy W. Walsh, Esq. DLA Piper Rudnick Gray Cary US LLP 1251 Avenue of the Americas New York, New York 10020-1104 Tel: (212) 835-6216 Fax: (212) 835-6001 Financial Condition as of December 31, 2004: Total Assets: $28,859,000 Total Debts: $47,566,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ New York's Health & Human Trade Debt $8,893,762 Service Union 1199/SEIU, AFL-CIO 310 West 43rd Street New York, NY 10036 Internal Revenue Service Tax Claim $8,100,000 One Lefrak City Plaza Corona, NY 11368 Attn: Officer M. Davy Anthony Fullington Litigation Debt $1,100,000 c/o Ricard K. Hayes, Esq. AUSA (Qui Tam) One Pierrepoint Plaza, 14th Floor Brooklyn, NY 11201 Patel, Silverman & Chadha, M.D. Trade Debt $833,731 c/o Rosen, Preminger & Bloom, LLP 67 Wall Street New York, NY 10005 Travelers Life & Annuity Co. Trust Obligation $685,176 One Cityplace Hartford, CT 06112 Cornerstone Management Trade Debt $664,603 Associates 100 West 57th Street, Suite 10e New York, NY 10019 Dr. Chada Trade Debt $660,165 The Pinnacle 112-03 Queens Boulevard Suite 201 Forest Hills, NY 11375 New York City Water Board Trade Debt $605,527 P.O. Box 410 Church Street Station New York, NY 10001 Posner II Litigation Debt $591,400 c/o Pauline Yoo, Esq. 151 West 30th Street, 11th Floor New York, NY 10001 Metrocare Ambulance Group Trade Debt $569,297 Attn: Facility Building 5811 Foster Avenue Brooklyn, NY 11234 Attn: Abraham Azar Tel: (718) 763-8888 Sodexho Trade Debt $473,542 90 Merrick Avenue, Suite 210 East Meadow, NY 11554 Attn: Myles Foley Tel: (516) 794-9150 HRS Trade Debt $467,076 3 Independence Way, Suite 201 Princeton, NJ 08540 Data Com Trade Debt $339,447 Telecommunications, Inc. c/o Elias C. Schwartz 343 Great Neck Road Great Neck, NY 11021 Lifeco Medical Trade Debt $307,279 22-02 Steinway Street Astoria, NY 11105 Attn: Annemarie Tel: (718) 423-0808 MBA $270,000 1289 Bunker Hill Road Cookeville, TN 38506 Keyspan Trade Debt $244,124 One Metro Tech Center Attn: Micael D'Agastino 12th Floor Brooklyn, NY 11201 Special Care Management Trade Debt $231,000 4260 Shoreline Drive Suite 150 Saint Louis, MO 63045 B. Braun Trade Debt $199,396 Caligor Trade Debt $186,480 Marconi-Picker Trade Debt $181,052 PIER ONE: Case Summary & 4 Largest Unsecured Creditors ------------------------------------------------------ Debtor: Pier One On The Sound, LLC 33 Bayville Avenue Bayville, New York 11709 Bankruptcy Case No.: 05-84550 Type of Business: Real Estate. The Pier One waterfront restaurant operates on the premises. See http://www.pieronerestaurant.com/ Chapter 11 Petition Date: June 30, 2005 Court: Eastern District of New York (Central Islip) Debtor's Counsel: Bruce Weiner, Esq. Rosenberg Musso & Weiner LLP 26 Court Street, Suite 2511 Brooklyn, New York 11242 Tel: (718) 855-6840 Total Assets: $4,000,500 Total Debts: $3,261,000 Debtor's 4 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Guiseppe Genova $931,000 2119 59th Street Brooklyn, NY 11204 Vincenza Genova $850,000 332 Street Johns Avenue Staten Island, NY 10305 Iammo Bello $180,000 39 East 60th Street New York, NY 10022 Joseph Genova $100,000 6-22nd Street Jericho, NY 11753 PRIME MORTGAGE: Fitch Puts Low-B Rating on 2 Certificate Classes ---------------------------------------------------------------- Prime Mortgage Trust's mortgage pass-through certificates, series 2005-2, composed of two groups; Group 1 and Group 2, is rated by Fitch Ratings: Group 1 -- $118,991,134 classes I-A-1 - I-A-3, I-X, I-PO, I-R-1 and I-R-2 senior certificates 'AAA'; -- $725,555 class I-B-1 'AA'; -- $544,166 class I-B-2 'A'; -- $241,851 class I-B-3 'BBB'; -- $120,925 privately offered class I-B-4 'BB'; -- $120,925 privately offered class I-B-5 'B'. The 'AAA' rating on the Group 1 senior certificates reflects the 1.60% subordination provided by the .60% class I-B-1, 0.45% class I-B-2, 0.20% class I-B-3, 0.10% class I-B-4, 0.10% class I-B-5 and 0.15% class I-B-6 (not rated by Fitch). Classes I-B-1, I-B-2, I- B-3, I-B-4 and I-B-5 are rated 'AA', 'A', 'BBB', 'BB' and 'B' based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the primary servicing capabilities of Wells Fargo Bank N.A. (rated 'RPS1' by Fitch). The Group 1 mortgage loans consists of 15-year fixed-rate mortgage loans totaling $120,925,951, as of the cut-off date (June 1, 2005), secured by first liens on one-to four- family residential properties. The mortgage pool demonstrates an approximate weighted-average loan-to-value ratio of 61.8%. The weighted average FICO credit score is approximately 750. Cash-out refinance loans represent 32.23% of the mortgage pool and second homes 14.2%. The average loan balance is $544,711. The three states that represent the largest portion of mortgage loans are California (29.61%), New York (13.74%) and Florida (4.92%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation', available on the Fitch Ratings web site at http://www.fitchratings.com/ SAMI deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, an election will be made to treat the trust as three separate real estate mortgage investment conduits. U.S. Bank National Association will act as trustee. QUIKSILVER INC: S&P Rates Proposed $350 Million Notes at BB- ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB' long-term corporate credit rating to global lifestyle apparel marketer and designer Quiksilver Inc. At the same time, Standard & Poor's assigned its 'BB-' debt rating to the company's proposed $350 million notes due 2015. Proceeds will be used to partially finance the previously announced acquisition of Skis Rossignol S.A. The above ratings are subject to Standard & Poor's review of the final documentation. The outlook on Huntington Beach, California-based Quiksilver is stable. The proposed $350 million notes are rated one notch below the corporate credit rating, reflecting Standard & Poor's criteria for notching of holding company debt issues when there is a material disadvantage due to structural subordination. In this case, Standard & Poor's believes there is relatively weaker protection afforded unsecured holders at the holding company level compared to operating company creditors, given the amount of priority obligations existing at the domestic operating company levels. Quiksilver designs and markets young mens' and womens' casual surf lifestyle apparel, including boardshorts, t-shirts, tops, skirts, pants, fleece, jackets, snowboarding wear and related accessories. The main brands are Quiksilver (for men) and Roxy (for women) and DC shoes. The ratings reflect: * Quiksilver's participation in a highly competitive and very promotional retail environment, * its relatively narrow niche focus, * the fashion risk inherent in its target market, and * the integration risk related to the proposed acquisition of Rossignol, which produces winter equipment and hard goods and operates primarily in Europe. The ratings also incorporate: * Quiksilver's diverse geographic distribution points, * its portfolio of well-recognized lifestyle brands with a loyal following, * its success at building a lifestyle brand with universal appeal from the 'grassroots" level, and * its expansion into international and non-core businesses. REHOBOTH MCKINLEY: Material Losses Cue Fitch to Lower Ratings ------------------------------------------------------------- Fitch Ratings has downgraded the rating on $3.7 million of outstanding New Mexico Hospital Equipment Loan Council hospital facility improvement and refunding revenue bonds (Rehoboth McKinley Christian Hospital Project), series 1996, to 'B-' from 'BB+'. The hospital also has $3.1 million of outstanding variable-rate demand bonds issued in 2000, which Fitch was not asked to rate. The series 1996 bonds remain on Rating Watch Negative. Since the last rating action on May 12, 2005, Rehoboth McKinley Christian Hospital (Rehoboth) has provided Fitch with its latest interim financials, which contain material operating losses and revised accounting methodologies. Through the nine months ended May 31, 2005, Rehoboth posted an operating margin of negative 22% (loss of $9.6 million), which resulted in maximum annual debt service coverage by EBITDA of negative 5.1 times (x). Historically weak financial controls and inaccurate reporting led to the new chief financial officer's decision in March 2005 to completely change the hospital's method for calculating allowances for accounts receivable and bad debt. Approximately $6 million of accounts receivable was written off, which resulted in a corresponding increase in contractual allowances on the income statement. Losses combined with a reserve for a third-party settlement have led to precariously low liquidity levels (unrestricted cash and investments of $1.9 million) with 10.6 days cash on hand, a cushion ratio of 1.0x, and cash to debt of 30.1% at May 31, 2005. With the significant losses through the nine months ended May 31, 2005, Fitch expects Rehoboth to have a rate covenant violation for fiscal 2005. Under the bond indenture, if Rehoboth is unable to maintain a MADS coverage ratio of at least 1.15x, the hospital will have to hire and follow the recommendations of an independent consultant and will have up to 60 days to remedy the covenant violation. While management believes the hospital will be able to meet current debt service obligations, failure to make any payment of principle or interest when they become due is an event of default. This may result in an acceleration of principle payments on the bonds to become due and payable immediately. Rehoboth's situation is further pressured by its outstanding VRDBs that are backed by an irrevocable letter of credit provided by Wells Fargo Bank, which expires in October 2005. Under the terms of the reimbursement agreement, Rehoboth is in violation of various covenants that may result in remedies by the bank, which include the acceleration of payments on the VRDBs. Management has indicated to Fitch that the hospital is currently in discussions with the bank on a possible extension of the LOC agreement. Additional concerns include the reliability of Rehoboth's financial statements and continued turnover in the finance department. Fitch has yet to receive Rehoboth's fiscal 2004 audited financial statement, which was required to be filed with the bond trustee by Feb. 1, 2005. Management has indicated that the 2004 audit should be available in the coming weeks and will include significant accounting adjustments. Management expects an operating loss of approximately $3.5 million for fiscal 2004 (the previous draft of the audited financial statements had indicated an operating gain of $1 million). Fitch notes that a new CFO started in May 2005 and has since implemented initiatives to overhaul the hospital's billing processes, charge master, and revenue cycle management. The CFO also has been more receptive in providing Fitch with ongoing disclosure and updates. The bonds will remain on Rating Watch Negative until Rehoboth is able to implement initiatives to stabilize the hospital's operating performance. Management has set a target to have the hospital breakeven from operations by fiscal 2006. Most importantly, it remains to be seen what actions will be taken by the bank and the bond trustee on behalf of bondholders due to Rehoboth's current financial condition. Fitch will continue to monitor the situation closely. Located in Gallup, NM, approximately 137 miles west of Albuquerque, Rehoboth McKinley Christian Hospital is a sole community provider with 113 staffed beds. Rehoboth had total operating revenue of approximately $67 million in fiscal 2004. Continuing disclosure to bondholders from the series 1996 bond issuance consists of only annual financial information submitted to the nationally recognized municipal information repositories through the bond trustee within 150 days, which Fitch views negatively. Disclosure to Fitch has historically been weak. RESIDENTIAL ACCREDIT: Fitch Puts BB & B Ratings on Class B Certs. ----------------------------------------------------------------- Fitch rates Residential Accredit Loans, Inc.'s mortgage pass- through certificates, series 2005-QS7: -- $350,554,315 classes A-1 - A-7, CB, A-P, A-V, R-I, and R-II certificates senior certificates 'AAA'; -- $9,619,500 class M-1 'AA'; -- $3,329,900 class M-2 'A'; -- $1,849,900 class M-3 'BBB'; Fitch also rates these privately offered subordinate certificates: -- $1,849,900 class B-1 'BB'; -- $1,110,000 class B-2 'B'. Fitch does not rate the $1,665,647 class B-3 certificates. The 'AAA' rating on the senior certificates reflects the 5.25% subordination provided by the 2.60% class M-1, 0.90% class M-2, 0.50% class M-3, privately offered 0.50% class B-1, 0.30% privately offered class B-2 and 0.45% privately offered class B-3. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and Residential Funding Corp.'s servicing capabilities (rated 'RMS1' by Fitch) as master servicer. The certificates are collateralized by two loan groups. As of the cut-off date (June 1, 2005), the mortgage pool consists of 1,935 conventional, fully amortizing, 30-year fixed-rate, mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $369,979,162. Loan Group I is composed of 1,223 mortgage loans with an aggregate principle balance of $264,369,993. The mortgage pool has a weighted average original loan-to-value ratio of 76.99%. The pool has a weighted average FICO score of 722, and approximately 50.4% and 6.92% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively. Equity refinance loans account for 21.24%, and second homes account for 2.72%. The average loan balance of the loans in the pool is $216,165. The three states that represent the largest portion of the loans in the pool are California (25.97%), Florida (9.95%) and Virginia (5.96%). Loan Group II is composed of 712 mortgage loans with an aggregate principle balance of $105,609,169. The mortgage pool has a weighted average OLTV of 77.1%. The pool has a weighted average FICO score of 722, and approximately 48.61% and 5.26% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively. Equity refinance loans account for 23.90%, and second homes account for 3.68%. The average loan balance of the loans in the pool is $148,327. The three states that represent the largest portion of the loans in the pool are Florida (13.19%), California (12.72%) and Texas (7.54%). All of the group I loans were purchased by the depositor through its affiliate, Residential Funding, from unaffiliated sellers as described in this prospectus supplement and in the prospectus, except in the case of 21% of the group I loans, which were purchased by the depositor from HomeComings Financial Network, Inc., or HomeComings, a wholly-owned subsidiary of the master servicer. Approximately 14.5% and 11.6% of the group I loans were purchased from National City Mortgage Company and CTX Mortgage Company, LLC, respectively, each unaffiliated sellers. Except as described in the preceding sentence, no unaffiliated seller sold more than 9.8% of the group I loans to Residential Funding. Approximately 71.1% of the group I loans are being or will be subserviced by HomeComings. All of the group II loans were purchased by the depositor through its affiliate, Residential Funding, from unaffiliated sellers as described in this prospectus supplement and in the prospectus, except in the case of 20.6% of the group II loans, which were purchased by the depositor from HomeComings, a wholly-owned subsidiary of the master servicer. Approximately 20.9% and 19.5% of the group II loans were purchased from CTX Mortgage Company, LLC and National City Mortgage Company, respectively, each unaffiliated sellers. Except as described in the preceding sentence, no unaffiliated seller sold more than 6.4% of the group II loans to Residential Funding. Approximately 68.0% of the group II loans are being or will be subserviced by HomeComings. None of the mortgage loans were subject to the Home Ownership and Equity Protection Act of 1994. Furthermore, none of the mortgage loans are loans that, under applicable state or local law in effect at the time of origination of the loan are referred to as (1) 'high-cost' or 'covered' loans or (2) any other similar designation if the law imposes greater restrictions or additional legal liability for residential mortgage loans with high interest rates, points and/or fees. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available on the Fitch Ratings web site at http://www.fitchratings.com/. The mortgage loans were originated under GMAC-RFC's Expanded Criteria Mortgage Program (Alt-A program). Alt-A program loans are often marked by one or more of the following attributes: a non-owner-occupied property; the absence of income verification; or a loan-to-value ratio or debt service/income ratio that is higher than other guidelines permit. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. Deutsche Bank Trust Company Americas will serve as trustee. RALI, a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as two real estate mortgage investment conduits. RESIDENTIAL ACCREDIT: Fitch Puts Low-B Rating on Class B Certs. --------------------------------------------------------------- Fitch rates Residential Accredit Loans, Inc.'s mortgage pass- through certificates, series 2005-QS8: -- $101,312,595 classes A-1, A-P, A-V and R certificates senior certificates 'AAA'; -- $1,822,000 class M-1 'AA'; -- $208,100 class M-2 'A'; -- $312,200 class M-3 'BBB'. Fitch also rates the privately offered subordinate certificates listed below: -- $156,100 class B-1 'BB'; -- $104,100 class B-2 'B'. Fitch does not rate the $156,160 class B-3 certificates. The 'AAA' rating on the senior certificates reflects the 2.65% subordination provided by the 1.75% class M-1, 0.20% class M-2, 0.30% class M-3, privately offered 0.15% class B-1, 0.10% privately offered class B-2 and 0.15% privately offered class B-3. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and Residential Funding Corp.'s servicing capabilities (rated 'RMS1' by Fitch) as master servicer. As of the cut-off date (June 1, 2005), the mortgage pool consists of 633 conventional, fully amortizing, 15-year fixed-rate, mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $104,071,255. The mortgage pool has a weighted average original loan-to-value ratio of 66.19%. The pool has a weighted average FICO score of 725, and approximately 51.09% and 3.74% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively. Equity refinance loans account for 52.50%, and second homes account for 4.99%. The average loan balance of the loans in the pool is $164,410. The three states that represent the largest portion of the loans in the pool are California (17.14%), Florida (8.92%) and Texas (7.29%). All of the mortgage loans were purchased by the depositor through its affiliate, Residential Funding, from unaffiliated sellers as described in this prospectus supplement and in the prospectus, except in the case of 29.4% of the mortgage loans, which were purchased by the depositor through its affiliate, Residential Funding, from HomeComings Financial Network, Inc., a wholly-owned subsidiary of the master servicer. Approximately 26.9% of the mortgage loans were purchased from and are being subserviced by National City Mortgage Company. Except as described in the preceding sentence, no unaffiliated seller sold more than 6.3% of the mortgage loans to Residential Funding. 54% of the mortgage loans are being subserviced by HomeComings Financial Network, Inc. None of the mortgage loans were subject to the Home Ownership and Equity Protection Act of 1994. Furthermore, none of the mortgage loans are loans that, under applicable state or local law in effect at the time of origination of the loan are referred to as (1) 'high-cost' or 'covered' loans or (2) any other similar designation if the law imposes greater restrictions or additional legal liability for residential mortgage loans with high interest rates, points and/or fees. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation', available on the Fitch Ratings web site at http://www.fitchratings.com/. The mortgage loans were originated under GMAC-RFC's Expanded Criteria Mortgage Program (Alt-A program). Alt-A program loans are often marked by one or more of the following attributes: a non-owner-occupied property; the absence of income verification; or a loan-to-value ratio or debt service/income ratio that is higher than other guidelines permit. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. Deutsche Bank Trust Company Americas will serve as trustee. RALI, a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as a real estate mortgage investment conduit. RESIDENTIAL ACCREDIT: Fitch Rates 2 Class B Certs. at Low-B ----------------------------------------------------------- Fitch rates Residential Accredit Loans, Inc.'s mortgage pass- through certificates, series 2005-QS9: -- $352,799,664 classes A-1 - A-9, A-P, A-V, R-I, and R-II certificates senior certificates 'AAA'; -- $8,347,700 class M-1 'AA'; -- $3,338,800 class M-2 'A'; -- $1,854,900 class M-3 'BBB'. Fitch also rates these privately offered subordinate certificates: -- $1,854,900 class B-1 'BB'; -- $1,112,900 class B-2 'B'. Fitch does not rate the $1,669,496 class B-3 certificates. The 'AAA' rating on the senior certificates reflects the 4.90% subordination provided by the 2.25% class M-1, 0.90% class M-2, 0.50% class M-3, privately offered 0.50% class B-1, 0.30% privately offered class B-2 and 0.45% privately offered class B-3. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and Residential Funding Corp.'s servicing capabilities (rated 'RMS1' by Fitch) as master servicer. As of the cut-off date (June 1, 2005), the mortgage pool consists of 1,995 conventional, fully amortizing, 30-year fixed-rate, mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $370,978,359. The mortgage pool has a weighted average original loan-to-value ratio of 76.55%. The pool has a weighted average FICO score of 722, and approximately 50.75% and 4.26% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively. Equity refinance loans account for 24.93%, and second homes account for 2.34%. The average loan balance of the loans in the pool is $185,954. The three states that represent the largest portion of the loans in the pool are California (21.02%), Florida (11.46%) and Texas (8.80%). All of the mortgage loans were purchased by the depositor through its affiliate, Residential Funding, from unaffiliated sellers as described in this prospectus supplement and in the prospectus, except in the case of 20.6% of the mortgage loans, which were purchased by the depositor through its affiliate, Residential Funding, from HomeComings Financial Network, Inc., a wholly-owned subsidiary of the master servicer. Approximately 21.5% and 10.7% of the mortgage loans were purchased from National City Mortgage Company and CTX Mortgage Company, LLC, respectively, each an unaffiliated seller. Except as described in the preceding sentence, no unaffiliated seller sold more than 8.7% of the mortgage loans to Residential Funding. Approximately 24.7% of the mortgage loans are being subserviced by National City Mortgage Company, an unaffiliated servicer and 64.6% of the mortgage loans are being subserviced by HomeComings Financial Network, Inc. None of the mortgage loans were subject to the Home Ownership and Equity Protection Act of 1994. Furthermore, none of the mortgage loans are loans that, under applicable state or local law in effect at the time of origination of the loan are referred to as (1) 'high-cost' or 'covered' loans or (2) any other similar designation if the law imposes greater restrictions or additional legal liability for residential mortgage loans with high interest rates, points and/or fees. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation', available on the Fitch Ratings web site at http://www.fitchratings.com/ The mortgage loans were originated under GMAC-RFC's Expanded Criteria Mortgage Program (Alt-A program). Alt-A program loans are often marked by one or more of the following attributes: a non-owner-occupied property; the absence of income verification; or a loan-to-value ratio or debt service/income ratio that is higher than other guidelines permit. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. Deutsche Bank Trust Company Americas will serve as trustee. RALI, a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as two real estate mortgage investment conduits. RLC INDUSTRIES: Moody's Upgrades $600MM Bank & Bond Ratings to Ba3 ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of RLC Industries Co. as: Ratings upgraded: * Corporate family rating upgraded to Ba3 from B1 * Issuer rating upgraded to B2 from B3 * $250 million gtd senior secured revolving credit facility upgraded to Ba3 from B1 * $350 million gtd senior secured term loan B upgraded to Ba3 from B1 The outlook for the ratings is stable. The ratings upgrade reflects: * RLC's stronger credit metrics, which are reflective of improved operating performance; * stronger cash flows; and * lower debt levels. The ratings also consider: * the significant asset value of RLC's timberlands; * a strategy of moving towards a more value-added product mix; * a continued focus on cost reduction; and * reasonable liquidity. However, the ratings also reflect: * the commodity focus of RLC's product mix and the challenges of moving towards a greater percentage of value-added products; * significant competitive pressures from market leaders with substantially greater scale and capital resources; and * the potential for capital outlays or distributions over the intermediate term. In addition, the ratings reflect RLC's concentrated ownership and board of directors, and relatively weak corporate governance. Over the past 12 to 18 months RLC benefited from increased demand and improved pricing for most of its products, predominantly plywood. For the twelve months ending March 31, 2005, the company generated EBITDDA of approximately $280 million and free cash flow of about $170 million, which enabled it to reduce outstanding debt by approximately $170 million. As a result, RLC has been able to generate strong credit metrics, with leverage on an EBITDDA to total debt basis of less than 1.5x, interest coverage exceeding 11.0x, and retained cash flow (before working capital) to total debt of over 65%. In addition, liquidity remained adequate with availability of over $200 million under its revolving credit facility and the expectation that the company will remain free cash flow positive. Despite these improvements, the company's sales remain focused on commodity type products such as plywood, particleboard, woodchips, and lumber, leaving the company's operating performance subject to the cyclical nature of these products. Although plywood has benefited from increased demand of late, substitution by oriented strand board will continue to erode its position in the market over time. Moody's believes that RLC will continue to be subject to the volatility of market prices and industry demand and although the company is currently increasing its focus toward more value-added higher margin products, such as medium density overlay and engineered wood products, the process will take time. In addition, competitive pressures from companies that manufacture similar products such as plywood and particleboard as well as engineered lumber products will continue to impact RLC. These companies tend to be market leaders that are much larger in scale, and that have a greater breadth of products. In addition, many benefit from greater sources of liquidity including timberlands, non-strategic assets and market access. The ratings benefit from the sizeable asset value of RLC's timberlands (738,000 acres), which have been appraised for over $1.0 billion. Also considered are the various cost savings currently in place as part of RLC's restructuring in 2003. As part of the restructuring, RLC idled various high cost manufacturing facilities, reduced staffing and realigned its product mix. As a result of its efforts, management estimates annualized cost savings of approximately $31 million. In addition, liquidity should be adequate with full availability under its bank revolver after incorporating covenant restrictions and no significant near term debt maturities. However, liquidity may decline if the Hallie Ford assets (which consist of non-voting stock of RLC and various forest properties) become available. Although the potential acquisition of the forest assets would represent tangible value, the RLC stock would most likely result in a direct use of cash with no tangible benefit to the company. RLC is a holding company with no assets or operations of its own and has been organized as a sub-chapter S corporation for various tax reasons. RLC is also a privately owned company with all voting and non-voting stock held by members of the Ford family and through various legal trusts (FBO the Ford family), and all voting stock is currently owned by Allyn C. Ford, RLC's president and chairman. Although management recently changed the composition of its board of directors the company has not yet established an audit or compensation committee. To date the company has been successful in minimizing its tax liability and maximizing shareholder value through various structures and accounting initiatives including the sub-chapter S structure and a unique depletion method (property specific method) for timberlands. However, as a result of these strategies the company has also paid distributions to its shareholders to reduce the shareholder's tax burden. Moody's anticipates additional tax distributions going forward, although the amount and timing of distributions are uncertain, and will be governed by the bank agreement. The stable outlook reflects the company's improved credit metrics, lower debt levels, substantial asset value and adequate liquidity as well as Moody's belief that management will continue to focus on increasing the percentage of value-added products and further cost reduction. The stable outlook also incorporates the expectation that the acquisition of the Hallie Ford assets (timberlands and stock) will not result in a material deterioration in credit metrics, liquidity or asset values. Factors that could positively impact the ratings and/or outlook would be: * continued improvement in operating performance; * a greater percentage of revenues derived from more value- added products; and * further debt reduction below current levels on a sustained basis. However, factors that are likely to restrict future ratings improvement are the company's concentrated ownership, relatively aggressive tax strategy and policies, and weak corporate governance. Events that would negatively pressure the ratings include: * deterioration in operating performance; * debt financed acquisition; or * sizeable capital outlay. RLC Industries Co., headquartered in Dillard, Oregon, is an integrated forest products company engaged in the growing and harvesting of timber and the manufacturing of wood products, including: * lumber, * plywood, * veneer, * particleboard, * specialty panels, * laminated veneer lumber, * I-joists, and * pulp chips. SALTON INC: Angelo Gordon Inks Pact for Private Debt Exchange ------------------------------------------------------------- Salton, Inc. (OTC: SFP) entered into an agreement in principle with Angelo, Gordon & Co., L.P., as discretionary investment manager for and on behalf of certain investment funds and accounts which beneficially own approximately $41.3 million or 33% of Salton's outstanding 10-3/4% Senior Subordinated Notes due Dec. 15, 2005, to participate in a private debt exchange offer for the outstanding 2005 Notes and the outstanding 12-1/4% Senior subordinated notes due April 15, 2008. A full-text copy of Salton's Agreement with Angelo Gordon is available at no charge at http://ResearchArchives.com/t/s?49 Under the terms of the exchange offer, which would be made available to qualified holders of 2005 Notes and, subject to proration, 2008 Notes, tendering holders would receive in exchange for the 2005 Notes and/or 2008 Notes an aggregate principal amount of new notes under a Salton second lien credit facility as follows: -- with respect to tendered 2005 Notes, the exchange ratio will range from 0.60 to 0.675 depending on the aggregate principal amount of the 2005 Notes tendered in the Exchange Offer. The exchange ratio will be the sum of (a) 0.60 and (b) the Incremental 2005 Note Participation Percentage. The "Incremental 2005 Note Participation Percentage" will be the product of: (a) 0.075 multiplied by (b) the ratio of: (x) the amount, if any, by which the aggregate amount of 2005 Notes tendered in the exchange offer exceeds $75 million, over (y) $50 million; provided that if the aggregate principal amountof 2005 Notes tendered for exchange does not exceed $75 million, the Incremental 2005 Note Participation Amount will be zero. -- with respect to tendered 2008 Notes, the exchange ratio will be 0.60. The maximum aggregate principal amount of new notes to be issued under the second lien credit facility in the exchange offer would not exceed $110 million. The second lien credit facility would mature on Jan. 15, 2008 and would bear interest at LIBOR plus 7%, payable semi-annually in cash. In addition, for each $1,000 of new notes issued to a holder of 2005 Notes and/or 2008 Notes in the exchange offer, such holder would also receive: -- 1.3636 shares of Series C Preferred Stock with a liquidation preference equal to $100.00 (the aggregate number of shares of the Series C Preferred Stock to be issued if the maximum of $110 million of new notes are issued in the exchange offer would be 150,000 with an aggregate liquidation preference of $15 million); provided that fractional shares would be paid in cash. The Series C Preferred Stock would: (i) rank on parity with the Series A Voting Convertible Preferred Stock and senior to the Series B Junior Participating Preferred Stock; (ii) be non-dividend bearing and non-voting (except as required under Delaware law); (iii) be redeemable by the holders upon a change of control at the liquidation preference plus a rate of 5% per annum compounded annually on each anniversary of the issuance date; and (iv) be redeemable by Salton at the face amount on the fifth anniversary of the issuance date. -- 20.58 shares of Common Stock (the aggregate number of shares of Common Stock to be issued if the maximum of $110 million of new notes are issued in the exchange offer would be 2,263,880); provided that fractional shares would be paid in cash. The shares of Common Stock would be subject to a registration rights agreement with Salton. Upon the closing of the exchange offer, a new independent board member designated by the holders of a majority of the Notes tendered would be added to Salton's Board of Directors, which board member would be reasonably acceptable to the existing Board of Directors of Salton. In connection with the exchange offer, each tendering holder of 2005 Notes would consent to an amendment to the indenture governing the 2005 Notes to remove substantially all of the covenants set forth in such indenture. The closing of the exchange offer is subject to various conditions, including: -- all documentation necessary to consummate the exchange offer being acceptable to Angelo Gordon; -- holders of at least $75,000,000 of aggregate principal amount of the 2005 Notes participating in the exchange offer; -- the execution by the senior lenders of an amendment to Salton's senior secured credit facility to, among other things, permit the exchange offer; and -- the execution by the indenture trustee of the amendment to the indenture governing the 2005 Notes. There can be no assurance that these conditions will be satisfied, that the exchange offer will be consummated or, if consummated, the exchange offer will reflect the foregoing terms. None of the securities proposed to be issued in connection with the exchange offer (including the new notes and shares referenced herein or in the term sheet attached to the agreement with Angelo Gordon, which is attached as an exhibit to the Form 8-K described below) have been registered under the Securities Act of 1933, as amended, or any state securities laws and unless so registered may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Company will file shortly after the issuance of this press release a Form 8-K with the Securities and Exchange Commission, including the agreement with Angelo Gordon, as well as the principal terms of the exchange offer and this press release as exhibits thereto. Ad Hoc Noteholders Committee Opposes Proposed Swap An ad hoc committee of Salton noteholders, comprised of certain holders of the Company's: -- 10-3/4% Senior Subordinated Notes due 2005 and -- 12-1/4% Senior Subordinated Notes due 2008, has concluded that the terms of the Company's proposed exchange offer are unacceptable and not in the best interests of the 2005 and 2008 Notes. The Committee has advised representatives of the Company that the terms of the proposed exchange offer: -- contemplate an inappropriate transfer of value from arms- length creditors to equity holders, including insiders, for less than fair consideration; -- is detrimental to the interests and recoveries of all creditors, including all noteholders; and -- represents, at best, a "band-aid" approach to the Company's compelling need for a comprehensive restructuring. As a result, the Committee believes that all creditors, including: -- senior creditors; -- holders of the 2005 Notes who have, to date, indicated a willingness to support the proposal; and -- all other creditors, should oppose the exchange offer and seek terms that: -- are fair; -- will provide reasonable compensation to creditors; and -- which do not use coercion to provide a windfall to equity holders. The Committee said that all creditors should, and are encouraged to, oppose the exchange offer as presently formulated. The Committee is seeking to meet with the Company to renegotiate the terms of the exchange offer and welcomes the participation of all creditors in such effort. On June 15, 2005, Salton failed to make an interest payment on its 2005 Notes. The Committee has retained Fried, Frank, Harris, Shriver & Jacobson LLP as its legal counsel and Chanin Capital Partners as its financial advisor. Creditors who would like more information are encouraged to contact Griffith Lee of Chanin Capital Partners at 310-445-4010. For media inquiries, please contact Lisa Gonzalez at Chanin Capital Partners at (212) 758-2629. Salton, Inc., designs, markets and distributes branded, high quality small appliances, electronics, home decor and personal care products. Its product mix includes a broad range of small kitchen and home appliances, electronics for the home, tabletop products, time products, lighting products, picture frames and personal care and wellness products. The company sells its products under a portfolio of well recognized brand names such as Salton(R), George Foreman(R), Westinghouse (TM), Toastmaster(R), Mellitta(R), Russell Hobbs(R), Farberware(R), Ingraham(R) and Stiffel(R). It believes its strong market position results from its well-known brand names, high quality and innovative products, strong relationships with its customers base and its focused outsourcing strategy. * * * As reported in the Troubled Company Reporter on June 17, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Salton Inc. to 'D' from 'CCC'. At the same time, Salton's subordinated debt rating was lowered to 'D' from 'CC'. These actions reflect the announcement by Lake Forest, Illinois- based Salton that it will not make its interest payment due June 15, 2005, on its senior subordinated notes that mature on Dec. 15, 2005. SALTON INC: SunTrust Replaces Wells Fargo as Indentures Trustee --------------------------------------------------------------- Salton, Inc. (OTC: SFP) disclosed that Wells Fargo Bank, National Association, resigned as trustee, agent and paying agent under the 2005 Indenture dated Dec. 16, 1998, and the 2008 Indenture dated Apr. 23, 2001. The resignation, which the Company accepted, took effect on June 27, 2005. Pursuant to the indentures, Salton issued its 10-3/4% Senior Subordinated Notes Due 2005 and 12-1/4% Senior Subordinated Notes Due 2008. The Company appointed SunTrust Bank, a national banking association, to succeed Wells Fargo under the Indentures effective June 27, 2005. SunTrust accepted the appointment and will act, on behalf of the holders of the Notes, as trustee, agent and paying agent. The Successor Trustee can be reached at: SunTrust Bank 777 Brickell Avenue, 2nd Floor Miami, Florida 33131 Attn: Catherine S. Krug Fax: 305-579-7023 Tel: 305-579-7475 Salton, Inc., designs, markets and distributes branded, high quality small appliances, electronics, home decor and personal care products. Its product mix includes a broad range of small kitchen and home appliances, electronics for the home, tabletop products, time products, lighting products, picture frames and personal care and wellness products. The company sells its products under a portfolio of well recognized brand names such as Salton(R), George Foreman(R), Westinghouse (TM), Toastmaster(R), Mellitta(R), Russell Hobbs(R), Farberware(R), Ingraham(R) and Stiffel(R). It believes its strong market position results from its well-known brand names, high quality and innovative products, strong relationships with its customers base and its focused outsourcing strategy. * * * As reported in the Troubled Company Reporter on June 17, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Salton Inc. to 'D' from 'CCC'. At the same time, Salton's subordinated debt rating was lowered to 'D' from 'CC'. These actions reflect the announcement by Lake Forest, Illinois- based Salton that it will not make its interest payment due June 15, 2005, on its senior subordinated notes that mature on Dec. 15, 2005. SALTON INC: Restating Financial Reports to Reclassify Pref. Stock ----------------------------------------------------------------- Salton, Inc. (OTC: SFP) and the Audit Committee of the Board of Directors, in consultation with the Company's independent registered public accounting firm, Deloitte & Touche LLP, will restate its financial statements for the fiscal quarters ended Oct. 2, 2004, Jan. 1, 2005 and April 2, 2005, and for the fiscal years ended July 3, 2004, June 28, 2003 and June 29, 2002. Subsequent to the issuance of the Company's consolidated financial statements for the fiscal quarter ended April 2, 2005, the Company determined that its Series A convertible preferred stock should be classified outside of permanent equity because the redemption of the Series A convertible preferred stock in shares of common stock is outside of the Company's control. The restatement to reclassify the Series A convertible preferred shares will have no effect on the Company's previously reported net income, earnings per share or cash flows. Current and historic debt covenants were also unaffected. Salton, Inc., designs, markets and distributes branded, high quality small appliances, electronics, home decor and personal care products. Its product mix includes a broad range of small kitchen and home appliances, electronics for the home, tabletop products, time products, lighting products, picture frames and personal care and wellness products. The company sells its products under a portfolio of well recognized brand names such as Salton(R), George Foreman(R), Westinghouse (TM), Toastmaster(R), Mellitta(R), Russell Hobbs(R), Farberware(R), Ingraham(R) and Stiffel(R). It believes its strong market position results from its well-known brand names, high quality and innovative products, strong relationships with its customers base and its focused outsourcing strategy. * * * As reported in the Troubled Company Reporter on June 17, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Salton Inc. to 'D' from 'CCC'. At the same time, Salton's subordinated debt rating was lowered to 'D' from 'CC'. These actions reflect the announcement by Lake Forest, Illinois- based Salton that it will not make its interest payment due June 15, 2005, on its senior subordinated notes that mature on Dec. 15, 2005. SBC COMMUNICATIONS: Applauds Stockholder Vote on AT&T Merger ------------------------------------------------------------ SBC Communications Inc. (NYSE: SBC) Chairman and Chief Executive Officer Edward E. Whitacre, Jr., congratulated AT&T stockholders on their vote in favor of the merger of the two companies. The stockholder action came during the AT&T annual meeting in Denver. "We applaud AT&T stockholders for the strong message they are sending about the need for more vibrant competition and customer choice in the communications marketplace," said Mr. Whitacre. "The combination of SBC and AT&T will speed the delivery of new technologies to customers and is a logical step in assuring America's role as a leader in global communications." The merger will put to best use the strengths of both companies by bringing together SBC's expertise in serving consumer and small business customers with AT&T's leadership in providing voice and data services to large business customers. These complementary sets of strengths will help enable a host of new technologies and services to consumers and businesses, and enhance customer choice. In addition to AT&T stockholder approval, merger clearances continue at a strong pace on the state level. The companies have cleared regulatory hurdles in 25 states and in the District of Columbia. Eleven states with notice requirements or approval authority remain to be completed. As well, federal and international reviews are underway. For more than 125 years, AT&T (NYSE: T) has been known for nparalleled quality and reliability in communications. Backed by he research and development capabilities of AT&T Labs, the company is a global leader in local, long distance, Internet and transaction-based voice and data services. SBC Communications Inc. -- http://www.sbc.com/-- is a Fortune 50 company whose subsidiaries, operating under the SBC brand, provide a full range of voice, data, networking, e-business, directory publishing and advertising, and related services to businesses, consumers and other telecommunications providers. SBC holds a 60 percent ownership interest in Cingular Wireless, which serves more than 50.4 million wireless customers. SBC companies provide high- speed DSL Internet access lines to more American consumers than any other provider and are among the nation's leading providers of Internet services. SBC companies also now offer satellite TV service. * * * As reported in the Troubled Company Reporter on Feb. 2, 2005, Fitch Ratings has placed the 'A+' senior unsecured debt rating of SBC Communications, Inc. on Rating Watch Negative and placed the 'BB+' senior unsecured debt rating of AT&T Corp. on Rating Watch Positive following the announcement of SBC's proposed acquisition of AT&T for approximately $15 billion in SBC common stock and the assumption of approximately $6 billion of net debt. SHAW GROUP: Moody's Rates $450 Mil. Sr. Secured Facility at Ba2 --------------------------------------------------------------- Moody's Investors Service has assigned a Ba2 rating to The Shaw Group Inc.'s $450 million senior secured bank credit facility. In addition, Moody's has upgraded the company's corporate family rating (formerly senior implied rating) to Ba2 from Ba3. The ratings outlook has been changed to positive following the company's raising of approximately $260 million in net equity proceeds to tender for its $250 million 10.75% senior unsecured notes. At this time, Moody's has withdrawn the ratings on the company's senior unsecured notes, with only $15 million in notes not tendered, and the $300 million senior secured credit facility, which has been replaced by the new $450 million facility. This concludes the review for possible upgrade Moody's initiated on April 7, 2005 upon the company's announcement of its equity offering to tender for its outstanding senior unsecured notes. The Ba2 ratings are supported by Moody's belief that Shaw's recently-improving operating performance and competitive position is sustainable due to a robust backlog of engineering, procurement and construction projects in the energy and chemicals industries and government and environmental markets. The Ba2 also considers that the company has begun to generate free cash flow for the first time since fiscal 2002, has little financial leverage, and now maintains a strong and flexible balance sheet, given the nominal amount of funded debt outstanding, making the company a more attractive counterparty for its customers with large, financially-complex construction projects. In addition, the company has a solid reputation resulting from its engineering capabilities, technology and procurement expertise in the energy and chemicals markets with a relatively small number of adept competitors. The Ba2 ratings also reflect: * Moody's belief there is little prospect of increased operating margin expansion due to the primary use of fixed cost contracts, with the potential for cost overruns, and cost plus margin contracts; * anticipated operating profit volatility due to the contractual nature of the companies business (the company has slightly less that two years business backlog); * quality of earnings issues relative to non-recurring reserve reversals and revenue from favorable dispute settlement claims, although these have largely subsided over the last year; * the company's exposure to customer concentration in cyclical energy and chemicals markets; and * an ongoing SEC investigation. The positive outlook is predicated upon Moody's belief that should the recent trend in improving pro forma credit metrics and ratios continue the company's credit ratings could be further upgraded. Over the next 12-18 months, Moody's expects the company will experience substantial revenue and cash flow growth particularly as high oil & gas prices drive demand for coal, nuclear and alternative energy sources, increased federal clean-air requirements, and the robust pace of expansion of international chemicals production facilities, particularly in the Middle East and China. Specifically, Moody's could upgrade Shaw's ratings if the company achieves and maintains adjusted debt-to-EBITDA of less than 2.0x, free cash flow-to-EBITDA of 35%, and free cash flow-to-adjusted debt of approximately 20%. For the last 12 months ending February 28, 2005, without taking into consideration the tender offer for the senior unsecured notes and the resulting reduction in $25 million in interest expense, the company had 3.1x adjusted debt-to-EBITDA, approximately 35% free cash flow-to-EBITDA, and 15% free cash flow-to-total debt. While the company has retired virtually all funded, long-term debt, leaving approximately $45 million in long- and short-term debt outstanding, Moody's metrics are calculated on the company's pro-forma capital structure, with particular emphasis on adjusted debt levels, which in addition to funded debt take into consideration unfunded pension liabilities and the capitalization of operating leases, and adjusted EBITDA and free cash flow. While Moody's does not currently perceive any prospects for a rating downgrade, the company's rating could come under pressure if the company's $5.1 billion backlog, as of February 28, 2005, were to contract meaningfully resulting in double digit annual percentage revenue declines and EBIT margins below 2.0%. Moody's believes that Shaw's new $450 million senior secured credit facility will provide the company with ample alternate liquidity given that it will primarily be utilized for performance letters of credit, of which there were nearly $250 million outstanding as of February 28, 2005, and up to $200 million can be utilized for working capital or for financial letters of credit. However, Moody's expects the company will not have a significant need to fund working capital with the revolver except possibly for week-to-week working capital on the Astoria power project, for which the company is reimbursed from restricted cash balances, which stood at a significant $122 million as of the end of the 2nd fiscal quarter. These working capital reimbursements flow through the investing section on the FAS 95 cash flow statement rather than cash flow from operating activities. While the facility will contain fairly unrestrictive financial covenants, including a maximum debt-to-EBITDA, minimum fixed charge coverage, and a minimum consolidated net worth, Moody's notes the presence of a material adverse change clause in the credit agreement, which could potentially inhibit availability during periods of stress. Moody's has assigned a Ba2 rating to both the senior secured credit facility and the corporate family rating level given that were the facility to be fully drawn, outside of its use to back up performance letters of credit, it would be the preponderance of the company's debt. As well, Moody's notes that the security does not provide a substantial amount of tangible asset coverage relative to the size of the facility. The Shaw Group Inc. -- http://www.shawgrp.com/-- is a leading global provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation, and facilities management services for energy, chemicals, environmental, infrastructure and emergency response markets. With over $3 billion in revenues, Shaw is headquartered in Baton Rouge, Louisiana, and employs approximately 20,000 people at its offices and operations in North America, South America, Europe, the Middle East and the Asia-Pacific region. SHOPKO STORES: Buying Back $100 Million of 9-1/4% Senior Notes -------------------------------------------------------------- ShopKo Stores, Inc. (NYSE: SKO) commenced an offer to purchase for any and all of its outstanding $100 million principal amount of 9-1/4% Senior Notes due 2022 in connection with the previously announced definitive merger agreement that provides for the acquisition of ShopKo by Badger Retail Holding, Inc., and Badger Acquisition Corp., which are affiliates of Minneapolis-based private equity firm Goldner Hawn Johnson & Morrison Incorporated. Holders of Notes validly tendered prior to 5:00 p.m., New York City time, on Thursday, July 14, 2005, will receive $1,081.86 per $1,000 principal amount of Notes, including a consent payment of $50.00 per $1,000 principal amount of Notes, if such Notes are accepted for purchase. Holders who validly tender their Notes after such time will receive $1,031.86 per $1,000 principal amount of Notes, if such Notes are accepted for purchase. Holders who tender their Notes will be deemed to consent to certain proposed amendments to the indenture governing the Notes, which will eliminate substantially all of the restrictive covenants and certain events of default in the indenture. Accrued interest up to, but not including, the settlement date will be paid in cash on all validly tendered and accepted Notes. The Offer will expire at midnight, New York City time, on Wednesday, Aug. 3, 2005, unless extended or earlier terminated. Tendered Notes may not be withdrawn and consents may not be revoked after the Consent Deadline, except as required by law. The consummation of the Offer is subject to specified conditions, including the consummation of the Merger, receipt of tenders representing not less than a majority in principal amount of the Notes, execution of a supplemental indenture, the absence of any material adverse change with respect to ShopKo or the financial markets, and other customary conditions. The Merger is expected to close in ShopKo's third fiscal quarter. Consummation of the Merger is not conditioned upon completion of the Offer. Badger Retail Holding, Inc., has obtained commitments for sufficient financing to complete the Merger whether or not the Offer is completed. Such financing includes borrowings of up to $700 million under either a mortgage facility or a secured term loan facility. If the Offer is consummated, the mortgage facility will be used. If the Offer is not consummated, the secured term loan facility will be used and the Notes will be equally and ratably secured, to the extent required under the indenture governing the Notes, by certain collateral for the term loan facility. The financing for the Merger is described in more detail in ShopKo's preliminary proxy material on Schedule 14A filed with the Securities and Exchange Commission on June 13, 2005. The terms of the Offer and Solicitation, including the proposed amendments to the indenture governing the Notes, are described in the Offer to Purchase and Consent Solicitation Statement dated June 30, 2005, copies of which may be obtained from Global Bondholder Services Corporation, the information agent for the Offer, at (866) 736-2200 (US toll free) or (212) 430-3774 (collect). Banc of America Securities LLC and Morgan Stanley & Co. Incorporated are acting as the dealer managers for the Offer. Questions regarding the Offer may be directed to Banc of America Securities LLC, the lead dealer manager, at (212) 847-5834 or (888) 292-0070. ShopKo Stores, Inc. -- http://www.shopko.com/-- is a retailer of quality goods and services headquartered in Green Bay, Wis., with stores located throughout the Midwest, Mountain and Pacific Northwest regions. Retail formats include 140 ShopKo stores, providing quality name-brand merchandise, great values, pharmacy and optical services in mid-sized to larger cities; 223 Pamida stores, 116 of which contain pharmacies, bringing value and convenience close to home in small, rural communities; and three ShopKo Express Rx stores, a new and convenient neighborhood drugstore concept. With more than $3 billion in annual sales, ShopKo Stores, Inc., is listed on the New York Stock Exchange under the symbol SKO. * * * As reported in the Troubled Company Reporter on April 18, 2005, Moody's Investors Service placed the long-term debt ratings of Shopko Stores, Inc., on review for possible downgrade following the company's announcement that it had signed a definitive merger agreement to be acquired by an affiliate of Goldner Hawn Johnson & Morrison. The downgrade reflects the anticipated significant increase in leverage as a result of the proposed transaction. The transaction is valued at slightly more than $1 billion and is expected to be funded predominantly from debt with only $30 million of the purchase price to be funded by equity. The company has received a commitment from Bank of America to provide $700 million in real estate financing and additional commitments from Bank of America and Back Bay Capital Funding LLC to provide $415 million in senior debt financing. The proceeds from these financings along with the $30 million of equity will be used to pay the merger consideration, refinance the borrowings under the existing revolving credit facility, fund the amounts due under the expected tender offer for the $100 million senior unsecured notes due 2022, plus all fees and expenses. In addition, the financing will be used to cover all future working capital needs. If substantially all of the senior notes are tendered the rating on those notes will be withdrawn. The review will focus on the debt protection measures of Shopko post acquisition as well as the company's business strategy going forward. These ratings are placed on review for possible downgrade: * Senior implied of B1; * Issuer rating of B2; and * Senior unsecured notes due 2022 of B2. SIGNATURE POINTE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- (iaN) Debtor: Signature Pointe Investors, L.P. 22 Corinth Avenue Los Angeles, California 90064 Bankruptcy Case No.: 05-13819 Type of Business: The Debtor operates an apartment in Austin, Texas as an Oakwood franchisee. Chapter 11 Petition Date: July 1, 2005 Court: Western District of Texas (Austin) Judge: Frank R. Monroe Debtor's Counsel: Patrick J. Neligan, Jr., Esq. Neligan Andrews Bryson Foley LLP 1700 Pacific Avenue, #2600 Dallas, Texas 75201 Tel: (214) 840-5300 Fax: (214) 840-5301 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Dae & Associates, Ltd. Forensic engineering $31,000 Geotech Engineering & services Testing 800 Victoria Drive Houston, TX 77002-2908 Ford Nassen & Baldwin, P.C. Legal sevices $24,493 8080 North Central Expressway Suite 1600, LB 65 Dallas, TX 75206-1819 City of Austin Utility provider $13,518 Utility Customer Service Office P.O. Box 2267 Austin, TX 78783-2267 Floor Trends Trade debt $12,996 P.O. Box 140622 Austin, TX 78714 Trugreen Landcare Contract $11,110 21486 Network Place Chicago, IL 60673 Wilmar Industries, Inc. Trade $5,866 P.O. Box 404284 Atlanta, GA 30384 Appliance Warehouse Contract $4,103 P.O. Box 847696 Dallas, TX 75284-7696 Infiniti Painting & Cleaning Trade debt $3,187 P.O. BOx 81724 Austin, TX 78708 Raider Fire Alarms Trade debt $2,352 P.O. Box 429 Athens, TX 75751 Walnut Creek Improvement Homeowners Association $2,301 Association P.O. Box 2810 Austin, TX 78768 ICI Dulux Paint Centers Trade debt $1,663 21033 Network Place Chicago, IL 60673 Home Depot Trade debt $1,600 P.O. Box 9903 Macon, GA 31297 Rutter Hobbs & Davidoff Legal services $1,461 1901 Avenue of the Stars, Suite 1700 Los Angeles, CA 90067 Waste Management of Longhorn Contract $1,404 Disposal P.O. Box 79168 Phoenix, AZ 85062 Holthouse Carlin Van Trigt Financial auditors $1,200 1601 Cloverfield Boulevard, Suite 300 Santa Monica, CA 90404 At Your Service Trade debt $1,088 Enterprises, Inc. 10308 North IH 35 Austin, TX 78753 Singenis Corporation Utility services $994 P.O. Box 64957 Lubbock, TX 79464 Crystal Clear Pools Contract $946 700 W Applegate Drive #100 Austin, TX 78753 Austin Apartment Association Trade debt $886 4107 Medical Parkway Austin, TX 78756 CJR Personnel, Inc. Trade debt $800 11940 Jollyville Road #230S Austin, TX 78759 SLIDELL INC.: Wants New Trial on $4.2 Million Millennium Verdict ---------------------------------------------------------------- Slidell, Inc., is asking a judge to set aside a $4.2 million judgment obtained by Millennium Inorganic Chemicals Inc., a wholly owned operating subsidiary of Millennium Chemicals Inc., purchased by Lyondell Chemical Company (NYSE: LYO) in Nov. 2004, or let the company present its case again to a new jury. Millennium says there's no basis for a new trial. Because privately held Slidell reportedly generates just over $15 million in annual revenue, its ability to pay the $4.2 million judgment is questionable. The Lawsuit On January 16, 2002, Slidell, Inc., sued Millennium Inorganic Chemicals Inc. Slidell asserted breach of contract and other related causes of action arising out of a contract between the two parties for the supply of packaging equipment. In the suit, Slidell sought unspecified monetary damages in excess of the statutory minimum. Millennium filed a counterclaim against Slidell for recovery of the money it had already paid for the equipment plus other direct damages arising out of Slidell's breach of its contractual obligations. Jury Verdict A jury trial began on January 11, 2005, in the United States District Court for the District of Minnesota (Case No. 02-cv- 00213). On February 24, 2005, the jury returned a verdict awarding Millennium $4,822,850.64 for its claim that Slidell breached its contractual obligations. Although the jury did not award Slidell any damages for its claim that Millennium breached its contractual obligations, the jury awarded Slidell $650,000 in damages for a related promissory estoppel claim by Slidell. Slidell Wants a New Trial Slidell now asks the Honorable John R. Tunheim to set aside the jury's verdict and order a new trial. Jeffrey W. Post, Esq., at Fredrikson & Byron, P.A., representing Slidell, argues that the jury's mixed verdict dramatically demonstrates that ultimate contract liability rested on the validity of Millennium's equitable estoppel and waiver defenses. Millennium's defenses are neither legally nor factually sustainable for four reasons, Mr. Post says: (1) Millennium failed to establish the elements of its equitable estoppel or waiver defenses; (2) the jury instructions on the defenses have critical omissions; (3) the instructions implied that either defense operates as a general bar to Slidell's breach claims as opposed to a specific breach; and (4) some Millennium breaches cannot be excused by waiver or estoppel. Mr. Post contends that the jury's finding that Slidell's control flow and connectivity diagrams are not trade secrets is against the great weight of the evidence. As a result, Slidell tells the Court, the jury's answers on the breach-of-contract and trade- secret claims should be set aside and a new trial ordered. No Grounds for New Trial Amanda M. Cialkowski, Esq., at Halleland Lewis Nilan & Johnson, P.A., representing Millennium Inorganic Chemicals Inc., reminds Judge Tunheim that for six weeks in January and February 2005, the parties ably and thoroughly -- some might say too thoroughly -- presented their evidence, contentions and arguments to the jury. The jury conscientiously considered that evidence, deliberated over two days, and returned its verdict in favor of Millennium and against Slidell on the breach of contract and trade secret issues in the case. Ms. Cialkowski urges Judge Tunheim to reject Slidell's argument that "the jury got it wrong" when it ruled against Slidell on these issues. "[A]sking this Court to reweigh the evidence and arguments presented at trial, and hopefully reach a different result," Ms. Cialkowski says, "raises no issue for this Court's review under Rules 50 and 59 of the Federal Rules of Civil Procedure. The only relevant consideration is whether the jury's verdict in Millennium's favor on these issues is supported by probative evidence. Because the Record contains ample testimony, exhibits and other evidence supporting the jury's ruling in favor of Millennium on the breach of contract and trade secret issues, this Court should not overturn that verdict." About Slidell Slidell, Inc. -- http://www.slidell.com/-- designs and manufactures packaging equipment, including material handling, bag filling, palletizing and stretch wrapping of powder and bulk solids. In business since 1975, the privately held company operates in a 140,000 square foot facility in Owatonna, Minnesota. Thomson Gale reports that Slidell generated $15.3 million in revenue in 2004 and employs 100 workers. STONE TOWER: Moody's Places $4.87M Class D-2 Notes on Watchlist --------------------------------------------------------------- Moody's Investors Service announced today that as part of the rating monitoring process it has placed these Classes of Notes issued by Stone Tower CLO Ltd, a collateralized debt obligation issuance, on the Moody's Watchlist for possible upgrade: (1) $12,000,000 Class A-2 Floating Rate Notes Due 2011 (the "Class A-2 Notes") rated "Aa2". (2) $14,750,000 Class B Floating Rate Notes Due 2011 (the "Class B Notes") rated "A2". (3) $11,250,000 Class C Floating Rate Notes Due 2011 (the "Class C Notes") rated "Baa2" (4) $4,750,000 Class D-1 Floating Rate Notes Due 2011 (the "Class D-1 Notes" rated "Ba2" (5) $4,875,000 Class D-2 Floating Rate Notes Due 2011 (the "Class D-2 Notes") rated "Ba3". Moody's noted that the transaction, which closed in July of 2003, has experienced an increased level of overcollateralization due to amortization of the Class A-1 Notes. Moody's stated that placement on the Watchlist for possible upgrade reflects Moody's opinion that the credit quality of the Class A-2 Notes, Class B Notes, Class C Notes, Class D-1 Notes and Class D-2 Notes may be improving. Rating Action: Placement on Moody's Watchlist for possible upgrade Issuer: Stone Tower CLO Ltd. The rating of these Classes of Notes have been placed on the Moody's Watchlist for possible upgrade: Class Description: * U.S. $12,000,000 Class A-2 Floating Rate Notes Due 2011 currently rated "Aa2". * U.S. $14,750,000 Class B Floating Rate Notes Due 2011 currently rated "A2". * U.S. $11,250,000 Class C Floating Rate Notes Due 2011 currently rated "Baa2". * U.S. $4,750,000 Class D-1 Floating Rate Notes Due 2011 currently rated "Ba2". * U.S. $4,875,000 Class D-2 Floating Rate notes Due 2011 currently rated "Ba3". STRUCTURED ASSET: Fitch Puts Low-B Ratings on $14.5MM Certs. ------------------------------------------------------------ Structured Asset Securities Corp. $536 million mortgage pass- through certificates, series 2005-S3, are rated by Fitch Ratings: -- $393.8 million classes A-1 and A-2 'AAA'; -- $20.9 million class M1 'AA+'; -- $19.8 million class M2 'AA'; -- $12.5 million class M3 'AA-'; -- $11.7 million class M4 'A+'; -- $11.1 million class M5 'A'; -- $10.3 million class M6 'A-'; -- $9.2 million class M7 'BBB+'; -- $8.4 million class M8 'BBB+'; -- $7.5 million class M9 'BBB'; -- $9.2 million class M10 'BBB'; -- $7.8 million class M11 'BBB-'; -- $7.5 million class B1 'BB+'; -- $7.0 million class B2 'BB'. The 'AAA' rating on the class A-1 and A-2 certificates reflects the 29.25% total credit enhancement provided by the 3.75% class M1, the 3.55% class M2, the 2.25% class M3, the 2.10% class M4, the 2.00% class M5, the 1.85% class M6, the 1.65% class M7, the 1.50% class M8, the 1.35% class M9, the 1.65% class M10, the 1.40% class M11, the 1.35% non-offered class B1, and the 1.25% non- offered class B2, as well as the 3.60% target overcollateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. The ratings also reflect the quality of the loans, the soundness of the legal and financial structures, and the capabilities of Aurora Loan Services LLC as master servicer. U.S. Bank, N.A, rated 'AA-' by Fitch, will act as trustee. On the closing date, the trust fund will consist of a pool of conventional, second lien, fixed-rate, fully amortizing and balloon, residential mortgage loans with a total principal balance as of the cut-off date of approximately $556,661,660. All of the mortgage loans are fixed-rate mortgage loans. The weighted average loan rate is approximately 10.12%. The weighted average remaining term to maturity is 265 months. The average principal balance of the loans is approximately $46,135. The weighted average combined loan-to-value ratio is 98.11%. The properties are primarily located in California (28.71%), Florida (8.20%), and New York (5.61%). Approximately 98.15% of the mortgage loans are 80 plus LTV Loans. Approximately 29.17% of the mortgage loans were acquired by Lehman Brothers Holdings Inc. from Aurora Loan Services LLC and 22.37% from Option One Mortgage Corporation. For federal income tax purposes, multiple real estate mortgage investment conduit elections will be made with respect to the trust estate. STRUCTURED ASSET: Fitch Places Low-B Rating on Two Cert. Classes ---------------------------------------------------------------- Structured Asset Investment Loan Trust's $2.2 billion mortgage pass-through certificates, series 2005-6, are rated by Fitch Ratings: -- $1.9 billion classes A1-A9 'AAA'; -- $68.1 million class M1 'AA+'; -- $63.5 million class M2 'AA'; -- $38.6 million class M3 'AA-'; -- $34 million class M4 'A+'; -- $34 million class M5 'A'; -- $26.1 million class M6 'A-'; -- $34 million class M7 'BBB'; -- $22.7 million class M8 'BBB-'; -- $11.3 million class M9 'BBB-'; -- $5.7 million class M10A 'BB+'; -- $5.7 million class M10F 'BB+'. The 'AAA' rating on the class A1 through A9 certificates reflects the 15.65% total credit enhancement provided by the 3.00% class M1, 2.80% class M2, 1.70% class M3, 1.50% class M4, 1.50% class M5, 1.15% class M6, 1.50% class M7, 1.00% class M8, 0.50% class M9, 0.25% class M10A, and 0.25% class M10F, as well as the 0.50% initial and target overcollateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. The ratings also reflect the quality of the loans, the soundness of the legal and financial structures, and the capabilities of Aurora Loan Services as master servicer. U.S. Bank, N.A (rated 'AA-' by Fitch) will act as trustee. On the closing date, the trust fund will consist of four pools of conventional, first and second lien, adjustable- and fixed-rate, fully amortizing and balloon, residential mortgage loans with a total principal balance as of the cut-off date of approximately $2,269,083,781. The group 1 mortgage pool consists of adjustable- rate and fixed-rate, Fannie Mae conforming, first and second lien mortgage loans with a cut-off date pool balance of $600,139,529. Approximately 18.83% of the mortgage loans are fixed-rate mortgage loans, and 81.17% are adjustable-rate mortgage loans. The weighted average loan rate is approximately 7.379%. The weighted average remaining term to maturity is 348 months. The average principal balance of the loans is approximately $146,877. The weighted average combined loan-to-value ratio is 82.56%. The properties are primarily located in California (31.43%), Illinois (9.27%), and Florida (6.86%). The group 2 mortgage pool consists of adjustable-rate and fixed- rate, Freddie Mac conforming, first and second lien mortgage loans with a cutoff date pool balance of $600,018,652. Approximately 19.06% of the mortgage loans are fixed rate mortgage loans and 80.94% are adjustable rate mortgage loans. The weighted average loan rate is approximately 7.206%. The WAM is 359 months. The average principal balance of the loans is approximately $188,566. The weighted average CLTV is 79.73%. The properties are primarily located in California (29.11%), New York (9.21%) and Hawaii (6.06%). The group 3 mortgage pool consists of adjustable-rate and fixed- rate, nonconforming, first and second lien mortgage loans with a cutoff date pool balance of $195,914,477. Approximately 2.16% of the mortgage loans are fixed rate mortgage loans and 97.84% are adjustable-rate mortgage loans. The weighted average loan rate is approximately 6.511%. The WAM is 358 months. The average principal balance of the loans is approximately $318,042. The weighted average CLTV is 80.48%. The properties are primarily located in California (64.19%), Arizona (3.34%), and Nevada (3.33%). The group 4 mortgage pool consists of adjustable-rate and fixed- rate, nonconforming, first and second lien mortgage loans with a cut-off date pool balance of $873,011,121. Approximately 18.00% of the mortgage loans are fixed-rate mortgage loans and 82.00% are adjustable-rate mortgage loans. The weighted average loan rate is approximately 7.283%. The WAM is 349 months. The average principal balance of the loans is approximately $207,513. The weighted average CLTV is 82.78%. The properties are primarily located in California (43.46%), New York (6.22%), and Florida (5.58%). Approximately 63.21% of the mortgage loans were acquired by Lehman Brothers Holdings Inc. from BNC, and 20.79% from Option One. For federal income tax purposes, multiple real estate mortgage investment conduit elections will be made with respect to the trust estate. TARGET GRAPHICS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Target Graphics, Inc. P.O. Box 1272 Chattanooga, Tennessee 37401 Bankruptcy Case No.: 05-14009 Type of Business: The Debtor offers commercial printing services. See http://www.tgiprinting.com Chapter 11 Petition Date: June 28, 2005 Court: Eastern District of Tennessee (Chattanooga) Judge: John C. Cook Debtor's Counsel: Cara J. Alday, Esq. Gary R. Patrick, Esq. Patrick, Beard, Schulman & Jacoway, P.C. Suite 202, Market Court 537 Market Street Chattanooga, Tennessee 37402 Tel: (423) 756-7117 Estimated Assets: $1 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Abitibi Consolidated $117,821 1228 Paysphere Circle Chicago, IL 60674 McGrann Paper $48,846 22476 Fisher Road Watertown, NY 13601 Perimeter Paper Company $35,653 P.O. Box 1151 Acworth, GA 30101 Platinum Plus for Business $28,460 United States Ink Corp. $23,163 Operations Consulting Group $23,000 Enovation Graphics System $18,523 Chattanooga Printing & Engraving Co. $12,987 Petty & Landis $11,146 Advanta Bank Corp. $10,307 Morrison Printing Company $9,129 Averitt Express, Inc. $7,951 Athens Paper Company $5,577 American Express-Blue $5,170 Regions Interstate Billing Services, Inc. $4,729 Capital One $4,034 Update, Ltd. $2,609 Millennium Packaging Solutions $2,438 Muller Martini Corporation $2,099 Pallett Resource, LLC $1,873 TELEGLOBE COMMS: Doesn't Want Any Reserve for Duplicate Claims -------------------------------------------------------------- Teleglobe Communications Corporation, and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to make an initial distribution to the holders of unsecured claims under their First Amended Joint Chapter 11 Plan without having to reserve for certain disputed scheduled and filed claims that are duplicative of the bondholder claims and prepetition lender Claims. Michael J. Merchant, Esq. at Richards, Layton & Finger, P.A., in Wilmington, Delaware, reminds the Court that on September 9, 2002, each of the Debtors filed their schedules of assets and liabilities with the Court, identifying the assets and liabilities of their estates. The Schedules identify, among other things, certain scheduled claims relating to amounts owed to the Prepetition Lenders under the Credit Agreements and the Bondholders under the Debentures. In addition to these scheduled claims, certain claims have been filed in Teleglobe's Chapter 11 Cases relating to amounts owed to the Prepetition Lenders under the Credit Agreements and the Bondholders under the Debentures. Under the Plan, the Bondholders were provided with an Allowed Class 1C Unsecured Claim under the Plan in the aggregate amount of approximately $1,278,960,337. Similarly, the Plan provides the Prepetition Lenders with an Allowed Class 1C Unsecured Claim under the Plan in the approximate aggregate amount of $1,256,618,611. The Reorganized Debtors intend to make an initial distribution to the holders of Allowed Class 1C Unsecured Claims under the Plan on or July 15, 2005. The amount of this initial distribution, however, will be significantly impacted by the amount of cash that the Reorganized Debtors are required to reserve on account of Disputed Claims under the Plan. Under the Plan, Reorganized Debtors are required to reserve cash on account of all Disputed Claims "in the aggregate amount sufficient to pay each Holder of a Disputed Unsecured Claim. A list of the Disputed Claims is available for free at http://ResearchArchives.com/t/s?44 Headquartered in Reston, Virginia, Teleglobe Communications Corporation is a wholly owned indirect subsidiary of Teleglobe Inc., a Canadian Corporation. Teleglobe currently provides services in more than 220 countries via a fully integrated network of terrestrial, submarine and satellite capacity. During the calendar year 2001, the Teleglobe Companies generated consolidated gross revenues of approximately $1.3 billion. As of December 31, 2001, the Teleglobe Companies has approximately $7.5 billion in assets and approximately 44.1 billion in liabilities on a consolidated book basis. The Debtors filed for chapter 11 protection on May 28, 2002 (Bankr. D. Del. Case No. 02-11518). Cynthia L. Collins, Esq., and Daniel J. DeFranceschi, Esq., at Richards Layton & Finger, PA, represent the Debtors in their restructuring efforts. TEXAS PETROCHEMICAL: Huff Names H. Cohn as New Liquidating Trustee ------------------------------------------------------------------ Jack B. Fishman -- the Liquidating Trustee appointed pursuant to the Modified Amended Joint Plan of Liquidation for Texas Petrochemical Holdings, Inc. and TPC Holding, LLC -- resigned from his post on June 16, 2005. On that same day, Huff Alternative Income Fund, L.P., as the Plan's proponent, and the primary beneficiary of the trust, named H. Miles Cohn to be the successor trustee of the Liquidating Trust. Mr. Cohn is a partner with the law firm of Sheiness, Scott, Grossman & Cohn, LLP, in Houston, Texas. Terms of Huffy's Plan As reported in the Troubled Company Reporter on May 18, 2005, the Plan intends to liquidate Texas Petrochemical Holdings and TPC Holdings' assets, with the sale proceeds distributed to creditors. The Plan proposes that term lenders under the Credit Agreement for which Credit Suisse First Boston is the agent will be paid a pro rata share of the cash proceeds from the Asset Sale or Sales up to their maximum claim amount, $50,000, plus interest. The Term Lenders Credit Agreement was inked on November 25, 2002, among Texas Petrochemical, L.P., and guarantor affiliates and their Term Lenders. Revolving lenders under the Credit Agreement for which Bank of America, N.A., is the agent, will get a pro rata share of what's left of the cash after the Term Lenders' claims have been fully satisfied. Holders of allowed unsecured claims will get a pro rata share of what's left of the estates' cash after Term and Revolving Lenders are fully paid. Holdings and TPC will pay Texas Petrochemical, L.P., what's left of the money after the Term and Revolving Lenders and Unsecured Claim Holders are fully paid. Equity interests will be cancelled on the effective date of the Plan. Texas Petrochemical, L.P. produces C4 chemical products widely used as chemical building blocks for synthetic rubber, nylon carpets, adhesives, catalysts and additives used in high- performance polymers. The company has manufacturing facilities in the industrial corridor adjacent to the Houston Ship Channel and operates product terminals in Baytown, Texas and Lake Charles, Louisiana. After filing for chapter 11 protection on July 20, 2003 (Bankr. S.D. Tex. Case No. 03-40258), the parent company emerged from bankruptcy in May 2004. The Court confirmed the Plan filed by Huff Alternative Income Fund LP for Texas Petrochemical Holdings, Inc., and TPC Holdings LLC on April 24, 2005. When the Debtors filed for protection from their creditors, they listed $512,417,000 in total assets and $448,866,000 in total debts on a consolidated basis. Mark W. Wege, Esq., at Bracewell & Patterson, LLP represents the Debtors. TOM'S FOODS: Moody's Withdraws Junk Rating on $60M Sr. Sec. Notes ----------------------------------------------------------------- Moody's Investors Service withdrew all credit ratings for Tom's Foods. Moody's has withdrawn these ratings because the issuer has entered bankruptcy. Please refer to Moody's withdrawal policy on moodys.com. Ratings withdrawn are: * $60 million senior secured notes, due 2004 at Caa3 * Corporate family rating (formerly the senior implied rating) at Caa3 * Unsecured issuer rating at Ca Tom's Foods, Inc., based in Columbus, Georgia, is a manufacturer and distributor of snack foods, primarily in Southeastern and Southwestern states. TOYS 'R' US: Post-Merger Debt Burden Prompts S&P to Pare Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Toys "R" Us Inc. to 'B+' and 'B-', respectively, from 'BB'. These ratings are based on publicly disclosed information and represent the highest ratings that could be assigned given the leveraged buyout. Ratings on the company remain on CreditWatch with negative implications, where they were placed on Jan. 8, 2004. "The downgrade reflects Toys "R" Us' substantial debt burden post- merger," said Standard & Poor's credit analyst Diane Shand. The negative CreditWatch listing indicates ratings could be lowered further if Toys "R" Us incurs additional debt through bank borrowings or if its capital structure is not improved through the sale of underperforming stores. Shareholders have approved the acquisition of the company by an investment group for $6.6 billion. In connection with the transaction, the investor group plans to have $6.2 billion in debt financing available (not all of which is expected to be drawn at closing). Hence, Toys "R" Us will be more significantly leveraged and its financial profile will deteriorate after the transaction. Without input from the company, Standard & Poor's estimates the company would leave $1.85 billion available under the revolver; thus leverage would rise to more than 7.5x from 5.1x currently and EBITDA coverage of interest would drop to only 1.6x from 2.8x. These cash flow protection measures are weak for the 'B+' rating category. Furthermore, the proposed financings will be issued at the operating company, which will subordinate existing debt at the holding company. Thus, the existing unsecured debt is rated two notches below the corporate credit rating to reflect its structural disadvantage. Standard & Poor's will monitor developments and resolve the CreditWatch listing when management has announced its operating strategy and financial policy. UAL CORP: Filing Chapter 11 Plan & Disclosure Statement by Aug. 1 ----------------------------------------------------------------- UAL Corporation (OTC Bulletin Board: UALAQ) and its debtor- affiliates began the process for exiting bankruptcy protection by proposing a timeline that keeps the Company on track to emerge from Chapter 11 this fall. Under the proposed schedule, the Debtors intend to file its Plan of Reorganization and Disclosure Statement with the Bankruptcy Court on or about Aug. 1, 2005. The proposed schedule was outlined in a filing with the U.S. Bankruptcy Court for the Northern District of Illinois overseeing United's Chapter 11 proceedings. "[Fri]day's filing represents perhaps the most significant step forward in our restructuring," said Glenn Tilton, president, chairman and chief executive officer of United. "We appreciate the substantial contributions of our stakeholders that have brought us to this point, and we look forward to our ongoing collaboration as we complete the work necessary to successfully conclude our restructuring and exit as a viable, competitive company." "Throughout our reorganization, the ability of our employees to remain focused on our customers and on improving our operations has been critical to our success." Jake Brace, executive vice president and chief financial officer, added: "We are today prepared to begin the exit process to emerge from bankruptcy this fall, despite extraordinary external challenges. While significant work remains, we believe this timeline for exit is realistically achievable." The Company has requested that the Court schedule a hearing to approve the Disclosure Statement for early September 2005, and that the Court fix Aug. 29, 2005, as the record date for determining the holders of stocks, bonds, debentures, notes and other securities entitled to receive ballots and materials necessary for voting on the Plan of Reorganization, as specified in the Bankruptcy Code. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. US AIRWAYS: Can Use ATSB Lenders' Cash Collateral Until July 29 --------------------------------------------------------------- In a stipulation approved by the U.S. Bankruptcy Court for the Eastern District of Virginia, US Airways, Inc., and its debtor- affiliates and these ATSB Lender Parties: * Govco Incorporated, * Citibank, N.A., * AFS Investments XII, Inc., and * International Lease Finance Corporation, and * Air Transportation and Stabilization Board agree to modify the Supplemental Cash Collateral Order to allow the Debtors, until 11:59 p.m. (New York time) on July 29, 2005, to continues using Cash Collateral securing repayment of the ATSB Loans. The Debtors covenant with the Lenders that they will not permit cumulative Consolidated EBITDAR for each of the four-month rolling periods to be less than: Minimum Cumulative Period Consolidated EBITDAR ------ -------------------- Sept 2004 - Dec. 2004 ($171,400,000) Oct. 2004 - Jan. 2005 ($192,700,000) Nov. 2004 - Feb. 2005 ($242,900,000) Dec. 2004 - Mar. 2005 ($238,500,000) Jan. 2005 - Apr. 2005 ($84,700,000) Feb. 2005 - May 2005 $103,100,000 Mar. 2005 - Jun. 2005 $200,000,000 The Debtors promise to limit their Capital Expenditures during each four-month rolling period to: Period Maximum CapEx ------ ------------- 09/01/04 - 12/31/04 $25,000,000 10/01/04 - 01/31/05 $30,000,000 11/01/04 - 02/28/05 $32,500,000 12/01/04 - 03/31/05 $32,500,000 01/01/05 - 04/30/05 $32,500,000 02/01/05 - 05/31/05 $32,500,000 03/01/05 - 06/30/05 $32,500,000 The Debtors will maintain an Unrestricted Cash Balance of no less than: For the Week Ending Weekly Minimum Unrestricted Cash ------------------- -------------------------------- 01/21/05 $502,000,000 01/28/05 $498,000,000 02/04/05 $417,000,000 02/11/05 $369,000,000 02/18/05 $369,000,000 02/25/05 $371,000,000 03/04/05 $325,000,000 03/11/05 $325,000,000 03/18/05 $325,000,000 03/25/05 $380,000,000 04/01/05 $325,000,000 04/08/05 $326,000,000 04/15/05 $330,000,000 04/22/05 $342,000,000 04/29/05 $333,000,000 05/06/05 $338,000,000 05/13/05 $331,000,000 05/20/05 $342,000,000 05/27/05 $352,000,000 06/03/05 $332,000,000 06/10/05 $362,000,000 06/17/05 $381,000,000 06/24/05 $374,000,000 07/01/05 $341,000,000 07/08/05 $325,000,000 07/15/05 $325,000,000 07/22/05 $325,000,000 07/29/05 $325,000,000 Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 96; Bankruptcy Creditors' Service, Inc., 215/945-7000) VISTEON CORPORATION: Moody's Raises Corporate Family Rating to B2 ----------------------------------------------------------------- Moody's Investors Service has raised the corporate family rating (previously called senior implied) of Visteon Corporation to B2 from B3 and raised the company's Speculative Grade Liquidity Rating to SGL-3 from SGL-4. The rating on the company's senior unsecured notes has been affirmed at B3, and the rating outlook is stable. The actions reflect: 1) prospective impact of concluding the memorandum of understanding with Ford Motor Company; 2) the revisions to the company's bank credit agreements under which collateral and up-streamed guarantees will be given to bank debt to the detriment of the unsecured notes; 3) the improved business position and cost competitiveness which a smaller but more focused Visteon will achieve upon closing a definitive agreement with Ford; and 4) an improved liquidity profile. However, even upon closing an agreement with Ford, Visteon will require additional restructuring actions to restore meaningful profitability, achieve material levels of positive free cash flow and improve its debt protection measures. The agreement with Ford will provide Visteon with substantial resources to fund future restructuring actions as well as short term cash flow benefits and resources to address the $250 million of notes maturing in August 2005. The granting of collateral to the banks over substantial domestic assets and the provision of up-streamed guarantees by material domestic subsidiaries will adversely impact the position of the unsecured notes, which will become effectively subordinated to the bank debt. Specifically, these ratings were affected: Visteon Corporation: * Corporate Family raised to B2 from B3 * Speculative Grade Liquidity Rating raised to SGL-3 from SGL-4 These ratings were affirmed: Visteon Corporation: * Senior Unsecured Notes, B3 * Issuer rating, B3 * Shelf ratings for senior unsecured, subordinated and preferred (P)B3, (P)Caa2, and (P)Caa3 respectively * Short Term rating, Not Prime The company's secured bank facilities are not rated. Visteon Capital Trust I: * Shelf rating for trust preferred, (P)Caa2 Upon closing an agreement with Ford (expected at the end of September), Visteon's results will become less sensitive to the swings in Ford's North American production volumes with content per vehicle anticipated to decline from roughly $3,000 per vehicle to less than $1,000. Customer concentration will be reduced with Ford's share of Visteon's revenues declining to roughly 50% on a pro forma basis from 70% currently. Geographic diversification will similarly improve with Europe & South America becoming the largest geographic segment with approximately 43%, followed by North America at 39% and Asia/Pacific with 18%. The company will also benefit from an improved cost structure, more flexible labor arrangements and a more manageable domestic manufacturing footprint. In addition, its legacy liabilities will be significantly reduced and short term cash flows will be accelerated through improved payment terms from Ford. Ford will provide up to $550 million of funds to facilitate future restructuring actions to re-position the continuing core units (climate, electronics and interiors) into more profitable businesses as well as the affected employees in the business units to be transferred to Ford. Moody's anticipates that on an annualized pro forma basis, Visteon's cash flow is anticipated to be break-even to positive from its current break-even to negative position. Visteon's exposure to higher steel costs will be reduced as the more metal intensive segments of chassis and powertrain will be transferred to Ford. Going forward Visteon may also be less capex intensive with annual capital expenditures running at or slightly below depreciation and amortization expense. The ratings also incorporate a number of challenges which Visteon will continue to face. These include: * ongoing low operating profit margins; * current weak production volumes in its primary markets, which remain cyclical; * pressure on margins from higher raw material costs and agreed customer price-downs; and * funding its portion of future restructuring actions. In addition, Visteon is likely to continue with weak free cash flow, albeit at levels better than prior to the agreement. While prospects for Visteon's internal sources of cash have improved compared to earlier expectations, its liquidity profile continues with dependency on access to revolving credit commitments, the total amount of which is being reduced. However, the need for substantial back-up commitments has been lowered through the change in the scope of its business. The company's liquidity profile will face renewal risks on short term lines of credit, factoring and accounts receivable securitization facilities. Visteon will have to service the same amount of debt on a smaller revenue base. It must also complete its internal accounting investigation and become current in its reporting obligations with the SEC and its lenders. The outlook is stable. Assuming Visteon reaches a definitive agreement with Ford by July 31, it will have secured financing to cover the $250 million of notes which mature in early August. Accelerated payment terms from Ford and approximately $300 million of anticipated receipts from the sale of inventory in the transferred assets, expected at the end of September, ought to fund repayment of the initial advance from Ford. However, the third quarter is traditionally a weak to negative cash flow period given seasonal factors in the production cycle. Visteon will have to cover these potential operating requirements in the third quarter from its own resources, but continues to benefit from the existing Ford funding agreement. Once past the closing of the Ford agreements, Moody's anticipates Visteon's free cash flow should be neutral to slightly positive. Cash available from the Ford agreement to fund additional restructuring actions will also reduce the amounts which Visteon would otherwise have to invest and source internally or externally to accomplish a meaningful improvement in its future operating performance and prospects for cash flow generation. Its core businesses are expected to enjoy more favorable growth prospects. Furthermore, upon revising the terms of its bank debt, it will gain from improved headroom under its revised financial covenant. Visteon's pro forma (full year 2005 for the continuing businesses) leverage on a balance sheet debt plus issued letters of credit to EBITDA basis will be under 4 times, but closer to 4.5 times on an adjusted basis for the present value of operating leases and off- balance sheet obligations (accounts receivable securitization and factoring). Continuing core business units will be close to break-even on an operating profit basis. But, with net interest expense continuing at roughly $140 million a year, EBIT coverage of interest will be less than 1 to 1. International operations should continue to be profitable, but the domestic segment will continue with losses. Free cash flow on a pro forma annual run- rate basis post the closing of the Ford agreements is expected to be neutral to slightly positive. As a result of these developments on leverage, cash flow and more favorable liquidity profile, the corporate family rating has been raised to B2. Visteon will be granting its bank group a lien over substantial portions of its domestic asset base. Bank facilities will consist of a term revolver of $775 million with a maturity of June 2007, up to $250 million outstanding under a delayed-draw term loan, and a $300 million short term line to provide a liquidity cushion for settlement of Ford's $250 million advance should the sale of inventory and or other working capital needs develop during the 4th quarter. The short term line will expire before the end of 2005. The facilities are secured by a first-priority lien on substantially all material tangible and intangible assets of Visteon and most of its domestic subsidiaries, as well as the stock of certain subsidiaries (excluding Halla Climate Control). The bond indentures covering Visteon's unsecured notes restrict the amount of domestic manufacturing assets which can be pledged to 15% of a defined consolidated net tangible asset calculation. Post closing of the Ford agreement this is expected to preserve as unencumbered assets less than principal of the remaining unsecured notes after the August re-payment. The bank facilities will also be given up-streamed guarantees from material domestic subsidiaries. While the secured bank debt will peak in the near term at roughly 20-25% of the adjusted debt capital (inclusive of letters of credit but prior to operating leases, securitization and factoring which would have claims on distinct off-balance sheet assets), the extent and quality of assets covered by their liens combined with the up-streamed guarantees will be detrimental to the recovery prospects for unsecured notes in downside scenarios. Consequently the rating of the unsecured notes has been confirmed at B3, one notch below the revised corporate family rating. Visteon's liquidity rating has been raised to SGL-3 from SGL-4. The company's liquidity profile consists of approximately $800 million of cash and liquid assets at the end of March. Its prospective internal cash flows need to be assessed over two principal time segments; an interim period prior to closing the Ford agreement, and afterwards. The interim period, during which Visteon continues with all of its current operations, also spans the 3rd quarter which historically has experienced reduced volumes and negative cash flow due to production scheduling and seasonal working capital needs. This period also includes $250 million of notes maturing in early August. The benefits of the current Ford funding agreement will continue during this period with Visteon experiencing accelerated payment terms from Ford, a reduction of approximately $25 million per month in the amounts it must reimburse Ford for "leased employees", as well as having Ford fund certain capital expenditures. None the less, this interim period is expected to experience negative cash flow. The $250 million of notes maturing in early August are expected to be covered by a Ford advance upon signing a definitive agreement anticipated at the end of July. That advance, which would be pari passu with the bank debt, would be repaid at closing the agreement and transfer of assets to a Ford managed entity. At that time Visteon would receive a cash payment for the value of inventory in the respective plants. That payment, estimated at approximately $300 million, should cover the repayment obligation to Ford. Post this interim period Visteon's cash flow should be close to self-funding until seasonal working capital needs build in 2006. However, internal cash flow may also be impacted by the timing and amount of restructuring actions which might require the company to contribute to the cash expenditures involved. Visteon's external sources will include its $775 million term revolver (under which less than $100 million of letters of credit would be issued), an interim $300 million short term revolver, which would expire in December 2005, a $100 million domestic account receivable securitization facility with its next maturity date of March 2006, factoring lines available to a European subsidiary as well as short term committed lines of credit to its international operations. These short term accommodations will have various maturity/renewal dates over the course of the next year. In addition Visteon will have up to $550 million of Ford funding to cover future restructuring expenditures. The revised bank credit agreements will continue with a sole financial covenant of net debt/EBITDA (the maximum amount varies by quarter and declines during 2006 and 2007 after peaking in 2005), which should provide the company with enhanced flexibility. Alternate liquidity will be constrained by the scope of the bank liens over the domestic assets. The combination of these factors results in an improved liquidity profile with adequate coverage. A critical assumption to this liquidity rating is reaching and closing a definitive agreement with Ford. Factors which could lead to positive rating developments include: * achieving free cash flow to debt of 5%; * sustained operating profit margins of 3% or higher ; * EBIT coverage of interest greater than 1.5 times; and * lowering adjusted leverage to substantially below 4 times (adjusted debt (ex-pension)/EBITDAR). Factors which could lead to negative rating developments include: * continuing negative free cash flow; * adjusted leverage moving above 5 times; * failure to complete the announced Ford agreement and related financing plans; or * adverse developments in its accounting investigation or inability to deliver financial statements within required time-frames. Visteon Corporation is a global supplier of automotive components for vehicle manufacturers and the aftermarket. The company currently has approximately 70,000 employees and a global delivery system of more than 200 technical, manufacturing, sales and service facilities located in 24 countries. W.R. GRACE: Gets Court Nod to Pay $38.2 Mil. to Retirement Plans ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorizes W.R. Grace & Co. and its debtor-affiliates to make minimum contributions, totaling approximately $38.2 million, to the Grace Retirement Plans for the 05-06 Funding Period by Code Section 412. The Debtors will contribute an additional contribution of $40,224 to the PBGC insured Owensboro union pension plan to avoid paying a 2005 PBGC variable rate premium of the same amount. The Grace Retirement Plans currently consist of 14 funded, defined benefit pension plans, each of which is qualified under Section 401(a) of the Internal Revenue Code. The most significant Grace Retirement Plan is the W. R. Grace & Co. Retirement Plan for Salaried Employees, which comprises approximately 81% of the assets and 83% of the liability of the Grace Retirement Plans in the aggregate -- depending on the measure of liability. Many of the Grace Retirement Plans are maintained pursuant to collective bargaining agreements Funded Status of Grace Retirement Plans Several different calculations to measure the liabilities and assets of the Grace Retirement Plans were updated. The updated amounts have been calculated by the actuary of the Grace Retirement Pension Plans. A table of the Updated Calculations is available for free at http://bankrupt.com/misc/Funded_Status.pdf Employees Covered by the Grace Retirement Plans Virtually all of the Debtors' current employees are covered by one of the Grace Retirement Plans. The Grace Salaried Plan alone covers more than 2,150 active, salaried employees or 65% of the Debtors' workforce in the United States. Contribution Schedule The schedule of legally required minimum contributions to the Grace Retirement Plans for the 05-06 Funding Period discloses: _________________________ ___________________ ___________ | | | | | Payment Due Date | Contributions | Plan Year | |_________________________|___________________|___________| | | | | | 2005 | | | | July 15 | $7,540,083 | 2005 | | October 15 | 8,732,502 | 2005 | |_________________________|___________________|___________| | | | | | 2006 | | | | January 15 | 8,732,909 | 2005 | | April 15 | 13,224,000 | 2006 | |_________________________|___________________|___________| | | | Total $38,229,494 | |_________________________________________________________| Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 88; Bankruptcy Creditors' Service, Inc., 215/945-7000) WACHOVIA BANK: Fitch Places Low-B Ratings on Six Cert. Classes -------------------------------------------------------------- Wachovia Bank Commercial Mortgage Trust, series 2005-C19 commercial mortgage pass-through certificates are rated by Fitch Ratings: -- $33,891,000 class A-1 'AAA'; -- $223,570,000 class A-2 'AAA'; -- $75,000,000 class A-3 'AAA'; -- $178,971,000 class A-4 'AAA'; -- $202,208,000 class A-5 'AAA'; -- $52,557,000 class A-PB 'AAA'; -- $237,279,000 class A-6 'AAA'; -- $126,705,000 class A-1A 'AAA'; -- $80,727,000 class A-FL 'AAA'; -- $80,727,000 class A-M 'AAA'; -- $100,909,000 class A-J 'AAA'; -- $1,555,784,000 class X-P* 'AAA'; -- $1,614,545,341 class X-C* 'AAA'; -- $40,363,000 class B 'AA'; -- $20,182,000 class C 'AA-'; -- $32,291,000 class D 'A'; -- $16,145,000 class E 'A-'; -- $20,182,000 class F 'BBB+'; -- $16,145,000 class G 'BBB'; -- $20,182,000 class H 'BBB-'; -- $8,073,000 class J 'BB+'; -- $8,073,000 class K 'BB'; -- $6,054,000 class L 'BB-'; -- $4,036,000 class M 'B+'; -- $2,018,000 class N 'B'; -- $4,036,000 class O 'B-'; -- $24,221,341 class P 'NR'. * Notional Amount and Interest Only. Class P is not rated by Fitch. Classes A-1, A-2, A-3, A-4, A-5, A- PB, A-6, A-FL, A-M, A-J, B, C, and D are offered publicly, while classes A-1A, E, F, G, H, J, K, L, M, N, O, P, X-P, and X-C 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 92 fixed-rate loans having an aggregate principal balance of approximately $1,614,545,341, as of the cutoff date. The rating on the class A-FL certificates only addresses receipt of the fixed-rate coupon and does not address whether investors will receive a floating-rate coupon. Additionally, the rating of the class A-FL certificates does not address any costs associated with a floating-rate swap. For a detailed description of Fitch's rating analysis, please see the report titled 'Wachovia Bank Commercial Mortgage Trust, Series 2005-C19' dated June 13, 2005 and available on the Fitch Ratings web site at http://www.fitchratings.com/ WELLS FARGO: Fitch Places Low B Rating on $14M Class M Certs. ------------------------------------------------------------- Fitch has rated the Wells Fargo Home Equity Asset-Backed Securities 2005-1 Trust: -- $1.051 billion classes AI-1A, AI-1B, and AII-1 'AAA'; -- $32.0 million class M1 'AA+'; -- $30.1 million class M2 'AA+'; -- $18.2 million class M3 'AA'; -- $15.7 million class M4 'AA'; -- $14.4 million class M5 'AA-'; -- $12.6 million class M6 'A+'; -- $12.6 million class M7 'A'; -- $8.8 million class M8 'A-'; -- $12.6 million class M9 'BBB+'; -- $12.6 million class M10 'BBB'; -- $7.5 million class M11 'BBB-'; -- $9.4 million class M12 'BB+'; -- $5.0 million class M13 'BB'. The 'AAA' rating on the senior certificates reflects the 16.30% total credit enhancement provided by the 2.55% class M1, the 2.40% class M2, the 1.45% class M3, the 1.25% class M4, the 1.15% class M5, the 1.00% class M6, the 1.00% class M7, the 0.70% class M8, the 1.00% class M9, the 1.00% class M10, the 0.60% class M11, the 0.75% class M12, the 0.40% class M13, the 0.30% unrated class M14, and the 0.75% initial overcollateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans and the integrity of the transaction's legal structure as well as the capabilities of Wells Fargo Bank, N.A., as servicer, rated 'RPS1' by Fitch. HSBC Bank USA, National Association is the trustee. The certificates are supported by two collateral groups. The first group consists of first lien adjustable-rate and fixed-rate mortgage loans with principal balances that conform to Freddie Mac guidelines. The mortgage balance as of the cut-off date was $795,416,120. Approximately 15.8% of the mortgage loans are fixed-rate mortgage loans and 84.2% are adjustable-rate mortgage loans. The weighted average loan rate is approximately 6.919%. The weighted average remaining term to maturity is 350 months. The average principal balance of the loans is approximately $132,393. The weighted average original loan-to-value ratio is 77.9%. The properties are primarily located in California (16.10%), Maryland (5.52%), and Arizona (5.41%). The second group consists of first lien adjustable-rate and fixed- rate mortgage loans with principal balances that may or may not conform to Freddie Mac guidelines. The mortgage balance as of the cut-off date was $460,588,497. Approximately 8.2% of the mortgage loans are fixed-rate mortgage loans and 91.8% are adjustable-rate mortgage loans. The weighted average loan rate is approximately 6.435%. The weighted average remaining term to maturity is 352 months. The average principal balance of the loans is approximately $306,242. The weighted average original loan-to- value ratio is 82.8%. The properties are primarily located in California (32.18%), Maryland (7.80%), and Virginia (6.07%). Wells Fargo Home Mortgage, Inc. assigned to the trust fund loan- level primary mortgage insurance policies. All of the mortgage loans with OLTVs greater than 80% are covered. All of the mortgage loans were purchased by Wells Fargo Asset Securities Corporation, acting as the depositor, from Wells Fargo Home Mortgage, Inc. The trust fund will make elections to treat some of its assets as one or more real estate mortgage investment conduits for federal income tax purposes. WESTPOINT STEVENS: Court Okays $703 Mil. Asset Sale to Carl Icahn ----------------------------------------------------------------- On June 23, 2005, WestPoint Stevens, Inc., and its subsidiaries entered into an asset purchase agreement with WS Textile Co., Inc., New Textile One, Inc., New Textile Two, Inc., Textile Co., Inc., for the sale of substantially all of the Company's assets. The Purchaser is indirectly owned and controlled by American Real Estate Holdings Limited Partnership. AREH is a subsidiary of American Real Estate Partners, L.P., which is an affiliate of Carl Icahn. Affiliates of AREH own approximately 40% of the debt under the Company's first lien credit facility and 51% of the debt under the Company's second lien credit facility. Under the Asset Purchase Agreement, the Purchaser will provide consideration valued at approximately $703 million, consisting of: (i) the payment of the lesser of (a) $120 million or (b) the amount necessary to pay in full all outstanding indebtedness under the Company's DIP Credit Agreement, dated as of June 5, 2003, as amended, among the Company and certain of its subsidiaries, Bank of America, N.A., Wachovia Bank, National Association and certain other lenders; (ii) 35% of newly issued shares of WS Textile's common stock will be distributed to or on behalf of the lenders under the Company's first lien credit facility; (iii) subscription rights to acquire up to an additional 47.5% of WS Textile Common Stock for an aggregate purchase price of $125 million will be distributed to or on behalf of the First Lien Lenders and, to the extent determined by the U.S. Bankruptcy Court for the Southern District of New York, the lenders under the Company's second lien credit facility; (iv) tender or a back to back standby letter of credit or cash collateral, not to exceed in the aggregate $35 million, to the administrative agent under the DIP Credit Facility; (v) the satisfaction of certain other secured claims which are senior to the first lien debt; (vi) the assumption of other specified liabilities of the Company, as set forth in the Asset Purchase Agreement; and (vii) $3 million in respect of wind-down costs. A full-text copy of the Asset Purchase Agreement is available for free at: http://bankrupt.com/misc/wspt_APA.pdf In connection with the Asset Purchase Agreement, WS Textile entered into an equity commitment agreement with Textile Holding LLC, a wholly owned subsidiary of AREH, AREH and Aretex LLC, a wholly owned subsidiary of AREH, pursuant to which Textile Holding agreed to purchase 5,250,000 shares of Parent Common Stock -- representing 17.5% of the WS Textile Common Stock -- for $187 million. The purchase will occur simultaneously with the closing of the transactions contemplated by the Asset Purchase Agreement. Furthermore, in connection with the Asset Purchase Agreement, WS Textile entered into a rights offering sponsor agreement with AREH, pursuant to which AREH agreed to purchase, through a direct or indirect subsidiary, at the rights offering exercise price, a number of shares of WS Textile Common Stock equal to the number of shares of WS Textile Common Stock with respect to which Subscription Rights have not been exercised by a specified date. Court Approves Sale WestPoint Stevens Inc. (Pink Sheet: WSPTQ.PK) ("WestPoint") and American Real Estate Partners, L.P. (NYSE: ACP - News; "AREP") reported that the U.S. Bankruptcy Court has approved the sale of substantially all of WestPoint's assets to an indirect subsidiary of AREP, which is controlled by Carl C. Icahn. The AREP offer was the highest and best bid received in connection with the sale process approved by the Court in its reorganization proceedings for WestPoint. The terms of the agreement valued at $703.5 million, include the purchase of substantially all of the assets of WestPoint, the repayment of WestPoint's outstanding debtor-in-possession loans and assumption of certain working capital liabilities, the satisfaction of other secured claims, and the payment of $3 million for wind-down costs. The agreement also provides for the issuance on account of the first lien debt of 35.0% of the equity in WS Textile Co., Inc., a newly formed company that will own indirectly the assets of WestPoint, a $125 million rights offering for 47.5% of the equity of WS Textile Co., Inc., and a cash investment of $187 million by AREP for 17.5% of the equity of WS Textile Co., Inc. By virtue of its position as a holder of WestPoint debt, AREP has agreed to subscribe to its portion of the rights expected to represent equity interests of not less than 19% of WS Textile Co., Inc., and has agreed to subscribe for any unexercised rights shares. As a result, it is expected that AREP will own in excess of 50% of the outstanding shares of WS Textile Co., Inc., and may own up to 79%, to the extent the subscription rights are not exercised. A closing date for the proposed sale has yet to be announced. The closing of the sale is subject to customary and other deal- specific conditions and will be reflected in an order of the U.S. Bankruptcy Court authorizing the transaction, which is expected to be entered next week. Following the sale, WestPoint will wind down its estate, and as a result, all shares of its common stock would be cancelled with no payment. Carl C. Icahn, Chairman of the Board of AREP's general partner reported, "We are pleased with the outcome of this process and with WestPoint. We look forward to continuing to earn the trust of WestPoint's customers, employees and vendors." M.L. "Chip" Fontenot, President and CEO of WestPoint Stevens commented, "Court approval of the sale agreement for WestPoint Stevens brings us closer to the successful conclusion of our reorganization process. Going forward, we will seek to take advantage of global opportunities." Mr. Fontenot added, "I would like to thank our customers for their support during this very difficult process. In addition, we are extremely grateful for the support of our employees, vendors and communities." AREP, is a master limited partnership engaged in a variety of businesses including oil and gas exploration and production; casino gaming and associated hotel, restaurant and entertainment operations; real estate activities including commercial rentals, residential development and associated resort activities; and investments in equity and debt securities. AREP's seeks to continue to grow and enhance the value of its core businesses and to acquire undervalued assets and companies that are distressed or in out-of-favor industries. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 215/945-7000) WHITE FOODS: Case Summary & 15 Largest Known Creditors ------------------------------------------------------ Debtor: White Foods of Glen Rose Ltd. P.O. Box 347 Bedford, Texas 76095 dba Burger King of Glen Rose Bankruptcy Case No.: 05-51717 Type of Business: The Debtor is a Burger King franchisee. Chapter 11 Petition Date: June 30, 2005 Court: Northern District of Texas (Ft. Worth) Debtor's Counsel: Richard L. Venable, Esq. Venable & Vida, LLP 3000 Central Drive Bedford, Texas 76021 Tel: (817) 358-9977 Fax: (817) 358-9988 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 15 Largest Known Creditors: Entity Claim Amount ------ ------------ Attorney General of Texas Unknown Bankruptcy Section P.O. Box 12548 Austin, TX 78711-2548 Burger King Corporation Unknown Attn: Frank Taylor P.O. Box 932980 Atlanta, GA 31193-2980 David Pulling, CPA Unknown 1801 Nouth Hampton, Suite 200 Desoto, TX 75115 Earnest White Unknown 3300 Stanolind Midland, TX 79707 GE Capital Unknown 10900 NE 4th St., Ste 500 Bellevue, WA 98004-5853 GE Capital Unknown Attn: Mark Johnson PO Box 848219 Dallas, TX 75284-8319 Jeffery White Unknown 2025 Crossbow Arlington, TX 76001 Linebarger, Heard, Goggan Unknown 1949 South IH 35 (78741) P.O. Box 17428 Austin, TX 78760 Somervell County Tax Assessor Unknown 112 Allen Drive Glen Rose, TX 76043-9998 Somervell County Tax Assessor Unknown 112 Allen Dr. Glen Rose, TX 76043-9998 Texas Comptroller Unknown Bankrutpcy Department P.O. Box 13528 Austin, Texas 78711 Timothy White Unknown 4217 County Road 411 Glen Rose, TX 76043 Town & Country Bank Unknown Attn: EK Hufstedler, III 405 SW Big Bend Trail Glen Rose, TX 76043 Tricia Tuscana Unknown 1108 Hidden Oaks Drive Bedford, TX 76022 White Foods Group II, Inc. Unknown C-O Tricia Tuscana 1108 Hidden Oaks Drive Bedford, TX 76022 WILFRED CHAN: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtors: Wilfred Henry Chan & Janet Tsai Chan dba Hearth Baked Traditions LLC 1405 Halifax Drive Mundelein, Illinois 60060 Bankruptcy Case No.: 05-26012 Type of Business: The Debtors own and operate an Atlanta Bread Company franchise. Chapter 11 Petition Date: June 30, 2005 Court: Northern District of Illinois (Chicago) Judge: Bruce W. Black Debtors' Counsel: David P. Leibowitz, Esq. Leibowitz Law Center 420 Clayton Street Waukegan, Illinois 60085-4232 Tel: (847) 249-9100 Total Assets: $444,980 Total Debts: $1,088,932 Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Bank Bank Loan $363,744 MAC N9314-100 P.O. Box 9149 Minneapolis, MN 55480-9149 Attn: James Wright Militello, Zanck & Coen 40 Brink Street Crystal Lake IL 60014 Tel: (815) 459-8800 Zero Investment and Management Rent $173,527 Corporation c/o Malet Realty, Ltd. Attn: Ernie Reinstein 900 West Jackson Boulevard, #4W Chicago, IL 60607-3024 Tel: (312) 243-5353 Song P. Tsai Personal Loan $138,785 1 Brookwood Court Mt. Laurel, NJ 08054 Tel: (609) 298-6500 Atlanta Bread Co, Inc. Trade Debt $45,302 4 Seasons Distribution Trade Debt $33,135 Chase fka Bank One Credit Card $17,749 Chase Automotive Finance Credit Card $17,725 Value of Collateral: $10,720 Capital One Services Credit Card $7,680 Discover Card Credit Card $7,090 American Express Credit Card $6,218 Cash Rebate Card Customer Service AT & T Universal Card Credit Card $5,293 Patel Enterprises, Inc. Loan $5,000 c/o Laurel Notch Motel Chase Platinum MasterCard Credit Card $4,956 Citicards Credit Card $2,867 Peoples Entergy Services Corp. Trade Debt $1,360 Ronnoco Coffee Company Trade Debt $1,212 Skyview Window Cleaning Trade Debt $1,150 D & L Produce & Trade Debt $950 Food Distribution Micros Systems, Inc. Trade Debt $768 Nicor $768 WINN-DIXIE: Sarria Wants Stay Lifted to Recover Leased Premises --------------------------------------------------------------- Sarria Enterprises, Inc., entered into a lease with Winn-Dixie Stores, Inc., and its debtor-affilaites for a store in Miami-Dade County, Florida. Pursuant to the Lease, the Debtors are required to pay their portion of real property taxes as levied against the premises as additional rent. On January 26, 2005, Sarria notified the Debtors that they have not paid their pro rata portion of the tax liability with respect to the premises from 1999 to 2004. Alan M. Burger, Esq., at Burger, Trailor & Farmer, PA, in West Palm Beach, Florida, relates that Sarria asked the Debtors to make their additional rent payment for $124,036, to no avail. Sarria wants the ability to avail itself to all remedies under the Lease as a result of the Debtors' default. Thus, Sarria asks the U.S. Bankruptcy Court for the Middle District of Florida to lift the automatic stay to allow it to pursue its remedies, including to suit for damages or to recover possession of the premises. 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). WINROCK GRASS: U.S. Trustee Wants Case Converted or Dismissed ------------------------------------------------------------- Charles E. Rendlen, III, the U.S. Trustee for Region 13, asks the U.S. Bankruptcy Court for the Eastern District of Arkansas, Little Rock Division, to dismiss Winrock Grass Farm, Inc.'s chapter 11 case or convert it to a chapter 7 liquidation proceeding. Jim Hollis, Esq., representing the U.S. Trustee, tells the Court that the Debtor failed to file its April and May 2005 operating reports. Without those reports, the U.S. Trustee is unable to determine how financially sound the Debtor is and whether Winrock's continued operation is viable. Also, Mr. Hollis adds, the Debtor failed to pay the U.S. Trustee statutory fees owed for the first quarter of 2005 pursuant to 28 U.S.C. Sec. 1930. Sale of Grass Farm Property The Debtor's sole asset, the Grass Farm Property, was sold last week to John W. "Jay" DeHaven, president of the DeHaven Group LLC, for $4,550,000. Metropolitan National Bank, holding a lien on the property to secure repayment of a $4,770,000 loan, got an order from the Court to foreclose on the property. When the Debtor failed to stay the foreclosure, it opted to sell the property to the best and highest bidder. Without the property, Mr. Hollis says, the Debtor can't propose a viable plan nor continue operations. The Court will convene a hearing on August 18, 2005, at 10:00 a.m., to consider the U.S. Trustee's request. Headquartered in Little Rock, Arkansas, Winrock Grass Farm Inc., -- http://www.winrockgrass.com/-- produces and markets Meyer Z-52 Zoysiagrass in the United States. The Company and its debtor- affiliates filed for protection on September 22, 2004 (Bankr. E.D. Ark. Case No. 04-21283). Charles Darwin Davidson, Sr., Esq., and Stephen L. Gershner, Esq., at Davidson Law Firm represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it estimated $50 million in assets and $10 million in debts. * BOND PRICING: For the week of June 27 - July 1, 2005 ------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- AAIPharma Inc. 11.000% 04/01/10 54 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 6 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 46 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 72 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. 4.500% 02/15/24 73 AMR Corp. 9.200% 01/30/12 70 AMR Corp. 9.750% 08/15/21 67 AMR Corp. 9.800% 10/01/21 65 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 65 AMR Corp. 10.400% 03/15/11 62 AMR Corp. 10.450% 11/15/11 63 Anvil Knitwear 10.875% 03/15/07 58 AP Holdings Inc. 11.250% 03/15/08 15 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 18 ATA Holdings 13.000% 02/01/09 21 Atlantic Coast 6.000% 02/15/34 15 Atlas Air Inc. 8.770% 01/02/11 29 Atlas Air Inc. 9.702% 01/02/08 61 Autocam Corp. 10.875% 06/15/14 65 Bank New England 8.750% 04/01/99 9 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 72 Calpine Corp. 7.750% 04/15/09 67 Calpine Corp. 7.875% 04/01/08 69 Calpine Corp. 8.500% 02/15/11 70 Calpine Corp. 8.625% 08/15/10 67 Calpine Corp. 8.750% 07/15/13 74 Cendant Corp. 4.890% 08/17/06 50 Charter Comm Hld. 8.625% 04/01/09 73 Charter Comm Hld. 9.625% 11/15/09 74 Charter Comm Hld. 10.000% 05/15/11 72 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 74 Collins & Aikman 10.750% 12/31/11 27 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 Covant-Call 07/05 7.500% 03/15/12 69 Cray Research 6.125% 02/01/11 47 Curagen Corp. 4.000% 02/15/11 75 Curative Health 10.750% 05/01/11 74 Delta Air Lines 2.875% 02/18/24 31 Delta Air Lines 7.299% 09/18/06 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 57 Delta Air Lines 8.000% 06/03/23 38 Delta Air Lines 8.300% 12/15/29 27 Delta Air Lines 8.540% 01/02/07 61 Delta Air Lines 8.540% 01/02/07 45 Delta Air Lines 8.540% 01/02/07 33 Delta Air Lines 9.000% 05/15/16 28 Delta Air Lines 9.200% 09/23/14 31 Delta Air Lines 9.250% 03/15/22 26 Delta Air Lines 9.300% 01/02/11 32 Delta Air Lines 9.320% 01/02/09 42 Delta Air Lines 9.375% 09/11/07 56 Delta Air Lines 9.480% 06/05/06 66 Delta Air Lines 9.750% 05/15/21 28 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 34 Delta Air Lines 10.375% 12/15/22 26 Delta Air Lines 10.430% 01/02/11 53 Delta Air Lines 10.500% 04/30/16 45 Delta Air Lines 10.790% 09/26/13 36 Delta Air Lines 10.790% 09/26/13 37 Delta Air Lines 10.790% 03/26/14 26 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 70 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 3 Epix Medical Inc. 3.000% 06/15/24 70 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 25 Federal-Mogul Co. 7.500% 01/15/09 25 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 64 Finisar Corp. 2.500% 10/15/10 74 Finisar Corp. 2.500% 10/15/10 73 Finisar Corp. 5.250% 10/15/08 74 Finova Group 7.500% 11/15/09 44 Firstworld Comm 13.000% 04/15/08 0 Foamex L.P. 9.875% 06/15/07 54 Ford Motor Co. 7.700% 05/15/97 72 Gateway Inc. 2.000% 12/31/11 74 GMAC 5.900% 01/15/19 73 GMAC 5.900% 02/15/19 71 GMAC 6.000% 02/15/19 72 GMAC 6.000% 02/15/19 70 GMAC 6.000% 03/15/19 72 GMAC 6.000% 03/15/19 72 GMAC 6.000% 03/15/19 74 GMAC 6.000% 03/15/19 73 GMAC 6.000% 09/15/19 74 GMAC 6.000% 09/15/19 72 GMAC 6.050% 08/15/19 74 GMAC 6.050% 10/15/19 73 GMAC 6.125% 10/15/19 74 GMAC 6.200% 04/15/19 74 GMAC 6.250% 12/15/18 74 GMAC 6.250% 01/15/19 75 GMAC 6.250% 05/15/19 74 GMAC 6.300% 08/15/19 74 GMAC 6.300% 08/15/19 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 67 Gulf States STL 13.500% 04/15/03 0 Holley Perf. Prod. 12.250% 09/15/07 75 Home Interiors 10.125% 06/01/08 68 Icos Corp. 2.000% 07/01/23 74 Idine Rewards 3.250% 10/15/23 74 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 44 Iridium LLC/CAP 10.875% 07/15/05 16 Iridium LLC/CAP 11.250% 07/15/05 17 Iridium LLC/CAP 13.000% 07/15/05 16 Iridium LLC/CAP 14.000% 07/15/05 16 Jordan Industries 10.375% 08/01/07 50 Kaiser Aluminum & Chem. 12.750% 02/01/03 20 Kellstorm Inds 5.750% 10/15/02 0 Key Plastics 10.250% 03/15/07 1 Kmart Corp. 6.000% 01/01/08 12 Kmart Corp. 8.990% 07/05/10 71 Kmart Corp. 9.350% 01/02/20 26 Kulicke & Soffa 0.500% 11/30/08 73 Level 3 Comm. Inc. 2.875% 07/15/10 53 Level 3 Comm. Inc. 5.250% 12/15/11 69 Level 3 Comm. Inc. 6.000% 09/15/09 53 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 64 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 48 MSX Intl. Inc. 11.375% 01/15/08 64 Natl Steel Corp. 8.375% 08/01/06 1 New World Pasta 9.250% 02/15/09 10 Northern Pacific Railway 3.000% 01/01/47 62 Northern Pacific Railway 3.200% 01/01/45 63 Northwest Airlines 7.248% 01/02/12 51 Northwest Airlines 7.360% 02/01/20 55 Northwest Airlines 7.626% 04/01/10 72 Northwest Airlines 7.691% 04/01/17 71 Northwest Airlines 7.875% 03/15/08 44 Northwest Airlines 8.070% 01/02/15 47 Northwest Airlines 8.130% 02/01/14 48 Northwest Airlines 8.700% 03/15/07 52 Northwest Airlines 8.875% 06/01/06 67 Northwest Airlines 8.970% 01/02/15 62 Northwest Airlines 9.875% 03/15/07 53 Northwest Airlines 10.000% 02/01/09 45 Northwest Airlines 10.500% 04/01/09 48 Nutritional Src. 10.125% 08/01/09 74 NWA Trust 9.360% 03/10/06 75 NWA Trust 11.300% 12/21/12 67 Oakwood Homes 7.875% 03/01/04 16 Oscient Pharm 3.500% 04/15/11 68 O'Sullivan Ind. 13.375% 10/15/09 42 Orion Network 11.250% 01/15/07 54 Outboard Marine 9.125% 04/15/17 0 Owens Corning 7.000% 03/15/09 72 Owens Corning 7.500% 05/01/05 74 Owens Corning 7.500% 08/01/18 73 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 61 Pixelworks Inc. 1.750% 05/15/24 72 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 7.250% 01/15/07 0 Polaroid Corp. 11.500% 02/15/06 0 Portola Packaging 8.250% 02/01/12 68 Primedex Health 11.500% 06/30/08 42 Primus Telecom 3.750% 09/15/10 23 Primus Telecom 5.750% 02/15/07 32 Primus Telecom 8.000% 01/15/14 53 Primus Telecom 12.750% 10/15/09 44 Psinet Inc 11.500% 11/01/08 0 Radnor Holdings 11.000% 03/15/10 68 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 67 Salton Inc. 12.250% 04/15/08 45 Scotia Pac Co. 6.550% 01/20/07 75 Scotia Pac Co. 7.110% 01/20/14 74 Silicon Graphics 6.500% 06/01/09 67 Specialty Paperb. 9.375% 10/15/06 69 Syratech Corp. 11.000% 04/15/07 26 Tekni-Plex Inc. 12.750% 06/15/10 67 Teligent Inc. 11.500% 03/01/08 1 Tops Appliance 6.500% 11/30/03 0 Tower Automotive 5.750% 05/15/24 21 Trans Mfg Oper 11.250% 05/01/09 56 Triton PCS Inc. 8.750% 11/15/11 70 Triton PCS Inc. 9.375% 02/01/11 69 Tropical SportsW 11.000% 06/15/08 40 Twin Labs Inc. 10.250% 05/15/06 14 United Air Lines 6.831% 09/01/08 40 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 23 United Air Lines 7.811% 10/01/09 62 United Air Lines 8.030% 07/01/11 36 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 12 United Air Lines 9.200% 03/22/08 45 United Air Lines 9.210% 01/21/17 53 United Air Lines 9.300% 03/22/08 35 United Air Lines 9.350% 04/07/16 51 United Air Lines 9.560% 10/19/18 41 United Air Lines 9.750% 08/15/21 13 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 12 United Air Lines 10.670% 05/01/04 14 United Air Lines 11.210% 05/01/14 15 Univ. Health Services 0.426% 06/23/20 68 Uromed Corp. 6.000% 10/15/03 0 US Air Inc. 10.250% 01/15/07 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 67 Venture Hldgs 9.500% 07/01/05 0 Venture Hldgs 11.000% 06/01/07 0 WCI Steel Inc. 10.000% 12/01/04 67 Werner Holdings 10.000% 11/15/07 69 Westpoint Steven 7.875% 06/15/08 0 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 64 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 Junior M. Pinili, 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 ***