/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050715.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, July 15, 2005, Vol. 9, No. 166 Headlines 101 POE STREET: Case Summary & 10 Largest Unsecured Creditors ACXIOM CORP: Stock Buy-Out Offer Prompts S&P's Negative Outlook ANDRIS PUKKE: FTC Says Suits Shouldn't Be Stayed Against Mr. Pukke ADVANCED ENERGY: Receives Nasdaq's Confirmation of Compliance AFFINITY MORTGAGE: Case Summary & 20 Largest Unsecured Creditors AFTERMARKET TECH: Improved Finances Prompt S&P's Positive Outlook AVISTA CORP: Avista Energy Renews $145 Million Line of Credit BALLY TOTAL: Asks Noteholders to Extend Waiver Until Oct. 31 BURGER KING: Closes $1.15 Billion Debt Refinancing CAMPBELL RADIO: Case Summary & 15 Largest Unsecured Creditors CATHOLIC CHURCH: Court Approves Portland's Six-Month Budget CATHOLIC CHURCH: Spokane's Move to Terminate Fee Order Draws Fire C-BASS: Moody's Reviews Series 1999-CB2 Certs. & May Downgrade CELERITEK INC: Sets July 22 as Final Record Date for Distributions CENTENARY COLLEGE: Low Tuition Revenue Cues Moody's to Cut Ratings CHILDREN'S TRUST: Fitch Assigns BB Rating on $33 Million Bonds COMMERCIAL MORTGAGE: Fitch Holds Low-B Ratings on 4 Cert. Classes CREDIT SUISSE: Moody's Junks Ratings on 4 Securitization Classes DIAMOND ENTERTAINMENT: Auditors Express Going Concern Doubt DOUBLECLICK INC: Completes Hellman & Friedman Merger Deal D.R. HORTON: Moody's Puts Low-B Ratings Under Review & May Upgrade ENRON CORP: Avnet Wants Court to Compel $1MM Claims Distribution EXIDE TECH: Appoints Mark Cummings as Health & Safety VP EXIDE TECH: Names George Jones Jr. as Human Resources EVP EXIDE TECH: Three More Firms File Class Actions FEDERAL-MOGUL: Asks Court to Okay KWLEM Insurance Settlement Pact FIRST CONSUMERS: S&P Ups Rating on Series 1999-A Class B Certs. FMC REAL: Fitch Assigns Low-B Ratings on Two Fixed-Rate Notes FOAMEX L.P.: Likely Default Prompts Moody's to Junk Ratings GLOBAL TEL*LINK: S&P Junks $22.5 Million Senior Secured Loan GRANT PRIDECO: Launching $175 Million Private Debt Placement GRANT PRIDECO: S&P Rates $175 Million Senior Unsec. Notes at BB GT BRANDS: Hires Bankruptcy Services as Claims & Noticing Agent GT BRANDS: Wants to Hire Getzler Henrich as Financial Advisors HANLEY WOOD: S&P Rates $352 Million Senior Secured Loans at B HIT ENTERTAINMENT: Moody's Rates $376 Million Sr. Sec. Loan at B1 IMPROVENET: Auditors Express Going Concern Doubt in Annual Report INTERSTATE BAKERIES: Court Consolidates California Profit Centers JABEZ MANUFACTURING: Case Summary & 21 Largest Unsecured Creditors JP MORGAN: Fitch Lifts Rating on $14MM Certs. Two Notches to BBB- J.P. MORGAN: S&P Lifts Low-B Rating on Class H Certificates KENILWORTH SYSTEMS: Restates Financials for 1998 through 2004 KMART CORP: Kenneth Maynard Gets Stay Lifted to Pursue Litigation KMART CORP: Wants Randall Boorman's Move to File Late Claim Denied MARTIN LUTHER: Case Summary & 20 Largest Unsecured Creditors MAYTAG CORP: Stockholders to Vote on Triton Merger on Aug. 19 METRIS COS: SEC Sends Wells Notice, Advancing Accounting Probe METRIS COS: Prepaying $49 Million 10-1/8% Senior Notes on Aug. 15 MILACRON INC: Slow Improvement Prompts S&P's Stable Outlook MIRANT CORP: Court Approves Perryville Settlement Agreement MIRANT CORP: Disclosure Statement Hearing Rescheduled to Aug. 17 MIRANT CORP: Wants Court to Okay Collateral Transfer Agreement MORGAN STANLEY: S&P Lifts Ratings on Four Certificate Classes NBTY INC: Moody's Rates $120 Million Senior Secured Loan at Ba2 NEXTEL COMMS: Launches Exchange Offers & Consent Solicitation NEXTEL COMMS: Shareholders Approve Proposed Merger with Sprint NEXTEL COMMS: Sprint Shareholders Approve Proposed Merger NORTH AMERICAN: Concludes $5 Million Refinancing with OPUS 5949 OCWEN FINANCIAL: De-Banking Prompts Moody's to Lower Ratings ORBITAL SCIENCES: Good Liquidity Prompts S&P's Positive Outlook PACIFICARE HEALTH: Fitch Puts $1.1 Billion Debt on Watch Positive PINE KNOLL: Case Summary & 3 Largest Unsecured Creditors PUBLIC SERVICE: Fitch Lifts Preferred Debt Rating 2 Notches to BB+ RISK MANAGEMENT: Wants to Hire McDonald Hopkins as Bankr. Counsel RISK MANAGEMENT: Taps Alvarez & Marsal as Restructuring Advisors ROBERT MONTGOMERY: Case Summary & 15 Largest Unsecured Creditors SAINT VINCENTS: Hires Bankruptcy Services as Claims Agent SAINT VINCENTS: Wants Dechert LLP as Special Conflicts Counsel SAINT VINCENTS: Wants to Make $2 Million Payment to Lien Claimants SALTON INC: 62.3% of Senior Noteholders Agree to Tender Notes SALTON INC: S&P Withdraws D Ratings After Interest Payment SCHULER HOMES: Moody's Puts Sr. Notes' Low-B Rating Under Review SCORE MEDIA: Equity Deficit Narrows to $5,458,000 at May 31 SECOND CHANCE: Armor Holdings to Replace Vests in Settlement SPRINGLETS BOTTLED: Voluntary Chapter 11 Case Summary STELCO INC: Plans to File CCAA Plan of Arrangement Today STELCO INC: Workers Tell CEO Pratt Not to Kowtow to Speculators TACTICA INT'L: Files Plan & Disclosure Statement in S.D.N.Y. TECK COMINCO: Improved Finances Prompts Moody's to Lift Ratings THANH HOANG: Case Summary & 6 Largest Unsecured Creditors TOWER AUTOMOTIVE: Taps Deloitte Tax Professionals as Consultants TOWER AUTOMOTIVE: Tower Product Wants to Lease Facility & Land TOWER AUTO: ZF Lemforder Wants Stay Lifted to Permit Set-Off TOYS 'R' US: S&P Cuts Rating on $13 Mil. Class A-1 Certs. to B+ US AIRWAYS: Plans to Move 89 Employees in Philly to Other Cities US AIRWAYS: Wants Confirmation Hearing Scheduled for September 15 VARTEC TELECOM: Seeks Court Approval for Fiserve Service Contract VARTEC TELECOM: Set to Make Adequate Protection Payments to UMB XYBERNAUT CORP: Potential Lender Won't Pursue DIP Financing YUKOS OIL: Chukotka Ct. Orders Yukos to Return 14.5% Sibneft Stake YUKOS OIL: Cypriot Subsidiary Sells Stake in Geoilbent Holdings * Allan Brilliant Co-Chairs Goodwin Procter's Insolvency Group * Arthur Marriott & Deborah Ruff Join LeBoeuf Lamb in London * BOOK REVIEW: Managing a Health Care Alliance ********* 101 POE STREET: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: 101 Poe Street, LLC dba IMAX LLC IV 101 East Poe Street, #31 Richmond, Virginia 23222 Bankruptcy Case No.: 05-36270 Chapter 11 Petition Date: July 13, 2005 Court: Eastern District of Virginia (Richmond) Judge: Douglas O. Tice Jr. Debtor's Counsel: Christopher A. Jones, Esq. LeClair Ryan, P.C. Riverfront Plaza, East Tower 951 East Byrd Street P.O. Box 2499 Richmond, Virginia 23218-2499 Tel: (804) 916-7104 Fax: (804) 916-7204 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bob Baird Professional Unknown 5005 Arapaho Trail Services Glen Allen, VA 23059 Tel: (804) 273-0723 City of Richmond Utilities Unknown Department of Public Utilities 900 East Broad Street Richmond, VA 23219 Tel: (804) 644-3000 Clive A. Morey Professional Unknown 3314 North Parham Road Services Richmond, VA 23294 Tel: (804) 527-1400 Dominion Virginia Power Utilities Unknown P.O. Box 26666 Richmond, VA 23261 Tel: (888) 667-3000 Hirschler Fleischer Professional Unknown Federal Reserve Bank Building Services 701 East Byrd Street Richmond, VA 23219 Tel: (804) 771-9546 IMAX Investments Professional Unknown 2405 Barton Avenue Services Richmond, VA 23222 Tel: (206) 322-1688 Internal Revenue Service Taxes Unknown 400 North 8th Street, Room 898 Richmond, VA 23240 Tel: (804) 698-5000 M. A. Motley Professional Unknown 2501 Northumberland Street Services Richmond, VA 23220 Tel: (804) 321-7363 Symone B. Scales Professional Unknown 2405 Barton Avenue Services Richmond, VA 23222 Tel: (206) 322-1688 Trible's, Inc. Trade debt Unknown 1280 Concord Avenue Richmond, VA 23228 Tel: (804) 264-8800 ACXIOM CORP: Stock Buy-Out Offer Prompts S&P's Negative Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit rating on Little Rock, Arkansas-based Acxiom Corp. At the same, the outlook was revised to negative from positive, reflecting the offer from the company's largest shareholder to buy the remainder of the company's shares for $23 per share. "At this time, Standard & Poor's does not know how the company will respond to this offer, and whether defensive measures might be used to counter these actions," said Standard & Poor's credit analyst Philip Schrank. Acxiom currently has no rated debt. The rating reflects Acxiom's good niche market position and adequate cash flow generation. Acxiom provides database marketing, data warehousing, and decision-support services. Business risk is tempered by Acxiom's expertise in managing its comprehensive consumer databases. More than one-half of its direct-marketing assignments are performed for long-term clients, and outsourcing contracts generally cover multiple years, offsetting a concentrated customer base and providing a degree of revenue predictability. However, the company is still a relatively small participant in a growing and fragmented industry that may see the entrance of several, much larger competitors. Channel partnerships and moderate acquisitions could continue, primarily to expand participation in selected vertical markets, enhance distribution capability, and provide additional operational diversity. Acxiom has implemented cost-reduction actions and increased revenues and profitability over the past year. Fiscal 2005 revenues were $1.2 billion, operating margins are approaching the mid-teens area, and the company generates good free cash flow. Following the conversion of $175 million of subordinated notes into stock, total debt to EBITDA is below 1X. ANDRIS PUKKE: FTC Says Suits Shouldn't Be Stayed Against Mr. Pukke ------------------------------------------------------------------ Andris Pukke, former president of bankrupt company Ameridebt Inc., filed for chapter 11 protection on Monday, July 11, 2005. The bankruptcy filing typically would have stayed creditors hounding Mr. Pukke and would have stayed lawsuits from progressing. However, the Federal Trade Commission believes the automatic stay doesn't apply to Mr. Pukke's case. Jeane M. Crouse, Esq., the FTC's counsel, said in published reports that ". . . bankruptcy wasn't formulated as a haven for wrongdoers." The FTC sued Ameridebt seeking to recover $172 million in fees that consumers paid to the company over the years. To recall, the Permanent Subcommittee on Investigations of the United States Senate Committee on Governmental Affairs discovered that Ameridebt was formed by Pamela Pukke, Mr. Andris' wife. Andris was made president of the company for two years. He then formed DebtWorks, Inc., to handle debt management programs for Ameridebt. The FTC claims that Mr. Pukke and his wife launched Ameridebt to defraud consumers through a debt management scheme which charged high but poorly disclosed fees. At the trade agency's behest, a receiver was appointed in April this year to control and track down assets that the FTC believes Mr. Pukke channeled to offshore accounts. According to Reuters, Mr. Pukke filed for chapter 11 to regain control of his assets. "The receivership probably will be displaced by the bankruptcy filing. So the receiver that previously had control of his property will probably surrender control to him and he will now be a fiduciary on behalf of his creditors," Lynn M. LoPucki, a UCLA law professor, said to Reuters. "Some call it the fox guarding the chicken coop." Mark Taylor, Ameridebt's chapter 11 trustee, told Reuters that Mr. Pukke will likely file a motion to remove the receiver. About Ameridebt Headquartered in Germantown, Maryland, AmeriDebt, Inc. -- http://ameridebt.org/-- is a credit counseling company. The Company filed for chapter 11 protection on June 5, 2004 (Bankr. Md. Case No. 04-23649). Stephen W. Nichols, Esq., at Deckelbaum Ogens & Raftery, Chartered, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $8,387,748 in total assets and $12,362,695 in total debts. Headquartered in Newport Beach, California, Andris Pukke is the founder of Ameridebt Inc. He filed for chapter 11 protection on July 11, 2005 (Bankr. C.D. Calif. Case No. 05-14811). William N. Lobel, Esq., at Irell & Manella LLP represents the Debtor. When he filed for protection from his creditors, Mr. Pukke listed $10 million to $50 million in assets and debts. ADVANCED ENERGY: Receives Nasdaq's Confirmation of Compliance ------------------------------------------------------------- Advanced Energy Industries, Inc. (Nasdaq: AEIS) received notification from the Listing Qualifications Department of The Nasdaq Stock Market that the Company's common stock will be listed for trading on Nasdaq under its ticker symbol "AEIS" as of the open of business on July 14, 2005. The Company previously disclosed that it has received a letter from the Listing Qualifications Department of The Nasdaq Stock Market that indicated Advanced Energy was not in compliance with the filing requirement for continued listing set forth in Nasdaq Marketplace Rule 4310(c)(14) due to the lack of an attestation on internal control from its independent auditor under Section 404 of the Sarbanes-Oxley Act. The Company filed Form 10-K/A on July 11, 2005 to address this issue. As reported in the Troubled Company Reporter on May 11, 2005, Advanced Energy identified two material weaknesses in its internal control over financial reporting as of Dec. 31, 2004, which are described in the Company's annual report: (i) a lack of appropriate segregation of duties defined within our enterprise resource planning system; and (ii) the combination of a lack of information system integration and uniformity regarding the Company's Japan operations and a lack of sufficient human resources for proper segregation of duties and oversight in Japan. Nasdaq Marketplace Rule 4310(c)(14) requires Advanced Energy to file with The Nasdaq Stock Market copies of all reports and other documents filed or required to be filed with the Securities and Exchange Commission (SEC) on or before the date they are filed with the SEC. The Nasdaq letter contends that Advanced Energy has not complied with this requirement, because Advanced Energy's Annual Report on Form 10-K for the year ended December 31, 2004 did not contain an opinion from Advanced Energy's independent auditor relating to management's assessment of internal control over financial reporting. The report from Advanced Energy's independent auditor relating to internal control over financial reporting, which is included in Advanced Energy's 2004 Form 10-K, states that the auditor is not able to express an opinion on management's assessment or on the effectiveness of Advanced Energy's internal control over financial reporting. Advanced Energy believes that the inclusion of the independent auditor's report in the 2004 Form 10-K constitutes compliance with Rule 4310(c)(14) and intends to present its arguments at the hearing before the Nasdaq Listing Qualifications Panel. The Company is also working with its independent auditors to resolve this issue. There can be no assurance that the Nasdaq Listing Qualifications Panel will determine that Advanced Energy is in compliance with Rule 4310(c)(14) or otherwise grant Advanced Energy's request for continued listing. Advanced Energy Industries, Inc. -- http://www.advanced- energy.com/ -- is a global leader in the development and support of technologies critical to high-technology manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, compact discs, digital video discs, architectural glass, and other advanced product applications. AFFINITY MORTGAGE: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Affinity Mortgage and Financial Services Inc. 108 North Spring Street Bellefonte, Pennsylvania 16823 Bankruptcy Case No.: 05-04603 Type of Business: The Debtor is a family-owned financing company that provides new home purchase financing, refinancing of debt, debt consolidation loans and home equity lines of credit. See http://eaffinitymortgage.com/ Chapter 11 Petition Date: July 12, 2005 Court: Middle District of Pennsylvania (Harrisburg) Judge: Mary D. France Debtor's Counsel: Robert L. Knupp, Esq. Knupp Kodak and Imblum PC 407 North Front Street P.O. Box 11848 Harrisburg, Pennsylvania 17108 Tel: (717) 238-7151 Fax: (717) 238-5258 Total Assets: $0 Total Debts: $2,855,082 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Omega Bank $891,386 P.O. Box 619 State College, PA 16804-0619 Internal Revenue Service $839,305 Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222 Commonwealth of Pennsylvania $299,707 Department of Revenue Bureau of Compliance Harrisburg, PA 17120 The Water Guy $123,877 Shinn Spring Water Co. Inc. 2 East Pointe Drive Birdsboro, PA 19508 Cardinal Financial Co. $102,176 Howland Hess Guinan Torpey 2444 Huntingdon Pike Huntingdon, PA 19006 Liberty Property Holdings $62,014 P.O. Box 1806 Lancaster, PA 17608 M&T Bank $57,797 One M & T Plaza Buffalo, NY 14240 Northwest Savings Bank $52,000 Second & Liberty Street Warren, PA 16365 BCCZ $45,729 2 Gateway Center Pittsburgh, PA 15222 Developers 1000 $27,386 P.O. Box 1806 Lancaster, PA 17608 WTAJ-TV 10 $20,000 5000 6th Avenue Altoona, PA 16602 CBC Companies $18,612 520 East Main Street Carnegie, PA 15106-2051 De Lage Landen Leasing $15,723 1111 Old Eagle School Road Wayne, PA 19087 Health America $15,633 R M S 512 7th Avenue, 11th Floor New York, NY 10018 Tek Tron Solutions $15,000 1575 Mcfarland Road Pittsburgh, PA 15216 Verizon $13,978 P.O. Box 28000 Lehigh Valley, PA 18002-8000 Myers Appraisals $13,300 907 Scalp Avenue, Suite 112 Johnstown, PA 15904 Deb Differ D&D App $13,000 241 Walker Road Lahdenberg, PA 19350 Prudential Realty $12,032 3700 South Water Street, Suite 100 Pittsburgh, PA 15203-2365 Richard A. Fornicola, Treasurer $12,007 420 Holmes Street Bellefonte, PA 16823 AFTERMARKET TECH: Improved Finances Prompt S&P's Positive Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Aftermarket Technology Corp. to positive from stable. ATC is a supplier of remanufactured transmissions and engines to automotive original equipment manufacturers. "The outlook revision reflects the company's potential for an upgrade within two years if its fairly new management team can demonstrate sustained improved credit measures and a disciplined approach to its potential acquisitions," said Standard & Poor's credit analyst Nancy C. Messer. Standard & Poor's also affirmed its 'BB-' corporate credit rating and its 'BB-' senior secured debt rating on ATC. The company's total balance sheet debt outstanding was $107 million at March 31, 2005. The ratings on Downers Grove, Illinois-based ATC reflect: * the company's aggressive financial risk profile and weak business profile, characterized by its exposure to highly competitive end markets, * its relatively small scope and scale, and * its customer concentration. Having significantly deleveraged, ATC is now focused on revenue expansion through a combination of internal and external initiatives under the leadership of the new senior management team, installed in early 2004. The strategy is driven by investment in business development activities and by opportunistic, possibly debt-financed acquisitions. The positive outlook reflects: * ATC's prospects for further improvements in its financial profile due to restructuring initiatives, * consistent free cash flow generation, and * debt reduction despite the company's growth focus. Still, the company's ratings are constrained by its weak business profile. ATC's revenues are derived from a small number of key customers, and the company's businesses have a small scope and scale. These weaknesses were evident in 2003 when ATC's two primary business segments were simultaneously afflicted by weak demand that drove EBITDA down nearly 40% year over year. Although ATC's EBITDA margins have likely declined permanently from pre-2003 levels because of competition, we expect the company to continue generating free cash flow. New business wins following the implementation of ATC's growth strategy should enhance the company's product and customer diversity and improve revenue and EBITDA stability over time. Any modest upgrade would depend on ATC's ability to sustain its solid credit measures in the year or two ahead as this strategy is executed. AVISTA CORP: Avista Energy Renews $145 Million Line of Credit ------------------------------------------------------------- Avista Energy, Avista Corp.'s (NYSE: AVA) electricity and natural gas marketing, trading and resource management subsidiary, renewed its committed line of credit, extending the expiration date to July 12, 2007, while increasing the aggregate amount from $110 million to $145 million. "We are very pleased to renew our credit facility for an increased amount and a longer committed term of two years," said Dennis Vermillion, president of Avista Energy. "We believe these enhancements demonstrate recognition by our banks that Avista Energy continues to be a strong, focused performer in Western energy markets. The renewed credit facility will provide continued financial flexibility going forward and reinforce our strong relationship with our banking partners." Avista Energy -- http://www.avistaenergy.com/-- is an electricity and natural gas marketing, trading and resource management business, applying its energy marketing knowledge and expertise to physical assets in Western regional markets. Avista Energy controls or manages hydroelectric and natural gas-fired resources or assets owned by other companies in the West and also manages natural gas assets -- both pipelines and storage. Avista Corp. -- http://www.avistacorp.com/-- is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. Avista Utilities is a company operating division that provides service to 330,000 electric and 285,000 natural gas customers in three western states. Avista's non-regulated subsidiaries include Avista Advantage and Avista Energy. Avista Corp.'s stock is traded under the ticker symbol "AVA." * * * As reported in the Troubled Company Reporter on Feb. 1, 2005, Moody's Investors Service upgraded the ratings of Avista Corporation's series C medium-term notes to Baa3 from Ba1. The rating action solely reflects the granting of first mortgage bond security to the notes, which had previously been unsecured. Avista Corp. provided first mortgage bond security to the series C MTNs in order to suspend negative covenants that had limited its ability to issue additional secured debt. Avista's other ratings are unaffected. Moody's said the rating outlook for Avista remains stable. BALLY TOTAL: Asks Noteholders to Extend Waiver Until Oct. 31 ------------------------------------------------------------ Bally Total Fitness Holding Corporation (NYSE: BFT) intends to seek a 90-day extension of the existing waivers from its public noteholders until Oct. 31, 2005. The original waivers, which relate to the Company's delay in providing financial statements as required by indentures governing its outstanding notes, will expire on July 31, 2005. "During the past nine months, we have made substantial progress towards completing this audit despite having to replace several key finance executives, hiring a new CFO, Treasurer and Controller and dealing with many complex accounting issues, several of which were unearthed during the process," Paul Toback, Chairman and Chief Executive Officer said. "Now I believe that barring any unforeseen circumstances, we are close to completing this long process despite needing a little more time to do so." Bally will not be able to provide its audited financial statements for 2002-2004 by July 31, 2005, and will seek an extension for up to 90 days of the waivers of reporting covenant defaults from holders of its 10-1/2% Senior Notes due 2011 and 9-7/8% Senior Subordinated Notes due 2007 under the indentures governing the notes. These defaults result from the Company's previously announced failure to timely provide its financial statements for the second and third quarters and full year 2004 and the first quarter of 2005 with the Securities and Exchange Commission and deliver such financial statements to the trustee and holders of notes pursuant to the indentures. If the waivers are not extended, the Company will be in default under its indentures after July 31, 2005. At any time thereafter, the obligations of the Company under its public notes could be accelerated after notice and the passage of cure periods under the indentures. Moreover, the Company's credit facility provides for a cross-default 10 days after delivery of such notice under either indenture, which would give the Company's lenders under the credit facility the right to accelerate the Company's obligations thereunder. New Auditors As a result of the previously disclosed investigation conducted by the Company's Audit Committee, which found multiple errors in the Company's past accounting, the Company decided to no longer rely on Ernst & Young LLP's reports with respect to prior year audits and engaged KPMG LLP to audit the Company's financial statements for 2002-2004. Bally's management has devoted a significant amount of their efforts and Company resources towards completing the multi-year audit. A key part of this effort has been bringing in new financial and accounting leadership. In recent months, the Company has appointed a new Chief Financial Officer, Treasurer, Controller and Assistant Controller. Given these parties' limited tenure with Bally, the involvement of a new auditing firm and the complexity surrounding the accounting issues involved, including, among others, revenue recognition and the valuation of goodwill and other intangible assets relating to prior acquisitions, Bally does not expect to complete such audits by July 31, 2005. Resolution of all remaining audit issues is expected to be completed in order to make the necessary filings with the Securities and Exchange Commission, the trustee and the noteholders no later than Oct. 31, 2005. The Company also expects a delay in filing its 10-Q report for the quarter ended June 30, 2005, which would also be covered by the waiver extension. As of July 12, 2005, the Company had no borrowings outstanding but has issued approximately $9.8 million of letters of credit under the $100 million revolving credit portion of its $275 million credit facility. Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R) , Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Feb. 15, 2005, Standard & Poor's Rating Services lowered its ratings on Bally Total Fitness Holding Corporation, including lowering the corporate credit rating to 'CCC+' from 'B-'. At the same time, Standard & Poor's changed its outlook on the ratings to negative from developing. Total debt outstanding at Sept. 30, 2004, was $747.7 million. "The rating actions are based on the potential for further delays in the filing of financial statements and on related uncertainties, in light of Bally's Audit Committee's recent findings," said Standard & Poor's credit analyst Andy Liu. BURGER KING: Closes $1.15 Billion Debt Refinancing -------------------------------------------------- Burger King Corporation disclosed the successful closing of the refinancing of its debt, effective July 13, 2005. The $1.15 billion transaction will reduce Burger King's total debt and annual interest expense and will create the Company's first stand- alone bank group since the Company was last independent in 1967. "This transition marks an important step in Burger King's history," said Greg Brenneman, chairman and CEO of Burger King Corporation. "The refinancing will give BKC the flexibility and resources it needs to fund our future growth. We are especially pleased by the strong market response to our offering." J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. led the financing as co-lead arrangers and joint bookrunners. The Company's credit facilities were previously guaranteed by Burger King Corporation's former parent company, the UK-based Diageo plc. The BURGER KING(R) system operates more than 11,000 restaurants in more than 60 countries and territories worldwide. Approximately 90 percent of BURGER KING restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades. Burger King Holdings Inc., the parent Company, is private and independently owned by an equity sponsor group comprised of Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners. Burger King is available on the Web at http://www.burgerking.com/ * * * As reported in the Troubled Company Reporter on June 21, 2005, Moody's Investors Service assigned a rating of Ba2 to the proposed $1.15 billion bank loan of Burger King Corporation. Together with cash on hand, proceeds from the new bank loan will refinance all debt incurred in the December 2002 leveraged buyout. Limiting the ratings are Moody's belief that Burger King's financial flexibility will remain weak for several years relative to higher rated restaurant peers and the challenges in steadily improving performance in the competitive hamburger QSR segment. However, the resilience of the Burger King brand and Moody's expectation that the company will continue to improve operating efficiency support the rating placement. The rating outlook is stable. This is the first time that Moody's has rated Burger King. CAMPBELL RADIO: Case Summary & 15 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Campbell Radio Company, LLC c/o Percy Squire 65 East State Street, Suite 200 Columbus, Ohio 43215 Bankruptcy Case No.: 05-62106 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Esq. Communications, Inc. 05-62109 Stop 26-Riverbend, Inc. 05-62112 Stop 26-Riverbend Licenses, LLC 05-62113 Type of Business: The Debtors own and operate three radio stations: WASN 1330 AM, WGFT 1500 AM, and WRBP 101.9 FM. Chapter 11 Petition Date: July 12, 2005 Court: Southern District of Ohio (Columbus) Judge: Barbara J. Sellers Debtors' Counsel: Grady L. Pettigrew, Esq. Cox Stein & Pettigrew Co LPA 115 West Main, 4th floor Columbus, Ohio 43215 Tel: (614) 224-1113 Fax: (614) 228-0701 Total Assets Total Debts ------------ ----------- Campbell Radio Company, LLC $0 $20,821,174 Esq. Communications, Inc. $0 $20,971,174 Stop 26-Riverbend, Inc. $0 $21,527,874 Stop 26-Riverbend Licenses, LLC $0 $20,010,149 Consolidated List of 15 Largest Unsecured Creditors of: -- Campbell Radio Company, LLC -- Esq. Communications, Inc. Entity Claim Amount ------ ------------ D.B. Zwirn Special Opportunities Fund $14,274,667 9 West 57th Street, 27th Floor New York, NY 10019 Liberty Media Corporation $1,500,000 12300 Liberty Boulevard Englewood, CO 80112 Huntington National Bank $1,000,000 P.O. Box 1558 #20325 Columbus, OH 43271 Harold E. Kelley $750,000 616 15th Street Ashland, KY 41101 Broadcast Music Inc. $677,513 320 West 57th Street New York, NY 10019 Bricker & Eckler $550,000 100 South Third Street Columbus, OH 43215 Fahey Backing Company $450,000 127 North Main Street Marion, OH 43202 Allied Capital $360,482 c/o Business Loan Center 645 Madison Avenue New York, NY Adrien N. Roe, Esq. $300,000 Two Gateway Center, 17th Floor Pittsburg, PA 15222 William Curack $250,000 74 South Fourth Street Columbus, OH 43205 Broadcast Capital $200,000 1001 Connecticut Avenue, Suite 705 Washington DC 20036 Florence Coleman $150,000 2735 Nantucket Road Xenia, OH 45385 City of Youngstown Ohio $150,000 26 South Thelps Street Youngstown, OH 44503 Capital Crossing Bank $108,512 101 Summer Street Boston, MA 02110 Katten Muchin Rosenman $100,000 1025 Thomas Jefferson Street, N.W., Suite 700 Washington DC 20007 CATHOLIC CHURCH: Court Approves Portland's Six-Month Budget ----------------------------------------------------------- As previously reported in the Troubled Company Reporter on November 19, 2004, The Archdiocese of Portland in Oregon and the Official Committee of Tort Claimants appointed in the diocese's chapter 11 case want to implement a procedure that will allow the Archdiocese, the parishes, and the schools to continue to utilize the funds and investments in various Accounts without: -- the necessity of the Court determining any of the disputed legal issues at this time; and -- without waiver of any rights by Portland, the Committee, or any party-in-interest to pursue determination of the Disputed Legal Issues in the future. Portland requires the continued use of what it deems to be its funds in the Accounts for its ordinary day-to-day operations. The parishes and schools require the use of funds in the Accounts for day-to-day operations -- including summer salaries, tuition assistance, scholarships, and textbooks, and for repairs and renovations to real and personal property. In addition, the funds in the ALIP are used to fund certain building projects at parishes and schools and other expenditures. * * * The Archdiocese of Portland in Oregon has prepared a budget, which sets forth the estimated cash to be used for day-to-day operations, and lists, which sets forth anticipated expenditures from the Archdiocesan Loan and Investment Program and Catholic Education Endowment Fund for the period from July 1, 2005, through December 31, 2005. A copy of the budget and lists is available at no charge at: http://bankrupt.com/misc/portland_3rd_operating_budget.pdf To preserve the viability of Portland, the parishes and the schools, to allow them to continue to operate in the ordinary course, and to provide adequate oversight over Portland's use and administration of the funds and investments in the Accounts, Portland and the Official Committee of Tort Claimants in Portland's case have agreed that Portland may continue to utilize the funds and investments in the Accounts and in accordance with the Operating budget, the ALIP budget, and the CEEF. Portland will use the funds in the Accounts only in the amounts and for the uses set forth in the Operating budget, the ALIP Budget, and the CEEF Budget. The parties agree that: (a) Portland may use the funds and investments in the Accounts only in the amounts and for the purposes described in the Operating Budget, the ALIP Budget, and the CEEF Budget through and including December 31, 2005. The Budget Period may be extended by further stipulation and Court order. So long as Portland's total Operating Budget expenditures do not exceed the aggregate amount, Portland's Operating Budget expenditures for any line item may exceed the amount budgeted for that line item by a factor of no more than 20% of the budgeted amount. (b) Portland will be authorized to make disbursements of ALIP and CEEF funds not provided in the ALIP Budget and CEEF Budget pursuant to these procedures: (1) Upon a request for a disbursement not provided for in the ALIP or CEEF Budget for an aggregate of $40,000 or less, within a six-month period, for repairs, maintenance, or other normal operating expenses, but excluding capital expenditures and other out of the ordinary transactions, and if the request complies with the established guidelines and for making for making the disbursement, Portland will be authorized to make the disbursement without further notice or Court order. (2) Upon a request for a disbursement not provided for in the ALIP Budget or CEEF Budget that is either (i) for a capital expenditure, or (ii) in excess of an aggregate of $40,000, within a six-month period, and if the request complies with the established guidelines and procedures for making the disbursement, then before making the disbursement, Portland will provide the Portland Tort Committee with 10 business days' prior written notice setting forth the name of the participant, the amount of the request, and a description of the purpose for the requested disbursement. (3) If no written objection is received from the Committee within the 10-day period, Portland will be authorized to make the requested disbursement without further Court notice or order. If the Committee objects to the disbursement, it will, within the 10-day period, provide Portland with written notice of its objection. (4) Upon receipt of the objection, Portland will not make the disbursement without first obtaining a written withdrawal from the Committee of its objection, or pursuant to a Court order after 20 days' notice and an opportunity for hearing to the participant requesting the disbursement, the Committee, the 20 largest unsecured trade creditors, the U.S. Trustee, and all parties requesting special notice. Judge Perris approved the stipulation. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Spokane's Move to Terminate Fee Order Draws Fire ----------------------------------------------------------------- As previously reported, the Association of Parishes in the Diocese of Spokane's Chapter 11 case asked the U.S. Bankruptcy Court for the Eastern District of Washington to terminate the order establishing interim fee application and expense reimbursement procedures, or at least to substantially modify the Order in a manner that the Diocese can represent to the Court that there is not a substantial negative impact on the Diocese's liquidity or cash flow position. John D. Munding, Esq., at Crumb & Munding, P.S., in Spokane, Washington, explains that due to the large amount of fees incurred by all professionals who are entitled to be paid by the estate, the payments to counsel under the Interim Fee Application Procedures Order directly impairs Spokane's liquidity and cash position. Objections (1) Tort Committee On behalf of the Tort Claimants Committee, Joseph E. Shickich, Jr., Esq., at Riddell Williams P.S., in Seattle, Washington, informs the U.S. Bankruptcy Court for the Eastern District of Washington that the Parishes' request is a tactical response to the Tort Committee's request to restrict use of estate property. The Association of Parishes defensively seeks to restrict use of estate funds for the payment of all counsel. The Court should not accept this proposal, Mr. Shickich asserts. Rather, the Court should require the Diocese and the Parishes to directly confront the issue of whether the Diocese, in its fiduciary capacity for the creditors, should be spending estate funds in an effort to minimize the estate. Mr. Shickich points out that the Committees have already accommodated the Parishes and have not forced the issue of whether Parish income must be used to pay Estate expenses. As a result, the payment of counsel fees under the Interim Fee Procedures Order does not impact the Parishes' operations. Mr. Shickich reminds Judge Williams that the Diocese has represented that, as of June 29, 2005, all payment requests under the Interim Fee Procedures Order through April 2005 will have been paid. Mr. Shickich notes that by the time the Termination Motion is heard, some of the requested amounts for May and June will have been paid and the effect of the Termination Motion will be to restrict the payment of funds to professionals going forward as they work on the bar date notice and the claims process, exclusivity and plan issues and, negotiate the resolution of the case. It is reckless to restrict the payment of professional fees in connection with those services, Mr. Shickich contends. Dillon E. Jackson, Esq., at Foster Pepper & Shefelman PLLC, on behalf of a group of tort litigants and tort claimants holding claims for clergy sexual abuse, agrees with the Tort Committee's assertion. Mr. Jackson says the Diocese's position on estate property is "urged against the interests of the creditors and the estate in this case, and at the substantial and unjustified expense to the estate." "This should not be permitted or condoned," Mr. Jackson says. (2) Official Committee of Tort Litigants The Official Committee of Tort Litigants contends that the Termination Motion does not address the Diocese's ultimate liquidity problem. The professionals' allowed administrative claims must be paid by the effective date of a plan. However, the Diocese does not have a current business plan that addresses this problem. "The Motion proposes an ostrich-like response: it defers the problem without proposing a solution," John W. Campbell, Esq., at Esposito, George & Campbell, PLLC, in Spokane, Washington, tells Judge Williams. The Termination Motion also lacks any factual support for the proposition that the Diocese lacks the financial resources to pay the claims. Mr. Campbell relates that no substantial response has been made to his request dated May 20, 2005, seeking financial information to support the Parishes' Motion. Mr. Campbell maintains that the administrative expenses in the Chapter 11 case is the result of the Diocese's failure to settle its state-court litigation and its scorched earth policy of failing to propose any settlement proposals to date. If the Diocese underestimated the financial impact of two committees, it should have moved towards a more efficient reorganization strategy. While the Diocese may contend that much of the expenses are attributable to inter-committee conflicts, the Tort Committee believes that this is simply not the case. If the Parishes think that the case has too many professionals, it should have objected to some of the employment applications. Instead, the Parishes resort to strong-arm tactics on the creditors' lawyers who have done more than anyone else to tee up the real issues in the case for the Court to resolve, or for the parties to settle. The Tort Committee believes that the timing the Termination Motion in the middle of the Tort Committee's summary judgment litigation was not without an eye to obtain a tactical advantage by attorneys who are using Parish resources to fund their litigation efforts without any judicial oversight. "It is nothing more then a motion for reconsideration of the [Interim Fee Procedures Order]," Mr. Campbell says. The request fails to meet the standards for reconsideration and does not set forth any reason for the termination or modification of the Interim Fee Procedures Order. Gayle E. Bush, the Legal Representative for Future Tort Claimants and Minors, supports the arguments presented by Tort Litigants and the Tort Committee. Spokane Wants Order Modified Shaun M. Cross, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, in Spokane, Washington, tells Judge Williams that the Diocese of Spokane does not object to a reasonable modification of the Interim Fee Procedures Order. The Diocese agrees that the circumstances of the Chapter 11 case have changed from the time it sought for an establishment of an interim fee procedure. According to Mr. Cross, the Diocese did not foresee the appointment of two committees of unsecured creditors and the increased legal expenses associated with two committees. Spokane proposes that the counsel for the Committees, the Parishes, and the Diocese be given a reasonable period of time to work out a stipulated modification to the Interim Fee Procedures Order. In the event a modification cannot be settled among them, the Diocese asks the to Court resolve the matter by telephonic hearing in late July or early August 2005. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) C-BASS: Moody's Reviews Series 1999-CB2 Certs. & May Downgrade -------------------------------------------------------------- Moody's Investors Service placed two tranches issued by C-Bass Mortgage Loan Asset-Backed Certificates, 1999-CB2 on review for possible upgrade and four tranches collectively from C-Bass Mortgage Loan Asset-Backed Certificates, 2002-CB1 and C-Bass 2002- CB2 Trust on review for possible downgrade. The underlying collateral in each deal consists of subprime residential mortgage loans. The series 1999-CB2 certificates are being place on review for possible upgrade in light of of strong performance of the mortgage pool, including lower than anticipated cumulative loss figures and significant amounts of excess spread. The certificates are being placed on review for possible downgrade based upon the poorer than anticipated performance of the underlying mortgage pools including, but not limited to, a build up in severely delinquent loans. Complete rating actions are as follows: Issuer: C-Bass Mortgage Loan Asset-Backed Certificates, 1999-CB2 Class 2M-1, Currently: Aa2; on review for possible upgrade. Class 2M-2, Currently: A2; on review for possible upgrade. Issuer: C-Bass Mortgage Loan Asset-Backed Certificates, 2002-CB1 Class B-1, Currently: Baa1; on review for possible downgrade. Class B-2, Currently: Baa3; on review for possible downgrade. Issuer: C-Bass 2002-CB2 Trust Class B-1, Currently: Baa2; on review for possible downgrade. Class B-2, Currently: Ba1; on review for possible downgrade. CELERITEK INC: Sets July 22 as Final Record Date for Distributions ------------------------------------------------------------------ Celeritek, Inc.'s (Nasdaq: CLTK) common stock has been delisted from the Nasdaq Stock Market effective July 11, 2005. Celeritek will close its stock transfer books and discontinue recording transfers of its common stock at the close of business on July 22, 2005. Thereafter, certificates representing the common stock will not be assignable or transferable on the books of the company. Any future distributions made by Celeritek will be made solely to the stockholders of record at the final record date, which is the close of business on July 22, 2005. As previously announced, Celeritek completed the sale of substantially all of its assets to Mimix Broadband, Inc., on June 3, 2005, for $2.8 million in cash, subject to a working capital purchase price adjustment, plus the assumption by Mimix of approximately $6 million in liabilities. Based on Celeritek's working capital at closing, the $2.8 million cash purchase price was adjusted downward by $300,000, for a final cash purchase price of $2.5 million. $300,000 of the $2.5 million cash purchase price is being held in escrow until Dec. 3, 2005, to satisfy any indemnification claims that may arise. Liquidation Plan As previously announced, Celeritek's adopted a plan of dissolution and complete liquidation on June 3, 2005. The key features of the plan of dissolution, as further described in Celeritek's definitive proxy statement for the shareholders meeting held on June 3, 2005, are to: (1) cease business operations, except as may be necessary to wind up the company's business affairs; (2) pay or make adequate provision for all of liabilities; and (3) distribute any remaining assets to shareholders in one or more liquidating distributions. Celeritek will also be changing its corporate name to "CTK Windup Corporation." On June 24, 2005, Celeritek made an initial liquidating distribution to its holders of common stock of $0.62 per share, or approximately $8.3 million in the aggregate, which was paid to shareholders of record on June 10, 2005. Celeritek cannot at this time predict the timing or amount of future liquidating distributions. Any amounts to be distributed to shareholders may be less than the price or prices at which Celeritek's common stock has recently traded or may trade in the future. Mimix Broadband Inc. supplies highly integrated and linear monolithic microwave integrated circuits (MMICs) for microwave and millimeter-wave wireless applications. The addition of Celeritek gives Mimix an immediate platform to expand its product portfolio and serve new, complementary markets. This combined company offers a more diversified product line to serve the top tier telecom, satellite and defense companies. CENTENARY COLLEGE: Low Tuition Revenue Cues Moody's to Cut Ratings ------------------------------------------------------------------ Moody's Investors Service has downgraded Centenary College's long- term debt rating to Ba1 from Baa2 and has assigned a negative outlook to the rating. The rating action affects the College's Series 1999 Revenue and Refunding Bonds issued through the Louisiana Public Facilities Authority, with $18 million outstanding. The rating downgrade is driven by severely imbalanced operating performance, in large part due to Centenary's challenging market position, which has led to stagnant tuition revenue. The negative outlook reflects our concerns that the College will continue to face significant revenue pressures, particularly on tuition, leading to ongoing operational challenges and further depletion of reserves. Legal Security: The Series 1999 bonds are unsecured general obligations of the College. Interest Rate Derivatives: None Strengths * Sound balance sheet position, with expendable resources covering debt and operations by 1.38 time and 0.95 times, respectively. * Ability to borrow up to $17.2 million of certain permanent endowments to provide the College additional liquidity in the event of an acceleration of the Series 1999 bonds. * Limited additional debt plans. Challenges * Market and recruiting challenges given a highly competitive environment, with high tuition discounting (60.9% for FY 2004) and low net tuition per student ($6,156 in FY 2004, up only 1% from the prior year due to the decision to not increase tuition for the year) leading to operational challenges. * Deep operating deficits that are expected to continue into the foreseeable future, with an average operating loss of 43.4% for FY 2004 (as calculated by Moody's), and negative operating cash flow. * Endowment spending of 8.0% for FY 2004 that is well above industry norms and contributes to Moody's measure of operating deficits, with the spend rate expected to remain high or, at best, only modestly declining due to operating demands. * Small enrollment size of 969 students, although enrollment did grow in Fall 2004 as the College implemented resident life programs to help in recruiting new students and improving retention of enrolled students. Recent Developments/Results Moody's believes that Centenary College will remain challenged by a highly competitive higher education market in Louisiana, competing as a small liberal arts college with other private colleges and universities as well as public universities in the State. In fall 2004 the College experienced increases in applications and enrollment, with 969 full-time equivalent students up from 914 the prior year. However, the increased enrollment came at a cost, with a total tuition discount of 60.9% for Fall 2004 - among the highest of Moody's rated private colleges and universities. As a result, net tuition per student is low - $6,156 per student for fiscal year 2004 and grew only 1% from the prior year. For Fall 2005, the College is currently projecting lower than anticipated freshmen enrollment, falling short of budgeted enrollment by 30-50 students, although the tuition discount rate is expected to be lower than budgeted. Centenary is undertaking a thorough review, with the assistance of national consultants, of its recruiting, financial aid and pricing strategies, as well as its marketing strategies and communication as a whole. It has implemented various resident life programs that have helped improve retention, which should have a positive impact on enrollment. However, with its competitive profile, Moody's believes the College will be challenged to achieve significant changes in the near-term. Moody's expects that Centenary's operating performance will remain negative for the next several years at least. In recent years, Centenary has relied heavily on above-average endowment draws to help bridge the budget gap. After normalizing investment and endowment spending to 5% of the prior three-year average value of cash and investments, as well as adjusting to include only those net assets released from restrictions applicable to operations, Moody's has calculated a three-year average operating loss of 43% for the period FY 2002 to 2004. The College has reduced its operating expense growth, with a 2% decrease in FY 2004, resulting from various expense initiatives. Nonetheless, with the need to invest in its programs, Moody's believes Centenary's longer-term success in balancing its future operations will be driven by its ability to grow student charges and build unrestricted philanthropy while maintaining careful oversight of expenses. Centenary's balance sheet remains its primary credit strength and provides the College with some resources to work through and address its strategic and operational challenges. Total finance resources stood at $106 million at FY 2004, up from the $100 million level for the prior year but still down substantially from a peak of $122 million in FY 2000 due to investment volatility over this period as well as high levels of endowment spending. Unrealized investment losses in FY 2002 and FY 2003 triggered technical defaults on the Series 1999 bonds due to the debt service coverage calculations, although the College made full and timely payment on the bonds. The College met the calculation for FY 2004 and anticipates doing so for the current fiscal year, FY 2005. The College is authorized to borrow from certain permanent endowments up to $17.2 million, if necessary, to make payment on the Series 1999 bonds. This ability to borrow from the endowment provides an additional source of liquidity should the Series 1999 Bonds be accelerated. However, Moody's notes that access to those funds is not available to the Trustee of the Series 1999 bonds, but is provided only to the College. Expendable resource coverage of debt and operations for FY 2004 were sound at 1.38 times and 0.95 times, respectively. Although Centenary reports positive investment performance for FY 2005 to date, we expect financial resources to show little if any net increase as the College funds its operating deficit. The College is currently conducting an $11 million fundraising campaign for annual and endowed scholarships, but we don't expect that to significantly add to resources in the near-term. The College has no debt plans for the next few years. However, Centenary is facing capacity constraints in its student housing facilities and is considering issuing additional debt within the next two to three years to add to its student housing capacity if enrollment growth is attained. Outlook The negative rating outlook for Centenary College reflects Moody's belief that it will face continued challenges in recruiting students and growing net tuition revenue. Although the College has taken steps to control expenses, longer term financial stability will need to be achieved through top-line revenue growth from tuition and philanthropy. If the College is unable to address revenue and expense pressures to improve operating performance, this could place further pressure on the rating, particularly if the College experiences a period of poor investment performance that further reduces unrestricted liquidity. What could change the rating - UP * Strengthening of student demand and improvement in financial aid and pricing strategies, resulting in a favorable impact on net tuition revenue; * improvement in unrestricted liquidity relative to debt and operations, and * a return to at least balanced operating performance, with endowment draws approximating those of peer institutions. What could change the rating - DOWN * Deterioration in liquidity; * continuance or worsening of operating deficits, * further weakening of student market position, and * additional borrowing. Key Indicators (FY 2004 financial statements, Fall 2004 enrollment) Total Enrollment: 969 full-time equivalent students Undergraduate Selectivity: 69.7% of applicants accepted Undergraduate Matriculation: 34.9% of accepted applicants enrolled Total Financial Resources: $106 million Total Long-Term Obligations: $18.0 million Expendable Resources to Debt: 1.38 times Expendable Resources to Operations: 0.95 times Three Year Average Operating Margin: -43.4% CHILDREN'S TRUST: Fitch Assigns BB Rating on $33 Million Bonds -------------------------------------------------------------- Fitch Ratings assigns these ratings to The Children's Trust, tobacco settlement asset-backed bonds, series 2005: Ratings for New Issuance: -- $74,523,430.50 series 2005A 'BBB-'; -- $33,686,015.70 series 2005B 'BB'. Ratings confirmed for existing The Children's Trust, tobacco settlement asset-backed bonds, series 2002: -- $1,132,195,000 series 2002 'BBB'. The ratings for the series 2005 and series 2002 bonds are based on the quality of the pledged receivables and overall credit quality of the industry, which Fitch rates 'BBB-'. The pledged receivables are Puerto Rico's share of the strategic payments, initial and annual payments under MSA agreement. Fitch believes, that due to the executory nature of MSA agreement the cash flows generated under this agreement can be rated a notch above the industry rating. Therefore, the highest possible rating at this point for tobacco settlement bonds is 'BBB'. Additionally, Fitch applies stress to forecast payments under the MSA consistent with the ratings assigned. In its stresses, Fitch only considers payments generated by the original participating manufacturers. Currently, the series 2002 can sustain stress scenarios in excess of those required by the 'BBB' rating. However, given the limiting factor of the overall industry rating, Fitch confirms the 'BBB' rating on the series 2002 bonds. The series 2005 bonds are issued as additional bonds under an amended and restated indenture between The Children's Trust and Deutsche Bank Trust. The series 2005 are subordinate to series 2002 bonds and will not receive any payments of interest or principal while series 2002 still outstanding. There is no liquidity reserve for series 2005 bonds. The accretion rates are 6.5% and 7.25% for series 2005A and series 2005B respectively. Under Fitch's 'BBB-' stress scenario, the series 2005A bonds can still make full payments of interest and principal. Although the legal final maturity date for series 2005A is 2050, under Fitch's 'BBB-' the bond pays out prior to its legal final date. Similarly, series 2005B bonds can make full payments of interest and principal under Fitch's 'BB' stress scenario. Although the legal final date for series 2005B is 2055, under Fitch's 'BB' stress scenario the bond pays out prior to its legal final. COMMERCIAL MORTGAGE: Fitch Holds Low-B Ratings on 4 Cert. Classes ----------------------------------------------------------------- Fitch Ratings upgrades Commercial Mortgage Acceptance Corp., commercial mortgage pass-through certificates, series 1998-C2: -- $173.5 million class D to 'AA+' from 'A+'; -- $43.4 million class E to 'A+' from 'A-'. These classes are affirmed by Fitch: -- $645.7 million class A-2 'AAA'; -- $671.1 million class A-3 'AAA'; -- Interest-only class X 'AAA'; -- $144.6 million class B 'AAA'; -- $173.5 million class C 'AAA'; -- $21.7 million class G 'BB+'; -- $36.1 million class H 'BB-'; -- $65.1 million class J 'B'; -- $21.7 million class K 'B-'. The $21.7 million class L remains at 'CC'. Fitch does not rate the $122.9 million class F or the $5.7 million class M certificates. The upgrades reflect the increased credit enhancement levels from loan payoffs and amortization. In addition, a total of seven loans (17%) have defeased to date, including three of the top five loans (16%). As of the June 2005 distribution date, the pool's aggregate principal balance has been reduced by 26% to $2.15 billion from $2.89 billion at issuance. As of the June 2005 distribution date, 10 loans (2.7%) were in special servicing, including five 90+ days delinquent loans (1.5%) and two 60 days loans (0.2%). The largest specially serviced loan (1.1%) is secured by an office property in Hatboro, PA and is 90 days delinquent. The second largest specially serviced loan (0.55%) is secured by a retail property in Provo City, UT. The next group of specially serviced loans (0.36% and 0.11%, respectively), is secured by two multifamily properties in Dallas, TX. For all of these loans, the special servicer is evaluating workout options and losses are expected. Realized losses in the pool total $37.7 million, or 1.3% of the pool's original principal balance. CREDIT SUISSE: Moody's Junks Ratings on 4 Securitization Classes ---------------------------------------------------------------- Moody's Investors Service has downgraded seven classes of mezzanine and subordinated tranches from four mortgage securitizations and placed on review for possible downgrade two mezzanine tranches from two mortgage securitization, issued by Credit Suisse First Boston Mortgage Securities Corp. in 2001 and 2002. The actions are based on the fact that the bonds' current credit enhancement levels, including excess spread where applicable, are low compared to the current projected loss numbers for the current rating level. The securitizations that are being downgraded and placed under review for possible downgrade suffer primarily from the performance of the underlying loans with cumulative losses exceeding our original expectations. The complete rating actions are as follows: Issuer: Credit Suisse First Boston Mortgage Securities Corp. Downgrade: * Series 2001-1; Class M-2, Downgrade from A2 to Baa2 * Series 2002-9; Class I-B-3, Downgrade from Baa3 to B1 * Series 2002-9; Class I-B-4, Downgrade from B1 to Caa2 * Series 2002-9; Class I-B-5, Downgrade from Caa2 to C * Series 2002-10; Class I-B, Downgrade from B1 to Ca * Series 2002-19; Class II-M-1, Downgrade from A2 to Ba2, under for possible further downgrade * Series 2002-19; Class II-M-2, Downgrade from Caa1 to C Review For Possible Downgrade: * Series 2002-9; Class I-B-2, current rating A2, under review for possible downgrade * Series 2002-10; Class I-M-2, current rating Baa2, under review for possible downgrade DIAMOND ENTERTAINMENT: Auditors Express Going Concern Doubt ----------------------------------------------------------- Pohl, McNabola, Berg and Company, LLP, expressed substantial doubt about Diamond Entertainment Corporation's ability to continue as a going concern after it audited the Company's financial statements for the period ended March 31, 2005. The Company has incurred recurring losses from operations, negative cash flows from operations, a working capital deficit and is delinquent in payment of certain accounts payable. Moreover, the Company may have difficulty raising additional equity capital prior to increasing the number of authorized shares. The Company has four primary sources of capital which include: -- cash provided by operations; -- a factoring arrangement with a financial institution to borrow against the Company's trade accounts receivable; -- short term borrowings; and -- funds derived from private investors. During the year ended March 31, 2005 and 2004, the Company recorded a positive cash flow of approximately $355,000 and $102,000, respectively. The increase in the net cash flow of approximately $253,000 over fiscal 2004 resulted primarily from increases cash provided by operating activities totaling approximately $1,561,000 offset by increases in net cash used in investing and financing activities totaling $1,308,000. Increases in net income resulting from higher DVD sales was the primarily reason for the Company's increase in cash flow. Although there can be no assurance, Management believes that its revenues will continue to increase during fiscal year 2005 and will generate positive cash flows in the coming year. Management anticipates cash flow provided by operations and short term borrowing from ATRE will be adequate to operate the business for the next twelve months. On March 31, 2005 the Company had assets of approximately $2,663,000 compared to $2,690,000 on March 31, 2004. The Company had a total stockholder's deficit of approximately $238,000 on March 31, 2005, compared to a deficiency of approximately $772,000 on March 31, 2004, a decrease of approximately $534,000. The decrease in stockholders' deficit for the year ended March 31, 2005 was the result the Company's decrease in its accumulated deficit of approximately $385,000 and net proceeds from the sale of common stock of approximately $149,000. As of March 31, 2005 the Company's working capital deficit decreased approximately $265,000 from a working capital deficit of approximately $1,301,000 at March 31, 2004, to a working capital deficit of approximately $1,036,000 at March 31, 2005. The decrease in working capital deficit was attributable primarily to an increase in cash, prepaid expenses, other current assets and an increase in deferred revenue, offset by decreases in bank overdraft, amount due factor, accounts payable, customer deposits and other miscellaneous current assets and liabilities. Net cash flow from operating activities was approximately $1,440,000 during the year ended March 31, 2005, compared to approximately $121,000 net cash used by operating activities for the same period a year earlier. The increase of approximately $1,561,000 was primarily attributable to increases in net income, inventory reserve, due from related parties, accounts receivable, and deferred revenue, offset by decrease in depreciation and amortization, accounts payable and customer deposits. Net cash used in investing activities were approximately $572,000 and $306,000 for fiscal 2005 and 2004, respectively. The increase of approximately $266,000 resulted from higher purchases of property and equipment and film masters and artwork. The Company during the year ended March 31, 2005, used approximately $513,312 in cash flows used in financing activities primarily for the reductions in cash overdraft, repayment of notes payable and decrease in amount due factor, offset by the sale of common stock. During the year ended March 31, 2004, cash used for financing activities totaled approximately $65,000 mainly for repayment of the Company's loan obligations and reduction of cash overdraft. Financing Agreements On Aug. 30, 1996, the Company entered into a financing agreement with a financial institution for a maximum borrowing of up to $2,500,000. The agreement called for a factoring of the Company's accounts receivable, and an asset-based note related to the Company's inventories. Subsequently, on October 29, 1999, the financial institution sold its financing agreement covering the factoring of the Company's accounts receivable to a factoring institution located in Dallas, Texas. The original financial institution retained the asset-based note related to the Company's inventories which was subsequently retired by the Company. Substantially all assets of the Company have been pledged as collateral for the borrowings. The factoring company typically advances to the Company 80% of the total amount of accounts receivable factored, less a factoring discount and nominal handling fees. The factor retains 20% of the outstanding factored accounts receivable as a reserve, which is held by the factoring company until the customer pays the factored invoice to the factoring company. The cost of funds for the accounts receivable portion of the borrowings with the factor is a 1.5% discount from the stated pledged amount of each invoice for every 30 days the invoice is outstanding. Factored accounts receivable past due more than sixty day from the payment date are charged against the 20% reserve balance held by the factor. The inventory portion of the borrowings was determined by the lesser of: (i) $800,000, (ii) 25% of the Company's finished toy inventory or (iii) 55% of the clients finished videotape inventory. The cost of funds for the inventory portion of the borrowings was at 1.4% per month on the average loan balance each month. During the year ended March 31, 2003, the inventory portion of the borrowings of $103,777 together with all accrued interest was paid in full. As of March 31, 2005, the Company recorded on its balance sheet, accounts receivable of approximately $481,000 net of allowance for doubtful accounts of approximately $32,000. Approximately $380,000 represented factored accounts receivable. Additionally, at March 31, 2005, the Company recorded as a current liability approximately $304,000 in outstanding factored receivables due factor. This liability consisted of approximately $380,000 in factored receivables owed to the factor less the 20% reserve held by the factor of approximately $76,000. All of the accounts receivable as of March 31, 2005 and 2004 have been pledged as collateral under the factoring agreement. At year ended March 31, 2005, the Company owed its principal shareholder, American Top Real Estate Co., Inc., approximately $278,000. During the year ended March 31, 2005, ATRE advanced funds totaling approximately $870,000 and the Company paid back approximately $972,300 in principal and interest. Borrowed funds were utilized as working capital to primarily purchase inventory required to support the sales during peak periods. The balance owed to ATRE at March 31, 2004 was approximately $322,000. ATRE was formed in March 1989 for the purposes of acquiring, owning and holding real property for commercial development. ATRE does not engage in any other business operations. The Company paid $50,000 for 50% of the issued and outstanding common stock of ATRE. Subsequent loan participation by the investors in ATRE reduced the Company's shareholder interest to 7.67%. The Company's 2003 operations include a write-down of its investment in ATRE, which reduced the Company's investment in ATRE to zero, net of taxes. The Company's equity investment in ATRE was written off due to the Company's recognition of its share of operating losses experienced by ATRE from the real property owned by it, notwithstanding the potential value of the real property, in accordance with equity accounting. As a consequence, the Company's future financial results will not be negatively affected by ATRE's ongoing operations. The Company has no obligation to fund future operating losses of ATRE. Although ATRE reported operating losses, it had cash available for investing, and agreed in 1996 to establish a $1,000,000 revolving line of credit for the Company at interest ranging from 10% to 14% per annum. The line of credit was provided in recognition of the services provided by the Company through Mr. James Lu in assisting to structure ATRE's lucrative real estate projects. Mr. Lu, an officer and director of the Company, serves as a director of ATRE. The Company does not anticipate a demand by ATRE for repayment of its loan to the Company in the near future. During the year ended March 31, 2005, the Company derived net cash proceeds from the sale of its common stock totaling approximately $130,000 which was offset by purchasing approximately $15,000 of it common stock from a shareholder. The Company may be unable to effectuate any equity financing until it has increased its authorized shares of common stock and/or effected a restructuring of its equity capital, such as by means of a stock split, combination or similar restructuring. Diamond Entertainment Corporation d/b/a e-DMEC was formed under the laws of the State of New Jersey on April 3, 1986. In May 1999, the Company registered in the state of California to do business under the name "e-DMEC". DMEC markets and sells a variety of videocassette and DVD (Digital Video Disc) titles to the budget home video and DVD market. The Company also purchases and distributes general merchandise including children's toy products, general merchandise and sundry items. DOUBLECLICK INC: Completes Hellman & Friedman Merger Deal --------------------------------------------------------- DoubleClick Inc. (Nasdaq: DCLK) completed the merger with Click Holding Corp. Click Holding is a subsidiary of private equity investment funds affiliated with Hellman & Friedman LLC and JMI Equity. DoubleClick stockholders approved the merger agreement governing the transaction at DoubleClick's annual stockholders meeting held on July 12, 2005. "DoubleClick has a blue chip roster of customers, and DART, Performics, and Abacus are among the strongest brand names in online advertising and direct marketing," said Philip Hammarskjold, Managing Director of Hellman & Friedman LLC. "We look forward to partnering with their experienced management team in order to achieve the optimal level of growth for these businesses." As previously announced, Kevin Ryan has stepped down as DoubleClick's CEO to pursue other opportunities. DoubleClick's TechSolutions and Data segments will now be operated separately. David Rosenblatt will continue to oversee DoubleClick's Ad Management, Email and Performics divisions as CEO of DoubleClick Digital Advertising and Email Solutions, while Brian Rainey will continue to lead the Data segment as the CEO of Abacus. "We feel that this is positive news for our customers," said David Rosenblatt, CEO of DoubleClick Digital Advertising and Email Solutions. "With Hellman & Friedman and JMI Equity's support, we will continue to focus our efforts on digital marketing and on investing in new and better tools for our clients, both in the short and long terms." "We believe that our employees and customers will benefit from the completion of this transaction," added Brian Rainey, CEO of Abacus. "We plan to maintain our commitment to helping catalog and specialty retail direct marketers succeed in an evolving, multi-channel world with leading data solutions." In accordance with the terms of the merger agreement, each outstanding share of DoubleClick common stock has been converted into the right to receive $8.50 in cash. Shares of DoubleClick common stock will continue to trade on the NASDAQ National Market until the market closes on July 13, 2005, at 4:00 P.M. (EDT) in accordance with NASDAQ trading policies, although those shares will represent solely the right to receive the merger consideration of $8.50 per share. DoubleClick's existing Zero Coupon Subordinated Notes due 2023 in the principal amount of $135 million will remain outstanding, subject to the rights of the holders to require DoubleClick to repurchase such notes at par following today's transaction. The aggregate consideration to be paid to DoubleClick stockholders is approximately $1.1 billion. As a result of the acquisition by Click Holding, DoubleClick will cease to be publicly traded and accordingly will no longer be listed on the NASDAQ National Market after the market closes on July 13, 2005. DoubleClick stockholders who have stock certificates in their own name will receive instructions by mail from American Stock Transfer & Trust Company, the exchange agent for the merger, concerning how and where to forward their certificates for payment. DoubleClick stockholders should exchange their stock certificates for the merger consideration promptly following receipt of these materials. Brokers will handle conversion for those holding DoubleClick stock through a brokerage account. Hellman & Friedman LLC -- http://www.hf.com/-- is a San Francisco-based private equity investment firm with additional offices in New York and London. Since its founding in 1984, the Firm has raised and managed over $8 billion of committed capital and invested in approximately 50 companies. The Firm's strategy is to invest in superior business franchises and to be a value-added partner to management in select industries, including media, software, information services, financial services, energy, and professional services. Hellman & Friedman is one of the few private equity firms with a focused effort in marketing services and software industries. Hellman & Friedman has invested in and helped build outstanding companies in these sectors, such as Blackbaud, Inc., Digitas, Inc., Mitchell International, Inc., Vertafore, Inc., and Young & Rubicam. JMI Equity -- http://www.jmiequity.com/-- based in San Diego and Baltimore, is a private equity firm exclusively focused on investments in the software and business services industries. Founded in 1992, JMI manages approximately $400 million and has invested in 60 companies throughout North America. JMI invests in growing businesses. The Firm's focus is on providing the first institutional capital to self-funded companies. JMI also invests in select recapitalization and management buyout financings. Representative investments include Unica Corporation, Eloqua Corporation, Blackbaud, Inc., Mitchell International, Mission Critical Software, NEON Systems, Inc. and Transaction Systems Architects. DoubleClick Inc. is the leading provider of solutions for marketers, advertising agencies, and web publishers to plan, execute, and analyze their marketing programs. DoubleClick's online advertising, email marketing and database marketing solutions help clients yield the highest return on their marketing dollar. In addition, the company's marketing analytics solutions help clients measure performance within and across channels. DoubleClick Inc. has global headquarters in New York City and maintains 21 offices around the world. * * * As reported in the Troubled Company Reporter on June 21, 2005, Standard & Poor's Ratings Services assigned its 'B' bank loan rating and a recovery rating of '2' to Internet ad service provider DoubleClick Inc.'s (B/Negative/--) $340 million first- lien senior secured credit facilities, indicating an expectation of substantial (80%-100%) recovery of principal in a default scenario. The facilities consist of a $50 million revolving credit facility due 2010 and a $290 million term loan B due 2012. At the same time, Standard & Poor's also assigned its 'CCC+' bank loan rating and a recovery rating of '5', indicating an expectation of negligible (0%-25%) recovery of principal in a default situation, to DoubleClick's $115 million second-lien term loan due 2013. Proceeds from the transaction will be used to finance partially the acquisition of DoubleClick by Hellman & Friedman LLC. The 'B' corporate credit rating on DoubleClick was affirmed and removed from CreditWatch, where it was placed with negative implications on Nov. 2, 2004. The outlook is negative. Pro forma for the transaction, the company will have $405 million of debt outstanding as of March 31, 2005. DoubleClick consists of two main operating units, TechSolutions and Data. TechSolutions provides tools and services for the planning, execution, and analysis of online marketing campaigns. The Data unit offers direct marketers a large set of transactional, geographic, demographic, and behavioral profiles to help acquire prospects. "The ratings reflect aggressive financial policies, pricing pressure at DoubleClick's ad management services, and earnings softness at its Data unit," said Standard & Poor's credit analyst Andy Liu. D.R. HORTON: Moody's Puts Low-B Ratings Under Review & May Upgrade ------------------------------------------------------------------ Moody's Investors Service placed the ratings of D.R. Horton, Inc. under review for possible upgrade, including the ratings of Ba1 and Ba2 on the company's existing senior notes and senior sub notes, respectively. The review will focus on Horton's commitment to maintaining capital structure discipline in the face of numerous growth opportunities, its larger-than-peer-group- average spec building practices, and its growing earnings concentration within California. The ratings under review are listed as follows: * Ba1 Corporate Family Rating (formerly, senior implied rating) * Ba1 on $215 million of 7.5% senior notes, due 12/01/07 * Ba1 on $200 million of 5% senior notes, due 1/15/09 * Ba1 on $385 million of 8% senior notes, due 2/1/09 * Ba1 on $235 million of 9.375% senior notes, due 7/15/09 (issued by Schuler Homes and assumed by D.R. Horton in the merger of February 2002; these will be redeemed on July 15, 2005) * Ba1 on $250 million of 4.875% senior notes, due 1/15/10 * Ba1 on $200 million of 7.875% senior notes, due 8/15/11 * Ba1 on $250 million of 8.5% senior notes due 4/15/12 * Ba1 on $300 million of 5.375% senior notes due 6/15/2012 * Ba1 on $200 million of 6.875% senior notes due 5/1/13 * Ba1 on $100 million of 5.875% senior notes due 7/1/13 * Ba1 on $200 million of 6.125% senior notes due 1/15/2014 * Ba1 on $250 million of 5.625% senior notes due 9/15/ 2014 * Ba1 on $300 million of 5.25% senior notes due 2/15/2015 * Ba1 on $300 million of 5.625% senior notes due 1/15/2016 * Ba2 on $150 million of 9.75% senior sub notes, due 9/15/10 * Ba2 on $200 million of 9.375% senior sub notes, due 3/15/11 * Ba2 on $145 million of 10.5% senior sub notes, due 7/15/11 (issued by Schuler Homes and assumed by D.R. Horton in the merger of February 2002) * SGL-2 Speculative Grade Liquidity rating Headquartered in Ft. Worth, Texas, D.R. Horton, Inc. is engaged in the construction and sale of homes designed principally for the entry-level and first time move-up markets. The company currently builds and sells homes in 22 states and 68 markets, with a geographic presence in the Midwest, Mid-Atlantic, Southeast, Southwest, and Western regions of the United States. Revenues and net income for the fiscal year that ended September 30, 2004 were $10.8 billion and $975 million, respectively. ENRON CORP: Avnet Wants Court to Compel $1MM Claims Distribution ---------------------------------------------------------------- Avnet, Inc., holds allowed secured Claim No. 24857 against Debtor Smith Street Land Company for $1,005,041. The Claim was filed on October 11, 2000, but was amended on June 9, 2004, to reflect a new service address. Avnet asks Judge Gonzalez to compel Smith Street to make a distribution on account of the Claim for $1,005,041 plus applicable interest. Stephen C. Hunt, Esq., at Adorno & Yoss, L.L.P., in Fort Lauderdale, Florida, notes that Avnet is presently a defendant in an adversary proceeding filed by certain Debtors seeking avoidance of alleged preferential and fraudulent transfers. The distribution on the Claim should not be delayed during the pendency of the Avoidance Action, Mr. Hunt contends. Smith Street, Mr. Hunt points out, is not a party to the Avoidance Action. Avnet therefore believes that the litigation of the Avoidance Action would not impact Avnet's entitlement to distribution on the Claim from Smith Street. Avnet has substantial defenses and a low risk of liability to the Debtors' bankruptcy estates, and is a large public corporation, Mr. Hunt points out. Accordingly, Avnet asserts that there should be no reasonable concern on the part of the Debtors as to its ability to satisfy any liability entered against it in the Avoidance Action. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. EXIDE TECH: Appoints Mark Cummings as Health & Safety VP -------------------------------------------------------- Exide Technologies (NASDAQ: XIDE) disclosed that Mark W. Cummings will join the Company as Vice President for Global Environmental, Health & Safety, effective July 25, 2005. "I have known Mark for many years, and he shares my belief that a company's performance in the areas of safety, environmental protection and compliance, and occupational health is indicative of its overall business performance," said Exide President and Chief Executive Officer Gordon A. Ulsh. "I am pleased that Mark has agreed to lead Exide's effort on environmental, health and safety practices." Mr. Cummings has 20 years of engineering, legal and environmental and safety management experience. Most recently, he was an independent environmental and safety consultant to the automotive industry. Prior to starting his own firm, he held a number of environmental and safety leadership positions with Wagner Lighting, Cooper Automotive and Federal-Mogul Corporation. Earlier in his career, he was a consultant with Parsons Corporation, an international engineering and infrastructure planning company, and an engineer for Texaco's Exploration & Production Division. Mr. Cummings holds bachelor's degree in geological engineering from the University of Missouri-Rolla and a JD degree from the University of Tulsa College of Law. He is a member of the Missouri Bar. Headquartered in Princeton, New Jersey, Exide Technologies -- http://www.exide.com/-- 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 July 8, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'CCC+' from 'B-', and removed the rating from CreditWatch with negative implications, where it was placed on May 17, 2005. "The rating action reflects Exide's weak earnings and cash flow, which have resulted in very high debt leverage, thin liquidity, and poor credit statistics," said Standard & Poor's credit analyst Martin King. Lawrenceville, New Jersey-based Exide, a manufacturer of automotive and industrial batteries, has total debt of about $740 million, and underfunded postemployment benefit liabilities of $380 million. EXIDE TECH: Names George Jones Jr. as Human Resources EVP --------------------------------------------------------- Exide Technologies (NASDAQ: XIDE) disclosed the appointment of George S. Jones Jr. as Executive Vice President - Human Resources, effective immediately. He succeeds Janice M. Jones, who has elected not to relocate from New Jersey to Exide's new corporate offices in Georgia. She will remain with the Company up to the end of the calendar year to work on special projects. "Having previously worked with George, I know he will bring a unique blend of operational experience and human resource expertise to his new role," said Exide President and Chief Executive Officer Gordon A. Ulsh. "His background will enable him to lead the human resources organization and provide the strategic and tactical support needed to drive profitability, passion for our customers, uncompromising quality and a company-wide culture of pride and commitment." Mr. Jones joins Exide after a highly successful career of nearly 30 years with Cooper Industries Inc. Most recently, he served as Vice President - Operations for Cooper Lighting, a $1.3 billion division headquartered in Peachtree City, Georgia. Mr. Jones also served as Vice President - Human Resources for Cooper Lighting; Director - Human Resources for Wagner Lighting in Cooper's Automotive Group; and Director - Human Resources in Cooper's Petroleum Equipment Group. Mr. Jones holds a bachelor's degree in industrial relations from Temple University. Headquartered in Princeton, New Jersey, Exide Technologies -- http://www.exide.com/-- 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 July 8, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'CCC+' from 'B-', and removed the rating from CreditWatch with negative implications, where it was placed on May 17, 2005. "The rating action reflects Exide's weak earnings and cash flow, which have resulted in very high debt leverage, thin liquidity, and poor credit statistics," said Standard & Poor's credit analyst Martin King. Lawrenceville, New Jersey-based Exide, a manufacturer of automotive and industrial batteries, has total debt of about $740 million, and underfunded postemployment benefit liabilities of $380 million. EXIDE TECH: Three More Firms File Class Actions ----------------------------------------------- Three more law firms have commenced class action lawsuits before the United States District Court for the District of New Jersey against Exide Technologies and its present and former officers: 1. Schiffrin & Barroway, LLP, 2. Goldman Scarlato & Karon, P.C., and 3. Stull, Stull & Brody. The Class Actions allege that Exide violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-l promulgated thereunder, by issuing a series of material misrepresentations to the market between November 16, 2004, and May 17, 2005. As previously reported, three law firms, including Milberg Weiss Bershad & Schulman LLP, have commenced class action lawsuits, asserting the same allegations before the New Jersey District Court against Exide and its present and former officers. Jarman Wants Documents Reviewed Roger Jarman, individually and on behalf of the purchasers of Exide Technologies' stocks between November 16, 2004 and May 17, 2005, demands a review of Exide's public documents, conference calls and announcements, SEC filings, wire and press releases and advisories in a class action filed against Exide and its present and former officers. Mr. Jarman alleges that: (1) Exide failed to adequately hedge against the increases in the price of lead and other commodities; (2) Exide's restructuring initiatives failed to reduce costs; (3) Exide would not properly forecast its inventory requirements; (4) Exide overstated its income by failing to write-down the value of obsolescent inventory and discontinued product lines; (5) Exide failed to comply with the provisions of contract with a large customer; and (6) Exide was in violation of the EBITDA and Leverage Ratio Covenants on its senior credit facility. Joseph J. DePalma, Esq., at Lite, DePalma, Greenberg & Rivas, LLC, in Newark, New Jersey, points out that Exide officers Gordon A. Ulsh, Craig Muhlhauser, J. Timothy Gargaro, and Ian J. Harvie possessed the power and authority to control the contents of Exide's quarterly reports, press releases and presentations to securities analysts, money and portfolio managers and institutional investors. Mr. Jarman believes that each officer was provided with copies of Exide's misleading reports and press releases prior to or shortly after their issuance. Thus, each officer had the ability and opportunity to prevent the issuance of the reports or cause them to be corrected. "Because of their positions and access to material non-public information available to them but not to the public, each of the [officers] knew that the adverse facts . . . had not been disclosed to and were being concealed from the public and that the positive representations which were being made were then materially false and misleading," Mr. DePalma contends. "The [officers] are liable for the false statements pleaded, as those statements were each 'group-published' information, the result of the collective actions of the [officers]." Mr. DePalma asserts that Exide and its officers acted with scienter because they: -- knew that the public documents and statements issued or disseminated in the name of Exide were materially false and misleading; -- knew that those statements or documents would be issued or disseminated to the investing public; and -- knowingly and substantially participated or acquiesced in the issuance or dissemination of those statements or documents as primary violations of the federal securities laws. Mr. Jarman further alleges that the officers were motivated to commit the fraud, so that Exide could complete a $350 million private placement of senior notes and floating rate, convertible senior subordinated notes. Headquartered in Princeton, New Jersey, Exide Technologies -- http://www.exide.com/-- 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 July 8, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'CCC+' from 'B-', and removed the rating from CreditWatch with negative implications, where it was placed on May 17, 2005. "The rating action reflects Exide's weak earnings and cash flow, which have resulted in very high debt leverage, thin liquidity, and poor credit statistics," said Standard & Poor's credit analyst Martin King. Lawrenceville, New Jersey-based Exide, a manufacturer of automotive and industrial batteries, has total debt of about $740 million, and underfunded postemployment benefit liabilities of $380 million. FEDERAL-MOGUL: Asks Court to Okay KWLEM Insurance Settlement Pact ----------------------------------------------------------------- On September 27, 2004, a settlement agreement was entered into between: a. Federal-Mogul Products, Inc., and DII Industries, LLC; and b. KWELM Management Services Limited, as the appointed run-off agent for: * Kingscroft Insurance Company Limited; * Walbrook Insurance Company Limited; * El Paso Insurance Company Limited; * Lime Street Insurance Company Limited and Mutual Reinsurance Company Limited and The Bermuda Fire & Marine Insurance Company Limited (In Liquidation); and * Southern American Insurance Company in liquidation, solely in respect of its participation in the pool operated by H S Weavers (Underwriting) Agencies Ltd. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., in Wilmington, Delaware, relates that the Settlement Agreement was the product of various policies of insurance that the Settling Insurers issued or subscribed to provide coverage for, among other things, asbestos-related bodily injury claims against: (1) Federal-Mogul Products, as successor-in-interest to Wagner Electric Company; and (2) DII Industries, as successor-in-interest to Turbodyne Corporation and Worthington Corporation. According to Mr. O'Neill, each of the Settling Insurers is insolvent and operating in run-off mode. These Insurers, Mr. O'Neill continues, have ceased to underwrite new liabilities, and are in the process of liquidating and paying, to the extent possible, their outstanding liabilities in connection with Schemes of Arrangement with their creditors being implemented under English law, with the exception of South American Insurance Company. South American Insurance Company is being liquidated under the supervision of the Third Judicial District Court in the State of Utah. Mr. O'Neill adds that FM Products and DII Industries have submitted claims against the Settling Insurers in the Settling Insurers' liquidation proceedings, which are ongoing in England or, in the case of South American Insurance Company, in Utah state court. The material terms of the Settlement Agreement are: (a) FM Products and DII Industries will have a joint allowed claim against the Settling Insurers for $7,000,000 to be apportioned among the Settling Insurers; (b) After the passage of the Bar Date in the Settling Insurers' Schemes of Arrangement, and assuming that no competing claims are asserted under the Subject Insurance Policies, the Settling Insurers agree to make payment as provided by the Settling Insurers' Schemes of Arrangement to an escrow account under the joint control of FM Products and DII Industries. In the case of South American Insurance Company, it must seek approval from the Utah state court to make the payment after the passage of the Bar Date. The Settling Insurers have agreed that FM Products and DII Industries will submit adequate supporting documentation in the Settling Insurers' Schemes of Arrangement relating to their claims against the Settling Insurers; and (c) In the event a competing claim were brought against the Settling Insurers prior to payment of the $7 million settlement amount, the Settling Insurers would evaluate the claim. If the claim appeared to be valid under the Subject Insurance Policies, the Settling Insurers would attempt to negotiate an appropriate revised value for the settlement with FM Products and DII Industries. If the negotiations were unable to arrive at an agreed amount among the parties, then the matter would be referred to the Scheme Adjudicator for the Settling Insurers' Schemes of Arrangement and to the South American Insurance Company for adjudication. The Bar Date in the Settling Insurers' Schemes of Arrangement had passed on September 29, 2004. The Debtors have verified that no competing claims have been brought in the Schemes of Arrangement that would dilute the recovery available to FM Products. Accordingly, the Debtors believe that the $7 million joint allowed claim of FM Products and DII Industries against the Settling Insurers is the basis on which distributions to FM Products will be determined. Hence, the Debtors ask the Court to approve the Settlement Agreement with KWELM Management based on five grounds: (a) The Settlement Agreement is the product of good faith, arm's-length negotiations among counsel to FM Products, DII Industries and KWELM Management, which commenced initially in late 2003; (b) The KWELM Settlement Agreement will liquidate FM Product's claims against the Settling Insurers without the need for expensive and burdensome claims estimation procedures, and will allow those claims to be paid promptly after the passage of the Bar Date; (c) FM Products believes that the settlement amounts and terms of payment are fair and reasonable; (d) Allocation of funds under the KWELM Settlement Agreement is subject to a Partitioning Agreement previously entered into by FM Products, DII Industries, Cooper Industries, Inc., and FM Products' insurers. The Partitioning Agreement was approved by the Bankruptcy Court in the Federal-Mogul's Chapter 11 cases on December 8, 2004; and (e) The KWELM Settlement Agreement has already been considered and granted by Judge Fitzgerald of the United States Bankruptcy Court for the Western District of Pennsylvania, who is presiding over the Chapter 11 cases of DII Industries and its affiliates. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a US$2.048 billion stockholders' deficit, compared to a US$1.926 billion deficit at Dec. 31, 2004. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. (Federal-Mogul Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIRST CONSUMERS: S&P Ups Rating on Series 1999-A Class B Certs. --------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on the class B certificates of First Consumers Master Trust's series 1999-A. At the same time, the ratings on classes A, B, and C of First Consumers Credit Card Master Note Trust's series 2001-A are affirmed and removed from CreditWatch negative, where they were placed March 28, 2002. Until this most recent review, interim reviews have not warranted the removal of these ratings from CreditWatch. The raised rating on the class B certificates from series 1999-A reflects: * increasing subordination relative to the series' pool factor, * the expected payment of the bonds, * the improved performance of the underlying pool of credit card receivables since Standard & Poor's last review in May 2004, and * the benefits of a structure that includes the allocation of finance charge collections based on a fixed percentage. Based on the current payment rate, the class B certificates from series 1999-A are expected to receive their principal payment in full in approximately three to four months. The possibility that a significant decrease in the payment rate could prevent the class B certificates from being paid out in full on the legal final payment date (Dec. 15, 2005) was considered by Standard & Poor's during its review. The affirmations on the classes in series 2001-A reflect the adequate credit enhancement available to support the classes at their current rating levels. The trust's charge-off rate has started to level off in the 20% range after peaking between September 2003 and April 2004, when gross charge-offs averaged in the 30% range. Total delinquencies have continued to show improvement as well. The 30-plus-day delinquency rate decreased from its peak level of 20% in September 2003 to its current level of 13.29%. In addition, the total payment and principal payment rates have leveled off in the 5% and 3% range, respectively. The trust yield has also been stable at an average of 19% over the past year. Series 1999-A, which is allocated finance charge collections based on a fixed allocation percentage, benefits from more monthly allocable finance charge collections available to absorb investor default amounts. Finance charge allocations to series 2001-A have not been as fortunate. The monthly allocable finance charge collections allotted to series 2001-A have been insufficient to absorb investor default amounts allocated each month to the series. As a result, approximately $94 million of cumulative investor charge-off amounts have been allocated to series 2001-A, thereby decreasing the likelihood of timely payment of interest and full repayment of principal to the classes A, B, and C. As of the June 2005 distribution date, the class B balance of series 1999-A and the class A balance of series 2001-A had been reduced by approximately 73% and 91%, respectively. The class B and C note balances from series 2001-A are currently at their initial balances. The class C notes from series 2001-A benefit from a spread account, which is available to cover the class C monthly interest to the extent monthly cash flows are insufficient. Also, at the class C maturity date, amounts in the spread account may be used to pay down any remaining principal balance of the class C notes and reimburse class C noteholders for any previous unreimbursed defaults. Although the current amount on deposit in the spread account is slightly more than the initial balance of the class C notes, there may not be enough funds to fully reimburse the class C holders if performance were to deteriorate. Spread draws would also be needed if monthly cash flows could not cover the class C interest for any month prior to its maturity date. Rating Raised First Consumers Master Trust Series 1999-A Rating ------ Class To From ----- -- ---- B B CCC Ratings Affirmed And Removed From Creditwatch Negative First Consumers Credit Card Master Note Trust Series 2001-A Rating ------ Class To From ----- -- ---- A B B/Watch Neg B CCC- CCC-/Watch Neg C CCC CCC/Watch Neg FMC REAL: Fitch Assigns Low-B Ratings on Two Fixed-Rate Notes ------------------------------------------------------------- Fitch Ratings assigns these ratings to FMC Real Estate CDO 2005-1, Ltd. and FMC Real Estate CDO 2005-1 Corp.: -- $131,825,000 class A-1 floating-rate secured notes due July 2045 'AAA'; -- $43,941,000 class A-2 floating-rate secured notes due July 2045 'AAA'; -- $43,941,000 class B floating-rate secured notes due July 2045 'AA'; -- $49,434,000 class C floating-rate secured deferrable interest notes due July 2045 'A'; -- $34,055,000 class D floating-rate secured notes due July 2045 'BBB+'; -- $13,182,000 class E floating-rate secured notes due July 2045 'BBB'; -- $21,970,000 class F floating-rate secured notes due July 2045 'BBB-'; -- 35,153,000 class G fixed-rate notes due July 2045 'BB'; -- $12,084,000 class H fixed-rate notes due July 2045 'B'. FMC is a cash flow collateralized debt obligation managed by SCFFI GP LLC. The ratings of the class A-1, class A-2 and class B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the class C, class D, class E, class F, class G and class H notes address the likelihood that investors will receive ultimate interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings are based upon the credit quality of the underlying assets, approximately 75% of which will be purchased by the transaction's close, in addition to credit enhancement provided by subordination, excess spread, and protections incorporated in the structure. Proceeds from the issuance may be invested in a portfolio of unrated commercial mortgage loan B-notes, commercial real estate mezzanine loans, commercial mortgage whole loans, commercial mortgage-backed securities, credit tenant lease loans, real estate investment trust debt securities, and real estate CDOs. FMC will have a five-year reinvestment period during which collateral principal payments will be reinvested according to the criteria outlined in the governing documents. The collateral manager has the ability to sell 10% of collateral consisting of CMBS per year on a discretionary basis during the reinvestment period and may sell defaulted and credit risk securities at any time. FMC is the first CDO managed by SCFFI, which is an affiliate of Five Mile Capital Partners LLC. Five Mile is an alternative fixed-income investment management firm founded in February 2003 by individuals whose former experience includes positions with Salomon Brothers Inc., Greenwich Capital Markets, Inc., Kidder, Peabody & Company, Inc., and PaineWebber Inc. Five Mile is majority owned and controlled by its management and minority owned by affiliates of American International Group, Inc., W.R. Berkley Corporation, and MBIA Inc. To date, Five Mile has launched three investment funds: Housatonic Fund, Silvermine Fund and Structured Income Fund, of which SCFFI is a general partner. The assets for FMC are from the Structured Income Fund, which has $662 million in equity commitments and is now closed to new investors. This fund focuses on debt and debt- like investments secured by commercial real estate, consumer receivables, and other asset-backed collateral. FMC Real Estate CDO 2005-1, Ltd. is a Cayman Islands exempted company. FMC Real Estate CDO 2005-1 Corp. is a Delaware corporation. FOAMEX L.P.: Likely Default Prompts Moody's to Junk Ratings ----------------------------------------------------------- Moody's Investors Service has lowered the ratings for Foamex L.P. and Foamex Capital Corporation and their outstanding debt obligations. The outlook remains negative. Ratings lowered: * $148.5 million of 9.875% senior subordinated notes, due 2007, from Caa2 to Ca * $51.6 million of 13.5% senior subordinated notes, due 2005, from Caa2 to Ca * $300.1 million of 10.75% senior secured notes, due 2009, from B3 to Caa2 * Corporate family rating, from B3 to Caa2 The downgrade reflects, in Moody's view, the increasing likelihood of a potential restructuring of the company's debt obligations over the near term, increasing the possibility that the 13.5% senior subordinated notes will not be repaid at maturity on August 15, 2005. On July 11, 2005, the company sharply lowered its 2Q05 earnings expectations due to sustained high chemical raw material costs and a weaker than expected operating environment. Moody's notes that the key contributing factor to Foamex's financial difficulties has been the escalating costs of its two major chemical raw materials, TDI and polyol, which on average rose more than 35% in the first quarter of 2005 from the same period a year ago. The sustained large increases in input costs have outpaced the company's efforts to raise its own selling prices to recover losses. The operating pressures have been exacerbated by the company's high debt load and tight liquidity conditions, in particular the upcoming maturity of its $52 million of 13.5% senior subordinated notes on August 15, 2005. The April 2005 sale of its rubber and felt carpet cushion businesses generated approximately $38.5 million in cash proceeds, up to $17 million of which has been made available for operational needs, thus limiting its already constrained funding options to repay the 13.5% senior subordinated notes at maturity. The company has announced the hiring of an investment banking firm to help evaluate strategic alternatives. If a debt restructuring were to be pursued, in Moody's view, it would result in significant principle loss for the second-lien senior secured notes and almost complete principle loss for the senior subordinated notes. Foamex L.P., based in Linwood, Pennsylvania, is the largest manufacturer and distributor of flexible polyurethane and polymer foam products in North America. The company reported LTM (April 3, 2005) revenues of $1.29 billion and total debt of $769 million as of April 3, 2005. GLOBAL TEL*LINK: S&P Junks $22.5 Million Senior Secured Loan ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Mobile, Alabama-based Global Tel*Link Corporation. At the same time, Standard & Poor's assigned its 'B' rating and '2' recovery rating to the company's $75 million, first-lien senior secured bank facility, which consists of: * a $12.5 million revolving credit facility (due 2010), * a $7.5 million funded letter of credit facility (due 2011), and * a $55 million term loan (due 2011). Standard & Poor's also assigned its 'CCC+' rating and '5' recovery rating to the company's $22.5 million, second-lien senior secured term loan, due 2012. The outlook is stable. The first-lien senior secured bank loan rating (the same as the corporate credit rating), along with the recovery rating, reflects Standard & Poor's expectation of substantial recovery (80% to 100%) of principal by lenders in the event of a payment default or bankruptcy. The 'CCC+' second-lien senior secured bank loan rating (two notches below the corporate credit rating), along with the '5' recovery rating, indicate Standard & Poor's expectation that the second-lien creditors can expect negligible (0%-25%) recovery of principal in the event of a payment default or bankruptcy. Proceeds from the bank facilities, along with an equity contribution by the sponsor, were used to fund the acquisition of AT&T National Public Markets, refinance existing debt, and add cash to the balance sheet to fund a deferred $10 million payment to AT&T. "The ratings on GTL reflect its small cash flow base, narrow focus within a competitive and evolving marketplace, potential challenges with the integration and retention of NPM's customer base, and limited liquidity," said Standard & Poor's credit analyst Ben Bubeck. These partly are offset by a largely recurring revenue base, supported by long-term customer contracts and a diverse customer base, as well as expectations for improved operating margins. GTL is the second-largest independent provider of inmate telecommunications services in the U.S. The company provides services to correctional facilities operated by city, county, state, and federal authorities in the U.S. and Canada. Pro forma for the refinancing and acquisition of NPM, the company had approximately $80 million of operating lease-adjusted debt as of March 2005. GRANT PRIDECO: Launching $175 Million Private Debt Placement ------------------------------------------------------------ Grant Prideco, Inc. (NYSE: GRP) plans to commence a private placement of $175 million principal amount of Senior Notes due 2015. The new notes will be placed pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The proceeds of the offering, together with borrowings under Grant Prideco's senior secured credit facility, will be used to finance the cash tender offer and consent solicitation launched today for the company's outstanding 9% Senior Notes due 2009. The Notes being offered have not been registered under the Act and may not be offered or sold in the United States absent registration or pursuant to an applicable exemption from the registration requirements of the Act. The Notes will be offered and sold only to qualified institutional buyers in reliance on Rule 144A of the Act and certain persons in offshore transactions in reliance on Regulation S under the Act. Grant Prideco -- http://www.grantprideco.com/-- headquartered in Houston, Texas, is the world leader in drill stem technology development and drill pipe manufacturing, sales and service; a global leader in drill bit technology, manufacturing, sales and service; and a leading provider of high-performance engineered connections and premium tubular products and services. * * * As reported in the Troubled Company Reporter on June 27, 2005, Standard & Poor's Ratings Services raised its corporate credit rating on Houston, Texas-based Grant Prideco Inc. to 'BB' from 'BB-'. In addition, the company's senior unsecured rating was raised to 'BB' from 'BB-'. The outlook is stable. "The upgrade is predicated on demonstrated sequential improvement in operating performance and debt reduction, following the company's acquisition of ReedHycalog in 2002," said Standard & Poor's credit analyst Jeffrey B. Morrison. "Furthermore, the upgrade reflects improved cash flow prospects for the company, in light of strengthening backlog, improved margins across its three operating segments, and favorable industry conditions that are expected to persist in the near to intermediate term," he continued. GRANT PRIDECO: S&P Rates $175 Million Senior Unsec. Notes at BB --------------------------------------------------------------- Standard & Poor's Rating Services assigned its 'BB' rating to Grant Prideco Inc.'s $175 million senior unsecured notes due 2015. In addition, Standard & Poor's affirmed its 'BB' corporate credit rating on the company. The outlook remains stable. As of March 31, 2005, Houston, Texas- based Grant Prideco had $373 million in long-term debt on a pro forma basis. The proceeds from the issuance will be used to finance the cash tender offer and consent solicitation for the company's outstanding 9% senior notes due in 2009. This transaction is part of management's recent refinancing initiatives that include a new $350 million senior secured credit facility (May 2005) and the call for $200 million in 9.625% senior secured notes due 2007 (June 2005). The ratings on Grant Prideco reflect exposure to the highly cyclical drill-stem and premium tubular manufacturing markets and somewhat limited product and service diversity. Leading market share in drill-stem products, solid market positions in its drillbit and tubular technology and services product lines, and the more stable cash flow characteristics of the company's drillbit operations do not quite offset concerns. "The stable outlook on Grant Prideco is predicated on improved operating performance and reduced financial leverage," said Standard & Poor's credit analyst Jeffrey Morrison. "In addition, the current outlook incorporates the expectation that the company will continue to fund small acquisitions in a manner consistent with the company's current financial profile," said Mr. Morrison. GT BRANDS: Hires Bankruptcy Services as Claims & Noticing Agent --------------------------------------------------------------- GT Brands Holdings LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to retain Bankruptcy Services, LLC, as their claims and noticing agent. Bankruptcy Services is a data-processing firm whose principals and senior staff have more than 15 years of in-depth experience in performing noticing, claims processing, claims reconciliation and other administrative tasks for chapter 11 debtors. BSL is also experienced in performing plan voting and distribution services, and other services relating to its role as a claims and noticing agent. BSL has been appointed to act as claims and noticing agent in many districts throughout the United States and has acted as claims and noticing agent in numerous cases, including the chapter 11 cases of Adelphia Communications Corp., Enron, Global Crossing and Regal Cinemas. BSL is expected to: (a) assist the Debtors with preparation and distribution of all required notices in these cases including, among others: 1. a notice of the commencement of these chapter 11 cases and the initial meeting of creditors under Section 341(a) of the U.S. Bankruptcy Code; 2. notice of claims bar dates; 3. notice of objections to claims; 4. notices of any hearings on the Debtors' disclosure statement and confirmation of the Debtors' chapter 11 plan; and 5. other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for the orderly administration of the Debtors' chapter 11 cases; (b) promptly file with the Clerk's Office a certificate or affidavit of service, after the service of a particular notice, that includes: 1. a copy of the notice served; 2. a list of persons upon whom the notice was served, along with their addresses; and 3. the date and manner of service; (c) receive, examine and maintain copies of all proofs of claim and proofs of interest filed in these cases; (d) maintain official registers in each of the Debtors' cases by docketing all proofs of claim and proofs of interest in the applicable claims database that includes the following information for each such claim or interest asserted: 1. the name and address of the claimant or interest holder and any agent thereof, if the proof of claim or proof of interest was filed by an agent; 2. the date the proof of claim or proof of interest was received by the Notice Agent and/or the Court; 3. the claim number assigned to the proof of claim or proof of interest; 4. the asserted amount and classification of the claim; and 5. the applicable Debtor against which the claim or interest is asserted; (e) implement necessary security measures to ensure the completeness and integrity of the claims registers; (f) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; (g) maintain an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interest and make the list available upon request to the Clerk's Office or any party in interest; (h) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in these cases without charge during regular business hours; (i) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of the transfers; (j) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; (k) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; (l) provide such other claims processing, noticing, disbursing and related administrative services as may be requested from time to time by the Debtors, including, but not limited to, assisting in preparation of the Debtors' schedules and statements of financial affairs; (m) oversee the distribution of the applicable solicitation material to each holder of a claim against or interest in the Debtors; (n) respond to mechanical and technical distribution and solicitation inquiries; (o) receive, review and tabulate the ballots cast, and make determinations with respect to each ballot as to its timeliness, compliance with the Bankruptcy Code, Bankruptcy Rules and procedures ordered by this Court subject, if necessary, to review and ultimate determination by the Court; and (p) perform such other related plan-solicitation services as may be requested by the Debtors. In addition to the foregoing, the Debtors seek to employ BSL to assist them with, among other things, certain data processing and ministerial administrative functions, including: (a) preparing their schedules, statements of financial affairs and master creditor lists, and any amendments thereto; and (b) acting as solicitation and disbursing agent in connection with the chapter 11 plan process. Allan S. Brilliant, Esq., at Goodwin and Getzler in New York tells the Court that his Firm was able to negotiate a discounted hourly rate for some of BSL's consultants and an additional 5% across the board discount (excluding out-of-pocket expenses) with respect to all hourly fees, as well as fees for mailings, noticing, printing and reproduction. The Debtors chose BSL because of the Firm's discounted fees which will provide greater value for the estates when compared to the competitor's bid. Kathy Gerber, president of Bankruptcy Services, discloses the discounted hourly rates of the Firm's professionals: Designation Hourly Rate ----------- ----------- Senior Manager/On-Site Consultants $225 Other Senior Consultants $160 Programmer $130 - $160 Associate $135 Data Entry/Clerical $40 - $60 Schedule Preparation $225 The Debtors believe that Bankruptcy Services, LLC: (a) neither holds nor represents any interest adverse to the Debtors or the Debtors' estates on matters for which it is to be retained; (b) has no prior connection with the Debtors, their creditors or any other party in interest; and (c) is a "disinterested" person as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in New York, GT Brands Holdings LLC and its debtor- affiliates are leading developers and multi-channel marketers of consumer products, focused primarily on the fitness and weight- loss, health and beauty, housewares, inspirational programming and family entertainment segments. The Debtors' marketing strategy emphasizes the development and introduction of branded video content and other products to consumers primarily through television infomercials. The Debtors also sell home videos (VHS and DVD) to major mass retailers as well as wholesale clubs, drugstore chains, convenience stores and specialized video retailers. The Debtor and its six debtor-affiliates filed for chapter 11 protection on July 11, 2005 (Bankr. S.D.N.Y. Case No. 05-15167). Brian W. Harvey, Esq., Allan S. Brilliant, Esq., and Emanuel C. Grillo, Esq., at Goodwin Procter LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets between $50 million to $100 million and debts of over $100 million. GT BRANDS: Wants to Hire Getzler Henrich as Financial Advisors -------------------------------------------------------------- GT Brands Holdings LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to employ Getzler Henrich & Associates LLC as their financial advisors and management consultants. Getzler Henrich will: 1) assist the Debtors in their preparation, analysis, and monitoring of historical, current, and projected financial affairs, including: a) schedules of assets and liabilities, statements of financial affairs, periodic operating reports; and b) analyses of cash receipts and disbursements, analyses of cash flow forecasts, analyses of various asset and liability accounts, analyses of any unusual or significant transactions between themselves and any other entities, and analyses of proposed restructuring transactions; 2) assist the Debtors in the valuation of their businesses and in the preparation of a liquidation valuation for a plan of reorganization plan and disclosure statement; 3) assist the Debtors in the preparation of a rolling 8-week cash forecasts, and in their review of existing and proposed systems and controls, including cash management; 4) assist the Debtors in preparing or reviewing strategic options, business plans and financial projections, and in reviewing and evaluating claims; 5) render expert testimony and litigation support services as requested from time to time by the Debtors and their counsel; 6) assist the Debtors in identifying or reviewing preference payments, fraudulent transfers and other potential causes of action; and 7) provide all other financial advisory and management consulting services as may be requested by the Debtors and their counsel. Peter A. Furman, a Managing Director at Getzler Henrich, discloses that his Firm received a $175,000 retainer. Mr. Furman reports Getzler Henrich's professionals current billing rates: Designation Hourly Rate ----------- ----------- Principals & Managing Directors $355 - $500 Directors $295 - $350 Associate Professionals & Consultants $125 - $305 Getzler Henrich assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in New York, GT Brands Holdings LLC and its debtor- affiliates are leading developers and multi-channel marketers of consumer products, focused primarily on the fitness and weight- loss, health and beauty, housewares, inspirational programming and family entertainment segments. The Debtors' marketing strategy emphasizes the development and introduction of branded video content and other products to consumers primarily through television infomercials. The Debtors also sell home videos (VHS and DVD) to major mass retailers as well as wholesale clubs, drugstore chains, convenience stores and specialized video retailers. The Debtor and its six debtor-affiliates filed for chapter 11 protection on July 11, 2005 (Bankr. S.D.N.Y. Case No. 05-15167). Brian W. Harvey, Esq., Allan S. Brilliant, Esq., and Emanuel C. Grillo, Esq., at Goodwin Procter LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets between $50 million to $100 million and debts of over $100 million. HANLEY WOOD: S&P Rates $352 Million Senior Secured Loans at B ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' bank loan rating and its recovery rating of '3' to Hanley Wood LLC's $352 million senior secured credit facilities. The '3' recovery rating indicates an expected meaningful recovery (50%-80%) of principal in the event of a default. The facilities consist of: * a $60 million revolving credit facility due 2011, * a $260 million term loan due 2012, and * a $32 million delayed-draw term loan due 2012. At the same time, Standard & Poor's assigned its 'B' corporate credit rating to the company. The rating outlook is stable. Pro forma total debt was $375 million at March 31, 2005. Washington, D.C.-based Hanley Wood is a leading specialized business-to-business media company serving the residential construction industry. Proceeds of the $260 million in bank term loan will be used to help fund the $618 million acquisition of Hanley Wood (representing an 11.2x EBITDA multiple) by JPMorgan Partners and Wasserstein & Co., which are investing $265 million in common equity. A $115 million 12.25% privately placed senior subordinated notes issue due 2013 is unrated. "The ratings reflect high risk resulting from the leveraged acquisition of the company, cyclical operating performance, and limited business diversity," said Standard & Poor's credit analyst Hal F. Diamond. These factors are only partially offset by the company's good niche competitive positions in the construction trade publishing and exhibition industries. The company's operations include more than 30 trade magazines and 15 expositions, although there is a concentration of profitability from two properties, Builder magazine and the Worlds of Concrete trade show. Operating performance is expected to be cyclical, with 55% of revenues generated from the residential new construction market and only 18% of sales derived from the more stable residential remodeling and renovations market. The company's exhibitions and publications generally target the same industries, providing some cross-selling opportunities to trade show exhibitors and magazine advertisers, and enabling the company to leverage its industry knowledge and client relationships. Trade publishing EBITDA is sensitive to cyclical advertising demand and accounts for 38% of total revenues because of the absence of circulation revenues. Hanley Wood has been making acquisitions to increase the EBITDA contribution from expositions, which have higher margins and are less vulnerable to economic cycles than the company's magazines. This strategy increased the percentage of EBITDA from the somewhat stabler exposition segment to 46% in the 12 months ended March 31, 2005, from 31% in 1999. Magazines accounted for 39% of EBITDA in the 12 months ended March 31, 2005, down from 60% in 1999. The stable outlook reflects Standard & Poor's expectation that the company will be able to effectively manage its business through the economic cycle while maintaining appropriate credit measures. The outlook would be revised to negative if a cyclical deterioration in operating performance and a material adverse change in its competitive environment resulted in an increase in debt leverage. Standard & Poor's would consider revising the outlook to positive over the intermediate term if the company is able to: * broaden its business base, * improve overall profitability, * lower debt leverage, and * maintain an appropriate margin of covenant compliance. HIT ENTERTAINMENT: Moody's Rates $376 Million Sr. Sec. Loan at B1 ----------------------------------------------------------------- Moody's Investors Service assigned ratings to HIT Entertainment Ltd, including a B1 corporate family rating (formerly known as senior implied), B1 senior secured bank rating, and a (P) B3 senior subordinated note rating. (Notes expected to be issued later in 2005.) The ratings reflect the significant financial risk at inception as HIT is highly leveraged with sizable annual programming expenses and a competitive operating environment, offset by HIT's attractive assets with strong brand value and good growth opportunities, sizable equity contribution from the sponsor and meaningful enterprise value relative to the debt. This is the first time that Moody's has rated HIT Entertainment. Proceeds from the transaction will finance the taking private of HIT Entertainment plc, a public company traded on the London Exchange. The purchase was fully priced at 12.4 times LTM EBITDA or an approximately 20% premium over trading value. More positively, Apax Partners contributed over 50% of the financing with sponsor equity, a sizable portion, and views HIT as a vehicle for a growing media enterprise. The following ratings have been assigned: - a B1 rating to the $77 million senior secured revolving credit facility due 2011, - a B1 rating to the $376 million senior secured Term Loan B due 2012, - a (P) B3 rating to the $172 million or proposed senior subordinated notes due 2013, and - a B1 corporate family rating, The rating outlook is stable. The ratings also consider the operating risks HIT faces in its pre-school focused business segments, including growing competition for viewers, new programming from Nick jr. and Noggin as well as a new channel launch by the Cartoon network, Tickle U. In addition, negative top line trends in the toy sector are attributed in part to the drifting of children away from traditional toys (HIT's orientation), mitigated by the company's focus on the early pre-school segment where parental approval and oversight is greatest. Additional risks include: customer concentration in the consumer product segment (WalMart 45%, Alliance Entertainment -- a toy distributor 13%, Target 11%) increasing programming costs and its consequent impact on interest coverage and free cash flow as well as overall execution risk associated with a new management team. However, the ratings benefit from the meaningful enterprise value associated with the key characters owned by HIT (Bob the Builder, Barney, and Thomas the Tank Engine) and the opportunities to exploit these characters across home entertainment, consumer products, television and live events. In Moody's view, HIT management has the opportunity to grow cash flow from its current nadir as a result of new exposure in the United States through agreements with PBS, a better licensing arrangement with a preferred toy manufacturing partner and the development of a new cable channel, Sprout, in conjunction with other key operators, Comcast, PBS and Sesame Street. Valuations of like media properties suggest that the sale of HIT would amply cover the company's debt burden. The stable outlook incorporates Moody's expectation that in less than two years HIT is likely to de-lever to a more manageable 5 times and generate modest free cash flow. If the company were to fund its investments in new media/characters with debt or without a concomitant improvement in cash flow, the outlook could become negative. Evidence of recovery as well as expected new growth would be necessary before a positive outlook would occur. Pro forma for the transaction and as of LTM 4/30/05, leverage is high at about 6.5 times debt-to-EBITDA. EBITDA coverage of interest is relatively better at about 2 times however capital expenditures are expected to absorb the company's free cash flow. (EBITDA-CapEx/interest expense of 1.2 is tight.) Notably, at least over the short term, HIT's capital investments are considered discretionary. Over the longer term, there would be a negative impact on growth in cash flow. Leverage at HIT is expected to moderate as the company gains greater coverage in the US television market which should fuel growth in the consumer product and home entertainment segments as well. The B1 ratings on the $453 million of senior secured bank credit facilities reflect the senior-most position of this class of debt and the debt protection measures provided by the credit agreement. The facilities are secured by all of the stock and substantially all of the assets of the borrower and its material subsidiaries and benefit from guarantees of material subsidiaries. The bank rating is the same as the corporate family rating given the preponderance of debt is at this level. Moreover, the term sheet provides for a $150 million incremental term loan. Moody's also notes the collateral does not include the Sprout joint venture but benefits from the valuable characters, film library and licensing agreements. The (P)B3 rating on the $172 million of senior subordinated notes, (which also benefit from guarantees of material subsidiaries), reflect their contractual and effective subordination to the bank credit facilities. HIT Entertainment, with offices London, Dallas and New York, is a leading pre-school entertainment company with a portfolio of properties including Bob the Builder, Thomas the Tank Engine, and Barney the Dinosaur. The company has operations in the UK, US, Canada, Japan and Germany. Business segments include home entertainment, consumer products television and live events as well as a recently announced US digital pre-school channel. IMPROVENET: Auditors Express Going Concern Doubt in Annual Report ----------------------------------------------------------------- Semple & Cooper, LLP, expressed substantial doubt about ImproveNet, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 31, 2004. The auditors point to the Company's net losses for 2004 and 2003, and ImproveNet's nominal working capital at Dec. 31, 2004. The Company has continued to sustain losses for the past several years, however, with funds received from a private placement in June 2004, it now has positive net worth. Its operating losses have limited the Company's ability to obtain vendor credit or extended payment terms and bank financing on favorable terms, accordingly, ImproveNet depends on its cash and cash equivalent balances to fund its operations. ImproveNet's principal capital requirements are to fund operations and capital expenditures, which includes expenditures related to the development and implementation of 1-800-Contractor and AdServePRO. Significant sources of liquidity are cash on hand, borrowings from credit facilities and proceeds from debt and equity issuances. The Company's net working capital as of December 31, 2004 was approximately $3,000, including restricted cash, versus negative working capital of approximately $223,000 as of December 31, 2003. The increase in net working capital primarily relates to the financing transaction completed in June 2004, which is discussed further below. Financing Transaction During June 2004, ImproveNet raised $1,050,000, from the sale of 10,500,000 common shares and three-year warrants to purchase 8,000,000 common shares at a strike price of $0.15 per share in a private placement transaction to several accredited investors. The issuance was made under applicable registration exemptions from both state and federal securities laws including section 4(2) of the Securities Act of 1933, as amended. The proceeds were allocated to the common shares and warrants based on the relative fair value of each security at the time of issuance with $621,500 allocated to the common shares and $428,500 allocated to the warrants. Due to the nature of certain potential financial penalties related to registration rights granted to the Investors, the most substantive of which would require ImproveNet to rescind the transaction at the option of the Investors should the applicable registration statement not be declared effective and remain effective by March 1, 2005, the shares of common stock were initially classified outside of equity as mezzanine financing and the warrants to purchase common stock were initially classified as a liability. During October 2004, the common shares and warrants became fully registered, at which time the amounts were reclassified to equity. Prior to the registration statement being declared effective, changes in the fair value of the warrants were recognized as other income or expense in the Company's statement of operations. Changes in the fair value of the warrants resulted in other income of approximately $162,000 recognized during 2004. In connection with the private placement transaction, ImproveNet granted the right to designate a nominee to its Board of Directors to one of the Investors. As part of the financing transaction described above, the Investors also purchased 1,500,000 common shares from affiliates of three of its officers and directors for an aggregate purchase price of $150,000. Each of these three selling parties entered into a lock-up agreement restricting future sales of their common stock for a specified period, as well as a voting agreement regarding the accredited investor's designated nominee to the Board of Directors. Separately, during June 2004 holders of $370,000 of principal of the Company's 8.0% convertible promissory notes elected to convert the then outstanding principal and interest to common shares and warrants on similar terms to the private placement offering described above. The conversion resulted in the issuance of 3,707,400 common shares and three-year warrants to purchase 2,466,666 common shares at a strike price of $0.15 per share. The issuance was made under applicable registration exemptions from both state and federal securities laws including section 4(2) of the Securities Act of 1933, as amended. Due to the modified conversion terms associated with this conversion, ImproveNet recognized a charge in the amount of approximately $695,000. The remaining $30,000 of the then outstanding principal of the 8.0% convertible promissory notes, which was with affiliates of ImproveNet, was repaid in the second quarter of 2004. Line of Credit During September 2004 ImproveNet entered into a line of credit for $100,000 with a national banking association. Interest accrues on all funds advanced on the line of credit at 1/4 point over the bank's prime lending rate. The maturity of the line of credit facility is Sept. 14, 2005, at which time the payment of all outstanding principal and accrued interest is due. There is no penalty for prepayment of outstanding amounts prior to maturity. The Company has secured its obligations under the line of credit with the pledge of a certificate of deposit. As of Dec. 31, 2004, there was approximately $62,000 drawn on this line of credit. During the first quarter of 2005, this line of credit was paid in full and closed. Separately, ImproveNet has an unsecured $95,000 line of credit agreement with a bank through its subsidiary eTechLogix, Inc. The agreement calls for interest at the bank's prime rate plus 2.75% and is due on demand. ImproveNet had outstanding balances on this line of credit of approximately $60,000 and $66,000 as of Dec. 31, 2004, and 2003, respectively. ImproveNet, Inc. -- http://www.improvenet.com/-- is a leading Internet-based home improvement services company that, through its TrueMatch(TM) platform, connects homeowners to local screened home improvement service providers throughout the United States. The Company was recognized by Money Magazine as "Best of the Web" in 2003 under the Home Improvement Category and was recently featured nationally on the Today Show, MSNBC, CNNfn, CBS Marketwatch and locally on many news networks and in newspapers. ImproveNet has been connecting homeowners with local screened home improvement service providers since 1996. INTERSTATE BAKERIES: Court Consolidates California Profit Centers ----------------------------------------------------------------- As previously reported, Interstate Bakeries Corporation and its debtor-affiliates have sought and obtained the U.S. Bankruptcy Court for the Western District of Missouri's authority to take actions as are necessary to consolidate operations in their Florida/Georgia, Mid-Atlantic, and Northeast profit centers. Since then, the Debtors have continued the analyses of the remaining seven profit centers with a focus on determining the aspects of the Debtors' businesses where the most significant improvements in profitability and efficiency could be achieved. By this motion, the Debtors ask the Court for authority to: (1) consolidate operations in their Northern and Southern California profit centers, including the closure of the identified bakeries and the reduction of routes, depots and thrift stores; (2) implement procedures for rejecting Contracts associated with the Profit Center consolidations; and (3) implement procedures for abandoning any Property associated with the Profit Center consolidations. Based on their analyses of the Northern and Southern California Profit Centers, the Debtors determine that to achieve the target levels of profitability and efficiency, they have to close certain bakeries, depots and thrift stores and deploy the remaining depots to service remapped delivery routes, for a corresponding work force reduction. The Debtors believe that the planned consolidation of the Profit Centers will result in reduced costs, more efficiencies and an improvement in their financial performance, which will be a significant component of the Debtors' long term business plan and, ultimately, a plan of reorganization. Accordingly, the Debtors intend to consolidate operations in the two Profit Centers: A. Northern California The Debtors plan to consolidate their operations in their Northern California Profit Center by closing two bakeries in San Francisco -- the Wonder/Hostess bakery and the Parisian San Francisco bakery -- and reducing routes, depots and thrift stores in Northern California, where the Debtors currently maintain regional facilities. The Debtors expect to complete these actions by August 22, 2005. The Debtors' preliminary estimate of charges to be incurred in connection with the Northern California Profit Center consolidation is approximately $13.5 million, including approximately $6 million of severance charges, approximately $2.5 million of asset impairment charges, and approximately $5 million in other charges. The Debtors further estimate that approximately $11 million of the costs will result in future cash expenditures. The Debtors intend to spend approximately $3 million in capital expenditures and accrued expenses to effect the consolidation. B. Southern California The Debtors intend to consolidate operations in their Southern California Profit Center by standardizing material handling and related distribution equipment and reducing routes, depots and thrift stores in Southern California. The Debtors' six bakeries within the Southern California Profit Center will continue to operate. The Debtors expect to complete these actions by August 24, 2005. The consolidation is expected to affect approximately 350 workers in the Southern California Profit Center. The Debtors' preliminary estimate of charges to be incurred in connection with the Southern California Profit Center consolidation is approximately $2.5 million, including approximately $1.5 million of severance charges and approximately $1 million in other charges. The Debtors intend to spend approximately $3.5 million for capital expenditures and accrued expenses to effect the consolidation. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, reports that the Debtors currently contribute to more than 40 multi-employer pension plans as required under various collective bargaining agreements, many of which are underfunded. Therefore, the Debtors will conduct the Profit Center consolidation in a manner that will not constitute a total or partial withdrawal from the relevant multi-employer pension plans resulting in material potential withdrawal liability. The Debtors have sent out Worker Adjustment and Retraining Notification notices to all parties-in-interest required to receive the notification. Contract Rejection Procedures The Debtors propose these procedures for rejecting additional executory contracts and unexpired leases associated with the Profit Center consolidations: (i) A Contract will be deemed rejected on the earlier of the date set forth in a notice of rejection or 10 days after the Rejection Notice is filed with the Court and delivered to any applicable special notice party; (ii) Objections must be filed within 10 days upon the filing of the Rejection Notice; (iii) If the Court denies the rejection, the Rejection Notice will be null and void. If the Court authorizes the rejection, the Contract would be deemed rejected as of the Rejection Date; and (iv) Affected parties will have 30 days after the Rejection Date to file a claim for rejection damages. Any claims not timely filed will be forever barred. Property Abandonment Procedures The Debtors propose these procedures for abandoning certain property associated with the Profit Center consolidations: (i) A property will be deemed abandoned on the earlier of the date set forth in a notice of abandonment or 10 days after the Abandonment Notice is filed with the Court and delivered to any applicable special notice party; (ii) Objections must be filed within 10 days upon the filing of the Abandonment Notice; and (iii) If the Court denies the abandonment, the Abandonment Notice would be null and void. If the Court authorizes the abandonment of the property, the property would be deemed abandoned as of the Abandonment Date. Mr. Ivester maintains that the proposed rejection and abandonment processes fairly preserve the rights of affected parties to appear before the Court and assert, as applicable, a rejection claim. Moreover, the processes allow for the Debtors to efficiently minimize unnecessary administrative charges. * * * Judge Venters grants the Debtors' request. The Debtors are authorized to reject: * the vehicle lease and service agreement with Salem Leasing Corporation, effective as of August 26, 2005; and * the supply agreement with School Board of Broward County, Florida, effective as of July 31, 2005. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) JABEZ MANUFACTURING: Case Summary & 21 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Jabez Manufacturing, LLC dba Landau Watercraft 2000 Industrial Lebanon, Missouri 65536 Bankruptcy Case No.: 05-61917 Type of Business: The Debtor builds aluminum pontoons and fishing boats. See http://www.landauboats.com/ Chapter 11 Petition Date: July 13, 2005 Court: Western District of Missouri (Springfield) Debtor's Counsel: Raymond I. Plaster, Esq. Raymond I. Plaster, P.C. 3275 East Ridgeview Street, Suite C Springfield, Missouri 65804 Tel: (417) 862-3704 Fax: (417) 862-1936 Estimated Assets: Unknown Estimated Debts: $500,000 to $1 Million Debtor's 21 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Samuel Specialty Metals $188,034 5022 Ashley Court Houston, TX 77041-6911 Ken-Mac Metals $51,290 P.O. Box 73230-N Cleveland, OH 44130 United Insurers $43,924 P.O. Box 1234 Lebanon, MO 65536 Maxicare $42,000 Bear Trailer $36,682 Romar Industries $27,046 Syntex $15,893 Go Boating $15,575 Eastern Metal Supply $15,219 Temple Industries $13,376 Teleflex $8,294 Future Foam $7,407 Harris Publishing $7,007 Pro Flight $5,821 Stearns $5,746 Igloo Products $4,999 Federal Protection $3,909 TNT Lift Systems $3,523 Cheetah Expediting $3,275 Thomas G. Farla $2,584 John Boyle & Company $1,715 JP MORGAN: Fitch Lifts Rating on $14MM Certs. Two Notches to BBB- ----------------------------------------------------------------- J.P. Morgan Commercial Mortgage Finance Corp.'s mortgage pass- through certificates, series 2000-C9, are upgraded by Fitch Ratings: -- $36.6 million class B to 'AAA' from 'AA+'; -- $38.7 million class C to 'AAA' from 'A'; -- $10.2 million class D to 'AA' from 'A-'; -- $28.5 million class E to 'A-' from 'BBB'; -- $14.3 million class F to 'BBB' from 'BBB-'; -- $14.3 million class G to 'BBB-' from 'BB+'. Fitch also affirms these classes: -- $34.5 million class A-1 'AAA'; -- $404.7 million class A-2 'AAA'; -- Interest-only class X 'AAA'; -- $20.4 million class H 'BB'. The $25.6 million class J certificates are not rated by Fitch. The upgrades reflect the increased credit enhancement levels from loan payoffs and amortization. In addition, a total of 11 loans (19%) in the pool have been defeased to date. As of the June 2005 distribution date, the pool's aggregate principal balance has been reduced by approximately 23% to $627.7 million from $814.4 million at issuance. Six loans are currently being specially serviced (4.4%), including four delinquent loans (3.6%). The largest of these loans (2%), is secured by three multifamily properties in Ohio and one in Michigan. The properties have been real estate owned since April 2005. Some improvements are being completed at the properties before they are marketed for sale. The next loan (0.76%) is secured by an office property in Lancaster, NY. The property is 62% occupied and a receiver is currently in place. The loan is in foreclosure. Losses are expected on several of the specially serviced loans; however, they are expected to be absorbed by the classes not rated by Fitch. The pool's realized losses to date total $19.2 million, or 2.4% of the original pool balance. J.P. MORGAN: S&P Lifts Low-B Rating on Class H Certificates ----------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on seven classes of J.P. Morgan Chase Commercial Mortgage Securities Corp.'s commercial mortgage pass-through certificates from series 2003-FL1. Concurrently, the ratings on four classes from the same transaction are affirmed. The raised ratings primarily reflect significant loan payoffs that have increased credit enhancement levels. The affirmed ratings reflect subordination levels that are appropriate under various stress scenarios. As of June 14, 2005, the pool consisted of nine floating-rate, interest-only loans with an outstanding balance of $109.0 million, down from 37 loans with an outstanding balance of $456.0 million at issuance. All of these loans are indexed to one-month LIBOR and are open to prepay without any penalty. The largest, third largest, and fifth largest loans in the pool had outstanding balances of $20.0 million, $17.8 million, and $10.5 million, respectively, and have paid off subsequent to the issuance of the last remittance report. Thus, the current pool balance is $60.7 million. As part of its surveillance review, Standard & Poor's reviewed recent property inspections provided by the master servicer, Midland Loan Services. All of the properties were deemed to be in "good" or "excellent" condition. The smallest loan in the pool has an outstanding balance of $6.0 million and was recently transferred to the special servicer. This loan matures on Aug. 10, 2005, and has two, one-year extension options. The property's performance has declined to a debt service coverage level that is not supportive of a loan extension. The borrower has expressed difficulty in its ability to pay off the loan. This loan is secured by a 168-unit multifamily complex located in San Marcos, Texas (approximately 30 miles south of Austin) that was constructed in 1984. Even though the property reported occupancy of 99.0% in 2004, up from 90.0% in 2003, the rental income went down by 4.0% during the same period. This reflects an aggressive occupancy campaign, where concessions were given to raise occupancy levels. As a result, 2004 net cash flow was $322,000, down from $446,000 in the previous year. Given the depressed cash flow, weakness in the apartment market in San Marcos, and the amount of debt on the property, Standard & Poor's anticipates a principal loss upon the eventual resolution of the loan. The largest remaining loan in the pool also presents credit issues. This loan has an outstanding balance of $19.2 million and is secured by a 360-unit multifamily property located in Stockbridge, Georgia (a suburb of Atlanta) that was built in 2000. Although this loan matures Aug. 10, 2005, and has one, one-year extension remaining, it may also not meet a LTV threshold that is a prerequisite for such an extension. Consequently, Standard & Poor's believes the borrower may have difficulty paying off the loan, as its current NCF may not support the amount of the total debt outstanding. In 2004, the property generated a NCF of $1.3 million, down 12.0% from 2003. The property is also subject to a $3.0 million mezzanine loan. Standard & Poor's resized each loan in the pool and the resultant loan sizings appropriately support the raised and affirmed ratings. Ratings Raised J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certs series 2003-FL1 Rating ------ Class To From Credit Enhancement ----- -- ---- ------------------ B AAA AA 76.0% C AAA A 61.8% D AAA A- 58.2% E AAA BBB+ 52.0% F AAA BBB 46.1% G AAA BBB- 41.6% H BBB- BB 26.5% Ratings Affirmed J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certs series 2003-FL1 Class Rating Credit Enhancement ----- ------ ------------------ A-2 AAA 90.0% J B 17.0% K B- 14.0% X-FL AAA -- KENILWORTH SYSTEMS: Restates Financials for 1998 through 2004 ------------------------------------------------------------- Kenilworth Systems Corporation (OTC Pink Sheets: KENS) reported its restated financials on Form 10-K/A as a "development stage company" for the periods from Nov. 24, 1998 to Dec. 31, 2004. Kenilworth emerged from bankruptcy proceedings in 1998 after having paid 100 percent of all approved claims without wiping out any shareholders. The restatement was ordered by the U.S. Securities and Exchange Commission. The changes encompassed restating previously reported amounts which increased operating deficiencies, the elimination of $4,256,926, which was the amount the Company disbursed on or about Sept. 28, 1998, to be discharged from Chapter 7 Bankruptcy Proceedings, and certain adjustments to losses sustained for the periods ended Dec. 31, 2002, 2003 and 2004 for having discounted the conversion feature of one year Convertible Promissory Notes from between ten cents ($.10) per share and twelve cents ($.12) per share to five cents ($.05) per share. The Company recently issued 33,257,913 shares of Restricted Common Stock for $3,808,139 in the conversion of Notes and in settlement of debt at an average price of $0.115 per share. All of the shares may have the restrictions lifted pursuant to Rule 144 and 144K within one or two years which may depress the trading price of the Company's Stock. "The filing of the Restated Financials will now enable the Company to hold the 2005 Annual Meeting of Shareholders," Maureen Plovnick, Director and Corporate Secretary, said. "Kenilworth is a New York Corporation, which requires a minimum of twenty (20) days Notice to Shareholder's Meetings which cannot be scheduled until the Commission approves the Company's Proxy Statement (filed on Form 14-A). We estimate the Meeting will take place by mid- September 2005." Kenilworth Systems Corporation, a development stage company, does not have significant operations. It Intends to engage in the design, development, and manufacture of terminals systems that permit individuals from remote locations, to play along with live in progress casino table games via TV satellite and digital cable broadcast. The company also plans to manufacture and market its product, Roulabette, used by casino patrons and other players to play along with live in-progress casino table games, such as Roulette, Craps, and Baccarat in casinos in the United States, as well as worldwide. Kenilworth was incorporated in 1968 and is based in Mineola, New York. KMART CORP: Kenneth Maynard Gets Stay Lifted to Pursue Litigation --------------------------------------------------------------- As previously reported in the Troubled Company Reporter on June 1, 2005, Kenneth Maynard asks the U.S. Bankruptcy Court for the Northern District of Illinois to condition, modify, or dissolve the automatic stay imposed by Section 362 of the Bankruptcy Code to permit him to pursue his claims against Kmart Corporation pending before the Franklin County Common Pleas Court, in Columbus, Ohio. Mr. Maynard sustained personal injuries on November 18, 1999, while unloading trucks at a Kmart dock. Mr. Maynard worked for Lee's Lumpers. He was asked by a Kmart employee to assist in releasing a jammed plate on the dock. This resulted in near amputation of four of his fingers. Mr. Maynard subsequently filed a lawsuit before the Court of Common Pleas of Franklin County, styled Kenneth Maynard, et al. v. Lee Valentine, et al. The litigation was stayed when Kmart entered bankruptcy. * * * Judge Sonderby finds that Kenneth Maynard has exhausted the personal injury settlement procedures. Accordingly, the Court modifies the automatic stay and the Plan Injunction with respect to Mr. Maynard's pending litigation in the Court of Common Pleas of Franklin County, Ohio. Judge Sonderby permits the Litigation to continue to final judgment or settlement. The Stay will remain in effect with respect to any and all actions by Mr. Maynard to execute on any final judgment or settlement against Kmart or any of its property. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Wants Randall Boorman's Move to File Late Claim Denied ------------------------------------------------------------------ Beth Anne Alcantar, Esq., at Johnson & Associates, in Chicago, Illinois, tells the Court that Randall A. Boorman sustained injuries at a Big Kmart Store, No. 4343, in West Palm Beach, Florida, on September 13, 2002. The Law Offices of Findler & Findler, P.A., representing Mr. Boorman, notified Kmart of the personal injury claim on November 6, 2002, which was acknowledged by Kmart's Claims Examiner. However, the Claims Examiner never notified Mr. Boorman of the Administrative Claims Bar Date before the deadline expired. Therefore, the Administrative Claims Bar Date passed without Findler filing a claim on Mr. Boorman's behalf. In March 2004, Findler became aware that it might be required to file a claim. Findler is not a bankruptcy attorney. Ms. Alcantar says Findler felt that because the injury had occurred after the Petition Date, Mr. Boorman's claim was not covered by the bankruptcy. But to comply with any applicable requirements, Findler sent the claim on March 8, 2004. According to Ms. Alcantar, Mr. Boorman's claim was not listed on Trumbull Services' Web site or the Public Access to Court Electronic Records. Ms. Alcantar asserts that the Claim was not processed properly. Shipment detail says the Claim was receive by the Bankruptcy Court on March 9, 2004. Findler sought clarification from Trumbull but received no reply. Findler filed suit in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida. On November 10, 2004, Kmart sent Mr. Boorman notice of the Administrative Claims Bar Date. For the first time, Mr. Boorman learned about the Administrative Claims Bar Date. On November 22, 2004, Kmart sought dismissal of the State Court Litigation based on Mr. Boorman's failure to timely file his claim. Pursuant to Rule 2006 of the Federal Rules of Bankruptcy Procedure, Mr. Boorman asks Judge Sonderby for an extension of time to file proof of its unsecured administrative expense claim and deem that claim timely filed. Ms. Alcantar contends that the excusable neglect standard for a request under Bankruptcy Rule 2006 has been met because Kmart did not provide Findler with the Bar Date Notice despite the fact that it knew Findler was representing Mr. Boorman. Mr. Boorman also asks the Court to modify the injunction mandated by Section 1141 of the Bankruptcy Code so he may proceed with the State Court Litigation to liquidate his claim so the amount may then be paid in accordance with Kmart's Plan of Reorganization. Kmart's Objection David E. Gordon, Esq., at Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP, in Chicago, Illinois, argues that Mr. Boorman failed to make an adequate showing of a lack of notice during the relevant notice period that was provide twice in May 2003. Contrary to Mr. Boorman's assertions, Kmart provided a timely and reasonable notice of the Administrative Bar Date to Findler & Findler. Mr. Gordon explains that Trumbull sent the Bar Date Notice to Findler no later than May 10, 2003, and again no later than May 19, 2003. The mailing was not returned as "undeliverable." Mr. Gordon asserts that Mr. Boorman has failed to present sufficient facts to establish that his untimely filing of an Administrative Claim Request Form was due to excusable neglect. That the notice was to mailed to Mr. Boorman's counsel and not returned as "undeliverable" establishes a presumption that the notice was received. Mr. Boorman presented no evidence as to how mail is retrieved from the post office and then processed at Findler. It is likely that the Bar Date Notice was received but not acted upon. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 98; Bankruptcy Creditors' Service, Inc., 215/945-7000) MARTIN LUTHER: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Martin Luther King Jr. Community Services of Illinois 453 South Adams Street Freeport, Illinois 61032 Bankruptcy Case No.: 05-73539 Type of Business: The Debtor is a not-for-profit community development corporation that provides charitable, benevolent, religious, scientific, employment, housing and educational services. See http://www.mlkcsi.org Chapter 11 Petition Date: July 14, 2005 Court: Northern District of Illinois (Rockford) Debtor's Counsel: Thomas E. Laughlin, Esq. Ritz & Laughlin, Ltd., P.C. 728 North Court Street Rockford, Illinois 61103 Tel: (815) 968-1807 Fax: (815) 961-1917 Total Assets: $2,034,121 Total Debts: $752,125 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Reverend Charles Collins $57,000 511 South Liberty Freeport, IL 61032 Caine & Weiner $15,031 P.O. Box 8500 Van Nuys, CA 91409-8500 Blue Cross-Blue Shield of Illinois $14,017 P.O. Box 1186 Chicago, IL 60690-1186 Accountemps $12,513 122400 Collections Center Drive Chicago, IL 60693 Danka Office Imaging $11,815 201 A 1111 South Alpine Road Rockford, IL 61108 Timmer & Associates, P.C. $7,899 Certified Public Accountants 4480 & 48th Avenue Court, Suite 3 Rock Island, IL 61201-9203 FHN $7,312 Central Business Office P.O. Box 268 Freeport, IL 61032 Philadelphia Insurance Companies $6,450 P.O. Box 8500-8955 Philadelphia, PA 19178-8955 Fifth Third Bank $5,327 Trust Department 101 West Stephenson Street Freeport, IL 61032 GIG Technologies $5,310 James Estes 10078 Bellview Road Orangeville, IL 61060 ComEd $5,174 Bill Payment Center Chicago, IL 60668-0001 Helsley Supply Company $4,945 4960 & 28th Avenue Rockford, IL 61109 Hewlett-Packard Company $3,102 Credit Tream P.O. Box 277205 6000 Feldwood Road College Park, GA 30349-7203 Pitney Bowes Purchase Power $2,959 P.O. Box 856042 Louisville, KY 40285-6042 Pitney Bowes Credit Corporation $2,357 1313 Atlantic, 3rd Floor Spokane, WA 99201-2303 Dyne, Friedland & Omrani $2,276 P.O. Box 7020 Van Nuys, CA 91409 Cub Food 30914 $2,196 1512 South West Avenue Freeport, IL 61032 Dell Marketing L.P. $2,032 c/o Dell USA L.P. P.O. Box 802816 Chicago, IL 60680-2816 Verizon North $2,003 P.O. Box 920041 Dallas, TX 75392-0041 Premium Assignment Corporation $1,841 P.O. Box 3100 Tallahassee, FL 32315-3100 MAYTAG CORP: Stockholders to Vote on Triton Merger on Aug. 19 ------------------------------------------------------------- Maytag Corporation (NYSE: MYG) has scheduled a special meeting of stockholders for Aug. 19, 2005, to consider and vote on the adoption of the merger agreement with Triton Acquisition Holding Co. As previously announced on May 19, 2005, Maytag and Triton Acquisition Holding Co., an entity organized by an investor group led by Ripplewood Holdings L.L.C., have entered into a merger agreement pursuant to which Maytag would become a subsidiary of Triton Acquisition Holding Co., and Maytag stockholders would receive $14.00 in cash for each of their shares of Maytag common stock. Stockholders of record of Maytag as of July 20, 2005, will be entitled to vote on the transaction. Maytag plans to mail definitive proxy material to its stockholders on or about July 20, 2005. HSR Waiting Period Maytag Corporation received notification from the Federal Trade Commission that the FTC has granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction remains subject to the receipt of debt financing by Triton Acquisition Holding Co., stockholder approval and other customary closing conditions. The Declining Offer On June 30, Maytag disclosed to the Securities and Exchange Commission that the Ripplewood-led Triton group had offered $23.50 per share cash for the company in December 2004. In February, the Triton group revised its offer to $17.25 per share and then to $14 two months later when it became clear that Maytag's business prospects and income would face challenges throughout the year. Maytag's board accepted the $14 offer on May 19. The Triton Deal If the Triton acquisition is completed, Maytag will become a subsidiary of Triton Acquisition Holding Co., SEC filings said. The company expects the Triton deal to be completed by Dec. 15. Triton's purchase of Maytag is expected to total $1.65 billion, which includes the assumption of $975 million of Maytag debt, repayment of financing and other closing costs, according to the proxy statement. The purchase would likely be financed by Triton through a $900 million line of revolving credit and $750 million in secured credit from Citigroup Global Markets Inc., Deutsche Bank Trust Company Americas, Deutsche Bank AG Cayman Islands Branch, JPMorgan Chase Bank, N.A. and J.P. Morgan Securities Inc., the documents said. In addition, Triton has obtained $450 million in equity commitments from the investor group, the documents said. The group includes New York-based Ripplewood Holdings LLC and RHJ International, of Belgium, investment firms started by Timothy Collins. GS Capital Partners, a Goldman Sachs & Co. investment firm, and J. Rothschild Group Ltd. are the other partners. Immediately following the closing of the merger, Triton Acquisition Holding will be owned: * 35.56% by entities affiliated with Ripplewood Partners II, L.P. and one or more other private equity funds sponsored by Ripplewood Holdings L.L.C. Ripplewood Holdings is a leading private equity firm established by Timothy C. Collins in 1995. To date, Ripplewood has invested in transactions with an aggregate enterprise value of $12 billion, focusing on investments in the United States and Japan; * 35.56% by RHJ International. RHJ International (Euronext: RHJI) is a limited liability company organized under the laws of Belgium, having its registered office in Avenue Louis 326, 1050 Brussels, Belgium. It is a diversified holding company focused on creating long-term value for its shareholders by acquiring and operating businesses in attractive industries in Japan and elsewhere; * 22.22% by GS Capital Partners V Fund, L.P. and one or more private equity funds sponsored by Goldman, Sachs & Co. GS Capital Partners V Fund, L.P., together with certain affiliated funds, currently serves as Goldman, Sachs & Co.'s primary investment vehicle for direct private equity investing. GS Capital Partners V Fund was raised in April 2005 with $8.5 billion of capital commitments and is managed by the Principal Investment Area of Goldman Sachs. Goldman Sachs, directly and indirectly through its various Principal Investment Area managed investment partnerships, has invested over $16 billion in over 500 companies since 1986 and manages a diversified global portfolio; and * 6.66% by one or more affiliates of J. Rothschild Group Ltd., an investment vehicle of the J. Rothschild Group of Companies, which includes RIT Capital Partners plc (LSE: RCP), a diversified investment trust, and family and charitable trusts associated with Lord Rothschild. A copy of the proposed Ripplewood deal is available for free at http://researcharchives.com/t/s?54 Maytag Corporation is a $4.7 billion home and commercial appliance company focused in North America and in targeted international markets. The corporation's primary brands are Maytag(R), Hoover(R), Jenn-Air(R), Amana(R), Dixie-Narco(R) and Jade(R). At Jan. 1, 2005, Maytag's balance sheet reflected a $75,024,000 stockholders' deficit, compared to $65,811,000 of positive equity at Jan. 3, 2004. * * * As reported in the Troubled Company Reporter on June 23, 2005, Maytag Corporation's 'BB' senior unsecured debt remains on Rating Watch Negative by Fitch Ratings following the company's announcement that it has received a preliminary non-binding proposal from Bain Capital Partners LLC, Blackstone Capital Partners IV L.P. and Haier America Trading, L.L.C. to acquire all outstanding shares of Maytag for $16 per share cash. As reported in the Troubled Company Reporter on Apr. 29, 2005, Moody's Investors Service downgraded Maytag Corporation's senior unsecured ratings to Ba2 from Baa3 and the short-term rating to Not Prime from Prime-3. At the same time the Ba2 senior unsecured note rating was placed on review for possible further downgrade. Moody's also assigned a new senior implied rating of Ba2. Moody's says the outlook for the ratings remains negative. The ratings downgraded are: * Senior unsecured rating to Ba2 from Baa3; the rating is placed on review for possible further downgrade * Issuer rating to Ba2 from Baa3, * Short term rating to Not Prime from P-3. The rating assigned: * Senior implied rating of Ba2. As reported in the Troubled Company Reporter on Apr. 26, 2005, Standard & Poor's lowered its long-term corporate credit and senior unsecured debt ratings on home and commercial appliance manufacturer Maytag Corp. to 'BB+' from 'BBB-'. At the same time, the 'A-3' short-term corporate credit and commercial paper ratings on the Newton, Iowa-based company were withdrawn. The ratings were removed from CreditWatch, where they were placed Jan. 28, 2005, following weaker-than-expected fourth quarter results and Standard & Poor's ongoing concerns about Maytag's ability to improve its operation performance. S&P says the outlook is stable. Total debt outstanding at April 2, 2005, was about $970 million. METRIS COS: SEC Sends Wells Notice, Advancing Accounting Probe -------------------------------------------------------------- Metris Companies Inc. (NYSE:MXT) received a "Wells Notice" from the staff of the U.S. Securities and Exchange Commission in connection with the Commission's investigation concerning the company's reporting and treatment of "Allowance for loan loss" for 2001, its valuation of "Retained interests in loans securitized" and other matters. That investigation was disclosed by Metris in August 2003. Under the SEC's procedures, a Wells Notice indicates that the staff intends to recommend that the Commission bring a civil injunctive action against recipients for possible violations of federal securities laws. The Wells Notice also covers the company's current chief executive officer and its controller. Recipients of Wells Notices have the opportunity to respond to the SEC staff before the staff makes its formal recommendation on whether any action should be brought by the SEC. Metris Companies Inc. -- http://www.metriscompanies.com/-- based in Minnetonka, Minn., is one of the largest bankcard issuers in the United States. The company issues credit cards through Direct Merchants Credit Card Bank, N.A. -- http://www.directmerchantsbank.com/-- a wholly owned subsidiary headquartered in Phoenix, Ariz. * * * As reported in the Troubled Company Reporter on Apr. 15, 2005, Moody's Investors Service raised the ratings of Metris Companies, Inc. (senior unsecured to B3 from Caa2) and its bank subsidiary Direct Merchants Credit Card Bank NA (issuer to Ba3 from B1). The rating outlook is stable. The rating agency said the upgrade reflects the improvements in Metris's asset quality. These improvements have led to positive earnings at the company as well as the release of trapped cash from its securitization conduits, and have also bolstered ABS investor confidence, giving the company improved access to the securitization market and greater funding flexibility. The ratings action concludes a ratings review begun on January 13, 2005. METRIS COS: Prepaying $49 Million 10-1/8% Senior Notes on Aug. 15 ----------------------------------------------------------------- Metris Companies Inc. (NYSE:MXT) intends to prepay, at par, the remaining $49.1 million of its unsecured 10-1/8% senior notes, which are due July 2006. The payment is expected to be made on Aug. 15, 2005, following the required notification period. "We will have prepaid $450 million of corporate debt in the last 10 months," said Metris Treasurer Scott Fjellman. "With this final prepayment, all our outstanding corporate debt will be eliminated." Metris Companies Inc. -- http://www.metriscompanies.com/-- based in Minnetonka, Minn., is one of the largest bankcard issuers in the United States. The company issues credit cards through Direct Merchants Credit Card Bank, N.A. -- http://www.directmerchantsbank.com/-- a wholly owned subsidiary headquartered in Phoenix, Ariz. * * * As reported in the Troubled Company Reporter on Apr. 15, 2005, Moody's Investors Service raised the ratings of Metris Companies, Inc. (senior unsecured to B3 from Caa2) and its bank subsidiary Direct Merchants Credit Card Bank NA (issuer to Ba3 from B1). The rating outlook is stable. The rating agency said the upgrade reflects the improvements in Metris's asset quality. These improvements have led to positive earnings at the company as well as the release of trapped cash from its securitization conduits, and have also bolstered ABS investor confidence, giving the company improved access to the securitization market and greater funding flexibility. The ratings action concludes a ratings review begun on January 13, 2005. MILACRON INC: Slow Improvement Prompts S&P's Stable Outlook ----------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on plastics machinery maker Milacron Inc. to stable from positive and affirmed the ratings on the company, including the 'B-' corporate credit rating. "The outlook revision reflects our view that the company's slow improvement in a recovering market, while good at the current rating, is less likely to lead to an upgrade over the next two years than was previously thought," said Standard & Poor's credit analyst Natalia Bruslanova. The ratings on Cincinnati, Ohio-based Milacron Inc. reflect its debt burden, which is still large though it has diminished somewhat. The ratings also reflect the company's weak cash generation due to the depressed end markets in plastic machinery and mold technologies, though these segments are slowly recovering. These weaknesses are partly offset by the company's steady and profitable positions in the machinery aftermarket and industrial metalworking fluids businesses. Milacron's lease-adjusted debt to EBITDA is likely to be about 6.5x for 2005, which is somewhat high for the rating. For an upgrade, Standard and Poor's believes the ratio would need to be sustained at about 5x, which entails a sharp improvement in EBITDA. If end markets strengthen markedly later in 2005 or in 2006 and Milacron benefits, Standard and Poor's could revise the outlook back to positive. If the very slow recovery in the plastic machinery market stalls, however, and the company's liquidity erodes, the outlook could be revised to negative or the ratings lowered. Despite the downturn in plastics machinery, Milacron remains a leader in the sector. The company's segments -- injection molding, blow molding, extrusion, and mold bases -- enjoy No. 1 positions in North America and No. 2 or No. 3 in Europe and Asia. The company's operating performance in 2004 and 2005 has improved because of cost reductions and some demand recovery. Longer-term improvement will be driven by the level of customer demand for plastic technologies machinery, which is showing signs of recovery. However, this is being hindered by high oil and resin prices that have hurt the profitability of Milacron's customers and their demand. Demand has also been weaker in automotive end markets. Customer capacity utilization is hovering around the 84%, a level that in the past has been necessary to spur significant order increases, but because customer profitability has been constrained by high raw material costs, new orders have been slower to recover than expected. Milacron's sales in the first quarter of 2005 were $192 million, up $3 million from a year ago. New orders in the quarter increased 8% from year-ago levels, to $202 million, the highest in four years, exceeding sales by $10 million. MIRANT CORP: Court Approves Perryville Settlement Agreement ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas gave Mirant Corporation, Mirant Americas Energy Marketing, LP, and Mirant Americas, Inc., permission to enter into a settlement agreement with Perryville Energy Partners, LLC, and Perryville Energy Holdings, LLC, to resolve certain claims arising from a Tolling Agreement. The Tolling Agreement is a 21-year contract between MAEM and Perryville Partners entered on April 30, 2001, pursuant to which MAEM was obligated to purchase all of the electricity generated by Perryville Partners' power plant located in Perryville, Louisiana. On June 7, 2001, Perryville Partners borrowed money under a Construction and Term Loan Agreement from KBC Bank, N.V., and certain other banks and financial institutions. The Term Loan is secured by: -- substantially all the assets of Perryville Partners, including the Perryville plant; and -- a pledge of the limited liability company interests of Perryville Holdings in Perryville Partners. At the time of the Term Loan, Perryville Holdings and Mirant Perryville Investments, LLC, owned the equity interests in Perryville Partners on a 50%-50% basis. In June 2002, Perryville Holdings purchased MPI's 50% equity interest in Perryville Partners for cash and an assumption of certain debt. Mirant Corp. guaranteed certain of MAEM's obligations under the Tolling Agreement. Perryville Partners and MAI also entered into a Subordinated Loan Agreement whereby MAI agreed to lend to Perryville Partners $100 million. MAI provided an additional guaranty of MAEM's obligations under the Tolling Agreement up to the amount outstanding under the Subordinated Loan. The Tolling Agreement was rejected on September 15, 2003. On November 7, 2003, Perryville Partners asked the Court to allow and compel the Debtors to pay $7,165,632 on account of its administrative expense claim for services rendered to MAEM pursuant to the Tolling Agreement for the period of July 31, 2003, through the Rejection Date. The Debtors and the Mirant Creditors' Committee objected to the administrative claim. Robin E. Phelan, Esq., at Haynes and Boone, LLP, in Dallas, Texas, reported that MAEM's rejection of that Tolling Agreement ultimately gave rise to: (a) separate Chapter 11 filings by the Perryville Parties in the U.S. Bankruptcy Court for the Western District of Louisiana; and (b) the filing by Perryville Partners of proofs of claim in the Debtors' Chapter 11 cases for alleged rejection damages in excess of $1.0 billion. Perryville Partners filed four claims against the Mirant Debtors: 1. Claim No. 6261, a general unsecured claim against MAEM for damages caused by rejection of the Tolling Agreement and unpaid prepetition amounts owed to Perryville Partners under the Tolling Agreement; 2. Claim Nos. 6262 and 6263 -- a general unsecured claim and a secured claim against MAI for $98,650,000 under the MAI Guaranty; and 3. Claim No. 6264, a general unsecured claim against Mirant for $177,178,391 under the Mirant Guaranty. The Debtors and the Mirant Creditors' Committee objected to the Claims. MAI also filed a proof of claim in the Louisiana Bankruptcy Court against each of Perryville Parties for $98,700,000, based on the unpaid balance under the Subordinated Loan. According to Mr. Phelan, the Mirant Parties and the Perryville Parties have been engaged in extensive litigation over the Claims. On the eve of trial of the initial phase of the claims litigation, the parties reached an agreement in principal to resolve their disputes, Mr. Phelan relates. The substantive terms of the Settlement Agreement are: A. Allowance of Perryville Partners' Claims against the Mirant Debtors a. Claim No. 6261 will be allowed as a prepetition general unsecured claim against MAEM for $207 million, subject to reduction if Perryville Partners exercises its right to offset the Allowed Sub Debt Claim against the Allowed MAI Guaranty Claim; b. The $207 million claim will be bifurcated into two separate and independent claims against MAEM: * Claim No. 6261A -- a prepetition, general unsecured claim for $98.7 million; and * Claim No. 6261B -- a prepetition, general unsecured claim for $108.3 million; c. Claim No. 6262 will be allowed as a prepetition claim against MAI for $98.7 million; d. Claim No. 6264 will be allowed as a prepetition general unsecured claim against Mirant for $177,178,391; e. All other prepetition claims which Perryville Partners have, or may have, against any of the Mirant Debtors will be disallowed and expunged, including Claim No. 6263; and f. The Administrative Expense Claim will be deemed to have been satisfied in full by virtue of MAEM's prior postpetition payments to Perryville Partners for $2,360,304. B. Allowance of MAI Claim Against Perryville Debtors MAI will be deemed to have an allowed general unsecured claim against Perryville Partners in Perryville Partners' Chapter 11 case for $98.7 million as "Allowed Sub Debt Claim." The Allowed Sub Debt Claim will rank: (1) junior to any and all claims of the Perryville Partners Lenders; (2) pari passu with any and all prepetition general unsecured claims against Perryville Partners; and (3) senior to the equity interests of Perryville Holdings in Perryville Partners. All other prepetition claims which any of the Mirant Debtors have, or may have, against any of the Perryville Debtors, excluding the Allowed Sub Debt Claim, will be disallowed and expunged. C. Treatment of Allowed Perryville Partners Claims To the extent that the bankruptcy estates of the Mirant Debtors are not substantively consolidated, Perryville Partners will be entitled to assert each of its allowed claims against the respective the Mirant Debtor obligated thereon, and Perryville Partners would be entitled to a distribution on account of each of the claim so long as Perryville Partners' aggregate recovery is not in excess of the dollar amount of its allowed Rejection Damages Claim plus interest thereon calculated at the applicable rate from the Mirant Petition Date through the date of payment in full (but only to the extent that Perryville Partners is entitled to postpetition interest under the Bankruptcy Code). If the Mirant Debtors are substantively consolidated: (a) the Allowed Mirant Guaranty Claim would be eliminated; (b) the Allowed MAI Guaranty Claim would be eliminated, except to the extent that Perryville Partners would continue to have its right to offset the claim against the Allowed Sub Debt Claim; and (c) Perryville Partners would be limited to a distribution solely on account of the Allowed Rejection Damages Claim. The Perryville Parties agreed not to oppose the substantive consolidation of the Mirant Parties, and the Mirant Parties have agreed, if their bankruptcy estates are substantively consolidated in whole or in part, that Similar Claims to the Allowed Perryville Partners Claims will not be afforded more favorable treatment than the Allowed Perryville Partners Claims. Perryville Partners' aggregate recovery under a Confirmed Mirant Plan on account of all of the Allowed Perryville Partners Claims will not exceed the dollar amount of the Allowed Rejection Damages Claim plus interest thereon calculated at the applicable rate from the Mirant Petition Date through the date of payment in full (but only to the extent that Perryville Partners is entitled to postpetition interest under the Bankruptcy Code). Until the time as: (1) Perryville Partners elects to exercise or to not exercise its right to offset the Allowed MAI Guaranty Claim against the Allowed Sub Debt Claim; or (2) Perryville Partners' right to exercise the offset is extinguished pursuant to the Settlement Agreement, that property which would otherwise be distributable on account of Claim 6261A (if Perryville Partners were to elect not to exercise its right of offset) will be held in escrow for the benefit of Perryville Partners or its assignee. If Perryville Partners elects to exercise its right to offset the Allowed MAI Guaranty Claim against the Allowed Sub Debt Claim, the Escrowed Property will be released to the Mirant Debtors or otherwise distributed in accordance with the Confirmed Mirant Plan. If Perryville Partners sends notice to the Mirant Debtors that it elects not to exercise its right to offset the Allowed MAI Guaranty Claim against the Allowed Sub Debt Claim or if Perryville Partners has not made its election before the expiration of the Election Deadline, the Escrowed Property (and all further distributions on account of Claim 6261A) will be promptly delivered, without any holdback, reduction or offset whatsoever, to Perryville Partners or its assignee. The Election Deadline will be midnight on the later of March 31, 2006, and the Mirant Effective Date, unless the Mirant Parties and the Perryville Parties otherwise agree in writing to extend that deadline. 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. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Disclosure Statement Hearing Rescheduled to Aug. 17 ---------------------------------------------------------------- According to Ian T. Peck, Esq., at Haynes and Boone, LLP, in Dallas, Texas, the hearing to consider Mirant Corporation and its debtor-affiliates' Amended Disclosure Statement is reset to August 17, 2005, at 9:00 a.m. As reported in the Troubled Company Reporter on April 1, 2005, the Debtors delivered their First Amended Joint Plan of Reorganization and First Amended Disclosure Statement explaining that Plan to the U.S. Bankruptcy Court for the Northern District of Texas on March 25, 2005. Mirant says that its plan as originally filed on January 19, 2005, was the product of extensive, but incomplete, negotiations with the Corp Committee, the MAGI Committee. Although not supported by either committee, Mirant believes that Plan reflected the basic construct around which the parties had negotiated to that point and otherwise represented, in the Debtors' view, a reasonable and appropriate compromise that permitted the value of the Debtors' business to be maximized and provided a fair allocation between the Debtors' estates. Negotiations regarding the terms under which the Debtors would emerge from chapter 11 protection continued since January. Mirant believes that the Amended Plan reflects the current status of discussions with various parties, and reflects an agreement in principal with the Corp Committee. Given the current state of negotiations, Mirant believes there is a reasonable prospect of obtaining the support of the MAGI Committee before the Disclosure Statement begins. Mirant makes it clear that the Amended Plan does not reflect material input from the Official Committee of Equity Security Holders because there isn't sufficient value to flow to that constituency. The Equity Committee continues to argue that holders of Equity Interests in Mirant are entitled to a recovery because the enterprise value of the Debtors' business exceeds the amount necessary to provide a full recovery to creditors. The Debtors say they're ready to proceed with the hearing on April 11, 2005, at which time they'll ask the Court to determine enterprise value. If creditors accept and the Court confirms the Amended Plan: * The Debtors' business will continue to be operated in substantially its current form, subject to: (1) certain internal structural changes that the Debtors believe will improve operational efficiency, facilitate and optimize the ability to meet financing requirements and accommodate the enterprise's debt structure as contemplated at emergence; and (2) potentially organizing the new parent entity for the Debtors' ongoing business operations in the jurisdiction outside the United States; * The estates of Mirant Corp., Mirant Americas Energy Marketing, LP, Mirant Americas, Inc., and the other debtor- subsidiaries -- excluding Mirant Americas Generation, LLC, and its debtor-subsidiaries -- will be substantially consolidated for purposes of determining treatment of and making distributions in respect of claims against and equity interests in Consolidated Mirant Debtors; * MAG's estates will be substantially consolidated for purposes of determining treatment of and making distributions in respect of Claims against and Equity Interests in Consolidated MAG; * The holders of unsecured claims against Consolidated Mirant Debtors will receive a pro rata share of 100% of the shares of New Mirant common stock, except for: (1) certain shares to be issued to the holders of certain MAG Claims; and (2) the shares reserved for issuance pursuant to the New Mirant Employee Stock Programs, which will provide for an eligible pool of awards to be granted to New Mirant's eligible employees and directors in the form of stock options; * The unsecured claims against Consolidated MAG will be paid in full through: (1) the issuance to general unsecured creditors and holders of MAG's revolving credit facility and MAG's senior notes maturing in 2006 and 2008 of: (i) new debt securities of a newly formed intermediate holding company under MAG -- "New MAG Holdco" -- or, at the option of the Debtors, cash proceeds from third-party financing transactions, equal to 90% of the full amount owed to those creditors; and (ii) common stock in the Debtors' new corporate parent that is equal to 10% of the amount owed; and (2) the reinstatement of MAG's senior notes maturing in 2011, 2021 and 2031; * The intercompany claims between and among Consolidated Debtors and Consolidated MAG will be resolved as part of a global settlement under the Amended Plan whereby Intercompany Claims will not receive a distribution under the Plan; * The consolidated business will have approximately $4.33 billion of debt -- as compared to approximately $8.63 billion of debt at the commencement of the Debtors' Chapter 11 cases -- comprised of: (1) $1.14 billion of debt obligations associated with non- debtor international subsidiaries of Mirant; (2) $169 million of miscellaneous domestic indebtedness including, in particular, the $109 million of the certain "West Georgia Plan Secured Notes", issued by West Georgia Generating Company, LLC; (3) $1.7 billion of reinstated debt at MAG; and (4) $1.32 billion of new debt issued by New MAG Holdco in partial satisfaction of certain existing MAG debt, which amount does not include the obligations under numerous agreements between Mirant Mid-Atlantic, LLC and various special purpose entities -- "Owner Lessors" -- which relate to two power stations, the Morgantown Station and the Dickerson Station; * To help ensure the feasibility of the Amended Plan with respect to Consolidated MAG, Mirant Corp. will contribute value to MAG, including the trading and marketing business -- subject to an obligation to return a portion of the imbedded cash collateral in the trading and marketing business to Mirant; provided that, under certain circumstances, the Debtors may elect to satisfy this obligation by transferring $250 million to Mirant Americas from New MAG Holdco -- the Mirant Peaker, Mirant Potomac and Zeeland generating facilities and commitments to make prospective capital contributions of $150 million for refinancing and, under certain circumstances, up to $265 million for sulfur dioxide capital expenditures; * MAG's prospective working capital requirements will be met with the proceeds of a new senior secured credit facility of $750 million; * Substantially all of the Debtors' contingent liabilities associated with the California energy crisis and certain related matters will be resolved pursuant to a global settlement in accordance with the Amended Plan; * The disputes regarding the Debtors' ad valorem real property taxes for the Bowline and Lovett facilities will be settled and resolved on terms that permit the feasible operation of these assets, or the Debtors that own the assets will remain in Chapter 11 until those matters are resolved by settlement or through litigation; * Substantially all of Mirant Corp.'s assets will be transferred to New Mirant, which will serve as the corporate parent of the Debtors' business enterprise on and after the Plan effective date and which will have no successor liability for any unassumed obligations of Mirant Corp.; similarly, the trading and marketing business of the "Trading Debtors" will be transferred to Mirant Energy Trading LLC, which shall have no successor liability for any unassumed obligations of the Trading Debtors; * The outstanding Mirant common stock will be cancelled and the holders thereof will receive any surplus value after creditors are paid in full, plus the right to receive a pro rata share of warrants issued by New Mirant if they vote to accept the Plan. A full-text copy of the amended Disclosure Statement is available at no charge at http://ResearchArchives.com/t/s?50 A full-text copy of the amended Plan of Reorganization is available at no charge at http://ResearchArchives.com/t/s?51 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. 70; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Wants Court to Okay Collateral Transfer Agreement -------------------------------------------------------------- Georgia Power Company and Debtor West Georgia Generation Company, L.L.C., formerly known as West Georgia Generation Company L.P. and Cataula Generation Company, L.P., entered into two Negotiated Contracts for the Purchase of Firm Capacity and Energy on July 18, 1996, and September 10, 1999. Pursuant to the 1996 Agreement, West Georgia agreed to sell to Georgia Power its electric generating facility located in Thomaston, Georgia. The 1996 Agreement expired by its terms on June 1, 2005. West Georgia also agreed to sell to Georgia Power under the 1999 Agreement: (a) 300 MW of capacity and no more than 350 MW of capacity between June 1, 2002, and May 31, 2005; and (b) 447 MW of capacity and no more than 525 MW of capacity between June 1, 2005, and May 31, 2009. The 1996 Agreement required West Georgia to post an $8 million collateral in the form of a letter of credit. Georgia Power subsequently drew down the entire letter of credit and is holding the $8 million, plus interest, as cash collateral. The 1996 Agreement also requires Georgia Power to deliver the 1996 Collateral to West Georgia on July 1, 2005. West Georgia posted another letter of credit for the benefit of Georgia Power amounting to $16 million pursuant to the 1999 Agreement. Georgia Power drew down the entire letter of credit and is holding the $16 million, plus interest, as cash collateral. Georgia Power is currently holding the collateral, and has applied $30,000 of the 1999 Collateral as liquidated damages. The 1999 Agreement required West Georgia to increase the letter of credit, or "Performance Security" from $16 million to $24 million. To resolve all issues arising out of the Collaterals, Jason D. Schauer, Esq., at White & Case LLP, in Miami, Florida, relates that Georgia Power and West Georgia entered into an agreement on July 5, 2005. The Agreement provides that: (a) Georgia Power will accept and retain an amount from the 1996 Collateral sufficient to satisfy West Georgia's obligation to increase West Georgia's "Performance Security" under the 1999 Agreement; (b) Georgia Power will waive its obligation to deliver the 1996 Collateral to West Georgia; (c) Georgia Power may retain any and all interest, accruing since April 14, 2005, necessary to maintain the $24 million cash collateral; and (d) Any money in excess of the $24 million principal amount must be delivered to West Georgia. The parties acknowledge that Georgia Power does not have a continuing duty to turn over any accrued interest on the 1999 Collateral to West Georgia except in accordance with the 1999 Agreement, but in the event the amount of the "Performance Security" is permitted to be reduced under the terms of the 1999 Agreement, or West Georgia in its sole discretion replaces all or a portion of the Performance Security with a letter of credit, the amount of the 1999 Collateral equal to the amount of Performance Security reduced or replaced must be promptly returned to West Georgia in accordance with the terms of the 1999 Agreement. Thus, the Debtors ask Judge Lynn to approve the parties' Collateral Transfer Agreement dated July 5, 2005. 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. 70; Bankruptcy Creditors' Service, Inc., 215/945-7000) MORGAN STANLEY: S&P Lifts Ratings on Four Certificate Classes ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on classes B, C, D, E, F, G, H, J, K, and L of Morgan Stanley Dean Witter Capital I Trust 2002-HQ's commercial mortgage pass-through certificates. Concurrently, all other outstanding ratings on this transaction are affirmed. At the same time, ratings on classes B- 1, B-2, and B-3 of Woodfield Mall Trust series 2002-WM are also raised. The raised and affirmed ratings reflect: * the recent defeasance of the Butera Portfolio loans, * the steady performance and strong sales of the Woodfield Mall, and * credit enhancement levels that provide adequate support through various stress scenarios. As of June 2005, the pool collateral consisted of 73 commercial mortgages with an outstanding balance of $720.1 million, down 15% from $845.9 million at issuance. There are no delinquent or specially serviced loans in the pool. The master servicer, GMAC Commercial Mortgage, reported net cash flow debt service coverage ratios for the entire pool for either full-year 2003 (7%) or full- or partial-year 2004 (93%). Five loans totaling $71.6 million, or 10% of the pool, have been defeased. Based on this information, and excluding defeasance, Standard & Poor's calculated a DSCR for the pool of 1.46x, which is essentially unchanged from 1.47x for the same loans at issuance. The composition of the pool's top 10 assets has changed since issuance, following the defeasance of the Butera Portfolio loans (when combined, the second largest exposure) and the full payoff of two of the five loans with investment-grade characteristics. Three of the top 10 loans still have credit characteristics consistent with investment-grade loans. The largest, Woodfield Mall, is discussed in more detail below. Excluding defeasance, the current weighted average DSCR for the top 10 loans, which constitute 50.9% of the pool, has declined to 1.48x, from 1.53x at issuance. The largest loan in the pool is a pari passu senior component of the Woodfield Mall loan for $126 million (17.5%). A subordinate B note with a current balance of $41.66 million was securitized in the Woodfield Mall Trust, a stand-alone transaction, and is represented by the B-1, B-2, and B-3 certificates. A 2.2 million- sq.-ft. super-regional mall in Schaumburg, Illinois, secures the loan. GMACCM reported NCF of $40.483 million and a DSCR of 1.69x for year-end 2004, down from $42.074 million NCF and a 1.76x DSCR at issuance (figures include the B note). However, the mall is presently performing better than at issuance, with current occupancy at 92.1%, versus 88% at issuance. The property manager also reported year-to-date sales of $530 per sq. ft. as of March 31, 2005, versus $506 at year-end 2004 and $466 at issuance. The senior component exhibits credit characteristics consistent with a loan rated 'AAA' based on Standard & Poor's current valuation assumptions. The ratings on the Woodfield Mall Trust that are secured by the B note are raised accordingly. A relatively small number of loans (10 loans totaling $48.8 million, or 6.8% of the pool) appear on the servicer's watchlist. Eight of them appear due to DSCRs below 1.0x, and were stressed accordingly in Standard & Poor's analysis. Of particular concern are One Burlington Avenue, an industrial property in Wilmington, Massachusetts, with a current occupancy of 61% and a large tenant scheduled to vacate later this year; and The Towneship at Clifton, a mobile-home park in Wichita, Kan., that reported a 0.59x DSCR and 53% occupancy as of year-end 2004. Standard & Poor's stressed various loans in the mortgage pool, paying closer attention to the watchlisted loans. The expected losses and resultant credit enhancement levels adequately support the current rating actions. Ratings Raised Morgan Stanley Dean Witter Capital I Trust 2002-HQ Commercial mortgage pass-thru certs series 2002-HQ Rating ------ Class To From Credit enhancement(%) ----- -- ---- -------------------- B AAA AA 16.59 C AAA A 12.48 D AA+ A- 11.45 E AA BBB+ 9.99 F A+ BBB 8.81 G A BBB- 7.64 H BBB+ BB+ 5.58 J BBB BB 4.70 K BBB- BB- 3.82 L BB- B+ 2.64 Woodfield Mall Trust Commercial mortgage pass-thru certs series 2002-WM Rating ------ Class To From ----- -- ---- B-1 AA+ AA- B-2 AA A B-3 AA- A- Ratings Affirmed Morgan Stanley Dean Witter Capital I Trust 2002-HQ Commercial mortgage pass-thru certs series 2002-HQ Class Rating Credit enhancement(%) ----- ------ --------------------- A-1 AAA 21.15 A-2 AAA 21.15 A-3 AAA 21.15 M B 1.76 N B- 1.47 X-1 AAA N/A X-2 AAA N/A N/A - Not applicable. NBTY INC: Moody's Rates $120 Million Senior Secured Loan at Ba2 --------------------------------------------------------------- Moody's Investors Service rated NBTY Inc.'s new $120 million senior secured term loan A at Ba2. In addition, Moody's affirmed NBTY's existing ratings, including its corporate family rating (formerly, "senior implied rating") of Ba2. Proceeds from the term loan (net $115 million) will fund NBTY's pending acquisition of Solgar from Wyeth. Notwithstanding the risks associated with a high-priced, debt-financed acquisition, the ratings affirmation reflects the strong alignment of Solgar with NBTY's products, integration capabilities, and long-term growth strategies, as well as the ongoing solid financial profile and market position of NBTY in the nutritional supplements industry. The outlook remains stable. These ratings were affected by the rating action: * Corporate family rating, affirmed at Ba2; * $120 million senior secured term loan A due 2010, assigned at Ba2; * $100 million senior secured revolving credit facility due 2008, affirmed at Ba2; * $139 million senior term loan C due 2009, affirmed at Ba2. * $150 million guaranteed senior subordinated notes due 2007, affirmed at B1. Solgar's trailing twelve month operating results, with sales of $105 million and EBITDA of $15 million, imply purchase multiples of 1.1x and 7.7x, respectively, which Moody's views as somewhat high, especially given recent industry challenges. In this regard, Moody's notes that NBTY's six-month operating results (through March 2005) have shown sluggish sales and meaningfully lower profits as the company has invested in promotional spending to offset difficult market conditions owning to unfavorable publicity around Vitamin E and the waning of low-carbohydrate diet fads. Nonetheless, NBTY's pro forma credit metrics following the acquisition (debt-to-EBITDA of 1.7x and rent adjusted debt-to- EBITDAR of 3.6x) remain well-positioned in the Ba2 rating category with the company expected to continue to generate strong free cash flow going forward. The Solgar transaction is consistent with prior rating expectations, given NBTY's acquisitive nature, and is viewed as well-aligned with the company's long-term business strategies. Through the acquisition, NBTY will add Solgar's premium branded products, and its distribution in the growing natural foods and international retail channels, to a large, diverse, and vertically-integrated position (global wholesaler and multi- channel retailer) in the nutritional supplements industry. As such, NBTY could realize margin benefits from sales mix shifts, from synergy opportunities, and from the leveraging of organic sales growth over its fixed costs. Ongoing rating support stems from NBTY's experienced management team, which has successfully integrated several acquisitions over the years (including the large Rexall purchase in 2003) and rapidly repaid related debt, and from favorable industry factors. In this last regard, Moody's notes the long-term demand potential from an aging population and from the broader increases in consumer health consciousness and acceptance of herbal and other non-prescription solutions. The industry's largely non-seasonal and recurring sales patterns (particularly in mail-order businesses where NBTY has a leading US position) provide further rating support. NBTY's ratings remain constrained by the potential for sales and earnings volatility owing to industry risks which Moody's views as above-average relative to other consumer goods companies. Foremost among these risks is the industry's dependence on faddish new product introductions to drive sales and profits, as weak brand equities and low-entry barriers often result in sales rapidly migrating to lower-margin private label. In this regard, Moody's notes the challenges of retaining market share and profits within a competitive landscape that includes large pharmaceutical companies, niche branded competitors, and private label manufacturers. The industry has also been historically subject to material regulatory, publicity, litigation, and product liability concerns that are associated with selling ingested health products. Lastly, the ratings recognize the challenges in managing NBTY's US retail operation, which is a weak profit contributor as the company uses these stores to test new products, clear inventories, and stay ahead of market trends. The stable ratings outlook reflects NBTY's good financial and liquidity profile, and the expectation that NBTY can maintain or improve its pro forma credit metrics over the coming year if the company is able to realize the expected benefits of the Solgar acquisition and if industry conditions stabilize. In this regard, Moody's notes that NBTY has reported improving sales trends for April and May 2005. Nonetheless, the stable outlook also reflects the potential for earnings to remain under pressure through fiscal 2005, or for NBTY to pursue further debt-financed acquisitions. Moody's could become uncomfortable with its stable outlook if these factors result in rent adjusted debt-to-EBITDAR above 4.0x. Conversely, more stable operating results and a return to pre- Solgar leverage levels (funded debt at 1.3x EBITDA and adjusted debt at 3.4x EBITDAR) could result in positive rating pressures. An upgrade would be possible if NBTY sustains adjusted leverage below 3.0x. The Ba2 rating on NBTY's new term loan A facility reflects its pari passu positioning with the existing senior secured facilities, which are secured by all assets and capital stock of the company and its domestic subsidiaries (excluding mortgaged properties), 65% of foreign subsidiary stock plus the upstream guarantees of all domestic subsidiaries. Moody's notes that the secured facilities will mature in March 2007 if NBTY has not repaid or refinanced its senior subordinated notes which come due in September 2007. Proposed amendments to the credit agreement (including loosening indebtedness, acquisition, capital expenditure, and dividend limits) are seen as consistent with current rating levels. Further, Moody's notes that financial covenants, excluding the fixed charge covenant (proposed to be eliminated), are expected to remain unchanged at achievable, but appropriately restrictive levels relative to the ratings. NBTY is a leading vertically integrated U.S. manufacturer and distributor of a broad line of high-quality, value-priced nutritional supplements in the U.S. and throughout the world. The company markets approximately 2,000 products under a variety of brand names including Nature's Bounty, Vitamin World, Puritan's Pride, Holland & Barrett, Rexall, Sundown, MET-Rx, WORLDWIDE Sport Nutrition, American Health, GNC (UK), De Tuinen, and Le Naturiste. NBTY markets its products through a variety of distribution channels including wholesale, U.S. retail, European retail and direct response. For the twelve months ended March 31, 2005, NBTY had net sales of $1.7 billion. NEXTEL COMMS: Launches Exchange Offers & Consent Solicitation ------------------------------------------------------------- Nextel Communications, Inc. (NASDAQ:NXTL) commenced an offer to exchange: (i) any and all of its outstanding 7.375% Senior Serial Redeemable Notes due 2015, Series A for an equal aggregate principal amount of newly issued 7.375% Senior Serial Redeemable Notes due 2015, Series D, (ii) any and all of its outstanding 6.875% Senior Serial Redeemable Notes due 2013, Series B for an equal aggregate principal amount of newly issued 6.875% Notes dues 2013, Series E, and (iii) any and all of its outstanding 5.95% Senior Serial Redeemable Notes due 2014, Series C for an equal aggregate principal amount of newly issued 5.95% Notes due 2014, Series F Notes. Nextel is also soliciting consents from the holders of all such notes to effect certain proposed amendments to the terms of the Series A Notes, Series B Notes and Series C Notes and to the related Indenture. The exchange offer and consent solicitation will expire at 12:00 Midnight, New York City time on Friday, August 5, 2005, unless extended or earlier terminated. Nextel's obligation to accept notes tendered in the exchange offer is conditioned upon the receipt of requisite consents to effect the proposed amendments. The newly issued Series D Notes, Series E Notes and Series F Notes to be issued in the exchange offer will be substantially identical to the Series A Notes, Series B Notes and Series C Notes, respectively, with the following exceptions: (a) the Exchange Notes will have the benefit of a new covenant under which Nextel will undertake to seek from Sprint Corporation, which will be renamed "Sprint Nextel" following consummation of the proposed merger between Nextel and Sprint, a guarantee of all Nextel's payment obligations with respect to the Exchange Notes; and (b) the Exchange Notes will have the benefit of a new covenant with respect to the provision of financial information and reports similar to the exiting covenant relating to the provision of financial information and reports, with the exception that if the Exchange Notes are subsequently guaranteed by a parent guarantor, the financial statements and reports required to be provided by such covenant may instead be provided by the parent guarantor. The proposed amendments to the Indenture being sought in the consent solicitation include: (a) eliminating the covenant to provide financial information with respect to the Original Notes; (b) providing that certain of the restrictive covenants relating to the Original Notes will terminate upon the earlier of: (i) the consummation of the proposed merger between Sprint and Nextel or (ii) the Original Notes achieving a rating of Investment Grade; and (c) amending the provision relating to supplemental indentures to allow Nextel to amend the Indenture and any notes issued thereunder without the consent of holders to provide additional rights or benefits to the holders or other changes that do not adversely affect the legal rights of any holder under the Indenture. The modified provisions regarding the termination of covenants described above would apply only to any remaining outstanding Original Notes and would not apply to the Exchange Notes. Under the terms of the consent solicitation, to effect the amendments, Nextel must receive consents from holders of not less than a majority in aggregate principal amount at stated maturity of all outstanding Series A Notes, Series B Notes and Series C Notes, with the holders of all such series of notes voting together as a single class on or prior to the Expiration Date. In addition, to be effective, the proposed amendments described above are subject to the execution of a supplemental indenture by Nextel and the Trustee. Nextel intends to execute such a supplemental indenture immediately following the Expiration Date. This press release does not constitute an offer of the Series D Notes, Series E Notes, or Series F Notes, nor the solicitation of offers to repurchase the outstanding Series A Notes, Series B Notes and Series C Notes, nor a solicitation of consents with respect to the Series A Notes, Series B Notes and Series C Notes. The offer has not been registered under the Securities Act of 1933, as amended. The Offer to Exchange and Consent Solicitation Statement and the related Letter of Transmittal and Consent, are available upon request, free of charge, from Georgeson Shareholder Communications, Inc., the information agent for the exchange offer and consent solicitation, at (877) 278-4751 (toll-free). Georgeson Shareholder Communication, Inc., as information agent, can also answer questions regarding the exchange offer and consent solicitation. Nextel Communications, a FORTUNE 200 company based in Reston, Va., is a leading provider of fully integrated wireless communications services and has built the largest guaranteed all-digital wireless network in the country covering thousands of communities across the United States. Today 95 percent of FORTUNE 500(R) companies are Nextel customers. Nextel and Nextel Partners, Inc. currently serve 297 of the top 300 U.S. markets where approximately 263 million people live or work. * * * Nextel's 5-1/4% convertible senior notes due 2010 carry Moody's Investor's Service's Ba3 rating, Standard & Poor's BB rating and Fitch's BB+ rating. NEXTEL COMMS: Shareholders Approve Proposed Merger with Sprint -------------------------------------------------------------- Nextel Communications Inc. (NASDAQ: NXTL) received approval from its stockholders for the proposed merger with Sprint Corporation (NYSE: FON). "The resounding stockholder support for this merger endorses the smart strategic rationale and the tremendous value creation opportunities before us," said William E. Conway, chairman of the board of Nextel. "It also recognizes a job well done by the Nextel executive team. With their dedication and vision, backed by the commitment of all Nextel employees, the company is poised to unite with Sprint and become America's premier telecommunications company." 786,848,210 of Nextel's outstanding shares of class A common stock, 71.3 percent of the outstanding shares, voted in favor of the proposal. The favorable vote represented 99.8 percent of the shares participating and voting at the meeting, demonstrating that the stockholders were overwhelmingly in favor of proceeding with the merger as provided for in the Agreement and Plan of Merger. The approval is an important step towards completion of the merger, which is expected to occur in the third quarter of 2005, pending regulatory approvals. Stockholders also voted to elect three directors - Timothy M. Donahue, Frank M. Drendel and William E. Kennard, each for a three-year term, and ratified the appointment of Deloitte & Touche LLP as Nextel's independent registered accounting firm for 2005. Furthermore, shareholders adopted an Amended and Restated Incentive Equity Plan. All of the vote tallies are considered preliminary until certified by independent election inspectors. At the meeting, Mr. Timothy Donahue, president and CEO of Nextel, provided stockholders with an overview on the industry and company, and an update on the merger approval and integration process. "The wireless industry is strong. Nextel is steadily increasing its share of the market, and we continue to lead the industry in key performance metrics," said Mr. Donahue. "We look forward to quickly completing the merger approval process and carrying our strong operating momentum into the combined company." The proposed merger-of-equals between Sprint and Nextel, which was announced on December 15, 2004, is expected to close in the third quarter of 2005 pending regulatory approvals. After the completion of the merger, the combined company stock will trade on the New York Stock Exchange under the ticker symbol "S." About Sprint Sprint offers an extensive range of innovative communication products and solutions, including global IP, wireless, local and multiproduct bundles. A Fortune 100 company with more than $27 billion in annual revenues in 2004, Sprint is widely recognized for developing, engineering and deploying state- of-the-art network technologies, including the United States' first nationwide all-digital, fiber-optic network; an award-winning Tier 1 Internet backbone; and one of the largest 100-percent digital, nationwide wireless networks in the United States. For more information, visit http://www.sprint.com/mr. About Nextel Nextel Communications, a FORTUNE 200 company based in Reston, Va., is a leading provider of fully integrated wireless communications services and has built the largest guaranteed all-digital wireless network in the country covering thousands of communities across the United States. Today 95 percent of FORTUNE 500r companies are Nextel customers. Nextel and Nextel Partners, Inc. currently serve 297 of the top 300 U.S. markets where approximately 263 million people live or work. * * * As reported in the Troubled Company Reporter on Dec. 17, 2004, Moody's Investors Service placed the ratings of Nextel Communications, Inc., and Nextel Finance Company on review for possible upgrade. Moody's also changed the rating outlook for Sprint Corporation and its subsidiaries to developing from positive. This rating action is based on the announcement that the two companies have entered into a definitive agreement to combine in a stock-for-stock merger of equals. The ratings on review for possible upgrade are: * Nextel Communications, Inc. -- Ba2 Senior implied rating -- Ba3 Issuer rating -- Ba3 Senior Unsecured Debt -- B2 Preferred Stock * Nextel Finance Company -- Ba1 Senior Secured Credit Facilities The ratings whose outlook is developing are: * Sprint Corporation -- senior unsecured long term at Baa3 * Sprint Capital Corporation -- senior unsecured long-term at Baa3 * United Telephone Co. of Florida -- first mortgage bonds at A3 * United Telephone Co. of Ohio -- first mortgage bonds at A3 * United Telephone Co. of Pennsylvania -- first mortgage bonds at A3 * Carolina Telephone & Telegraph Company -- senior unsecured long-term at Baa1 * Centel Capital Corporation -- senior unsecured long-term at Baa2 * Central Telephone Co. -- senior secured long-term at A3 As reported in the Troubled Company Reporter on Oct. 29, 2004, Standard & Poor's Ratings Services placed its ratings on Reston, Virginia-based wireless service provider Nextel Communications Inc., including the 'BB+' corporate credit rating, on CreditWatch with positive implications. Total operating lease-adjusted debt was around $10.4 billion at Sept. 30, 2004. As reported in the Troubled Company Reporter on June 28, 2004, Fitch Ratings has upgraded the ratings on Nextel Communications Inc.'s senior unsecured notes to 'BB+' from 'BB' and Nextel Finance Company's senior secured bank facility to 'BBB-' from 'BB+' and Nextel's preferred stock rating to 'BB' from 'BB-'. In addition, Fitch has assigned a 'BBB-' rating on Nextel Finance Company's new five-year $4 billion senior secured revolving credit facility. The Rating Outlook is Positive. The rating action reflects Nextel's continued progress in improving its credit profile by optimizing its capital structure through the company's proposed $4 billion revolving credit facility, the $770 million reduction in debt since the end of 2003, and future expectations for balance sheet improvement to further reduce financial risk. Moreover, Nextel's strong operational performance through its differentiated push-to-talk service, leading to high average revenue per user, low churn, and solid net additions, underpins management expectations for healthy free cash flow prospects in 2004 in excess of $1.7 billion. NEXTEL COMMS: Sprint Shareholders Approve Proposed Merger --------------------------------------------------------- Sprint (NYSE: FON) shareholders overwhelmingly approved all of the proposals related to the merger of Sprint and Nextel Communications, Inc. (Nasdaq: NXTL). "The Sprint and Nextel merger is a bold move that will allow the newly merged company to play a winning hand," Sprint Chairman and CEO Gary Forsee told Sprint shareholders following the close of the votes. "Together, we will be a well-positioned communications company, with unmatched wireless capabilities and a global IP network. And, the proposed spin-off of our local telecommunications business will create the largest, non-RBOC local company, serving 7.6 million access lines in 18 states." The proposed merger-of-equals between Sprint and Nextel, which was announced on Dec. 15, 2004, is expected to close in the third quarter of 2005 pending regulatory approvals, and the anticipated spin-off of Sprint's local telecommunications business is expected to occur in 2006. After the completion of the merger, the combined company stock will trade on the New York Stock Exchange under the ticker symbol "S". "When you consider the substantial synergies that can be achieved, along with the strong brand and market position that we will enjoy, we believe Sprint Nextel will provide shareholders an even more compelling investment opportunity," Mr. Forsee said. These four proposals related to the merger were approved by Sprint shareholders based upon the preliminary voting results: * the amendment to Sprint's articles of incorporation to increase the authorized shares of series 1 common stock was approved by 97 percent of the votes cast, 74 percent of outstanding common stocks, and 74 percent of total voting power; * the amendment of Sprint's articles of incorporation to create a class of non-voting common stock and create the ninth series preferred stock was approved by 96 percent of the votes cast and 73 percent of total voting power; * the adoption of the Sprint Nextel amended and restated articles of incorporation was approved by 98 percent of the votes cast and 74 percent of total voting power; and * the issuance of Sprint Nextel series 1 common stock, non- voting common stock and ninth series preferred stock in the merger was approved by 97 percent of the votes cast and 74 percent of total voting power. The shareholder proposal concerning senior executive retirement benefits, which the company opposed, failed to pass as it was approved by only 39 percent of the votes cast and 30 percent of shares outstanding based upon the preliminary voting results. Sprint also announced that shareholders voted to elect Board of Director nominees Gordon M. Bethune, Dr. E. Linn Draper, Jr., James H. Hance, Jr., Deborah A. Henretta, Irvine O. Hockaday, Jr., Linda Koch Lorimer, Gerald L. Storch and William H. Swanson, with each nominee receiving more than 85 percent of the votes cast, based upon the preliminary voting results. Shareholders also ratified the appointment of KPMG LLP, as Sprint's independent registered public accounting firm with 98 percent of the votes cast in favor of the ratification. All of the vote tallies are considered preliminary until certified by the independent inspector of elections. About Sprint Sprint offers an extensive range of innovative communication products and solutions, including global IP, wireless, local and multiproduct bundles. A Fortune 100 company with more than $27 billion in annual revenues in 2004, Sprint is widely recognized for developing, engineering and deploying state- of-the-art network technologies, including the United States' first nationwide all-digital, fiber-optic network; an award-winning Tier 1 Internet backbone; and one of the largest 100-percent digital, nationwide wireless networks in the United States. For more information, visit http://www.sprint.com/mr. About Nextel Nextel Communications, a FORTUNE 200 company based in Reston, Va., is a leading provider of fully integrated wireless communications services and has built the largest guaranteed all-digital wireless network in the country covering thousands of communities across the United States. Today 95 percent of FORTUNE 500r companies are Nextel customers. Nextel and Nextel Partners, Inc. currently serve 297 of the top 300 U.S. markets where approximately 263 million people live or work. * * * As reported in the Troubled Company Reporter on Dec. 17, 2004, Moody's Investors Service placed the ratings of Nextel Communications, Inc., and Nextel Finance Company on review for possible upgrade. Moody's also changed the rating outlook for Sprint Corporation and its subsidiaries to developing from positive. This rating action is based on the announcement that the two companies have entered into a definitive agreement to combine in a stock-for-stock merger of equals. The ratings on review for possible upgrade are: * Nextel Communications, Inc. -- Ba2 Senior implied rating -- Ba3 Issuer rating -- Ba3 Senior Unsecured Debt -- B2 Preferred Stock * Nextel Finance Company -- Ba1 Senior Secured Credit Facilities The ratings whose outlook is developing are: * Sprint Corporation -- senior unsecured long term at Baa3 * Sprint Capital Corporation -- senior unsecured long-term at Baa3 * United Telephone Co. of Florida -- first mortgage bonds at A3 * United Telephone Co. of Ohio -- first mortgage bonds at A3 * United Telephone Co. of Pennsylvania -- first mortgage bonds at A3 * Carolina Telephone & Telegraph Company -- senior unsecured long-term at Baa1 * Centel Capital Corporation -- senior unsecured long-term at Baa2 * Central Telephone Co. -- senior secured long-term at A3 As reported in the Troubled Company Reporter on Oct. 29, 2004, Standard & Poor's Ratings Services placed its ratings on Reston, Virginia-based wireless service provider Nextel Communications Inc., including the 'BB+' corporate credit rating, on CreditWatch with positive implications. Total operating lease-adjusted debt was around $10.4 billion at Sept. 30, 2004. As reported in the Troubled Company Reporter on June 28, 2004, Fitch Ratings has upgraded the ratings on Nextel Communications Inc.'s senior unsecured notes to 'BB+' from 'BB' and Nextel Finance Company's senior secured bank facility to 'BBB-' from 'BB+' and Nextel's preferred stock rating to 'BB' from 'BB-'. In addition, Fitch has assigned a 'BBB-' rating on Nextel Finance Company's new five-year $4 billion senior secured revolving credit facility. The Rating Outlook is Positive. The rating action reflects Nextel's continued progress in improving its credit profile by optimizing its capital structure through the company's proposed $4 billion revolving credit facility, the $770 million reduction in debt since the end of 2003, and future expectations for balance sheet improvement to further reduce financial risk. Moreover, Nextel's strong operational performance through its differentiated push-to-talk service, leading to high average revenue per user, low churn, and solid net additions, underpins management expectations for healthy free cash flow prospects in 2004 in excess of $1.7 billion. NORTH AMERICAN: Concludes $5 Million Refinancing with OPUS 5949 --------------------------------------------------------------- North American Technologies Group, Inc. (OTC Pink Sheets: NATK) finalized a re-financing of its Construction Loan with OPUS 5949 LLC and a new $5,000,000 financing with some of the Company's major shareholders. "We are extremely pleased with the confidence that OPUS and the shareholders have placed in the Company and its personnel," Joe Dorman, the Company's CFO said. After entering into a Forbearance Agreement with OPUS on May 9, 2005, the Company was required to seek additional financing. The Company believes that the terms of the new financing arrangements are extremely beneficial to the Company. The financing should provide adequate capital to the Company to enable it to achieve and maintain production of railroad ties at or beyond the designed capacity of its existing manufacturing lines. Under the terms of the new financing arrangement with the shareholders, the Company issued $5,000,000 in 7% Convertible Debentures with principal due at the end of one year. $2 million of the $5 million in gross proceeds of sale of the Debentures was immediately paid to the Company. The remaining $3 million is being held in a custodial account from which the Company may draw funds to meet the Company's future cash needs. At the end of one year the funds remaining in the custodial account may be repaid to the purchasers of the Debentures to meet the Company's obligations to them. Interest on the Debentures is payable at a simple rate of 7% per annum in shares of the Company's common stock. The Company also issued three-year warrants to purchase an aggregate of 5,554,438 shares of its common stock at $0.24 per share in connection with the sale of the Debentures. Mr. Dorman said the refinancing of the OPUS Construction Loan is very beneficial to the Company. The interest rate was reduced to 7% from prime plus 7%, and the accumulated interest of $1,022115.68 was paid by the issuance of 4,541,822 shares of common stock. Additionally, the Company can, for the next year, make quarterly interest payments on the OPUS Construction Loan in kind by issuing shares of common stock. Mr. Dorman indicated that absence of a required cash payment of principal or interest on the OPUS Construction Loan or the Debentures for a year will permit the Company to utilize available cash flow to develop the Company's tie manufacturing business. Full-text copies of the Company's financing arrangements with OPUS and the shareholders are available at no charge at: http://ResearchArchives.com/t/s?6e The Company will use the proceeds of the Debentures for general working capital, to make improvements to its production lines in Marshall, Texas, to purchase additional raw material handling equipment which is needed for anticipated future production and to redeem its outstanding shares of Class AA Convertible Preferred Stock. Mr. Dorman indicated that he believes that many of the "start-up" problems in the Marshall facility, that previously resulted in significant operating losses, are being solved and that the Company anticipates that future tie production will increase significantly. Mr. Dorman indicated that the Company anticipates the increased production will now allow the Company to quickly reach the sales level of 75,000 ties to Union Pacific Railroad during 2005, at which time the Company may sell its ties to Union Pacific at a 17% increase over its present price. The increased tie production, together with substantial decreases in the price of recycled plastic that has recently been occurring, could result in the Company experiencing positive cash flow within the next fiscal year. Forbearance Agreement North American and its subsidiaries TieTek LLC, and TieTek Technologies, Inc., are parties to a Construction Loan Agreement, dated Feb. 4, 2004 (as amended) with Opus under which $15 million in principal and interest was outstanding as of July 7, 2005. TieTek previously failed to make the $757,944 payment of principal and interest due April 1, 2005 on the Construction Loan. On May 9, 2005, the Company, TieTek and TTI became borrowers under a Forbearance Agreement with Opus pursuant to which Opus agreed to defer receipt of the principal payments due under the Construction Loan until Jan. 1, 2006, and to forebear in the enforcement of its rights until Dec. 31, 2005. Upon the execution of the Forbearance Agreement, TieTek executed a promissory note to Opus in the amount of $407,944, representing the interest payment originally due under the Construction Loan on April 1, 2005. Under the Forbearance Agreement, the Borrowers were obligated to: -- select special counsel and an investment banker to determine the feasibility of refinancing the Construction Loan, and/or obtaining a bridge loan, a working capital loan or a permanent loan; -- solicit from certain of the Company's large shareholders financing for the Borrower's cash needs during the period necessary for TieTek to achieve stabilization of its manufacturing processes; -- obtain a commitment for such additional financing on or before July 30, 2005; -- engage one or more consultants to assist the Borrower in improving its operations and stabilizing the manufacturing processes; and -- provide to Opus certain financial information on an accelerated basis. The Company believes that the amendments that it has negotiated to the Construction Loan and the new financing that it has received from its existing stockholder group taken together are highly beneficial to the Company and should provide adequate capital to the Company to continue its operations and stabilize its manufacturing processes throughout the next twelve months. North American Technologies Group, Inc., through its TieTek subsidiary, has patented technology which utilizes recycled plastics, tires and other raw materials to produce railroad ties that are an alternative to wood ties. Going Concern Doubt Ham Langston & Brezina, LLP, the Company's certified public accountants, has included a going concern qualification to their opinion regarding the Company's financial statements for the year ended December 31, 2004. In recent years, the Company has incurred losses from operations and has an accumulated deficit of $73,558,395 as of December 31, 2004. The Company has negative cash flows from operations of $10,338,309 and $2,133,663 for the years ended December 31, 2004 and 2003 respectively. In addition, debt service and working capital requirements for the upcoming year reach beyond current cash balances. The Company's management said it plans to attempt to restructure its existing debt in the near future and to raise additional amounts of capital and add production lines to its Marshall, Texas facility. OCWEN FINANCIAL: De-Banking Prompts Moody's to Lower Ratings ------------------------------------------------------------ Moody's Investors Service downgraded its prospective ratings on Ocwen Financial Corporation's shelf filing, including the rating on senior unsecured debt to (P)B2 from (P)B1. Moody's also downgraded Ocwen Capital Trust I preferred stock to Caa1 from B3. In Moody's opinion, Ocwen's credit standing has weakened as a result of its changed business model and de-banking strategy. This concludes the review initiated in February 2004. The outlook for all ratings is now stable. Moody's believes that Ocwen has a number of credit strengths. After the de-banking transaction, the company is in a solid capital position, and should post coverage ratios that are suitable for its senior (P)B2 rating. Ocwen has also made strides to simplify its business as a fee-based mortgage servicer, and disposed of the non-core assets that were a continuous drag on earnings. Ocwen has an established market position in the specialty servicer business, and post-debanking, there is substantial growth potential for the company as many of the constraints to growth were removed, Moody's said. These credit positives are mitigated by a number of weaknesses. Although an impediment to growth, the de-banking removed an important, stable source of funding and Moody's took comfort in the regulatory constraints over the size of the firm's investment in volatile mortgage servicing rights. Moody's believes that Ocwen's purchases of servicing rights will need to be very carefully managed. A key to success is the ability to purchase servicing rights at a reasonable cost. However, servicing rights are inherently volatile, being subject interest rate movements - creating substantial risk to the company and creditors. Ocwen, unlike many other mortgage servicers, does not have the "natural hedge" of an originations capability to protect it against interest rate (and therefore servicing rights) fluctuations. As a servicing company, Ocwen is also exposed to substantial operational risks. Moody's will carefully monitor the turnover levels at Ocwen's off-shore facilities. Rising turnover levels are a substantial concern given the large transfer of operations offshore, and that facility's important role as a call center for the servicing business. Additionally, the uncertain liability surrounding the firm's various outstanding legal issues is a concern. This presents an event risk for the credit. What could change the rating up: Given the business model and the concerns cited above, we believe there will be limited upward pressure on the rating. The addition of less volatile earnings sources that are meaningful to the company's debt servicing capability would be viewed positively. What could change the rating down: A material legal judgment against the firm, earnings volatility or margin compression beyond expectations, or a view that operational risks are increasing could lead to negative pressure on the rating. The following ratings were downgraded: Ocwen Financial Corporation: * Senior Unsecured Shelf: To (P)B2 from (P)B1 * Junior Subordinated Shelf: To (P)Caa1 from (P)B2 * Preferred Shelf: To (P)Caa2 from (P)Caa1 Ocwen Capital Trust I: * Backed Preferred Stock: To Caa1 from B3 Ocwen Capital Trust II: * Backed Preferred Stock: To (P)Caa1 from (P)B3 Ocwen Financial Corporation is a financial services company with headquarters in West Palm Beach, Florida. ORBITAL SCIENCES: Good Liquidity Prompts S&P's Positive Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including the 'BB-' corporate credit rating, on Orbital Sciences Corp. The outlook is revised to positive from stable. The Dulles, Virginia- based launch vehicle and satellite manufacturer has approximately $125 million in rated debt. "The outlook revision reflects an improving financial profile, moderate debt leverage, and good liquidity," said Standard & Poor's credit analyst Christopher DeNicolo. The outcome of ongoing government investigation could have a negative effect on the credit quality of the company, but cannot be determined until the investigation is complete. The ratings reflect: * Orbital's modest size, * limited program diversity, * the risky nature of the launch business, * the possibility of debt-financed acquisitions, * a weak commercial space market, and * some uncertainty regarding future funding for missile defense programs. These factors are offset somewhat by: * leading positions in market niches, * modest debt leverage, and * currently high levels of defense spending. Orbital is a leading provider of small launch vehicles and small geostationary communications satellites, as well as boost vehicles and targets for missile defense programs. Orbital's launch vehicle segment (48% of first-quarter 2005 revenues) has been bolstered by a contract to develop boosters for the Ground-based Midcourse Defense and Kinetic Energy Interceptor programs. Sales from these two programs contributed more than half of this segment's revenues. Orbital has begun delivering operational boosters for GMD, but KEI is still early in its development. Although funding for missile defense programs continues to be robust, with around $8 billion proposed for fiscal 2006, spending on KEI is likely to be reduced. Orbital's Pegasus and Taurus small launch vehicles have been affected by weakness in the overall launch services market. The satellite and related systems segment (49%) has benefited from higher sales in the science, technology, and military low earth orbit satellite product lines, offset somewhat by weak demand for GEO communications satellites. Consolidated firm backlog was a healthy $1 billion at March 31, 2005, more than 1.4x forecast 2005 revenues. On May 26, 2005, U.S. government agents executed search warrants at two of Orbital's facilities. The focus of the investigation is believed to be contracting procedures related to certain launch vehicle programs. Orbital is cooperating with the investigation. Standard & Poor's will monitor the situation and determine the impact on the company's credit quality as more information becomes available. Continued improvement in profitability and cash generation as a result of the missile defense contract and demand for military and scientific satellites could lead to an upgrade in the near to intermediate term. The outlook could be revised to stable if leverage increases to fund a major acquisition, profitability deteriorates materially in the satellite or transportation management units, or missile defense spending is significantly reduced. The impact on the outlook or rating from the government investigation cannot be determined at this time. PACIFICARE HEALTH: Fitch Puts $1.1 Billion Debt on Watch Positive ----------------------------------------------------------------- Fitch Ratings has placed PacifiCare Health Systems Inc.'s debt ratings on Rating Watch Positive, affecting approximately $1.1 billion of debt outstanding. The Rating Watch Positive placement follows PacifiCare's announcement that it will be acquired by UnitedHealth Group, Inc. in a transaction valued at approximately $9 billion. UNH (senior debt rated 'A'; Outlook Stable by Fitch) is a leading health care services company with total medical membership of 23.1 million. The rating action reflects Fitch's view that the proposed acquisition by UNH will significantly improve PacifiCare's financial position and operating profile. PacifiCare's current ratings have been based, in part, on the company's comparatively weaker balance sheet fundamentals and limited business profile. Fitch expects that PacifiCare's ratings will be upgraded upon close of the transaction, which is expected to occur in the first quarter of 2006. Following the close of the transaction, Fitch expects UNH to retire all of PacifiCare's outstanding debt. The proposed acquisition of PacifiCare significantly strengthens UNH's competitive position in California managed care market and the Medicare business seeing as approximately 1.8 million, or 57% of Pacificare's 3.2 million members are located in California, a state where UnitedHealth has historically lacked a competitive market share. Pacificare's provider network within the state of California will be of significant value to UnitedHealth, which currently gains use of a provider network through a network access agreement with Care Trust in California. In addition, UnitedHealth will be acquiring the second largest player in the Medicare Advantage program. Pacificare will add 716,000 Medicare Advantage members to UnitedHealth's existing 345,000 of Medicare Advantage membership, and will give an additional boost to UnitedHealth's plans to participate in the Medicare drug benefit beginning in 2006. The following ratings are placed on Rating Watch Positive by Fitch: PacifiCare Health Systems, Inc.: -- Long-term 'BB+'; -- 10.75% senior unsecured notes due 2009 'BB+'; -- Bank loan 'BB+'; -- 3% convertible subordinated debentures 'BB'. NOTE: This is a corrected version of the original press release dated July 7, 2005. The release inaccurately cited UnitedHealth's network access agreement with Blue Shield of California. The agreement is with Care Trust in California. PINE KNOLL: Case Summary & 3 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Pine Knoll Corporation dba Whispering Pines Cottages 35 Dieskau Street Lake George, New York 12845 Bankruptcy Case No.: 05-14879 Type of Business: The Debtor rents 12 cottages. The Debtor also has docking and boat rental facilities. See http://www.whisperingpinescottages.com/ Chapter 11 Petition Date: July 14, 2005 Court: Northern District of New York (Albany) Debtor's Counsel: Michael J. Toomey, Esq. Toomey & Gallagher, LLC One South Western Plaza P.O. Box 2144 Glens Falls, New York 12801 Tel: (518) 743-9000 Total Assets: $1,213,561 Total Debts: $140,400 Debtor's 3 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ New York State Department of Taxation $1,200 A. Harriman Campus Albany, NY 12227 Warren County Treasurer $28,200 Warren County Municipal Center Lake George, NY 12845 Niagra Mohawk $9,000 300 Erie Boulevard West Syracuse, NY 13252 PUBLIC SERVICE: Fitch Lifts Preferred Debt Rating 2 Notches to BB+ ------------------------------------------------------------------ Fitch Ratings upgraded these ratings of Public Service Company of New Mexico: -- Senior unsecured debt to 'BBB' from 'BBB-'; -- Preferred debt to 'BB+' from 'BB-'. Fitch also assigns these ratings: -- PNM's 'F2' short-term debt; -- Implied senior unsecured debt 'BBB-' to PNM Resources; -- PNMR's 'F3' short-term credit rating. The senior unsecured debt ratings of PNMR's recently acquired subsidiary, Texas New Mexico Power Company, have been upgraded to 'BBB' from 'BB'. Fitch has also raised and withdrawn the ratings of TNP Enterprises to reflect the recent redemption of all TNP debt. The TNP rating action is summarized below. The Rating Outlook for all PNMR, PNM and TNMP debt securities is Stable. TNP Enterprises is upgraded by Fitch: -- Senior secured bank facility to 'BBB' from 'B+' and withdrawn; -- Senior notes to 'BBB-' from 'B' and withdrawn; -- Preferred stock to 'BB' from 'CCC' and withdrawn. PNMR's ratings reflect the relatively predictable cash flows from its utility operating companies, PNM and TNMP, which account for the vast majority of consolidated earnings and cash flows. The ratings also consider the net positive impact of the $1.024 billion TNP acquisition, which closed June 6, 2005, and manageable post-acquisition parent company debt levels. The TNP acquisition was funded primarily with equity and equity- linked securities, the proceeds of which were used to acquire TNP's equity and redeem its high coupon debt. At the merger close, PNMR redeemed TNP's $111 million secured credit facility and, on July 6, 2005, redeemed $188 million of TNP's 14 .5% senior redeemable preferred stock and $275 million of 10.25% senior subordinated notes due 2010. The TNP acquisition provides potential operating synergies and a balanced platform for expansion consistent with PNMR's regional strategy. While volatility of returns and emerging retail electric provider operations at First Choice Power are concerns, the business model should benefit in the longer term from the improved creditworthiness and risk management capabilities of its new corporate parent. Fitch estimates that PNMR's unregulated operations, composed of PNM's regional, wholesale power, and newly acquired Texas REP operations, accounted for 25% of PNMR's 2004 consolidated pro forma EBITDA and 13% of total assets. PNMR's growth aspirations for its newly acquired unregulated Texas power supply company, FCP, and its strategy to expand its presence through opportunistic M&A and asset acquisition in the Desert Southwest are sources of concern for fixed income investors. The absence of fuel and purchase power cost adjustment mechanisms for both PNM and TNMP in New Mexico is also a key credit concern. PNM has operated without a fuel adjustment clause since 1994, and TNMP's fuel pass-through will be suspended at the end of 2005 under the terms of its New Mexico merger agreement. Challenging regulatory environments in Texas and New Mexico are significant risk factors for PNMR, PNM, and TNMP fixed-income investors. The increased PNM credit ratings better reflect the utility's relatively predictable cash flows, improved credit metrics, manageable service territory growth characteristics, and competitive rates. The ratings also consider repeal of restructuring legislation in New Mexico and the terms of the utility's global rate settlement. PNM's New Mexico rate plan provides lower rates for customers and rate certainty through 2007. The rate plan also permits central dispatch of retail jurisdictional and unregulated generating assets, with PNM retaining all profits above a specified threshold and recovery of coal reclamation and other costs. PNM is required to file a general rate case to establish post-2007 tariffs, under the terms of the rate plan. The TNMP credit upgrade reflects the utility's status as a subsidiary of a much stronger corporate parent following the acquisition of TNP by PNMR, diminished contagion risk with FCP, and the utility's solid interest coverage ratios. TNMP's ratings also consider the low risk and relatively predictable earnings and cash flow characteristics of its transmission and distribution operations and generally reasonable merger settlement agreements in Texas and New Mexico. PNMR is a registered utility holdings company. On June 6, 2005, PNMR closed on the acquisition of TNP, which is now an intermediate holding company subsidiary of PNMR. Prior to the merger close, substantially all of PNMR's operating income and cash flows were contributed by its New Mexico-based core electric and gas utility operating subsidiary, PNM. TNP's primary operating subsidiaries are TNMP a relatively low-risk operating utility company in Texas and New Mexico and FCP, its REP in Texas. RISK MANAGEMENT: Wants to Hire McDonald Hopkins as Bankr. Counsel ----------------------------------------------------------------- Risk Management Alternatives, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Ohio for permission to employ McDonald, Hopkins, Burke & Haber Co., LPA as their general bankruptcy counsel. McDonald Hopkins is expected to: a) advise the Debtors of their duties and obligations as debtors-in-possession under chapter 11 and appear before the Bankruptcy Court on all matters in the Debtors' chapter 11 cases; b) execute the Debtors' decisions by filing with the Court motions, objections and other relevant documents; c) assist and advise the Debtors in the administration of their chapter 11 cases and take all other actions necessary to protect the rights of the Debtors' estates; and d) perform all other legal services for the Debtors that are necessary in their chapter 11 cases. Shawn M. Riley, Esq., a shareholder at McDonald Hopkins, is the lead attorney for the Debtors. Mr. Riley discloses that his Firm received a $355,357.30 retainer. Mr. Riley reports McDonald Hopkins' professionals current billing rates: Designation Hourly Rate ----------- ----------- Shareholders $240 - $440 Associates $140 - $250 Legal Assistants $90 - $175 Law Clerks $85 McDonald Hopkins assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Duluth, Georgia, Risk Management Alternatives, Inc. -- http://www.rmainc.net/-- provides consumer and commercial debt collections, accounts receivable management, call center operations, and other back-office support to firms in the financial services, telecommunications, utilities, and healthcare sectors, as well as government entities. The Company and ten affiliates filed for chapter 11 protection on July 7, 2005 (Bankr. N.D. Ohio Case Nos. 05-43959 through 05-43969). When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and between $50 million to $100 million in debts. RISK MANAGEMENT: Taps Alvarez & Marsal as Restructuring Advisors ---------------------------------------------------------------- Risk Management Alternatives, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Ohio for permission to employ Alvarez & Marsal, LLC, as their restructuring advisors. Alvarez & Marsal will: a) assist the Debtors in analyzing and evaluating their current business plan and preparing business, and operating and restructuring plans; b) assist the Debtors in financing issues, including negotiation with the Debtors' lenders to amend their credit agreements, assist in preparing reports and other liaison with creditors, customers and other stakeholders; c) assist the Debtors' current cost containment initiatives, the identification of additional cost reductions, operational improvement opportunities and other cash generation alternatives; d) assist the Debtors in financing issues, including negotiating with their lenders to amend their credit agreements, assist in preparing reports and other liaison with their creditors, customers and stakeholders; e) evaluate the Debtors' current liquidity position, assist in developing short-term cash flow forecast and implement working capital improvement initiatives; f) assist the investment banker retained by the Debtors to execute a sale transaction, including providing financial information to potential acquirers and facilitating due diligence process; g) assist the Debtors in preparing financial related disclosures required by the Court, in identifying and implementing short-term cash management procedures, in evaluating and implementing asset sales and other restructuring and refinancing strategies and alternatives, in identifying executory contracts and leases and performing cost benefit evaluations with respect to the assumption or rejection of those leases; h) assist in evaluating the present level of operations and identification of areas of potential cost savings, including overhead and operating expense reductions and efficiency improvements, and in preparing financial information for distribution to creditors and other parties-in-interest; i) assist the Debtors and their counsel in preparing any chapter 11 plans and disclosure statements and in evaluating and analyzing avoidance actions, including fraudulent conveyances and preferential transfers; and j) provide expert witness testimony with respect to financial and restructuring matters, and provide litigation services with respect to accounting and tax matters. Lawrence R. Hirsh, a Managing Director at Alvarez & Marsal, discloses that his Firm received a $400,000 retainer. Mr. Hirsh discloses that Alvarez & Marsal will be paid with a $300,000 Incentive Fee payable upon the earlier of: a) the consummation of a plan of reorganization; and b) the sale, transfer or other disposition of all or a substantial portion of the assets or equity of the Debtors. Mr. Hirsh reports Alvarez & Marsal's professionals bill: Designation Hourly Rate ----------- ----------- Managing Directors $470 - $625 Directors $375 - $475 Associates $275 - $375 Analysts $150 - $300 Alvarez & Marsal assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Duluth, Georgia, Risk Management Alternatives, Inc. -- http://www.rmainc.net/-- provides consumer and commercial debt collections, accounts receivable management, call center operations, and other back-office support to firms in the financial services, telecommunications, utilities, and healthcare sectors, as well as government entities. The Company and ten affiliates filed for chapter 11 protection on July 7, 2005 (Bankr. N.D. Ohio Case Nos. 05-43959 through 05-43969). Shawn M. Riley, Esq., at McDonald, Hopkins, Burke & Haber Co., LPA, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and between $50 million to $100 million in debts. ROBERT MONTGOMERY: Case Summary & 15 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Robert R. Montgomery 4400 West University Boulevard, #2202 Dallas, Texas 75209 Bankruptcy Case No.: 05-37892 Type of Business: The Debtor owns and operates Stately Designs, Inc., which designs, manufactures and distributes home accessory products. Chapter 11 Petition Date: July 14, 2005 Court: Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: Joseph A. Friedman, Esq. Kane, Russell, Coleman & Logan PC 1601 Elm Street, Suite 3700 Dallas, Texas 75201-7207 Tel: (214) 777-4200 Total Assets: $282,280 Total Debts: $2,192,271 Debtor's 15 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ JP Morgan Chase Bank $356,406 2200 Ross Avenue Dallas, TX 75201 Internal Revenue Service $165,352 P.O. Box 21126 Philadelphia, PA 19114 Citi Cards $37,214 111 Sylvian Avenue Englewood Cliffs, NJ 07632 MBNA America $27,372 American Express $22,544 American Express $22,543 JP Morgan Chase-VISA $13,500 Neiman Marcus $9,415 Barg & Henson $5,825 JP Morgan Chase Bank $5,247 OSI Collection Services, Inc. $3,857 MCI $1,294 Jaguar Credit Corporation $858 AFNI, Inc. $814 Trinity Dermatology $11 SAINT VINCENTS: Hires Bankruptcy Services as Claims Agent --------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for authority to employ Bankruptcy Services LLC as their official claims, noticing and balloting agent. The Debtors tell the Court that they need to employ an official claims agent due to the large number of notice parties in their chapter 11 case. More than 51,000 entities or persons must be given notice for various purposes in this bankruptcy case. Specifically, BSI will: (a) docket all claims received, maintain the official claims for the Debtors on behalf of the Clerk of Court, and provide the clerk with a certified duplicate unofficial Claims Register; (b) specify, in the Claims Register, relevant information for each docketed claim: -- the claim number assigned, -- the date received, -- the name and address of the claimant and agent, -- the creditor number, -- the scheduled amount, -- the amount and classification of the claim, and -- any relevant comments affecting the disposition of claims; (c) provide case information and transmit notices to appropriate parties as required by the Bankruptcy Code and the Bankruptcy Rules; (d) record all transfers of claims and provide any notices of the transfer required by Bankruptcy Rule 3001; (e) make changes in the Claims Register pursuant to Court order; (f) provide access to the public for examination of copies of the proofs of claim without charge during regular business hours; (g) on completion of the docketing process for all claims received to date by the clerk's office, turn over to the Clerk copies of the Claims Register for review; (h) maintain the official mailing list for the Debtors of all entities that have filed a proof of claim, which list will be available on request by the clerk or on request and payment of an appropriate copying charge by a party in interest; (i) assist in the preparation of the Debtors' Schedules; (j) perform all balloting services, including distributing ballots and accompanying documents, and serving as balloting agent to receive and tabulate voting results, or other services as required by the Debtors; (k) box all original documents in the proper format, as provided by the clerk's office, and make arrangements for its long-term storage as instructed by the clerk's office, at the closing of the Debtors' cases; (l) submit an Order dismissing BSI on completion of its duties and responsibilities 30 days prior to, and upon, the closing of the Debtors' cases; and (m) promptly comply with further services as the Debtors or the clerk's office will request, at BSI's normal rates. Timothy Weis, chief financial officer of Saint Vincent Catholic Medical Centers, relates that BSI will be paid based on the customary hourly rates of its professionals: Professional Hourly Rate ------------ ----------- Senior Managers $225 On-Site Consultants $225 Other Senior Consultants $185 Programmer $130 - $160 Associate $135 Data Entry/Clerical $40 - $60 Schedule Preparation $225 The Debtors will pay BSI for all materials necessary for its performance under the engagement, other than computer hardware and software, and any reasonable out-of-pocket expenses, including, without limitation, transportation, long distance communications, printing, postage and related items. Mr. Weis discloses that the Debtors provided a $50,000 retainer to BSI to cover for prepetition services. BSI has requested a $15,000 retainer for its postpetition services. Section 156(c) of the Judicial Procedures Code expressly provides that the Court may utilize facilities or services, which pertain to the provision of notices, dockets, calendars, and other administrative information to parties in Chapter 11 cases. Mr. Weiss asserts that BSI's employment will: (a) relieve the clerk's office of a significant administrative burden; (b) avoid delay in processing proofs of claim and interests; (c) reduce legal fees that would be otherwise incurred in connection with the retrieval of proof of claim copies from the clerk's office and responding to numerous claim-related inquiries; and (d) reduce costs of notice to parties and provide efficient medium to communicate case information. The Debtors' management and professionals will coordinate responsibilities with BSI to ensure that no unnecessary duplication of services occurs. Kathy Gerber, senior vice president at BSI, tells the Court that BSI and its employees do not have any connection with the Debtors, their creditors or any other party-in-interest, except that Jay D. Chazanoff, a director at SVCMC, is a part-time consultant to Epiq Systems, Inc., BSI's parent company. Mr. Chazanoff has not worked for BSI since January 31, 2003. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 03; Bankruptcy Creditors' Service, Inc., 215/945- 7000) SAINT VINCENTS: Wants Dechert LLP as Special Conflicts Counsel -------------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for authority to employ Dechert LLP as their special conflicts counsel. According to Timothy Weis, Saint Vincents' Chief Financial Officer, issues may arise that may cause McDermott Will & Emery LLP -- the Debtors' general corporate counsel -- to be adverse to the Debtors. Therefore, the Debtors seek the Court's authority under Section 327(e) of the Bankruptcy Code to employ Dechert LLP as their special conflicts counsel in their Chapter 11 cases in connection with certain matters in which McDermott cannot or does not act. To the extent that McDermott is unable, Dechert will: (a) take all necessary actions to protect and preserve the Debtors' estates, including: * the prosecution of actions on the Debtors' behalf; * the defense of any actions commenced against the Debtors; * the negotiation of disputes in which the Debtors are involved; and * the preparation of objections to claims filed against the Debtors' estates; (b) prepare on the Debtors' behalf all necessary motions, applications, and other papers in connection with the administration of the Debtors' estates; and (c) perform all other necessary legal services in connection with the prosecution of the Chapter 11 cases. Mr. Weis informs the Court that McDermott has supplied Dechert with a list of creditors and parties-in-interest that McDermott has represented or currently represents. Joel H. Levitin, Esq., a partner at Dechert LLP, tells Judge Beatty that his firm does not hold or represent any interest adverse to the Debtors' estates, their creditors, or any other parties-in-interest under Section 327(e) of the Bankruptcy Code with respect to 24 entities that McDermott has represented or currently represents: -- Steadfast Insurance Company, -- XL Insurance Company, -- Zurich Insurance Company, -- Kemper Insurance Companies, -- Computer Sciences Corporation, -- Accountemps, -- NYU School of Medicine, -- Lumenis Ltd., -- New York Health Care, Inc., -- NYU Hospital Center, -- NYU Medical Center, -- Premier Health Care Services, Inc., -- Bank of Tokyo Financial Corp., -- Marine Midland Bank, -- The Reilly Mortgage Group, -- Ambac Assurance Corp., -- Coastal Electric Services Company, -- Vornado Realty Trust, -- Advanced Technology Laboratories, -- AGFA Corp., -- Bayer Corp., -- Commerce Bank, -- Dade Behring, Inc., and -- U.S. Bank Trust, National Association Mr. Levitin relates that Dechert's proposed retention would be for the limited purpose of representing the Debtors, to the extent that McDermott does not or cannot do so, in the resolution of: (1) matters involving the Cleared Parties; (2) matters involving the other McDermott-represented parties, in the event Dechert is able to clear conflicts with respect to those parties; and (3) any other matters the Debtors request of Dechert that do not create any interest adverse to the Debtors or their estates. The Debtors have been informed that McDermott and Dechert will coordinate their activities to avoid duplication of effort. Mr. Weis asserts that Dechert is particularly well suited to serve as special conflicts counsel in the Debtors' cases. Dechert is a full-service law firm with offices in New York, Philadelphia, Washington, D.C., Boston, Princeton, Harrisburg, Hartford, Newport Beach, London, Luxembourg, Brussels, and Paris, among other offices. Mr. Weis relates that the Debtors have employed Dechert in the past to provide advice to, and to conduct investigations for, the Debtors on certain discrete matters where the criminal justice process was implicated. None of those matters are currently pending. The Debtors have selected Dechert because of its knowledge of the Debtors from prior representation and because of its considerable experience in, among other areas, bankruptcy restructuring, tax, real estate, employment, environmental, litigation, mergers and acquisitions, and general corporate matters. Dechert will charge the Debtors based on its hourly rates, which currently are: Professional Fee ------------ --- Lawyers $235 - $750 Non-lawyers $100 - $195 Dechert will also seek reimbursement for necessary expenses incurred. The firm has received a $100,000 retainer from the Debtors. The Debtors do not owe Dechert any amount for prepetition services. Excluding the postpetition retainer, Dechert received $40,925 from the Debtors for services rendered within one year before the Petition Date. No payments were made to Dechert within 90 days before the Petition Date. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 03; Bankruptcy Creditors' Service, Inc., 215/945- 7000) SAINT VINCENTS: Wants to Make $2 Million Payment to Lien Claimants ------------------------------------------------------------------ Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to pay certain prepetition claims relating to construction and other lien claimants in amounts, necessary or appropriate to: (a) obtain release of critical or valuable goods, materials or equipment that may be subject to liens, and (b) maintain a reliable, efficient and smooth construction, repair and maintenance system. The Debtors tell the Court that they rely heavily on third party contractors and vendors to construct, repair and maintain their facilities at various locations. Under some state laws, a constructor or repairer may have a lien on the facilities, which it improves or repairs, which secures the charges or expenses incurred in connection with the work performed. Pursuant to Section 363(e) of the Bankruptcy Code, certain bailees may also be entitled to adequate protection of a valid possessory lien. The Debtors expect that certain Lien Claimants may have outstanding invoices for work performed or goods that were delivered prior to the Petition Date. As a result, the Claimants will likely argue that they are entitled to possessory liens for services, transportation and storage, as applicable, related to the goods in their possession and may refuse to perform services or to deliver or release the goods before their claims have been satisfied and their liens redeemed. Stephen B. Selbst, Esq., at McDermott Will & Emery LLP, in Chicago, Illinois, notes that the payments to be made to Lien Claimants will not exceed $2 million. Mr. Selbst asserts that the payment is minimal compared to the importance and necessity of the uninterrupted receipt of services and the losses the Debtors may suffer if their operations are disrupted. Moreover, the Debtors do not believe that there are viable timely alternatives to the Lien Claimants that they have used prior to the Petition Date. The Debtors propose to pay and discharge the claims on a case-by- case basis. The Debtors will not pay a claim unless the Lien Claimant has perfected or, in the Debtors' judgment, is capable of perfecting or may be capable of perfecting in the future, one or more liens in respect of the claim. The payment will be conditioned on the Lien Claimant's assurance to continue providing services for the Debtors. Because only the claimants that have perfected secured claims or are capable of having perfected secured claims will be paid, the payment will not affect the amount of the creditors' distribution, but only the timing. The Debtors request that banks and financial institutions be authorized and directed to receive, process, honor and pay all checks presented for payment for the prepetition obligations to the Lien Claimants. The Debtors have sufficient cash reserves to pay for those obligations. A list of the Lien Claimants is available at no charge at: http://bankrupt.com/misc/svcmc_lien_claimants.pdf Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 03; Bankruptcy Creditors' Service, Inc., 215/945- 7000) SALTON INC: 62.3% of Senior Noteholders Agree to Tender Notes ------------------------------------------------------------- Holders of Approximately 62.3% of Senior Subordinated Notes Due 2005 Agree to Tender Their Notes; Salton Makes Interest Payment Due on 2005 Notes within Grace Period Salton, Inc. (NYSE--SFP) entered into support agreements with holders of an aggregate of approximately 62.3%, or $77.8 million, of Salton's outstanding 10-3/4% senior subordinated notes in connection with Salton's previously announced private debt exchange offer. The holders of approximately $50.9 million of 12-1/4% senior subordinated notes due 2008 have also entered into support agreements. Subject to the terms and conditions of the support agreements, the parties thereto have agreed to tender their notes to Salton in the exchange offer. The exchange offer is scheduled to expire on Aug. 2, 2005. Salton has made the June interest payment, which was due on the 10-3/4% senior subordinated notes within the 30-day grace period provided under the indenture governing the notes. The support agreements are subject to various conditions, including: -- holders of at least $75,000,000 of aggregate principal amount of the 10-3/4% senior subordinated notes due 2005 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 10-3/4% senior subordinated notes due 2005. 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 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. Salton, Inc., is a leading designer, marketer and distributor of 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: S&P Withdraws D Ratings After Interest Payment ---------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'D' corporate credit and 'D' subordinated debt ratings on Salton Inc. Salton announced that it has made the June interest payment on its 10.75% senior subordinated notes within the 30-day grace period provided under the indenture governing the notes. Salton also announced that it has entered into support agreements with holders of its 10.75% senior subordinated notes due 2005 and its 12.25% senior subordinated notes due 2008. Subject to the terms and conditions of the support agreements, the note holders have agreed to tender their notes to Salton in an exchange offer scheduled to expire on Aug. 2, 2005. SCHULER HOMES: Moody's Puts Sr. Notes' Low-B Rating Under Review ---------------------------------------------------------------- Moody's Investors Service placed the ratings of D.R. Horton, Inc. under review for possible upgrade, including the ratings of Ba1 and Ba2 on the company's existing senior notes and senior sub notes, respectively. The review will focus on Horton's commitment to maintaining capital structure discipline in the face of numerous growth opportunities, its larger-than-peer-group- average spec building practices, and its growing earnings concentration within California. The ratings under review are listed as follows: * Ba1 Corporate Family Rating (formerly, senior implied rating) * Ba1 on $215 million of 7.5% senior notes, due 12/01/07 * Ba1 on $200 million of 5% senior notes, due 1/15/09 * Ba1 on $385 million of 8% senior notes, due 2/1/09 * Ba1 on $235 million of 9.375% senior notes, due 7/15/09 (issued by Schuler Homes and assumed by D.R. Horton in the merger of February 2002; these will be redeemed on July 15, 2005) * Ba1 on $250 million of 4.875% senior notes, due 1/15/10 * Ba1 on $200 million of 7.875% senior notes, due 8/15/11 * Ba1 on $250 million of 8.5% senior notes due 4/15/12 * Ba1 on $300 million of 5.375% senior notes due 6/15/2012 * Ba1 on $200 million of 6.875% senior notes due 5/1/13 * Ba1 on $100 million of 5.875% senior notes due 7/1/13 * Ba1 on $200 million of 6.125% senior notes due 1/15/2014 * Ba1 on $250 million of 5.625% senior notes due 9/15/ 2014 * Ba1 on $300 million of 5.25% senior notes due 2/15/2015 * Ba1 on $300 million of 5.625% senior notes due 1/15/2016 * Ba2 on $150 million of 9.75% senior sub notes, due 9/15/10 * Ba2 on $200 million of 9.375% senior sub notes, due 3/15/11 * Ba2 on $145 million of 10.5% senior sub notes, due 7/15/11 (issued by Schuler Homes and assumed by D.R. Horton in the merger of February 2002) * SGL-2 Speculative Grade Liquidity rating Headquartered in Ft. Worth, Texas, D.R. Horton, Inc. is engaged in the construction and sale of homes designed principally for the entry-level and first time move-up markets. The company currently builds and sells homes in 22 states and 68 markets, with a geographic presence in the Midwest, Mid-Atlantic, Southeast, Southwest, and Western regions of the United States. Revenues and net income for the fiscal year that ended September 30, 2004 were $10.8 billion and $975 million, respectively. SCORE MEDIA: Equity Deficit Narrows to $5,458,000 at May 31 ----------------------------------------------------------- Score Media Inc. reported that its revenue for the third quarter increased by $1.7 million to $7.3 million compared to $5.6 million in the prior year. This increase was largely due to greater television subscriber revenue reflecting the effects of a new wholesale rate structure that was implemented with several broadcast distribution undertakings in the first and second quarters of fiscal 2005. Advertising revenue during the third quarter increased by $0.4 million compared to the prior year, despite the adverse effect of a National Hockey League strike that affected other sports specialty television networks. The Score was successful in identifying, producing and marketing several new live event sports programs, as well as launching new news programs, which together sustained advertising revenue during a fiscal quarter where other networks reported advertising declines. Operating expenses excluding rights fees were $4.9 million during the quarter, compared to $4.6 million in the prior year, representing an increase of $0.3 million. This increase resulted from higher marketing expenses associated with media advertising and greater occupancy costs resulting from a new property lease at The Score's facilities. Program rights expenses were $0.4 million during the quarter, compared to $0.2 million in the prior year. The increase in program rights at The Score reflects higher program rights fees for Toronto Raptors basketball as well as NCAA basketball. Net income from continuing operations before interest, income taxes, depreciation and amortization was $2.3 million compared to $0.8 million in the same period last year, an increase of $1.5 million. During the third quarter, the Company disposed of an investment whose carrying value had been nil, and realized a gain on sale of $277,000. Interest expense for the second quarter of approximately $0.3 million was comparable to the prior year. Depreciation and amortization expense of $0.3 million in the second quarter was comparable to the prior year. For the third quarter, fixed asset additions were approximately $0.3 million compared to $56 thousand in the prior year. Net income for the three months ended May 31, 2005 was $1.9 million or $0.02 per share based on a weighted average 82.8 million Class A Subordinate Voting Shares and Special Voting Shares outstanding, an improvement of $1.5 million compared to $0.4 million or nil per share based on a weighted average 82.6 million Class A Subordinate Voting Shares and Special Voting Shares outstanding in the prior year. For the three months ended May 31, 2005, net income included $0.1 million of income from discontinued operations and for the three months ended, May 31, 2004, net income included $0.2 million of income from discontinued operations. Nine Months Ended May 31, 2005 Revenues for the nine months ended May 31, 2005 increased to $19.0 million from $15.2 million for the same period last year, an increase of $3.8 million. Advertising revenues for the nine months ended May 31, 2005 increased by approximately $0.4 million compared to the prior year. Subscriber fee revenue increased by approximately $3.4 million, due to the effects of a new wholesale rate structure that was implemented with several broadcast distribution undertakings in the first and second quarters of fiscal 2005. Operating expenses excluding rights fees were $14.1 million for the nine months ended May 31, 2005 compared to $13.1 million in the prior year, representing an increase of $1.0 million. This increase resulted from greater marketing expenses discussed above as well as expenses associated with federal tariffs for music rights, greater CRTC license fees, increased staffing and greater occupancy costs resulting from a new property lease at The Score's facilities. Program rights were $1.0 million during the nine-month period ended May 31, 2005, compared to $1.7 million in the prior year. Certain program rights for the nine month period ended February 28, 2005 increased for live events such as Toronto Raptors basketball and NCAA basketball, but decreased overall, reflecting lower program rights fees on World Wrestling Entertainment properties as well as lower program rights costs for other programs. Interest expense for the nine-month period ended May 31, 2005 was $0.8 million compared to the $1.1 million in the prior year. The decrease of approximately $0.3 million reflects lower borrowings of bank debt and related party debt due to improved cash flow from operations and cash proceeds from the sale of PrideVision's Canadian operations in the prior year. Depreciation and amortization expense for the nine-month period ended May 31, 2005, was $0.9 million compared to $0.8 million in the prior year. For the nine-month period ended May 31, 2005, fixed asset additions were approximately $1.4 million compared to $0.8 million in the prior year. The increase in fixed assets resulted primarily from new investment in broadcast studio equipment. Net income for the nine months ended May 31, 2005 was $2.5 million, or $0.03 per share based on a weighted average 82.8 million Class A Subordinate Voting Shares and Special Voting Shares outstanding compared to a loss of $1.2 million or ($0.01) per share based on a weighted average 82.6 million Class A Subordinate Voting Shares and Special Voting Shares outstanding in the prior year, an increase of $3.7 million. For the nine months ended May 31, 2005, net income included $0.1 million of income from discontinued operations and for the nine months ended May 31, 2004, net income included $0.3 million of income from discontinued operations. Liquidity and Capital Resources Cash flows provided by continuing operations for the three months ended May 31, 2005, were $1.1 million compared to cash flows used in continuing operations of $92 thousand in the prior year reflecting significantly improved income from continuing operations in the current year. Cash flows provided by discontinued operations were $159 thousand compared to cash flows provided by discontinued operations of $35 thousand in the prior year. Cash flows provided by continuing operations for the nine months ended May 31, 2005 were $1.0 million compared to cash flows used in continuing operations of $38 thousand in the prior year reflecting significantly improved income from continuing operations in the current year mitigated in part by negative working capital movements. Cash flows provided by discontinued operations for the nine months ended May 31, 2005 were $0.5 million compared to cash flows used in discontinued operations of $0.2 million in the prior year. For the balance of fiscal 2005 and for fiscal 2006, the Company anticipates that cash flows provided by operations will increase compared to fiscal 2004 based on anticipated increases in both advertising and subscriber revenues with more moderate increases in operating expenses. The Company has sufficient working capital lines of credit to support its operations. Cash flow used in financing activities was $0.4 million for the three months ended May 31, 2005 compared to cash flow provided by financing activities of $22,000 in the prior year. This resulted from refinancing its bank lines of credit as well as a line of credit provided by Levfam Finance Inc., a related party, with a new credit facility provided by its banker on May 26, 2005. Cash flow provided by financing activities was $0.1 million for the nine months ended May 31, 2005 compared to $22,000 for the comparable period in the prior year. During the nine months ended May 31, 2005, the Company drew down $10.0 million by way of a new five-year reducing term loan, and $2.0 million from a new working capital line of credit provided by its bank, and repaid all amounts owing to Levfam Finance Inc. Cash flow used in investment activities for the three months ended May 31, 2005, was $0.7 million compared to cash flow used in investment activities of $0.8 million in the prior year. The decrease in cash flow used in investment activities reflects increased fixed asset additions to expand and improve programming and production facilities at The Score Television Network, but significantly lower deferred charges compared to the prior year. Deferred charges were higher in the prior year as a result of a financing charge paid to extend the Company's bank lines of credit. For the entire fiscal 2005 year, the Company anticipates that expenditures on new and replacement fixed assets will be approximately $1.8 million, which can be financed by cash flows from operations. Other than the credit facilities described, the Company has no other financial instruments and thus believes that there are no price, credit or liquidity risks that it could be subject to from such instruments. Score Media Inc. (TSX: Scr.sv) is a media company focused on the specialty television sector through its main asset, The Score Television Network. The Score is a national specialty television service providing sports, news, information, highlights and live event programming, available across Canada in over 5.5 million homes. As of May 31, 2005, Score Media's equity deficit narrowed to $5,458,000 from an $8,094,000 deficit at August 31. SECOND CHANCE: Armor Holdings to Replace Vests in Settlement ------------------------------------------------------------ Armor Holdings (NYSE: AH) will replace up to 156,000 Second Chance bullet-resistant vests to the law enforcement community as part of a legal settlement reached between Toyobo Company, Ltd., and Toyobo America, Inc. The settlement also includes a certified class of national police organizations, departments, agencies and officers who purchased certain models of the Zylon-containing vests manufactured by Second Chance Body Armor. Toyobo is the Japanese manufacturer of the bullet-resistant fiber Zylon(R). Wednesday's settlement in the Oklahoma state court case of Lemmings, et al. v. Second Chance Body Armor, Inc., and Toyobo Company, Ltd., et al. (Lemmings), is subject to final court approval, which the parties anticipate will occur in October, 2005, and follows the recent announcement by Second Chance that certain of its vest models need to be replaced but their poor financial position prevents them from offering any replacement option. Second Chance filed for Chapter 11 bankruptcy protection in the Western District of Michigan, in October 2004. Based on information received from Class Counsel, there are approximately 156,000 vests sold by Second Chance which may need to be replaced through this program. Although Armor Holdings is not a party in the Lemmings case, in order to assist the law enforcement community in their efforts to quickly replace their Second Chance Ultima/Ultimax or Triflex vests, Armor Holdings has agreed to offer a special one-time, promotional price for its concealable body armor. Armor Holdings is the largest supplier of concealable and tactical body armor to the U.S. law enforcement community through its American Body Armor(R), PROTECH(TM) Tactical and Safariland Armorwear(TM) brands. "As a leader in this industry, we are both pleased and proud to be able to offer the law enforcement community a much-needed solution to this problem," Robert R. Schiller, President of Armor Holdings, Inc., said. "Ensuring the safety of the members of the law enforcement community is one of our most important priorities. It is also a great responsibility which we assume with the utmost care and concern, both in the conduct of our business and in the quality of our products." The settlement provides various benefits to officers and departments, including a $29 million fund established by Toyobo. The Settlement Fund will provide class members with two options: (a) a one-time cash payment whereby each class member will receive a pro rata portion of the fund. Attorneys representing the class have estimated the amount of cash each class member will receive as somewhere between $370 and $965, depending on the number of class members that decide to participate in the Settlement. (b) an Armor Holdings voucher for the same amount of cash each class member would otherwise receive, plus an additional $25 credit provided by Armor Holdings. The voucher, redeemable for up to five years, may be used to purchase any model of American Body Armor or Safariland vest or to purchase any other law enforcement product offered by any of Armor Holdings APEX distributors, including duty gear, less lethal munitions, tactical/SWAT safety gear, riot protection helmets and shields, batons, ballistic resistant enclosures, protective gloves, drug detection and forensic products and other products. Armor Holdings manufactures many of the world's most well- recognized brands of security products, which it offers through a network of more than 500 distributors and agents domestically and internationally. Scott O'Brien, President of Armor Holdings, Inc.'s Products Division, commented, "We believe the settlement announced by Toyobo and the class action attorneys represents an important benefit to the law enforcement community. We are proud to have been able to contribute by offering both a promotional price vest replacement option and a voucher worth an additional $25 to affected officers and departments. We strongly encourage all affected officers to learn more about this settlement by either calling (877)567-2754, or visiting the settlement website at http://www.zylonvestclassaction.com/and return their claim form before the specified deadline." Mr. O'Brien continued, "We take great care to ensure the safety and efficacy of our products. As part of that effort, Armor Holdings has established VestCheck(TM), an industry-leading safety initiative geared to raising awareness for proper fit, coverage, maintenance and evaluation of body armor worn by law enforcement officers. An important component of VestCheck(TM) is our used- vest testing program, which began in 2003 and provides an evaluation and assessment of the useful service life of body armor that has been worn in the field. The VestCheck(TM) evaluation process includes the physical inspection and ballistic performance testing of every vest collected, as well as an in-depth review of individual officer wear, storage and maintenance habits. We also feel it is important to act immediately upon what we learn from these tests, which is why we decided last year to reduce the warranty on our Xtreme ZX model and establish a Warranty/Exchange program for officers wearing that vest model. Utilizing our state of the art in-house ballistic laboratory, we believe that since the inception of VestCheck(TM), Armor Holdings has done more used- vest testing than virtually all of the other body armor manufacturers combined. We think it is important to share the information we learn from this testing, so we have shared this data with the law enforcement departments that participate in the tests, as well as with the National Institute of Justice, and we will continue to do so." Armor Holdings, Inc. (NYSE: AH) -- http://www.armorholdings.com/ -- is a diversified manufacturer of branded products for the military, law enforcement, and personnel safety markets. Based in Central Lake, Michigan, Second Chance Body Armor, Inc. -- http://www.secondchance.com/-- manufactures wearable and soft concealable body armor. The Company filed for chapter 11 protection on Oct. 17, 2004 (Bankr. W.D. Mich. Case No. 04-12515) after recalling more than 130,000 vests made wholly of Zylon, but it did not recall vests made of Zylon blended with other protective fibers. Stephen B. Grow, Esq., at Warner Norcross & Judd, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and liabilities of $10 million to $50 million. Daniel F. Gosch, Esq., at Dickinson Wright PLLC, represents the Official Committee of Unsecured Creditors. SPRINGLETS BOTTLED: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Springlets Bottled Water Company, Inc. dba Sedona Springs 951 West Watkins Street Phoenix, Arizona 85007 Bankruptcy Case No.: 05-12661 Type of Business: The Debtor bottles water from natural springs in Northern Arizona. See http://www.sedonaspringsh2o.com/ Chapter 11 Petition Date: July 13, 2005 Court: District of Arizona Judge: James M. Marlar Debtor's Counsel: Dennis J. Wortman, Esq. Dennis J. Wortman, P.C. 2700 North Central Avenue, Suite 850 Phoenix, Arizona 85004-1162 Tel: (602) 257-0101 Fax: (602) 775-4544 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. STELCO INC: Plans to File CCAA Plan of Arrangement Today -------------------------------------------------------- Stelco Inc. (TSX:STE) will appear in Court on July 18, 2005 to seek an extension of the stay period in its Court-supervised restructuring from that date until September 9, 2005. Stelco also reported that it will file a restructuring Plan Outline today, July 15, 2005. The Plan Outline will reflect the Company's discussions with stakeholders during the past 17 months. It will endeavour to balance the interests of those stakeholders, which in many cases are inconsistent, in a fair, reasonable and responsible manner, enabling Stelco to emerge as a viable company over the long term. The Company further indicated that it will return to Court on or before September 9, 2005, to file a formal restructuring plan, to seek a further stay extension, and to seek a Meeting Order. That Order, if granted, will approve the procedures with respect to the calling and conduct of a meeting of affected creditors to consider and vote upon the Company's restructuring plan, as well as the manner in which the materials for such meeting will be distributed. Stelco, Inc. -- http://www.stelco.ca/-- is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. In early 2004, after a thorough financial and strategic review, Stelco concluded that it faced a serious viability issue. The Corporation incurred significant operating and cash losses in 2003 and believed that it would have exhausted available sources of liquidity before the end of 2004 if it did not obtain legal protection and other benefits provided by a Court-supervised restructuring process. Accordingly, on Jan. 29, 2004, Stelco Inc. and certain related entities filed for protection under the Companies' Creditors Arrangement Act. STELCO INC: Workers Tell CEO Pratt Not to Kowtow to Speculators --------------------------------------------------------------- The United Steelworkers demanded that Stelco Inc.'s plan outline, which the company has indicated it intends to file with the Court today, be at least as good as the plan put forward by a Steelworker-led coalition. The coalition plan would provide the company with $1.35-billion of new committed financing and a strong commitment to the company's Critical Capital Spending Program. "It is long past time for you and Stelco's Board of Directors to speak up for Stelco; not kowtow to financial speculators," says a letter sent Wednesday to CEO Courtney Pratt, signed by five Stelco local union presidents, three Steelworker district directors and National Director Ken Neumann. "Irresponsible nay saying by a company captured by financial speculators is not helpful. It is time to make a choice and be accountable for that choice. "We demand and expect that any plan that Stelco files will be at least as good for the company's long-term viability and its obligations to its most vulnerable stakeholders as is ours." In April, the Steelworkers agreed to a letter of intent with the financial arm of Brascan, Tricap Management Ltd. The Steelworkers/Tricap plan has gained the strong support of a diverse coalition, including the Ontario government, the unionized employees of Stelco, the company's managers and other salaried employees, and its hourly and salaried retirees. The plan proposes a commitment to provide a total of $1.35-billion in new capital with a $500-million cash up-front contribution to pension funding. "In November of 2004, you sought and received the approval of the court for the Deutsche Bank Stalking Horse bid," said the Wednesday letter to Mr. Pratt. "Today, you have in front of you our plan, which provides the company with significantly greater liquidity, less leverage and a greater upfront pension contribution than did Deutsche Bank. "You have an obligation to fight for a long-term viable Stelco, but please understand that if you do not, we will." The full text of the letter is available at: http://www.uswa8782.com/newsletter/PrattLetterJUL13a.pdf About USW The United Steelworkers of America represents more than 850,000 workers in the U.S. and Canada. Headquartered in Pittsburgh, Penna., it represents employees in the steel, paper, forestry, rubber, manufacturing, energy, mining, aluminum and service industries. The Steelworkers' Local 8782 website is: http://www.uswa8782.com/ About Stelco Stelco, Inc. -- http://www.stelco.ca/-- is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. In early 2004, after a thorough financial and strategic review, Stelco concluded that it faced a serious viability issue. The Corporation incurred significant operating and cash losses in 2003 and believed that it would have exhausted available sources of liquidity before the end of 2004 if it did not obtain legal protection and other benefits provided by a Court-supervised restructuring process. Accordingly, on Jan. 29, 2004, Stelco Inc. and certain related entities filed for protection under the Companies' Creditors Arrangement Act. TACTICA INT'L: Files Plan & Disclosure Statement in S.D.N.Y. ------------------------------------------------------------ Tactica International, Inc., delivered its Plan of Reorganization and Disclosure Statement to the U.S. Bankruptcy Court for the Southern District of New York. The Plan is the result of substantial negotiations among the Debtor, the Official Committee of Unsecured Creditors and IGIA Inc. The Plan contemplates a restructuring that has two major components: 1. Exit Financing The Debtor has received Bankruptcy Court approval of the IGIA DIP Facility on a final basis. As part of the Plan, the Debtor will convert the third tranche of the IGIA DIP Facility funds -- consisting of $750,000, less costs and expenses -- to the Exit Financing, which shall be made available for: (a) paying the Debtor's administrative expenses under Section 503(b) of the U.S. Bankruptcy Code; (b) paying the Debtor's ordinary course of business expenses; (c) funding the Plan; and (d) paying the Debtor's obligations as may otherwise be approved by the Court. 2. Distributions to Unsecured Nonpriority Creditors The Debtor is in the process of analyzing the validity of all claims filed in its chapter 11 case. Until this process is complete, the Debtor will not be able to state with certainty any estimated or projected distributions to unsecured creditors. Based on the amount of claims filed to date, the Debtor estimates that unsecured creditors will receive, in total, Pro Rata distributions over time having a total nominal value of as much as 25% of their Allowed Claims from the following sources: (a) Initial Distribution consisting of: -- the $700,000 Cash Distribution, -- the Net Innotrac Reallocated Proceeds, and -- the Parent Commom Stock; and (b) Creditors' Trust. Innotrac is a wharehouse owner in Reno, Nevada. Innotrac asserted a warehouseman's lien of $2.7 million on the Debtor's inventory. Pursuant to the June 23, 2005, Innotrac Global Settlement Final Order, the inventory was to be sold by Innotrac. The proceeds of the sale are to be distributed according to a formula set forth in the Innotrac Global Settlement. Innotrac will reallocate a portion of its proceeds of the Inventory to the Creditor Trust to be distributed holding Allowed General Unsecured Claims as well as pay the Debtor a surplus of the proceeds of any sale of the Innotrac inventory above a threshold level. A full-text copy of the disclosure statement explaining the Debtors' plan of reorganization is available for a fee at" http://www.researcharchives.com/bin/download?id=050714034642 Headquartered in New York, New York, Tactica International, Inc., a wholly owned subsidiary of IGIA, Inc. -- http://www.igia.com/ -- designs, develops and markets personal and home care items under the IGIA and Singer brands. Product categories include hair care, dental care, skin care, sports and exercise, household and kitchen. Tactica holds an exclusive license to market a line of floor care products under the Singer name. Tactica also owns rights to the "As Seen On TV" trademark. The Company filed for chapter 11 protection on Oct. 21, 2004 (Bankr. S.D.N.Y. Case No. 04-16805). Timothy W. Walsh, Esq., at Piper Rudnick, LLP, represents the Debtor in its restructuring effort. When the Company filed for protection from its creditors, it reported assets amounting to $10,568,890 and debts amounting to $14,311,824. TECK COMINCO: Improved Finances Prompts Moody's to Lift Ratings --------------------------------------------------------------- Moody's Investors Service upgraded the senior unsecured debt ratings of Teck Cominco Limited and Teck Cominco Metals Ltd. to Baa2 from Baa3 and the subordinated debentures exchangeable for Inco shares to Baa3 from Ba1. The rating outlook was changed to positive. The upgrade and change in outlook reflects the company's improved financial profile, which has benefited from top-of-the-cycle conditions over the past year and a half, and Moody's view that Teck Cominco will continue to enjoy improved earnings performance and strengthened cash flow generation over the next twelve to eighteen months. The upgrade also reflects the improvement in Teck Cominco's capital structure over the past three years as the company has taken advantage of higher metals prices to reduce debt, and Moody's expectation that the company will be able to sustain improved debt protection measurements over the intermediate term as cash flow should continue to be strong given the anticipated metals price environment. Ratings upgraded are: Teck Cominco Limited: -- Senior unsecured notes to Baa2 from Baa3 and -- 3% subordinated debentures exchangeable for Inco shares to Baa3 from Ba1 Teck Cominco Metals Limited: -- Senior unsecured, guaranteed by Teck Cominco, to Baa2 from Baa3 The Baa2 rating reflects Teck Cominco's strong position across a variety of metals markets, coupled with its overall cost position, which should enable it to continue to improve its operating performance and debt coverage metrics. The rating action also considers the strong capital structure, as evidenced by its December 31, 2004 adjusted debt to capitalization ratio of 28%, down from 42% at December 31, 2003. Adjusted debt includes unfunded pension liabilities, operating leases using Moody's modified p.v. approach, and both the exchangeable debenture due 2024 and the Inco exchangeable debenture. With respect to the Inco exchangeable debenture, Moody's recognizes that the payment obligation under these debentures is to pay a fixed number of Inco shares and that the number of shares comprising this obligation has been pledged to the debenture holders. As such, Teck Cominco's real exposure under the debentures is limited to the capital gains tax payable upon settlement of the debentures. The rating also considers the company's susceptibility to cyclical metals prices and the need to manage strategic reinvestments without impairing the capital structure. The positive outlook reflects Teck Cominco's diversity through its interests in zinc, copper, gold and metallurgical coal. Additionally, the company also benefits from its ability to sell power from its Trail smelter. Moody's expects the company to continue to benefit from positive prices for copper, zinc, gold and coal. With respect to coal, the company began to benefit from a doubling of met coal annual contract prices to $125 per tonne in the second quarter of this year. An increase in rating is likely over the next twelve months if the company continues to benefit from strong metals and coal prices (in which case Moody's anticipates that the company should continue to generate adjusted debt to EBITDA in the range of 1x) and if the company refrains from any significant debt financed acquisitions or decapitalizations. Given the positive outlook, the ratings are unlikely to be lowered over the next twelve to eighteen months unless the company undertakes significant debt financed acquisitions or recapitalizes in an unexpected manner. Longer term, the rating could be lowered if the company were to suffer a sustained period of fundamental deterioration in metals and coal prices, and /or fundamentally higher operating costs than it has today. In these scenarios, the rating could remain at Baa2 if the company, in Moody's view, is able to generate through-the- cycle adjusted debt to EBITDA in the range of 3x. A lowering of this ratio to the range of 3.5x could result in a downgrade to Baa3. Headquartered in Vancouver, British Columbia, Canada, Teck Cominco had revenues of C$3.4 billion in 2004. THANH HOANG: Case Summary & 6 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Thanh Hoang 9101 Clewerwall Drive Bethesda, Maryland 20817 Bankruptcy Case No.: 05-25738 Chapter 11 Petition Date: July 12, 2005 Court: District of Maryland (Greenbelt) Judge: Nancy V. Alquist Debtor's Counsel: Christopher Hamlin, Esq. McNamee, Hosea, Jernigan, Kim, Greenan & Walker, P.A. 6411 Ivy Lane, Suite 200 Greenbelt, Maryland 20770 Tel: (301) 441-2420 Fax: (301) 982-9450 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tuan Bui Lawsuit pending $280,000 c/o J. Charles Curren regarding Deed of 9695 C. Main Street Trust on 7724 Lisle Fairfax, VA 22031 Ave., Falls Church, VA Tu Bui Lawsuit pending $200,000 7724 Lisle Avenue Falls Church, VA Douglas J. Sanderson Debtor signed deed $75,000 Richard M. Pollak of trust for property [Address not provided] located at 3405 Hewitt Ave., Silver Spring, MD 20906 Comptroller of the Treasury Income taxes due from Unknown for the State of Maryland 1997 to 2004 Hewiit Avenue, LLC Lawsuit pending Unknown Re: 2911 Hewitt Ave., Silver Spring, MD Internal Revenue Service Income taxes due Unknown From 1997 to 2004 TOWER AUTOMOTIVE: Taps Deloitte Tax Professionals as Consultants ---------------------------------------------------------------- Tower Automotive Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for authority to employ Deloitte Tax LLP as their tax service providers and tax consultants, nunc pro tunc to June 7, 2005. Matthew A. Cantor, Esq., at Kirkland & Ellis LLP, in New York, relates that Deloitte Tax has rendered tax services to the Debtors since its formation in August 2004. As a result, the firm has considerable knowledge concerning the Debtors and is already familiar with the Debtors' business affairs. Moreover, the firm's significant qualifications and extensive experience in tax matters is widely recognized. The Debtors, therefore, believe that Deloitte Tax is well qualified and able to perform tax services in a cost-effective, efficient, and timely manner. Mr. Cantor reports that the Debtors have already sought and obtained Court authority to employ Deloitte & Touche to provide independent auditing and accounting services; Ernst & Young LLP to provide internal auditing services; and Jefferson Wells International, Inc., to provide internal tax and accounting staff. The firms assured the Debtors that they will make every effort to avoid duplication of their work. As the Debtors' tax consultants, Deloitte Tax will: (a) compute the Debtors' tax asset and stock basis to assist them in evaluating the income from the cancellation or discharge of indebtedness, including its effects under Internal Revenue Code Sections 108 and 1017 pertaining to tax basis in assets, tax basis in stock, and tax net operating loss carryovers. These services will include a computation of the Debtors' cumulative earnings and profits to provide them with support regarding the tax effect of post-bankruptcy distributions to new equity holders; (b) advise the Debtors in evaluating and modeling alternative tax methodologies to understand post-bankruptcy tax attributes available under the applicable newly issued tax regulations and the absorption of these attributes based on the Debtors' operating projections, including a technical analysis of the effects of Treasury Regulation Section 1.1502-28 and the interplay with IRC Section 108/1017; (c) advise the Debtors in evaluating and modeling the potential effect of the Alternative Minimum Tax in various post-emergence scenarios; (d) assist the Debtors in analyzing the effects of tax rules under IRC Sections 382(l)(5) and (l)(6) pertaining to the post-bankruptcy net operating loss carryovers and limitations on their utilization; (e) advise the Debtors in analyzing net built-in gain or loss position at date of bankruptcy to understand any limitations on use of tax losses generated from post- bankruptcy asset or stock sales; (f) assist the Debtors by working with their creditors and financial advisors on cash tax effects of bankruptcy and in understanding the post-bankruptcy tax profile; (g) advise the Debtors on the proper treatment of postpetition interest; (h) advising the Debtors on the proper treatment of prepetition and postpetition reorganization costs; (i) determine the state tax consequences of the income from the discharge of indebtedness and any ownership changes, including their resulting impact on the amount and use of state net operating losses; (j) advise the Debtors on the state tax aspects of the post- bankruptcy environment with a focus on optimizing the post-bankruptcy tax structure for state tax purposes. Strategies that are both general and specific will be developed and discussed with the Debtors' management. These strategies will concentrate on the potential reduction of state income and franchise, sales and use, payroll and unemployment, property, excise and gross receipts taxes, and other state taxes; (k) assist the Debtors in evaluating and modeling the effects of liquidating, merging, or converting entities as part of the post-emergence plan, including the effects on federal and state tax attributes, state incentives, apportionment, and other tax planning; (l) assist the Debtors in reviewing the potential effects of the US GAAP FAS 109 deferred tax and valuation allowances for potential tax basis in asset reductions as a result of their bankruptcy; (m) assist the Debtors in the review and analysis of tax treatment of items adjusted for GAAP purposes as a result of "fresh start" accounting, as required for the emergence date of the US GAAP balance sheet, to identify the appropriate tax treatment of adjustments to equity, including issuance of new equity, options, or warrants, and other adjustments to assets and liabilities recorded; (n) document, as appropriate, the tax analysis, opinions, recommendation, conclusions, and correspondences for any proposed restructuring alternative tax issue or other tax matters; and (o) perform other similar or related professional tax services, including, assistance in connection with reports requested of the Debtors by the Court, the U.S. Trustee and parties-in-interest, as the Debtors, their attorneys, or financial advisors may from time to time request. The Debtors will pay Deloitte Tax for its services under its customary hourly rates, subject to periodic adjustments: Hourly Rates National Local ------------------ Partner/Principal/Director $450 $475 Senior Manager $350 $390 Manager $290 $300 Senior Accountants/Consultants $215 $215 In addition, Deloitte Tax will seek reimbursement for reasonable and necessary expenses incurred in connection with the Debtors' Chapter 11 cases. Mr. Cantor reports that the Debtors have paid Deloitte Tax less than $400,000 for tax services during calendar year 2004, plus $120,529 during the 90 days prior to the Commencement Date. The firm is not currently owed any amounts for prepetition tax services rendered to the Debtors. Scott L. Shekell, a member of Deloitte Tax, assures Judge Gropper that the firm: -- has no connection with the Debtors, their creditors or other parties-in-interest, -- does not hold any interest adverse to the Debtors' estates; and -- is a "disinterested person," as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05- 10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOWER AUTOMOTIVE: Tower Product Wants to Lease Facility & Land -------------------------------------------------------------- In July 1999, Tower Automotive Technology Products, Inc., acquired an automotive manufacturing facility and land in Marion County, Indiana, as an ancillary part of Tower Products' larger acquisition of Active Tool & Manufacturing Co., Inc. Since its purchase, the Marion Facility has never been occupied or operated by Tower Products. In fact, Tower Products has no intention of doing so in the future. Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, informs the U.S Bankruptcy Court for the Southern District of New York that the current costs of holding the inoperative plant total approximately $350,000 per year. From December 2000 to 2004, in an attempt to offload or minimize the expense of holding the inoperative plant, Tower Products have unsuccessfully sought a buyer for the Marion Facility. In 2004, Turley, Martin & Tucker Auction Services, a professional auctioneer services firm hired by Tower Products to advertise and hold an auction for the sale of the Marion Facility, failed to receive any bid for the Property, despite the fact that no minimum bid was required. In early 2005, after nearly exhausting its marketing efforts, Tower Products approved the demolition of the Marion Facility since there were no viable tenants or purchasers. Tower Products intended the demolition to significantly reduce the Marion Facility's $350,000 annual carrying cost and limit Tower Products' potential exposure for future environmental liability. Marion County Lease In March 2005, prior to commencing demolition, and as a result of the ongoing marketing efforts of one of Tower Products' prepetition commercial real estate agents, GMB Associates, Inc., Tower Products identified Active Properties LLC as a potential lease tenant and purchaser for the Marion Facility. Following arm's-length negotiations, Tower Products agreed to enter into a lease agreement with Active Properties, pursuant to which Tower Products will lease the Marion Facility to Active Properties for $1.00 for the first year, and grant Active Properties the option to renew the Lease Agreement for another year or convert it to a purchase of the Marion Facility, land and certain fixed equipment for $1.00. A copy of the Marion County Lease is available for free at: http://bankrupt.com/misc/marioncountylease.pdf Pursuant to the Marion County Lease, Active Properties will also pay the annual carrying costs associated with the Marion Facility as they become due during the term of the Lease. In addition, in exchange for the option to purchase under the Marion Facility Lease Agreement, Active Properties will make a one-time $30,000 cash payment as Broker Fee to Tower Products, which will be payable upon entry of a Court order approving Tower Products' request. Tower Products, in turn, will promptly pay the Broker Fee to GMB Associates in consideration for its postpetition services rendered to Tower Products in connection with procuring Active Properties as a tenant and potential purchaser of the Marion Facility. During the term of the Lease, Active Properties will obtain a $1,000,000 comprehensive general liability insurance policy for Tower Products' benefit. Active Properties will also keep all improvements on the premises insured against loss or damage by fire with a $2,000,000 standard fire insurance policy in Tower Product's name. In the event that Active Properties elects to purchase the Marion Facility under the Marion County Lease, it agrees to (x) take the Marion Facility "as is, where is," and (y) be responsible for all costs related to any environmental clean-up and site remediation. Any unknown or future environmental liability with respect to the Marion Facility will be Active Properties' obligation. Accordingly, Tower Products asks the Court for authority to: (a) lease the Marion Facility to Active Properties; and (b) grant Active Properties the option to purchase the Marion Facility free and clear of claims, liens and encumbrances. Tower Products believes that it has already obtained adequate authority, with respect to the potential sale of the Marion Facility, pursuant to the Court's Order authorizing and approving expedited procedures for the sale or abandonment of de minimis assets. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05- 10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOWER AUTO: ZF Lemforder Wants Stay Lifted to Permit Set-Off ------------------------------------------------------------ ZF Lemforder Corporation asks the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay to exercise a right to set off its various mutual prepetition debts and claims with Tower Automotive Inc. and its debtor-affiliates. John J. Hunter, Jr., Esq., at Hunter & Schank, Co., LPA, in Toledo, Ohio, relates that prior to the Petition Date, both ZF Lemforder and the Debtors manufactured and sold components to one another in the ordinary course of their business operations. As of the Petition Date, the Debtors owed $3,135,500 to ZF Lemforder, for the purchase of goods, while ZF Lemforder, in turn, owed the Debtors $3,201,225. ZF Lemforder has demanded reclamation of $624,828 in goods. Pursuant to the general purchasing terms and conditions of both ZF and the Debtors, the laws of the State of Michigan, Mr. Hunter contends, apply to the parties' purchasing relationship. Thus, ZF Lemforder is entitled to set off the amounts properly due and owing to it from the Debtors. This, according to Mr. Hunter, constitutes proper cause for the Court to grant ZF Lemforder relief from the stay to effect its right of set-off. ZF Lemforder will withdraw its $624,828 reclamation request, in the event that it is granted relief from stay. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05- 10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOYS 'R' US: S&P Cuts Rating on $13 Mil. Class A-1 Certs. to B+ --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the $13 million Corporate Backed Trust Certificates Toys "R" Us Debenture-Backed Series 2001-31 Trust's class A-1 certificates to 'B+' from 'BB'. The rating remains on CreditWatch with negative implications. The transaction is a swap-independent synthetic security that is weak-linked to the underlying collateral, Toys "R" Us Inc.'s 8.75% debentures due Sept. 1, 2021. The rating action reflects the credit quality of the underlying securities issued by Toys "R" Us Inc. US AIRWAYS: Plans to Move 89 Employees in Philly to Other Cities ---------------------------------------------------------------- Thomas Ginsberg at The Philadelphia Inquirer reports that on June 29, 2005, US Airways Group, Inc., advised the Pennsylvania Department of Labor and Industry that it would transfer 59 pilots, 29 flight attendants, and one other employee from its Philadelphia operation by September 1, 2005. Mr. Ginsberg relates that all but one of the jobs from PSA Airlines, Inc., will be transferred to Air Wisconsin Airlines Corp., which will operate US Airways Express flights in Charlotte, North Carolina; Dayton, Ohio; and Knoxville, Tennessee. In addition, PSA Airlines will maintain its current payroll of about 1,550 people. 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. 98; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Wants Confirmation Hearing Scheduled for September 15 ----------------------------------------------------------------- US Airways, Inc., and its debtor-affiliates ask Judge Mitchell of the U.S. Bankruptcy Court for the Northern District of Texas to set September 15, 2005, 9:30 a.m., Eastern time, as the Confirmation Hearing Date. The Debtors also ask the Court to fix September 12, 2005, at 4:00 p.m., Eastern time, as the deadline for creditors and other parties-in-interest to file and serve objections to confirmation of the Plan. Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, clarifies that Confirmation Objections must: (1) be in writing; (2) comply with the Federal Rules of Bankruptcy Procedure and the Local Rules of the U.S. Bankruptcy Court for the Eastern District of Virginia; (3) set forth the name of the objector, the nature and amount of any claim or interest, specifying the appropriate Debtor, their estates or property; (4) state the legal and factual bases for the objection; and (5) be filed with the Court with proof of service, served by electronic mail, personal service, overnight delivery or first-class mail and received by the Objection Deadline. Confirmation Objections must be received by: -- Counsel for the Debtors Arnold & Porter LLP Attn: Brian P. Leitch, Esq. 370 Seventeenth Street, Suite 4500 Denver, Colorado 80202 - and - Arnold & Porter LLP Attn: Daniel M. Lewis, Esq. Neil M. Goodman, Esq. 555 Twelfth Street, NW Washington, DC 20004 e-mail address: usairwaysservice@aporter.com - and - McGuirewoods LLP Attn: Lawrence E. Rifken, Esq. 1750 Tysons Boulevard, Suite 1800 McLean, Virginia 22102-4215 - and - McGuirewoods LLP Attn: Douglas M. Foley, Esq. 101 West Main Street, Suite 9000 Norfolk, Virginia 23510-1655 e-mail address: usairwaysservice@mcguirewoods.com -- United States Trustee Office of the United States Trustee Attn: Dennis J. Early, Esq. 115 South Union Street Alexandria, Virginia 22314 e-mail address: ustpregion04.ax.ecf@usdoj.gov -- Counsel for America West Skadden, Arps, Slate, Meagher & Flom LLP Attn: Timothy R. Pohl, Esq. 333 West Wacker Drive Chicago, Illinois 60606 e-mail address: TPOHL@skadden.com -- Plan Investors ACE Aviation Holdings Inc. Air Canada Centre 7373 Cote-Vertu Blvd. West Saint-Laurent, Quebec H4Y 1H4, Canada Eastshore Aviation, LLC Attn: Christine Deister W6390 Challenger Drive, Suite 203 Appleton, Wisconsin 54924 Par Investment Partners, L.P. Attn: Edward L. Shapiro One International Place Suite 2401 Boston, Massachusetts 02110 Peninsula Capital Advisors, LLC Attn: Ted Weschler 404B East Main Street Charlottesville, Virginia 22902 Republic Airways Holdings Inc. Attn: Chief Executive Officer 8909 Purdue Avenue Suite 300 Indianapolis, Indiana 46268 Tudor Investment Corp. Attn: Stephen N. Waldman 1275 King Street Greenwich, Connecticut 06831 Wellington Management Company, LLP Attn: Legal Services Department 75 State Street Boston, Massachusetts 02109 Wexford Capital LLC Attn: President and General Counsel Wexford Plaza 411 West Putnam Avenue Greenwich, Connecticut 06830 -- Counsel for the Creditors' Committee Otterbourg, Steindler, Houston & Rosen, P.C. Attn: Scott L. Hazan, Esq. Brett H. Miller, Esq. 230 Park Avenue New York, New York 10169 e-mail addresses: shazan@oshr.com and bmiller@oshr.com - and - Vorys, Sater, Seymour & Pease LLP Attn: Malcolm M. Mitchell Jr., Esq. 277 South Washington Street, Suite 310 Alexandria, Virginia 22314-3674 e-mail address: mmmitchell@vssp.com -- ATSB Air Transportation Stabilization Board Attn: Executive Director 1120 Vermont Avenue, N. W., Suite 970 Washington, DC 20005 - and - Curtis Mallet-Prevost Colt & Mosle LLP Attn: Steven J. Reisman, Esq. 101 Park Avenue New York, New York 10178-0061 e-mail address: sreisman@cm-p.com 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. 98; Bankruptcy Creditors' Service, Inc., 215/945-7000) VARTEC TELECOM: Seeks Court Approval for Fiserve Service Contract ----------------------------------------------------------------- VarTec Telecom Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas for permission to enter into a one-year Master Services Agreement with Fiserve Solutions, Inc., d/b/a Personix. The Master Services Agreement names Fiserve Solutions as the single supplier for the Debtors' customer bill printing and other printing requirements. It further releases the Debtors from Fiserve Solutions' $886,000 prepetition claim. The Debtors and Fiserve Solutions signed the Agreement on July 1, 2005, after an existing prepetition service agreement expired in February 2005. Fiserve Solutions has provided printing services to the Debtors since February 2000. The Debtors tell the Court that Fiserve Solutions will provide services necessary to their billing and collections process. The Debtors add that using a single supplier for these services will significantly reduce costs. They anticipate saving $415,000 per year with the shift to a single supplier system. The Honorable Steven A. Felsenthal will convene a hearing to discuss the Debtors' request on August 18, 2005 at 2:00 p.m. in Dallas, Texas. A copy of the Master Services Agreement is available for a fee at http://www.researcharchives.com/bin/download?id=050714024707 About Fiserve Solutions Fiserv (Nasdaq: FISV) provides information management systems and services to the financial industry, including transaction processing, outsourcing, business process outsourcing and software and systems solutions. The company serves more than 16,000 clients worldwide, including banks, credit unions, financial planners/investment advisers, insurance companies and agents, self-funded employers, lenders and savings institutions. Headquartered in Brookfield, Wis., Fiserv reported $3.4 billion in processing and services revenues for 2004. About VarTec Telecom Headquartered in Dallas, Texas, VarTec Telecom Inc. -- http://www.vartec.com/-- provides local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04-81694. Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed more than $100 million in assets and debts. VARTEC TELECOM: Set to Make Adequate Protection Payments to UMB --------------------------------------------------------------- Vartec Telecom Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas for authority to make adequate protection payments to UMB Bank, N.A. Adequate protection payments are payments made to a secured creditor to compensate for any diminution in the value of collateral from the time a debtor files for chapter 11 protection until a reorganization plan is confirmed. Vartec pledged four voice and data switches located in Pennsylvania, Washington, Colorado, and Texas, to secure repayment of a prepetition loan from UMB Bank. The equipment secures an $8 million promissory note signed by Vartec in August 2001. Approximately $1.3 million of the principal amount remains outstanding as of July 2005. Vartec will continue to pay UMB Bank interest on the principal outstanding under the promissory note postpetition. The Debtors do not disclose the actual amount of the payments to be made. The Honorable Steven A. Felsenthal will convene a hearing to discuss the Debtors' request on August 18, 2005 at 2:00 p.m. in Dallas, Texas A copy of the Security Agreement is available for a fee at: http://www.researcharchives.com/bin/download?id=050714024232 About UMB Bank UMB Financial Corporation is a regional, multi-bank holding company with locations in Missouri, Illinois, Colorado, Kansas, Oklahoma and Nebraska. Since 1913, UMB has served Midwestern communities with outstanding customer service, innovation and sound banking principles. The holding company, along with its lead bank, UMB Bank, N.A., offers a wide range of products for individuals and businesses including: traditional banking products, treasury management, investments, trust and wealth management, insurance, annuities, loans, financial planning and brokerage services. About Vartec Telecom Headquartered in Dallas, Texas, Vartec Telecom Inc. -- http://www.vartec.com/-- provides local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04- 81694. Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed more than $100 million in assets and debts. XYBERNAUT CORP: Potential Lender Won't Pursue DIP Financing ----------------------------------------------------------- Xybernaut Corporation disclosed in a regulatory filing with the Securities and Exchange Commission that its unidentified lender decided not to pursue a commitment letter for a debtor-in- possession financing in the event the Company seeks to file for bankruptcy protection. The Company made a $125,000 initial expense deposit to the potential lender in connection with a letter agreement dated June 30, 2005. The potential lender based its decision on due diligence undertaken in connection with the possible financing, and returned approximately $54,000 to Xybernaut of the initial deposit on July 8, 2005. "The Company continues to face a severe liquidity crisis and possible insolvency," Perry L. Nolen, the Company's President and Chief Executive Officer, relates in a regulatory filing delivered to the Securities and Exchange Commission. The Company previously disclosed that it retained Alfred F. Fasola, a consultant with extensive financial and management restructuring expertise to advise the Company with respect to reducing costs, conserving cash, restructuring and other alternatives to attempt to maximize shareholder value. Mr. Fasola was involved years ago with Herman's Sporting Goods' chapter 11 proceedings. A long list of other problems plaguing Xybernaut were reported in the Troubled Company Reporter on May 4, 2005. Since that time, the company's shares have been delisted from the NASDAQ, class action lawsuits have been filed against the Company and certain of its current and former officers and directors, and federal prosecutors have commenced an investigation into the Company. On June 1, 2005, Xybernaut Corporation entered into an engagement letter with IP Innovations Financial Services, Inc., to act as a strategic and financial advisor to the Company and to assist the Company in its analysis, consideration and, if appropriate, execution of various financial and strategic alternatives. Pursuant to the engagement letter, IPI is: i) advising the Company and developing and preparing a valuation report that assesses the market value of the Company's intellectual property in a monetization scenario; ii) providing general financial and strategic advisory services for the operation of the Company, including assisting the Company in evaluating potential investors in the business or acquirers of the business of the Company; and iii) advising and assisting the Company in obtaining suitable financing and/or debtor-in-possession financing to meet the Company's needs. In consideration for these services, the Company will pay IPI (i) a flat fee of $63,250 for the IP valuation report; (ii) $25,000 per month for a minimum of six months for the advisory services relating to potential investors and acquirers, and if the Company completes an acquisition transaction, a transaction advisory fee equal to one percent of the transaction consideration; and (iii) a transaction advisory fee equal to 3% of the principal amount of any financing obtained by the Company as a result of IPI's advisory services. CFO Resigns Bruce C. Hayden, the Company's Senior Vice President and Chief Financial Officer, resigned from his posts effective July 8, 2005. In addition, Phillip E. Pearce resigned as a Company director effective July 7, 2005. Noritsugu Yamaoka resigned as director effective July 11, 2005. About the Company Xybernaut Corporation -- http://www.xybernaut.com/-- provides wearable/mobile computing hardware, software and services, bringing communications and full-function computing power in a hands-free design to people when and where they need it. Headquartered in Fairfax, Virginia, Xybernaut has offices and subsidiaries in Europe (Benelux, Germany, UK) and Asia (Japan, China, Korea). The company latest balance sheet delivered to the Securities and Exchange Commission, dated Sept. 30, 2004, shows $17 million in assets. YUKOS OIL: Chukotka Ct. Orders Yukos to Return 14.5% Sibneft Stake ------------------------------------------------------------------ A court in the Chukotka peninsula of Russia directed Yukos Oil Company to return 14.5% of Sibneft to the company's major shareholders, Bloomberg New reports. Yukos agreed to merge with Sibneft in 2003 through a $13.9 billion cash and stock purchase transaction. The deal collapsed when Russia asserted tax claims against Yukos and Yukos founder Mikhail Khodorkovsky was arrested. Michael Teagarden and Torrey Clark of Bloomberg relate that Yukos has returned its 57.5% stake in Sibneft in October 2004. Yukos still holds 34.5% in Sibneft, including a 20% stake for which it paid $3 billion in cash and a 14.5% stake acquired through a share swap. Headquartered in Houston, Texas, Yukos Oil Company is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. On Feb. 24, 2005, Judge Letitia Z. Clark dismissed the Chapter 11 case. (Yukos Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) YUKOS OIL: Cypriot Subsidiary Sells Stake in Geoilbent Holdings --------------------------------------------------------------- Yukos Oil Company's Cypriot subsidiary has sold its 34% stake in energy holding company Geoilbent to Russneft, according to Russian daily Kommersant. Financial details of the transaction were not revealed, but RosBusinessConsulting previously reported that the stake is worth between $150 to $170 million. Russneft is a non-listed company that just entered the Russian oil industry. Russneft is rumored to be behind the lawsuit to halt the sale of the remaining 66% of Geoilbent. The case was brought by Broadwood Trading & Investments Ltd., which has claimed pre- emption rights over the majority stake. Russneft has denied the allegations. Headquartered in Houston, Texas, Yukos Oil Company is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. On Feb. 24, 2005, Judge Letitia Z. Clark dismissed the Chapter 11 case. (Yukos Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Allan Brilliant Co-Chairs Goodwin Procter's Insolvency Group -------------------------------------------------------------- Goodwin Procter LLP, a leading national law firm with offices in Boston, New York, New Jersey and Washington, D.C., announced the addition of Allan S. Brilliant to the firm's Insolvency and Business Reorganization Practice. Mr. Brilliant joins the firm as partner in its New York office and will co-chair the Insolvency and Business Reorganization Practice with Emanuel C. Grillo. Mr. Brilliant concentrates his practice in bankruptcy reorganizations and non-judicial workouts and restructurings representing debtors, bank groups, bondholder committees, asset acquirers and unsecured creditors' committees in complex restructurings and reorganizations. Mr. Brilliant was lead counsel to Envirodyne Industries, Viskase Corporation and Ben Franklin Retail Stores in their respective Chapter 11 cases. He also was lead counsel to the Bank Group in Chapter 11 cases for Global Crossing, Levitz Furniture, Network Plus and Key3Media. He was counsel to Bondholders Committee in the restructurings of Cornerstone Propane, Motient Corporation and Orbcomm. Mr. Brilliant joins the firm from Milbank, Tweed, Hadley & McCloy LLP where he was a partner and member of that firm's Financial Restructuring Group. He received his B.S. cum laude in business from The Wharton School of Business at the University of Pennsylvania and his J.D. cum laude from Northwestern University. About Goodwin Procter LLP Goodwin Procter LLP -- http://www.goodwinprocter.com/-- is one of the nation's leading law firms. The firm's core areas of practice are corporate, litigation and real estate, with specialized areas of focus that include financial services, private equity, technology companies, REITs and real estate capital markets, intellectual property and products liability. Goodwin Procter is headquartered in Boston, with offices in New York, New Jersey and Washington, D.C. * Arthur Marriott & Deborah Ruff Join LeBoeuf Lamb in London ------------------------------------------------------------ The international law firm of LeBoeuf, Lamb, Greene & MacRae LLP announced that Arthur Marriott QC, one of the first two solicitors ever to be honored as Queen's Counsel, and Deborah Ruff have joined the Firm as partners in its litigation practice. They will be based in LeBoeuf Lamb's London office, bringing the number of partners in London to 20. Both were previously with the London office of Debevoise & Plimpton LLP. "We are delighted and honored to welcome two partners of such high caliber to our fast-growing London office," LeBoeuf Lamb Chairman, Steven H. Davis said. "Arthur Marriott's vast experience and towering reputation are unmatched in the field of arbitration. He and Deborah Ruff will fortify our already strong litigation team in London. "The addition of Arthur and Deborah underscores once again our commitment to hiring talented and accomplished lawyers that can address our clients' most challenging legal issues," said Mr. Davis. London Managing Partner, Peter Sharp said, "I am delighted Arthur Marriott and Deborah Ruff are joining our growing team in London. We are committed to expanding our global dispute resolution capabilities and providing the best quality of service to our clients worldwide. Arthur and Deborah will help us continue to achieve this goal." Arthur Marriott has extensive experience as counsel in all forms of international commercial arbitration and litigation throughout the world, including oil and gas, civil engineering, construction and joint venture disputes. Mr. Marriott also represents clients in complex commercial litigation in the English courts. He has been appointed as a Recorder and Deputy High Court Judge, again one of the first two solicitors ever to attain that position. He is also a President of Mental Health Review Tribunals. Key positions Mr. Marriott holds are member of the Council of the International Council for Commercial Arbitration (ICCA), member of the board of the London Court of International Arbitration (LCIA), member of the board of the Hong Kong International Arbitration Centre (HKIAC), Fellow of the Chartered Institute of Arbitrators and a Chartered Arbitrator. During the course of his career, Mr. Marriott has published and spoken widely on the subjects of international arbitration and ADR. He is the co-author of ADR Principles and Practice (First Edition Sweet & Maxwell 1993, Second Edition 1999), and a co- editor of, and author in, the Handbook of Arbitration Practice (3d ed. 1997 Sweet & Maxwell). He was also a principal proponent of the reform of English legislation governing arbitration, which resulted in the passage of the Arbitration Act 1996. Deborah Ruff also joins LeBoeuf Lamb from Debevoise & Plimpton LLP's London office where she had worked since 2000. Prior to Debevoise & Plimpton, Ms. Ruff had trained and worked at the law firm of Richards Butler. Before becoming a lawyer she was an analyst with Saudi Aramco and an analyst and in business development with Batis. Ms. Ruff's practice includes a wide variety of international arbitration cases, both institutional and ad hoc, and international litigation (Commercial Court and Chancery). She has advised clients on International Centre for Settlement of Investment Disputes (ICSID), Bilateral Investment Treaty (BIT), LCIA, American Arbitration Association (AAA) and International Chamber of Commerce (ICC) arbitrations. LeBoeuf, Lamb, Greene & MacRae LLP has more than 600 lawyers practicing in 20 offices worldwide. Well known as one of the preeminent legal services providers to the energy and insurance/financial services industries, the Firm has built upon these strengths to gain prominence in corporate, litigation, insolvency, taxation, environmental, real estate and technology/intellectual property practices. * BOOK REVIEW: Managing a Health Care Alliance ---------------------------------------------- Author: Arnold D. Kaluzny, Richard B. Warnecke, and Associates Publisher: Beard Books Softcover: 241 pages List Price: $34.95 Order your personal copy at http://amazon.com/exec/obidos/ASIN/1587980843/internetbankrupt Written for health care managers, policy makers, and health service providers alike, Managing a Health Care Alliance describes the establishment and potential of organizational alliances dedicated to providing state-of-the-art health care for local communities. The book grew out of an evaluation of the Community Clinical Oncology Program (CCOP)-a groundbreaking initiative funded by the National Cancer Institute (NCI)-that linked 52 communities from Massachusetts to California with major research centers. CCOP is directed and monitored by NCI's Division of Cancer Prevention. The authors' goals in writing the book were to demonstrate the potential impact of public-private alliances on the provision of cancer care in the community; to improve management of these alliances through better decisionmaking by participants; and to advance thinking about the role of alliances in other areas of health care delivery. First published in 1996, this Beard Books edition includes a new preface written by the current director and associate director of NCI's Division of Cancer Prevention. This preface brings CCOP's activities up to date and discusses the evaluation findings from the perspective of the passing of four years. CCOP represented a change in attitude from previous NCI efforts to assist cancer-care centers in reaching out beyond the confines of their own institutions. In previous programs, participating physicians could enroll patients in protocols used by sponsoring institutions but were not given membership in the research groups in those institutions. One of the founders of CCOP said, "(w)e created the specialty of medical oncology and it grew like wildfire. You suddenly have out there some 2,800 physicians who are young and well-trained, who are going to, one way or another, treat this population of patients. They might as well be part of the research effort." From inception in 1983 to 1986, CCOP focused on the development of concepts and the testing of chemical agents in the treatment of acute leukemias and solid tumors. In 1986, NCI expanded CCOP's mission to include trials of cancer prevention and controls. The program's launch was not without its difficulties. As one community oncologist said, "(t)he initial response of community oncologists has generally been positive and enthusiastic but tempered by a sense of caution and even suspicion. Community oncologists.are apprehensive at the complexities of the mechanisms dealing with the federal bureaucracy and potential loss of control of their patients." Managing Health Care Alliances shows how all participants overcame caution, suspicion and other obstacles to create an effective, far-reaching oncology program. Using CCOP as an example, Drs. Kaluzny and Warnecke demonstrate clearly and cogently how to meet the challenges of providing quality health services by creating new organizational models- working, strategic alliances between public and private participants. They offer compelling evidence of the effectiveness of joining clinical research facilities and community providers. Their work concluded that the research centers indeed benefit from the pool of diverse participants in clinical trials, and the communities have access to state-of-the-art care. This authoritative book is essential reading for those who want to deliver better care to patients through the mechanism of alliances. It deals with highly technical information, but is highly readable and doesn't "talk down" to the layperson. Arnold D. Kaluzny is Professor of Health Policy and Administration, School of Public Health, a Senior Research Fellow at the Cecil G. Sheps Center for Health Services Research, and a member of the Lineberger Comprehensive Cancer Center, University of North Carolina at Chapel Hill. Richard B. Warnecke is Professor of Epidemiology, Sociology and Public Administration, School of Public Health, University of Illinois at Chicago. He is also Director of the Health Policy Center and Associate Director for Cancer Control and Education at the Cancer Center. ********* 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 ***