/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050816.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, August 16, 2005, Vol. 9, No. 193 Headlines 295 SUMMIT: Case Summary & 15 Largest Unsecured Creditors ABRAXAS PETROLEUM: Balance Sheet Upside-Down by $43.24M at June 30 ACE AVIATION: Plans to Spin Off Jazz Air in Third Quarter ADELPHIA COMMS: Arahova Panel Can't Pursue Intercompany Claims AGILENT TECH: KKR & Silver Lake Win Auction with $2.6 Billion Bid AMAZON.COM: Settles Patent Infringement Lawsuit for $40 Million ANCHOR GLASS: Proposes New Wells Fargo-Backed DIP Financing Pact ANCHOR GLASS: Hires Carlton Fields as Bankruptcy Counsel ANCHOR GLASS: Wants Cahill Gordon as Special Counsel APARTMENT AT TIMBER: Thomas D. Stalnaker Named as Ch. 11 Trustee APARTMENT AT TIMBER: Ch. 11 Trustee Wants Own Firm as Counsel ASARCO LLC: Court Defers Ruling on Automatic Stay Provisions ASARCO LLC: Gets Court Nod to Maintain Existing Bank Accounts ASARCO LLC: Gets Court Nod to Maintain Existing Business Forms ASIA GLOBAL: Ch. 7 Trustee Wants 360 Summary Judgment Reconsidered ATA AIRLINES: Founder & CEO Retires & John Denison Named New CEO AURA SYSTEMS: U.S. Trustee Picks 3-Member Creditors Committee CABLEVISION SYSTEMS: Balance Sheet Upside Down by $2.48 Billion CARL YERKEL: Wants to Hire Eric Liepins as Bankruptcy Counsel CENTENNIAL COMMS: Equity Deficit Narrows to $482 Million at May 31 CHYRON CORP: June 30 Balance Sheet Upside-Down by $1.8 Million COLLINS & AIKMAN: Committee Objects to Lazard Freres' Fees CONSUMERS ENERGY: Sells $175 Million First Mortgage Bonds COUNSEL CORP: Equity Deficit Widens to $50.8 Million at June 30 DEEP RIVER: Files Disclosure Statement in New Jersey DELTA AIR: Selling Airline Subsidiary to SkyWest for $425 Million DELTAGEN INC: Exclusive Plan Filing Period Intact Until Oct. 18 DOUBLE JS: Case Summary & 19 Largest Unsecured Creditors DYNEGY HOLDINGS: Fitch Lifts Secured Debt Rating One Notch to B+ EDWARD ARNOLD: List of 11 Largest Unsecured Creditors ENRON CORP: Court Allows Southaven Claims for $56 Million ENRON CORP: SourceNet Holds Allowed $1.08 Million Unsecured Claim ENRON: Parties Settle Cornerstone Propane Claims Dispute ERIE TOBACCO: Fitch Rates Subordinated Asset-Backed Bonds at BB FEDDERS CORP: Expects To Report $600,000 Second Quarter Loss FEDERAL-MOGUL: Asks Court to Okay Envirochem Settlement Agreement FINOVA CAPITAL: U.S. Trustee Appoints 3-Member Equity Committee FOAMEX INT'L: Considering Prepackaged Chapter 11 Filing FOAMEX INT'L: Delays Form 10-Q Filing & Names New CRO GENEVA STEEL: Ch. 11 Trustee Wants to Probe Albert Fried & Co. GLOBAL CROSSING: June 30 Balance Sheet Upside-Down by $71 Million GLOBAL CROSSING: Representative Settles Claims Totaling $81.6 Mil. GS MORTGAGE: Fitch Affirms Low-B Rating on Six Certificate Classes HAYES LEMMERZ: Will Discuss 2nd Quarter Earnings on Sept. 8 INTERSTATE BAKERIES: Gets Court Nod to Reject 7 Real Estate Leases JAMES KENNEDY: List of 8 Largest Unsecured Creditors JENNINGS OF MICHIGAN: Case Summary & 20 Largest Creditors KEYSTONE CONSOLIDATED: Gets Court Nod to Reimburse Exit Lender LAC D'AMIANTE: Wants Until November 8 to File Chapter 11 Plan MAYTAG CORP: Board Recommends Whirpool's $2.7 Bil. Merger Proposal MIRANT CORP: Mirant Bowline to Recover $4.9 Mil. from Insurer MIRANT CORP: Wants to Enter into New Consent Decree with DEC MOVIE GALLERY: Posts $12.2 Million Net Loss in Second Quarter NANOMAT INC: U.S. Trustee Wants to Hire Harry Davis as Auctioneer NETEXIT INC: Excl. Plan Solicitation Period Extended Until Dec. 25 NEWS CORP: Earns $717 Million of Net Income in Fourth Quarter NVE INC: Asks Court to Extend Schedule-Filing Deadline OWENS CORNING: Third Circuit Rejects Substantive Consolidation PLYMOUTH RUBBER: Delphi Corp. Wants Setoff Rights Protected PROVIDIAN MASTER: Fitch Places BB Rating on $85.1 Million Notes PUBLICARD INC: June 30 Balance Sheet Upside-Down by $6.3 Million QWEST COMMS: Resumes Talks with Workers Union After Pact Expired REDDY ICE: 99.9% of Noteholders Tender 8-7/8% Sr. Sub. Notes REVLON CONSUMER: Selling $75MM Senior Notes in Private Placement RUFUS INC: Wants to Assume Management Agreement With Hunte Corp. SALON MEDIA: Reports $100,000 Loss in First Fiscal Quarter SENECA GAMING: Posts $17.9 Million Net Loss in Third Quarter SIGNATURE POINTE: Wants Access to HUD's Cash Collateral SIGNATURE POINTE: Taps Neligan Tarpley as Bankruptcy Counsel SIMTEK CORPORATION: Posts $2.9 Million Net Loss in Second Quarter SOLUTIA INC: Has Until Nov. 11 to Make Lease-Related Decisions TELEGLOBE COMMS: Has Until Nov. 25 to Object to Proofs of Claim TIMES SQUARE: Case Summary & 20 Largest Unsecured Creditors TITANIUM METALS: Board Okays Two-for-One Split of Common Stock TRUMP HOTELS: Wants to Disallow 426 Claims UAL CORP: Court Authorizes 1997-1 EETC Senior Tranche Purchase UAL CORP: Wants to Amend Club DIP Facility to Control EETC UAL CORP: Taps Mayer Brown as Special Litigation Counsel US AIRWAYS: Expects to Close Virginia Headquarters by Jan. 2006 VARTEC TELECOM: Court Approves Asset Sale to Comtel for $82.1MM VIVENTIA BIOTECH: June 30 Balance Sheet Upside-Down by C$34.6 Mil. VIVENTIA BIOTECH: Board Ratifies $3.3 Million Interim Financing WELLINGTON PROPERTIES: Wants to Use LaSalle Bank's Cash Collateral WELLINGTON PROPERTIES: Wants Excl. Period Extended Until Sept. 12 WESTERN WATER: Brings-In Garald Barber & General Capital Partners WESTPOINT STEVENS: Asks Bankr. Court to Dismiss Chapter 11 Cases WESTPOINT STEVENS: Files List of Contracts Assigned to Textile WILLIAM HECKSTEDEN: Case Summary & 15 Largest Unsecured Creditors WINFIELD CAPITAL: SBA Default Triggers Going Concern Doubt WINFIELD CAPITAL: Posts $460,358 Net Loss for Qtr. Ended June 30 WORLDCOM INC: Court Approves PSInet Settlement Agreement WORLDCOM INC: Balks at Mississippi Power's Move for Claim Payment WYNDHAM INTERNATIONAL: Stockholders Approve Blackstone Merger YUKOS OIL: Alvarez & Marsal Gets Reimbursement from Yukos * Large Companies with Insolvent Balance Sheets ********* 295 SUMMIT: Case Summary & 15 Largest Unsecured Creditors --------------------------------------------------------- Debtor: 295 Summit Associates, LLC 295 Summit Avenue Saint Paul, MN 55102 Bankruptcy Case No.: 05-45276 Type of Business: The Debtor specializes in condominium conversion, remodeling and restoration. Chapter 11 Petition Date: August 11, 2005 Court: Minneapolis Judge: Robert J. Kressel Debtor's Counsel: Kurt M. Anderson, Esq. P.O. Box 2434 Minneapolis, Minnesota Financial Condition as of August 11, 2005: Total Assets: $2,200,000 Total Debts: $1,116,513 Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ed Hanlon Advance/Loan $29,000 3516 Decatur Court North New Hope, MN 55427 Kelly & Fawcett, P.A. Legal Fees $20,144 2350 Piper Jaffray Plaza 444 Cedar Street Saint Paul, MN 55101 Katz, Manka, Telinsky, Due Legal Fees $19,418 Attn: Robert Due, Esq. 225 South Sixth Street Mansfield, Tanick & Cohen Legal Fees $12,178 Attn: Tom Wallrich, Esq. 220 South Sixth Street Suite 1700 Minneapolis, MN 55402-4511 Loucks & Associates Land Surveying $5,758 Auto-Owners Insurance Insurance $5,249 Daniel Fregine Landscape Services $4,500 Anthony Rainier Strouth Labor & Landscaping $2,500 Hinding Heating Service Fees $1,374 Air & Conditioner Premier Auction Company Auction Services $500 B.T. Design Billboard Signs $450 Perterson, Fram & Bergman Legal Fees $245 Bernick & Lifson, P.A. Legal Fees Unknown Saint Paul Water Services Utilities Unknown Xcel Energy Utilities Unknown ABRAXAS PETROLEUM: Balance Sheet Upside-Down by $43.24M at June 30 ------------------------------------------------------------------ Abraxas Petroleum Corporation (AMEX:ABP) reported financial and operating results for the quarter and six months ended June 30, 2005. Production of 1.4 Bcfe for the quarter generated revenue of $9.6 million and net income of $305,000 from continuing operations. This compares to a net loss from continuing operations of $444,000 or $0.01 per share for the same quarter of 2004. Continuing operations represent financial and operating results from operations in the U.S. only as all of Grey Wolf Exploration Inc.'s historical performance and results from the sale of Grey Wolf shares owned by Abraxas in its initial public offering that closed on February 28, 2005, are treated as discontinued operations. As a result of the elimination of the company's capital expenditure limitations, a significant item related to the second quarter of 2005 results included capital expenditures of $8.8 million compared to $1.3 million in the second quarter of 2004. These capital expenditures enabled sequential quarterly production to increase 9% and contributed to a 23% increase in revenue from first quarter of 2005 and should further contribute to additional increases in production during the third quarter. "Increasing production through the quarter is attributable to the two Edwards horizontal wells that came on-line late in the quarter plus our continuing efforts to sustain and increase production on more mature fields through low-risk, low-cost re-completion programs. We expect production growth to continue through the 2nd half of 2005 as newly drilled or re-completed wells come on-line. Two wells are currently being completed in the Oates SW Field of West Texas, both of which have shown indications of commercial gas production during completion operations, and we expect to spud a well in Wyoming this week. Three significant events occurred subsequent to the end of the 2nd quarter that we expect to positively impact our results going forward - the third Edwards horizontal well came on-line, our strategic acquisition in West Texas and the closing of our $12 million private placement of equity. Combined with rising production and strong commodity prices, these events should allow us to accelerate our capital development program for the remainder of 2005 and into 2006, provided we do not experience significant delays in procuring equipment or crews," commented Bob Watson, Abraxas' President and CEO. A general increase in field operating costs experienced by the entire industry together with increased general and administrative costs, primarily associated with Sarbanes-Oxley related expenses, have impacted Abraxas' actual per unit costs. Based on these factors, our adjusted guidance for 2005 direct lifting costs and G&A is as follows (direct lifting costs do not include production taxes that are approximately 10% of revenue): Direct Lifting Costs $1.10 per Mcfe G&A $0.75 per Mcfe As a result of the recent private placement of equity, Abraxas' capital expenditure budget for 2005 is under review and an expanded budget will be presented to the board of directors next month for approval. Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas exploitation and production company with operations in Texas and Wyoming. As of June 30, 2005, Abraxas Petroleum's equity deficit narrowed to $43,244,000 from a $53,464,000 deficit at Dec.31, 2004. ACE AVIATION: Plans to Spin Off Jazz Air in Third Quarter --------------------------------------------------------- ACE Aviation Holdings, Inc., intends to proceed with an initial public offering of Jazz Air Limited Partnership through an income trust structure, to maximize the value of its business units for the benefit of its shareholders. The company expects to file a preliminary prospectus for the offering in the third quarter, with ACE retaining a majority interest in Jazz Air. ACE Aviation is the parent holding company of Air Canada and ACE's other subsidiaries. Air Canada is Canada's largest domestic and international full-service airline and the largest provider of scheduled passenger services in the domestic market, the transborder market and each of the Canada-Europe, Canada-Pacific, Canada-Caribbean/Central America and Canada-South America markets. Air Canada is a founding member of the Star Alliance network, the world's largest airline alliance group. In addition, the Corporation owns Jazz Air LP, Aeroplan LP and Destina.ca, which is an on-line travel site. The Corporation also provides Technical Services through ACTS LP, Cargo Services through AC Cargo LP and Air Canada, Groundhandling Services through ACGHS LP and Air Canada and tour operator services and leisure vacation packages through Touram LP. * * * As reported in the Troubled Company Reporter on Oct. 5, 2004, Standard & Poor's Ratings Services assigned its 'B' long-term corporate credit rating to Montreal, Quebec-based ACE Aviation Holdings Inc. and its wholly owned subsidiary, Air Canada. S&P says the outlook is stable. ADELPHIA COMMS: Arahova Panel Can't Pursue Intercompany Claims -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York denied the request of the ad hoc committee of holders of over $500 million in senior notes issued by Arahova Communications, Inc., Adelphia Communications Corporation's debtor-affiliate, for leave, standing and authority to prosecute intercompany claims and causes of actions, on behalf of Arahova and its debtor subsidiaries in the ACOM Debtors' Chapter 11 cases. The Court's ruling came after the ACOM Debtors, its Official Committee of Unsecured Creditors Ad Hoc Committee of ACC Senior Noteholders objected to the request. The ACOM Debtors insisted that the issues raised in the Arahova Committee's Motion should be raised in their proposed resolution dispute. The ACOM Debtors believe that proceeding in any other manner would simply lead to lengthy and uncontrolled litigation that threatens the proposed sale of ACOM and jeopardizes the undisputed billions of dollars in enhanced value that it will generate. The Equity Committee asserted that the Arahova Committee's request is superfluous and inappropriate in light of the ACOM Debtors' proposed resolution process. The Equity Committee admits that the Arahova Committee may be the appropriate entity to prosecute the Arahova Intercompany causes of action but because the Resolution Process provides a forum for all parties to investigate those causes of action, the motion is unnecessary. ACC Senior Noteholders Panel asserted that the motion makes no sense, is incomplete and lacks context. The transfers about which the Arahova Committee complains are merely components of complex transactions that involved the movement of assets and liabilities among numerous different Debtor entities. Furthermore, any grant of standing to pursue alleged fraudulent transfers among the ACOM Debtors cannot be made in isolation and instead should be made in the context of a comprehensive framework like that outlined in the Debtors' proposed Resolution Process. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue Nos. 101 & 102; Bankruptcy Creditors' Service, Inc., 215/945-7000) AGILENT TECH: KKR & Silver Lake Win Auction with $2.6 Billion Bid ----------------------------------------------------------------- Kohlberg Kravis Roberts & Co. and Silver Lake Partners won the auction of Agilent Technologies Inc.'s semiconductor business with a $2.6 billion bid, The Wall Street Journal reports. Bain Capital and Warburg Pincus, teamed up in a bid for the unit. Texas Pacific Group, CVC Partners and Francisco Partners also pursued the unit. Both bidding groups dropped out during the auction process. Goldman Sachs Group Inc. handled the sale for Agilent. Agilent Technologies Inc. (NYSE: A) -- http://www.agilent.com/-- is a global technology leader in communications, electronics, life sciences and chemical analysis. The company's 28,000 employees serve customers in more than 110 countries. Agilent had net revenue of $7.2 billion in fiscal year 2004. * * * As reported in the Troubled Company Reporter on Apr. 15, 2005, Standard & Poor's Ratings Services raised its corporate credit and senior unsecured debt ratings on Palo Alto, California-based Agilent Technologies Inc. to 'BB+' from 'BB'. The ratings upgrade is in response to the relatively recent but sustained improvements in the company's profitability and cash flow generation, in combination with a liquid balance sheet and moderate financial policies. S&P says the outlook is now stable. As reported in the Troubled Company Reporter on Dec. 22, 2004, Moody's Investors Service affirmed the debt ratings of Agilent Technologies, Inc., and revised the rating outlook to stable from negative. AMAZON.COM: Settles Patent Infringement Lawsuit for $40 Million --------------------------------------------------------------- Amazon.com entered into a settlement with Soverain Software, LLC of a lawsuit alleging patent infringement by Amazon.com. The litigation was settled on terms that include, among other things, a one-time payment of $40 million in third quarter 2005, dismissal of all claims and counterclaims, mutual releases, and a non-exclusive license to Soverain's patent portfolio. Amazon.com expects to record a previously unanticipated charge to "Other operating expense" of up to $40 million in third quarter 2005 in connection with this settlement. The litigation was originally filed on January 12, 2004 in the United States District Court for the Eastern District of Texas. Amazon.com (NASDAQ: AMZN), a Fortune 500 company based in Seattle, opened its virtual doors on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Amazon.com seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer customers the lowest possible prices. Amazon.com and third-party sellers offer millions of unique new, refurbished, and used items in categories such as health and personal care, jewelry and watches, gourmet food, sports and outdoors, apparel and accessories, books, music, DVDs, electronics and office, toys and baby, and home and garden. Amazon.com and its affiliates operate seven retail websites: http://www.amazon.com/http://www.amazon.co.uk/ http://www.amazon.de/http://www.amazon.co.jp/ http://www.amazon.fr/http://www.amazon.ca/and http://www.joyo.com/ As of June 30, 2005, stockholders' deficit narrowed to $64 million from a $227 million deficit at Dec. 31, 2004. Amazon's shareholder deficit topped $1.4 billion in 2001. * * * As reported in the Troubled Company Reporter on Dec. 8, 2004, Moody's Investors Service upgraded the long-term debt ratings of Amazon.com and assigned a positive rating outlook as a result of the company's consistent improvement in operating margins, reduction in funded debt levels, and strengthening operating cash flow. These ratings are upgraded: * Senior implied of B1, * Issuer rating of B2, * Various convertible subordinated notes issues maturing 2009 thru 2010 of B3, * Multiple shelf ratings of (P) B2, (P) B3, and (P) Caa1. This rating is affirmed: * Speculative grade liquidity rating of SGL-2. ANCHOR GLASS: Proposes New Wells Fargo-Backed DIP Financing Pact ---------------------------------------------------------------- Through an oral motion on August 8, 2005, Anchor Glass Container Corporation asked Judge Paskay for permission to obtain postpetition advances and other financial accommodations on an interim basis from Well Fargo Bank, N.A., as administrative agent for the holders of the 11% Senior Secured Notes due 2013, pursuant to a term sheet. The Debtor will also enter into an agreement with certain holders of Senior Secured Notes, who agree to become note purchasers, to issue an additional $125,000,000 by month's end. The Debtor will use the funds to pay all obligations to the Note Purchasers under the $15,000,000 Facility and retire in full the Wachovia DIP Facility and the Madeline Facility. The salient terms of the Wells Fargo Term Sheet are: Use of Proceeds: Proceeds of the notes issued under the Facility will be used to pay for the postpetition operating expenses of the Debtor in accordance with a budget, which will be agreed upon by the Debtor and the Note Purchasers, and other costs and expenses of administration of the Chapter 11 case. Expenses not on the Budget require approval of the Note Purchasers: (A) After $5,000,000 of the Note proceeds has been used, in the event a weekly variance of net cash flows exceeds negative $500,000 then the Debtor will require Note Purchasers consent for further variances. (B) If positive variance, net positive can roll forward to next week. (C) The Debtor agrees to twice weekly cash forecast and business update calls with the Note Purchasers. Closing Date: August 10, 2005, the date the Court entered an interim order approving the Facility. Maturity Date: The earliest of (x) September 24, 2005, 45 days from the Closing Date, or (y) the date on which an Event of Default occurs. All amounts outstanding and any other obligations of the Debtor under the Facility will be due and payable in full in cash on Maturity Date. Prepayment Fee: A fee equals to 100 bps if the Facility is refinanced with a replacement DIP financing before maturity, unless the replacement DIP financing is the $125,000,000 Facility. Interest Rate: The Facility will bear cash interest at a rate equal to the rate applicable to a LIBOR interest period of three months on the Closing Date plus 700 bps, payable on the Maturity Date. Default Interest Rate: During the continuance of an Event of Default, the Facility will bear cash interest at an additional 200 bps per annum. Commitment Fees: A commitment fee to the Note Purchasers equal to 100 bps of the principal amount of the Facility will be earned and due and payable to the Note Purchasers upon entry of the Interim Order. Agent's Agreement: All fees, terms and conditions applicable to appointment and duties of the Administrative Agent with respect to the Facility will be reasonably acceptable to the Note Purchasers. Expenses: The Debtor will pay in the ordinary course, without further Court order: (a) all reasonable out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution and delivery of the note purchase documentation and the funding of the Facility, the administration of the Facility and any amendment or waiver of any provision of the note purchase documentation; (b) reasonable out-of-pocket costs and expenses of the Note Purchasers in connection with the enforcement or protection of any of their rights and remedies under the note purchase documentation; and (c) all reasonable fees and expenses of the Note Purchasers' professionals in connection with the Case. The Note Purchasers will provide a summary of those fees and expenses to the Debtor, any duly appointed official committee, the office of the US Trustee and, in the event of an objection within five days of receipt, an objection will be heard by the Court. Priority: All amounts owing by the Debtor under the Facility in respect at all times will constitute allowed super-priority administrative expense claims in the Case having priority over all administrative expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code, subject only to the Carve-out. Collateral: All amounts owing by the Debtor under the Facility will be secured by a first priority perfected priming security interest in all of the assets of the Debtor, which currently secure the Senior Secured Notes, subject only to valid and enforceable liens of records as of commencement date of the case as are acceptable to the Administrative Agent and the Note Purchasers in their sole discretion, and the Carve-Out for professional fees. Carve-Out: $500,000 Adequate Protection: As a result of the priming contemplated, The Bank of New York, as Trustee for the Senior Secured Notes, for the benefit of all holders of the Senior Secured Notes, will be granted: (a) a replacement security interest in, and lien on all of the Debtor's property that currently serves as collateral for the Senior Secured Notes; and (b) a security interest in, and a lien on, the Debtor's working capital, except that the lien may be junior to existing liens held by the Prepetition Lenders. Covenant: Among others, the Debtor agrees not to seek any other DIP financing other than the $125,000,000 to be provided by certain holders of Senior Secured Notes who agree to become note purchasers. The Debtor and Wells Fargo agree to customary events of default provisions. The Debtor also agrees to indemnify Wells Fargo and each Note Purchaser and their affiliates from any claims or causes of action claims in connection with the Facility. The Note Purchasers and their commitment are: Purchaser Amount --------- ------ Merrill Lynch Global Allocation Fund, Inc. $5,684,159 FAM Variable Series Funds, Inc. 332,621 FAM Series Fund, Inc. 119,427 Debt Strategies Fund, Inc. 2,350,057 Merrill Lynch Global Investment Series 3,414,049 Merrill Lynch Global Allocation Fund (Australia) 99,687 Transamerica Life Insurance Company 3,000,000 Judge Paskay will convene a hearing on August 30, 2005, at 1:30 p.m. to consider final approval of the Wells Fargo Facility. Objections are due August 22. A full-text copy of the Court's Interim Order is available at no charge at: http://bankrupt.com/misc/IOadditionalloan.pdf A full-text copy of the Term Sheet is available at no charge at: http://bankrupt.com/misc/wellsfargotermsheet.pdf Wachovia Wants Interim Order Vacated Wachovia Capital Finance Corporation (Central), as agent for certain of the Debtor's lenders, asks the Court to set aside the interim order authorizing the Debtors to obtain additional DIP financing. Richard H. Malchon, Jr., Esq., at Ruden, McClosky, Smith, Schuster & Russell, PA, in Tampa, Florida, explains that Wachovia was not duly informed of the emergency hearing. Mr. Malchon adds that during the emergency hearing on first day motions, the Debtor, through its counsel, made passing reference to the Debtor's negotiations to obtain additional $15,000,000 DIP financing from certain noteholders. Mr. Malchon further adds that the Debtor did not describe the terms for the $15,000,000 Credit Facility. Neither did the Debtor request the Court to authorize it to obtain the $15,000,000 Credit Facility. The Debtor's request for interim approval of the Wachovia Facility specifically and expressly represented to the parties and to the Court that the Debtor "is filing" a separate motion on August 8, 2005, seeking approval of the $15,000,000 Credit Facility. Mr. Malchon notes that there was no motion filed. The failure to do so constitutes a denial of basic due process. The Debtor's brief reference to the $15,000,000 Credit Facility and the Court's consideration of same clearly fails to comply with the notice requirements of Section 364 of the Bankruptcy Code and Rules 4001(c) and (d) of the Federal Rules of Bankruptcy Procedure, Mr. Malchon asserts. Mr. Malchon also contends that the Interim Priming Order submitted to the Court by the Debtor contains numerous other misstatements of fact, all of which will be shown to the Court at the hearing and anyone of which is sufficient to warrant vacatur of the Interim Priming Order. Wachovia has outlined to Debtor in detail a number of objections to the terms of the Interim Priming Order together with suggested resolutions. Wachovia Outlines Objection In a letter dated August 11, 2005, Wachovia's New York counsel, Jonathan N. Helfat, Esq., at Otterbourg, Steindler, Houston & Rosen, PC, in New York, notified Robert A. Soriano, the Debtor's counsel, their receipt of the draft interim priming order without an attached Term Sheet. Wachovia retrieved a copy of the Interim Priming Order with the Term Sheet. "We are astonished that the Debtor sought entry of the Interim Priming Order on an Ex Parte basis and without requesting the consent of Wachovia or Madeleine, LLC, or even favoring us with a draft of the proposed Interim Priming Order or Term Sheet," Mr. Helfat says. Mr. Helfat reminds Mr. Soriano that Section 364 of the Bankruptcy Code requires notice and hearing before the Additional Financing can be approved. "The allegations that 'the Debtor has been unable to procure the necessary financing on terms more favorable than the financing offered by Agent and Purchasers pursuant to the Term Sheet' is simply untrue as Wachovia offered to provide the Debtor with a similar $15 million term loan," Mr. Helfat argues. Wachovia is prepared to consent the entry of the Interim Priming Order provided: 1. The Priming Noteholders must agree to be bound by the Collateral Access and Intercreditor Agreement between Wachovia and the Bank of New York, as Note Trustee for the existing noteholders. 2. There will be no grant of junior liens in the Wachovia collateral unless Wachovia receives junior liens in the Existing Noteholders' and Priming Noteholders' Collateral and any junior liens granted in the Wachovia collateral, whether granted as additional security for the Priming Noteholders or as adequate protections for the Existing Noteholders, must remain junior, subordinate and subject to the rights and remedies granted to Wachovia under the Wachovia DIP Order, until all obligations due Wachovia have been indefeasibly paid and satisfied in full. 3. The right of the Priming Noteholders to be repaid, at maturity or otherwise, for the $15,000,000 postpetition financing provided to the Debtor will for all purposes remain subject to the repayment in full of all obligations owed to Wachovia, except in the event that proceeds are generated from the sale or other disposition of the Existing Noteholders' or Priming Noteholders' Collateral. 4. The super-priority claims and postpetition liens on unencumbered assets granted to the Priming Noteholders and Existing Noteholders pursuant to the Interim Priming Order will be junior, subordinate and subject to the post- petition liens and super-priority claims granted to Wachovia pursuant to the Wachovia DIP Order. 5. Upon the occurrence of an "Event of Default" or the "Maturity Date", the right of the Priming Noteholders and Existing Noteholders to exercise any rights or remedies under the Interim Priming Order, the accompanying Term Sheet or any related "Financing Agreements" will be of no force and effect and be stayed until Wachovia has been repaid in full or afforded the opportunity to exercise its rights and remedies in accordance with the terms of the Wachovia DIP Order and Collateral Access and Intercreditor Agreement. Upon the occurrence of an "Event of Default" or the "Maturity Date", the Priming Noteholders' sole remedy will be to stop lending until Wachovia is repaid in full. 6. As discussed on August 8, 2005, the Budget attached to the Wachovia DIP Orders needs to be revised for the Debtor to remain in compliance with the terms of the Wachovia DIP Order. 7. The fees, interest and various other costs, including the Carve-Out Expenses, the fees and expenses incurred by any professionals retained solely by the Priming Noteholders, and the costs associated with indemnification rights, will only be payable solely out of the proceeds of the $15,000,000 postpetition financing provided by the Priming Noteholders and will not be payable from the proceeds of the working capital facility provided by Wachovia. 8. Wachovia will not object to the appointment of a "CRO" provided that any potential candidate is acceptable to Wachovia. 9. The Interim Priming Order must be revised to expressly provide that the postpetition liens, super-priority claims and other relief granted is limited to the $15,000,000 financing provided by the Priming Noteholders. 10. The No Modification or Stay provision of the Interim Priming Order must be modified to mirror that of the Wachovia DIP Order. 11. The Interim Priming Order and accompanying Term Sheet will require other additional modifications in order to be consistent with the terms and conditions of the Wachovia DIP Order, which additional modifications are open for discussions. Wachovia reserves all rights with respect to any documentation. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Hires Carlton Fields as Bankruptcy Counsel -------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida gave Anchor Glass Container Corporation permission to hire Carlton Fields, PA, as counsel. Anchor Glass hired Carlton Fields as its legal adviser with respect to restructuring and bankruptcy-related issues prior to filing its chapter 11 petition. The firm also represented the Debtor in its prior Chapter 11 case filed in April 2002. The Debtor has selected Carlton Fields to serve as its bankruptcy counsel because the firm and its attorneys have extensive experience in bankruptcy and debtor-creditor law. Carlton Fields is familiar with the Debtor's financial affairs and with the rules and procedures of the Court. The Debtor believes that Carlton Fields and its attorneys are qualified to represent it in this case. As legal counsel, Carlton Fields will: (a) render legal services with respect to the Debtor's powers and duties as a debtor-in-possession, the continued operation of the Debtor's business, and the management of its property; (b) prepare on behalf of the Debtor necessary motions, applications, orders, reports, pleadings and other legal papers; (c) appear before the Court, any appellate courts and the United States Trustee to represent and protect the interests of the Debtor; (d) assist the Debtor and participate in negotiations with creditors and other parties-in-interest in formulating the plan of reorganization, drafting the plan and a related disclosure statement and any amendment thereto, and take necessary legal steps to confirm a plan; (e) represent the Debtor in adversary proceedings, contested matters and matters involving administration of this case, both in federal and state courts; (f) assist the Debtor in negotiations with potential financing sources and prepare contracts, security instruments or other documents necessary to obtain financing; and (g) perform all other legal services that may be necessary for the proper preservation and administration of the Chapter 11 case. Carlton Fields will charge at its standard hourly rates and reimbursed for reasonable and necessary expenses it incurs. The professional charges are: Professional Hourly Rates ------------ ------------ Shareholder $275 - $550 Associate $175 - $350 Paralegal $120 - $175 Robert A. Soriano, Esq., a partner at Carlton Fields PA, assures the Court that the firm does not represent any other party except the Debtor in the Chapter 11 case. However, Mr. Soriano discloses that Carlton Fields, as co-counsel with Lowenstein Sandler PC, represents the Debtor, certain present and former individual directors of the Debtor, and three entities affiliated with Cerberus Capital Management, L.P., in four federal securities class actions consolidated into Davidco Investors LLC vs. Anchor Glass Container Corporation, et al., Case No. 8:04-CV-2561-SCB-EAJ, and the shareholders' derivative action styled Carmona vs. Deneau, et al., Case No. 8:05-CV-272- SDM-EAG, both pending in the United States District Court for the Middle District of Florida. In connection with the class actions, Carlton Fields believes that there is no conflict of interest between the Debtor and the other defendants the firm represents. Pursuant to an agreement between the defendants, if a conflict does arise, the firm's first obligation will be to the Debtor and it will continue to represent it. Madeleine L.L.C., an entity that is an affiliate of Cerberus, is a creditor of the Debtor. In addition, Cerberus and certain of its affiliates own a majority of the equity of the Debtor. Carlton Fields does not believe that its representation of Cerberus in the federal litigation constitutes an interest adverse to the Debtor and its estate. Carlton Fields has also represented Madeleine in the past in matters unrelated to the Debtor. The firm is not currently representing that entity in any matter. Wachovia Capital Finance Corporation (Central), formerly known as Congress Financial Corporation (Central), for itself and as agent, is a secured lender to the Debtor. While Carlton Fields does not represent Wachovia Capital, in the past the firm has represented Congress Financial in matters unrelated to the Debtor. Carlton Fields also represents Wachovia Bank, N.A., and various of its affiliates in matters unrelated to the Debtor. Before its engagement in the case as counsel for the Debtor, Carlton Fields obtained conflict waivers from both the Debtor and Wachovia Corporation with respect to this engagement. Wachovia's waiver is subject to certain conditions, Mr. Soriano notes. Should any dispute with Wachovia Capital arise, like a challenge to the amount, validity, priority or extent of its liens or claims, Carlton Fields would not represent the Debtor in connection therewith. Any representation would then be handled by special counsel or counsel for the unsecured creditors' committee when one is appointed. Carlton Fields does not believe that its representation of Wachovia and certain of its affiliates affects the exercise of the firm's independent judgment as counsel to either the Debtor in this case or Wachovia in other unrelated matters. Bank of America is a participant in the credit facility for which Wachovia Capital is agent. Mr. Soriano discloses that Carlton Fields has represented Bank of America in various matters unrelated to the Debtor, and is currently representing the Bank in one or two loan modifications unrelated to the Debtor. GE Capital Corporation is a participant in the same loan. Carlton Fields has represented GE in various matters unrelated to the Debtor. It is not currently representing the company, but may be representing one or more of its affiliates in matters unrelated to the Debtor's case. Mr. Soriano also reports that the Debtor has paid Carlton Fields for all prepetition services performed by the firm on the Debtor's behalf. In the past year, Carlton Fields received $308,176 for services rendered. The firm has also received a $300,000 retainer to be applied to legal services to be rendered from August 3 to 8, 2005, and to postpetition fees and costs. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Wants Cahill Gordon as Special Counsel ---------------------------------------------------- Anchor Glass Container Corporation asks the U.S. Bankruptcy Court for the Middle District of Florida for permission to hire Cahill Gordon & Reindel LLP as special counsel, nunc pro tunc to August 8, 2005. The Debtor turned to Cahill Gordon for legal advice before its 2002 bankruptcy proceeding. The firm performed services with respect to corporate, litigation, restructuring and bankruptcy- related issues. Cahill Gordon served as co-bankruptcy counsel to the Debtor during its 2002 restructuring. Since the completion of the 2002 restructuring, Cahill Gordon has undertaken various specific assignments for the Debtor and others involved in transactions with the Debtor. The Debtor selected Cahill Gordon to serve as its special counsel because the firm and its attorneys have extensive experience in corporate finance, financial restructuring and bankruptcy and debtor-creditor law. The Debtor believes that Cahill Gordon and its attorneys are well qualified to represent it in this case. As special counsel, Cahill Gordon will provide services with respect to: -- corporate law-related issues related including federal and state securities law matters, tax and pension matters; -- corporate governance; -- assistance in debtor-in-possession financing; -- assistance in connection with other postpetition transactions including asset sales; -- business combinations; -- financing transactions in connection with a reorganization plan; and -- litigation matters as are designated by the Debtor and do not constitutes matters central to the Debtor's reorganization. The Debtor will compensate Cahill Gordon for legal services an hourly basis in accordance with the firm's customary hourly rates and for reasonable and necessary expenses and charges incurred in connection with the case: Professionals Hourly Rates ------------- ------------ Partners, Senior Counsel $636 - 668 and Counsel Associates $332 - 628 and Senior Attorneys Paralegal/Legal Assistant $160 - 260 Specialized Corporate $420 Research Paraprofessional James J. Clark, Esq., a member of Cahill Gordon, attests that the firm does not hold any interest adverse to the Debtor or to the estate. Mr. Clark further states that Cahill Gordon does not have any connection with any creditor or other party-in-interest, or their attorneys or accountants, or the United States Trustee for Region 21 or any of its employees. In 1987, Cahill Gordon represented Bankers Trust Company, Dillon Read & Company Inc., and J.P. Morgan & Co. in connection with the former Anchor Glass Container Corporation. The firm ceased any involvement with the Old Anchor before the bankruptcy proceeding. Mr. Clark informs the Court that the Debtor has paid Cahill Gordon for all prepetition services. Since January 2005, Cahill Gordon has received payment from the Debtor of $132,340 for professional services rendered and expenses incurred. Cahill Gordon is also holding $8,630 as an unapplied retainer services to be performed during the Chapter 11 case. The Debtor and Cahill Gordon have agreed that the unapplied retainer will be applied, subject to the Court's approval, against its postpetition billings and will not be placed in a separate account. Anchor Glass is a large corporation and claims may be bought and sold from time to time, there is a possibility that present or former clients of Cahill Gordon may acquire claims against or have rendered services to Anchor Glass without Cahill Gordon being aware of it. Cahill Gordon will not represent any of those parties in relation to the Debtor's chapter 11 case, Mr. Clark assures the Court. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) APARTMENT AT TIMBER: Thomas D. Stalnaker Named as Ch. 11 Trustee ---------------------------------------------------------------- The Honorable Timothy J. Mahoney approved the request of the U.S. Trustee for Region 13 to appoint a chapter 11 trustee to take control of Apartment at Timber Ridge, LP's restructuring. The U.S. Trustee reports that he consulted with these parties-in- interest regarding the appointment of Thomas D. Stalnaker to serve as the Chapter 11 Trustee: Richard Beheler, Esq. Christopher Giamino, Esq. Attorneys for Federal National Mortgage Association; Linda Cargill Cargill Investment Group, Ltd.; Peter Olberg, Esq. Attorney for Cargill and Lehman Brothers; and Howard T. Duncan, Esq. Attorney for the Debtor Headquartered in Dallas, Texas, Apartment at Timber Ridge, LP, aka Timber Ridge Apartments, operates a residential apartment building in Omaha, Nebraska. The Company filed for chapter 11 protection on June 3, 2005 (Bankr. D. Nebr. Case No. 05-82135). Howard T. Duncan, Esq., at Duncan Law Office, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts between $10 million to $50 million. APARTMENT AT TIMBER: Ch. 11 Trustee Wants Own Firm as Counsel ------------------------------------------------------------- Thomas D. Stalnaker, the Chapter 11 Trustee for Apartment at Timber Ridge, LP, sought and obtained permission from the U.S. Bankruptcy Court for the District of Nebraska to employ Stalnaker, Becker & Buresh, P.C., as his counsel. Stalnaker Becker will give the Chapter 11 Trustee legal advice with respect to: * the investigation of actions of the Debtor, * the operation of the Debtor's business, * the preparation of a Plan of Reorganization and Disclosure Statement, * the recovery, collection and sale of assets of the estate, and * the prosecution of possible objections to claims, and such other services as may properly be necessary in order for the Trustee out his duties. Court records do not disclose the Firm's current billing rate. Robert J. Becker, Esq., at Stalnaker Becker, discloses that the Trustee, Mr. Stalnaker, is: * an officer of the Firm; * a director of the Firm; * a shareholder of the Firm; and * a member of the panel of Chapter 7 Trustees for the District of Nebraska appointed by the office of the United States Trustee. Mr. Becker also discloses that the Firm has represented Micro Plumbing, an unsecured creditor, in matters unrelated to the Chapter 11 case. Mr. Becker assures the Court that the Firm does not hold any interest adverse to the Trustee, or the estate in the matters upon which it is to be engaged. Headquartered in Dallas, Texas, Apartment at Timber Ridge, LP, aka Timber Ridge Apartments, operates a residential apartment building in Omaha, Nebraska. The Company filed for chapter 11 protection on June 3, 2005 (Bankr. D. Nebr. Case No. 05-82135). Howard T. Duncan, Esq., at Duncan Law Office, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts between $10 Million to $50 Million. ASARCO LLC: Court Defers Ruling on Automatic Stay Provisions ------------------------------------------------------------ The Bankruptcy Code provides debtors with various protections from their creditors. Specifically, Section 362(a) of the Bankruptcy Code provides for an automatic stay of: (1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against a debtor that was or could have been commenced before the Petition Date, or to recover a claim against a debtor that arose before the Petition Date; (2) the enforcement, against a debtor or against property of the estate, of a judgment obtained before the Petition Date; (3) any act to obtain possession of property of the estate or to exercise control over property of the estate; (4) any act to create, perfect, or enforce any lien against property of the estate; (5) any act to create, perfect, or enforce any lien against property of a debtor to the extent that the lien secures a claim that arose before the Petition Date; (6) any act to collect, assess, or recover a claim against a debtor that arose before the Petition Date; (7) the set-off of any debt owing to a debtor that arose before the Petition Date against any claim against a debtor; and (8) the commencement or continuation of a proceeding before the United States Tax Court concerning a debtor. Creditors unfamiliar with the automatic stay may attempt to proceed against ASARCO LLC'S property despite the commencement of these Chapter 11 cases. Any unilateral self-help action could jeopardize the Debtor's reorganization efforts and result in irreparable harm to the Debtor's estates and other parties-in- interest. Although the stay arises by operation of law, ASARCO believes that a court order is necessary and helpful to ensure creditor compliance with the stay. Accordingly, the Debtor asks the U.S. Bankruptcy Court for the Southern District of Texas to confirm the applicability of the automatic stay. ASARCO also asks Judge Schmidt to confirm that: -- it is authorized to continue operating its businesses and managing its properties; -- it has the power to enter into all transactions, including obtaining services, supplies and inventories, that it could have entered into in the ordinary course of businesses had there been no bankruptcy filing; and -- suppliers and other parties may continue to engage in transactions with it in the ordinary course of business in the same manner and on the same terms and conditions as they did before the Petition Date. Section 1108 of the Bankruptcy Code authorizes a trustee to operate the business and manage the properties of the estate in the ordinary course of business. Section 1107(a) provides that, with certain exceptions, a debtor has all of the rights, powers and duties of a trustee in a case under Chapter 11. Hence, ASARCO notes that it is authorized under the Bankruptcy Code to operate its businesses and manage its properties in the ordinary course of businesses without Court approval. ASARCO points out, however, that certain parties with whom it does business may be reluctant to continue their business relationships without evidence that the Debtor is indeed so authorized. Texas Commission Objects The Texas Commission on Environmental Quality, through the Office of the Attorney General of Texas, asks the Court to set a hearing on the Motion in the ordinary course. The Commission wants more time to review the Debtor's request. Greg Abbot, Attorney General of Texas, asserts that the Debtor has offered no evidence of an actual dispute or adversary party against whom it is seeking these orders, thus creating no immediate problem which would necessitate the hearing of the motion on an emergency basis. The Texas Commission requests the Court to set the matter in the ordinary course so that parties-in-interest may have an appropriate opportunity to respond. Mr. Abbot says a brief review of the Debtor's request raises several concerns, one of which is the broad language the Debtor has employed with respect to the applicability of the automatic stay. Mr. Abbot informs the Court that the Commission seeks more than two business days' notice to brief this highly important issue, and for the Court not to entertain the Debtor's request on an emergency basis. In the alternative, the Commission objects to the Motion and asks the Court to deny it in total. Court's Ruling The Court authorizes ASARCO to operate its business and manage its properties in the ordinary course as well as maintain all prepetition business relationships incident thereto. The Debtor is also authorized to promptly pay for all services rendered to or for it as may be agreed, absent a bona fide dispute. Judge Schmidt deferred ruling on the Debtor's request to enforce the automatic stay provisions. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 thru 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos- driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. ASARCO has asked that the five subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASARCO LLC: Gets Court Nod to Maintain Existing Bank Accounts ------------------------------------------------------------- The United States Trustee has certain operating guidelines, including one provision requiring a debtor-in-possession to open new bank accounts and close all existing accounts to provide a clear line of demarcation between prepetition and postpetition claims and payments. The Debtor seeks a waiver of this provision. James R. Prince, Esq., at Baker Botts L.L.P., in Dallas, Texas, tells that Court that, if enforced in this case, this requirement would cause enormous disruption in the Debtor's business and would impair its efforts to reorganize. Mr. Prince further asserts that maintenance of the bank accounts would greatly facilitate the Debtor's transition to postpetition operations. ASARCO assures the U.S. Bankruptcy Court for the Southern District of Texas that it will not intentionally pay, and each of the banks where the accounts are maintained will be directed not to pay, any debts incurred before the Petition Date other than as specifically authorized by the Court. Mr. Prince says ASARCO is aware of a number of outstanding checks that were issued prepetition to various parties, and that the company has implemented safeguards like freezing accounts and issuing stop-payment orders to prevent prepetition checks from clearing postpetition. The Bankruptcy Court for Southern District of Texas has allowed debtors to maintain their existing bank accounts in the past, Mr. Prince reminds Judge Schmidt, citing In re Encompass Services Corporation, et al., Case No. 02-43582-H4-11 (Bankr. S.D. Tex. November 20, 2002); EOTT Energy Partners, L.P., et al., Case No. 02-21730-H1-11 (Bankr. S.D. Tex. October 9, 2002); and In re Sterling Chem. Holdings, Inc., et al., Case No. 01-37805-H4-11 (Bank. S.D. Tex. August 22, 2001). Court's Ruling Judge Schmidt authorizes the Debtor to designate, maintain, close or continue to use, with the same account numbers, all of its bank accounts existing as of the Petition Date. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 thru 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos- driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. ASARCO has asked that the five subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASARCO LLC: Gets Court Nod to Maintain Existing Business Forms -------------------------------------------------------------- ASARCO LLC sought and obtained the Court's authority to continue using all correspondence and business forms, as well as checks existing immediately before the Petition Date, without reference to its status as debtor-in-possession. Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas, explains that changing correspondence and business forms would be unnecessary and burdensome to the estate, as well as expensive and disruptive to ASARCO's business operations. Mr. Kinzie attests that parties doing business with ASARCO will be aware of its status as debtor-in-possession. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 thru 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos Of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos- driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. ASARCO has asked that the five subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASIA GLOBAL: Ch. 7 Trustee Wants 360 Summary Judgment Reconsidered ------------------------------------------------------------------ Robert L. Geltzer, the Chapter 7 Trustee for Asia Global Crossing Ltd., asks the U.S. Bankruptcy Court for the Southern District of New York to reconsider its decision denying the AGX Trustee's request for summary judgment in connection with 360networks Corporation's $100 million claim. In his Decision, Judge Bernstein held that AGX breached the AGX Guaranty when it anticipatorily repudiated the Guaranty on January 29, 2003 -- the date when the Court approved the sale of AGX's assets to Asia Netcom Corp., Ltd. The Court held that "anticipatory repudiation occurs when the obligor commits an act that makes it actually or apparently impossible for him to perform." Jonathan L. Flaxer, Esq., at Golenbock Eiseman Assor Bell & Peskoe, LLP, in New York, contends that the Court's reconsideration of its Decision is warranted because certain triable issues exist as to whether the ANC Sale resulted in anticipatory repudiation of the AGX Guaranty. Mr. Flaxer asserts that the ANC Sale had no impact on AGX's ability to honor its obligations under the AGX Guaranty to provide capacity on the PC-1 and EAC systems to 360networks. Similarly, AGX guarantees the obligations due under the Asia Capacity, which is defined to include capacity in connection with the PC-1 and EAC systems. Therefore, the ANC Sale does not constitute anticipatory repudiation. Mr. Flaxer recounts that the EAC System is a trans-pacific telecommunication cable owned by East Asia Crossing Limited. On the other hand, the PC-1 System is owned by Pacific Crossing Ltd. Both of the owners happen to be an indirect, wholly owned AGX subsidiary. As part of the ANC Sale, the stock conveyance of EA Crossing to ANC was effected. However, AGX did not sell any interest in Pacific Crossing to ANC. Since AGX never directly owned capacity on the PC-1 system, it was always the case that to obtain that capacity, AGX might turn to Pacific Crossing as the supplier, Mr. Flaxer explains. Moreover, Mr. Flaxer points out that during the ANC Sale, there was an excess of telecommunications capacity in the marketplace. Thus, even with respect to the EAC capacity, there is no reason to believe that ANC -- the new owner of the EAC capacity -- would have declined to sell that capacity to AGX. Based on the record, even if 360networks had ordered capacity after January 29, 2003 -- the date the Court approved the ANC Sale -- or between the ANC Sale's closing date and March 30, 2003, at the time that AGX would have been called on to honor any demand, telecommunications capacity was in substantial abundance and, therefore, may have been available. Accordingly, the AGX Trustee wants a trial to determine whether the occurrence of the Approval Date or the March 10, 2003, Closing Date prevented AGX from supplying capacity if it had been requested by 360Networks. Court Should Fix AGX Guaranty Repudiation Date Mr. Flaxer insists that the operative date of AGX's repudiation of the AGX Guaranty did not occur on January 29, 2003. Mr. Flaxer also contends that Judge Bernstein's approval of the ANC Sale did not vest ownership interest in ANC. However, AGX's assets remained property of the estate until the ANC Sale was consummated. Until that period, AGX could have honored the AGX Guaranty's terms by supplying any requested capacity to 360networks. "What the Court approved on January 29, 2003, was [a] form of agreement between the parties, which may not have yet been executed," Mr. Flaxer clarifies. The ANC Sale Order provides that the "Acquired Assets" will be transferred and assigned to ANC effective on the consummation of the transactions contemplated by the Sale Agreement. Pursuant to the Sale Order, the transfer and assignment of the Acquired Assets has been effected as of the Closing Date. Similarly, the Sale Order provides for any entity in possession of the Acquired Assets to surrender them on the Closing Date. Mr. Flaxer contends that, in general, there were many conditions to closing, each of which had to be satisfied for ANC to be required to close. The Sale Agreement even covers numerous mechanisms to which it may be terminated at any time before the Closing Date, which termination includes AGX's and ANC's "mutual written consent." Mr. Flaxer tells Judge Bernstein that after the Approval Date, the transaction might not have closed, and AGX would still have been the owner of the Acquired Assets. Thus, the AGX Trustee asks the Court to establish March 10, 2003, as the actual repudiation date of the AGX Guaranty. AGX Trustee Wants to Prove 360networks' Breach In accordance with Judge Bernstein's Decision, the Master Agreement imposed obligations and elaborate procedures on the parties in connection with planning for 360networks' future needs. The AGX Trustee wants to make sure that he will be able to adduce facts at trial demonstrating that 360networks' breaches and anticipatory repudiations of the Master Agreement either relieved AGX of any obligation to perform, or rendered it impossible for AGX to locate and deliver requested capacity. The AGX Trustee seeks to clarify that the trial referred to in the Decision will encompass the issues of fact attendant to his remaining objections to the 360networks' Claim, which objections were not addressed in the AGX Trustee's request as they contain genuine issues of material fact. 360networks Wants AGX's Reconsideration Request Denied Alan J. Lipkin, Esq., at Willkie Farr & Gallagher, LLP, in New York, argues that the AGX Trustee fails to state controlling decisions or factual matters overlooked by the Court, or to otherwise demonstrate clear error or manifest injustice that would merit reconsideration. Mr. Lipkin tells Judge Bernstein that the AGX Trustee simply seeks to introduce new facts and arguments not discussed in his prior pleadings, in the futile hope of changing the Court's determination. Accordingly, 360networks asks the Court to deny the AGX Trustee's request for reconsideration. Concerning the issue whether AGX anticipatorily repudiated the Guaranty, Mr. Lipkin notes that the AGX Trustee never argued that AGX could have delivered $100 million of Asia Capacity to 360networks once AGX had pursued the sale of substantially all of its assets to ANC. Mr. Lipkin contends that the Court need not be burdened with the numerous flaws in the AGX Trustee's argument on the ANC Sale, since any argument is no longer available to the AGX Trustee. Equally nonsensical, Mr. Lipkin points out, is the AGX Trustee's speculation that AGX might have supplied $100 million of Asia Capacity -- which was contractually required to be available for 15 to 25 years -- during six weeks between the Approval Date and the Closing Date, or that the ANC Sale might not have closed based on the parties' mutual decision. "Again, the Trustee's wishful musings bear no relation to any argument or substantiated fact timely placed before the Court," Mr. Lipkin says. Mr. Lipkin further asserts that the AGX Trustee's allegations of breaches by 360networks provide no citations or support and that the Court should not give an advisory opinion about it. "The [Court's] Opinion speaks for itself," Mr. Lipkin remarks. Regarding the AGX Trustee's request that Judge Bernstein advice him as to the extent the AGX Trustee's other objections to 360networks' Claim survive the Opinion, Mr. Lipkin maintains that that issue should not be handled on an advisory basis, particularly without citation or detail from the AGX Trustee. 360networks Insists It Is Entitled to Summary Judgment The Court had previously ruled that 360networks' request for summary judgment regarding the AGX Trustee's remaining claim objection theories was premature. Now that "the AGX Trustee's request has failed," 360networks is renewing its request for summary judgment in its favor. Mr. Lipkin contends that 360networks is entitled to Summary Judgment on the three remaining claim objections raised by the AGX Trustee. The AGX Trustee had argued that the Settlement Agreement constituted "payment in full" of 360network's claim under the Master Agreement and the AGX Guaranty. 360networks believes that this argument is baseless as the Settlement Agreement makes no reference to any payment, treats all settled claims separately, and provides for the AGX Guaranty to survive -- a result totally inconsistent with the full payment. In addition, the AGX Trustee has not cited a single claim of Global Crossing Bandwidth against 360networks, let alone one whose release could constitute a full payment. Furthermore, the AGX Trustee had asserted that AGX's incurrence of the AGX Guaranty was a fraudulent conveyance that deserves disallowance of 360networks' Claim pursuant to Section 502(d) of the Bankruptcy Code. Mr. Lipkin argues that Section 502(d) is inapplicable because the statute of limitations for the AGX Trustee to bring an action has expired. Also, Section 502(d) only applies to unreturned transfers, not incurred obligations. The AGX Trustee had also indicated that AGX may assert GC Bandwidth's defenses under the Master Agreement. Mr. Lipkin counters that AGX became primarily liable under the Master Agreement once GC Bandwidth filed for Chapter 11 protection and released all claims against 360networks. Mr. Lipkin points out that the AGX Trustee has failed to identify GC Bandwidth's single potential claim against 360networks and has admitted that 360networks had no affirmative obligation that could give rise to a claim by GC Bandwidth under the Master Agreement. AGX Trustee Fights Back "The 360networks' Objection is premature," the AGX Trustee tells Judge Bernstein. At present, the Court has not yet determined whether to reconsider the decision, let alone entertain further argument as to the propriety of the arguments contained in the parties' pleadings, the AGX Trustee says. Mr. Flaxer relates that Judge Bernstein's Decision ordered a trial on whether 360networks was willing to accept delivery of the Asian Capacity. However, the Decision is silent about whether that trial would encompass the factual matters attendant to the AGX Trustee's objections to the 360netorks' Claim. Similarly, Mr. Flaxer notes, the Decision does not address whether the AGX Trustee will be able to adduce facts concerning 360networks' breach of the Master Agreement at that trial. Mr. Flaxer further contends that 360networks' request for Summary Judgment is "ill-placed" because it violated the pre-motion conference requirement under Rule 7056-1 of the Local Rules of the United States Bankruptcy Court for the Southern District of New York. Accordingly, the AGX Trustee asks Judge Bernstein to overrule 360networks' objection to his Reconsideration Request. Asia Global Crossing Ltd., through its direct and indirect subsidiaries, as well as through a number of in-country joint ventures and commercial arrangements with Asian partners, provides the Asia Pacific region with a broad range of integrated telecommunications and IP services. The Company filed for chapter 11 protection on Nov. 17, 2002 (Bankr. S.D.N.Y. Case No. 02-15749). When the Debtor filed for protection from its creditors, it listed $2,279,771,000 in total assets and $2,616,316,000 in total debts. David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP, represents the Debtor in its restructuring efforts. The Court converted the Debtor's chapter 11 case to a chapter 7 proceeding on June 11, 2003. The Court appointed Robert L. Geltzer as the Debtor's chapter 7 trustee. Attorneys at Golenbock Eiseman Assor Bell & Peskoe LLP represent Mr. Geltzer. (Global Crossing Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Founder & CEO Retires & John Denison Named New CEO ---------------------------------------------------------------- ATA Holdings Corp. (PinkSheets:ATAHQ) reported that its founder, J. George Mikelsons, intends to retire from his position as President and Chief Executive Officer of the Company. Upon retirement, Mr. Mikelsons will continue to serve as the Company's non-executive Chairman of the Board until the earlier of the Company's confirmed plan of reorganization or December 31, 2005. The Company, its subsidiary, ATA Airlines, Inc., and Mr. Mikelsons are seeking Bankruptcy Court approval of the terms of Mr. Mikelsons' retirement and retirement compensation arrangements. If Bankruptcy Court approval is obtained, Mr. Mikelsons' retirement will be effective on August 31. Mr. Mikelsons, 67, founded ATA's predecessor, the Ambassadair Travel Club, in 1973. Following deregulation of the airline industry in 1978, ATA was certified as a common carrier in 1981. Mr. Mikelsons formed the predecessor to ATA Holdings in 1984 to serve as the holding company for Ambassadair, ATA Airlines and future affiliates of the Company. The Company completed an initial public offering in 1993 and was traded on the Nasdaq Stock Exchange until November 2004. Under Mr. Mikelsons' leadership, ATA became the 10th largest airline in the United States and North America's largest operator of military and commercial passenger charters. ATA has carried more than 100 million passengers while maintaining an excellent safety record. "The restructuring of ATA to enhance its long-term competitiveness has involved the hard work of many dedicated ATA employees. My heart and thanks goes out to each and every one of them," said Mr. Mikelsons. "I am leaving to enjoy retirement like others my age, but am confident I will be leaving ATA in good hands. I was pleased to have played a role in forging an alliance with Southwest Airlines, which I consider to be the premier low cost carrier in the U.S. "The new ATA senior management team assembled over the past year is very capable, experienced, and hard working, and highly motivated to preserve ATA in the face of unprecedented, adverse industry conditions. I also wish to express my special appreciation for the continuing support throughout my career at ATA of ATA's employees, vendors and lessors, the State of Indiana, the cities of Indianapolis and Chicago, and most importantly, all of ATA's many valued and loyal customers." Upon his retirement, Mr. Mikelsons will be succeeded as Chief Executive Officer of the Company by John G. Denison. Mr. Denison was previously named Chief Executive Officer of ATA Airlines on February 21, 2005. Prior to joining ATA, Mr. Denison served in senior management positions with Southwest Airlines from 1986 to 2001, including Executive Vice President of Corporate Services and Chief Financial Officer. Prior to joining Southwest, Mr. Denison held various positions with LTV Corporation and Chrysler Corporation. "It's hard to imagine anyone other than George at the helm at ATA," said Mr. Denison. "I know I speak on behalf of all ATA employees when I thank George for his leadership and wisdom, and wish him the best in his retirement. I look forward to continuing to work with our senior management team and employees to sustain the momentum George generated guiding ATA to a successful reorganization." ATA Airlines, now in its 32nd year of operation, offers "easy" and affordable travel to major business centers and popular vacation destinations like New York, Dallas/Ft. Worth, Boston, Hawaii, Florida, Mexico and the Caribbean. Through direct ATA flights and connecting Southwest Airlines codeshare flights, ATA now serves customers in more than 75 destinations. Try ATA's 15-times-every- weekday nonstop service between the New York area and Chicago- Midway. For more information, visit http://www.ata.com Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000) AURA SYSTEMS: U.S. Trustee Picks 3-Member Creditors Committee ------------------------------------------------------------- The United States Trustee for Region 16 appointed three creditors to serve on an Official Committee of Unsecured Creditors in Aura Systems, Inc.'s chapter 11 case: 1. R. Joseph Decker, Esq. Prindle, Decker & Amaro, LLP 310 Golden Shore, 4th Fl. Long Beach, California 90801 Phone: 562-436-3946, Fax: 562-495-0564 2. Dr. Arthur J. Schwartz 28717 Rothrock Dr. Rancho Palos Verdes, California 90275 Phone: 310-920-6516, Fax: 310-820-4118 3. Dr. Maurice Zeitlin P.O. Box 7950 Van Nuys, California 91409 Phone: 818-842-1125, Fax: 310-820-4118 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Headquartered in El Segundo, California, Aura Systems, Inc., -- http://www.aurasystems.com/-- develops and sells AuraGen(R) mobile induction power systems to the industrial, commercial and defense mobile power generation markets. The Company filed for chapter 11 protection on June 24, 2005 (Bankr. C.D. Calif. Case No. 05-24550). Ron Bender, Esq., Levene Neale Bender Rankin & Brill LLP represent the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it reported $18,036,502 in assets and $28,919,987 in debts. CABLEVISION SYSTEMS: Balance Sheet Upside Down by $2.48 Billion --------------------------------------------------------------- Cablevision Systems Corporation (NYSE:CVC) reported financial results for the second quarter ended June 30, 2005. Consolidated net revenue grew 6% to over $1.2 billion compared to the year- earlier period, reflecting strong revenue growth in Telecommunications Services, offset in part by lower revenue in Rainbow's Other Programming businesses. Operating income decreased 46% to $107.6 million and adjusted operating cash flow decreased 14% to $401.0 million. The decreases in operating income and AOCF are primarily related to certain payments and credits totaling approximately $106.1 million that favorably impacted Madison Square Garden in 2004. Excluding these items, second quarter revenue, operating income and AOCF would have increased 7%, 17% and 12%, respectively. Highlights for the second quarter include: -- more than 20,000 basic subscribers added; fifth consecutive quarter of basic subscriber gains; -- Revenue Generating Unit growth of more than 332,000 new units, resulting from continued customer growth in video, high-speed data and voice; -- more than 1.3 million RGUs added across Cable Television's services since Q2'04; -- Cable Television net revenue growth of 16% and AOCF growth of 13% since Q2'04; Cablevision President and CEO James L. Dolan commented: "For the second quarter, ongoing consumer demand for Cablevision's products continued to drive industry-leading penetration rates across all of our consumer services - analog and digital video, high-speed data and voice. The company experienced its fifth consecutive quarter of basic subscriber growth, while our digital video service ended the quarter with a noteworthy penetration rate of 58%. In addition, we are extremely pleased with the continued enthusiastic response to our voice product, which added nearly 114,000 customers in just the last three months." Results from Continuing Operations The operating results of FSN Ohio, FSN Florida and Rainbow DBS's distribution operations are included in discontinued operations and are not presented in the table below. The VOOM HD Networks are included in the Rainbow segment for all periods presented. Telecommunications Services - Cable Television and Lightpath Telecommunications Services includes Cable Television - Cablevision's "Optimum" branded video, high-speed data, and voice residential and commercial services offered over its cable infrastructure - and its "Optimum Lightpath" branded, fiber- delivered commercial data and voice services. Second quarter Telecommunications Services net revenues rose 16% to $895.3 million, operating income increased 23% to $135.3 million, and AOCF increased 15% to $354.2 million, all as compared to the year-earlier period. Cable Television Cable Television second quarter net revenues increased 16% to $855.6 million, operating income increased 19% to $141.3 million and AOCF rose 13% to $337.2 million, each compared to the year- earlier period. The increases in revenue, operating income, and AOCF reflect the addition of more than 1.3 million Revenue Generating Units from the second quarter of 2004 resulting from growth in basic video, digital video, high-speed data, and voice customers. Highlights include: -- basic video customers up 20,757 or 0.7% from March 2005 and 54,195 or 1.8% from June 2004; fifth consecutive quarter of basic subscriber gains; -- iO: Interactive Optimum digital video customers up 118,531 or 7% from March 2005 and 575,774 or 49% from June 2004; -- Optimum Online high-speed data customers up 79,285 or 6% from March 2005 and 340,822 or 29% from June 2004; -- Optimum Voice customers up 113,877 or 31% from March 2005 and 363,309 from June 2004, a three-fold increase; -- Revenue Generating Units up 332,040 or 5% from March 2005 and 1,332,288 or 25% from June 2004; -- Advertising revenue up 6% from June 2004; -- Cable Television RPS of $95.22, up $4.04 or 4% from March 2005 and $11.64 or 14% from June 2004; -- AOCF margin of 39.4% compared to 38.3% in March 2005 and 40.4% in June 2004; Lightpath For the second quarter, Lightpath net revenues increased 16% to $47.6 million, operating loss decreased 30% to $6.1 million and AOCF increased 53% to $17.0 million, each as compared to the prior year period. The increase in revenue and AOCF is primarily attributable to revenue growth in Ethernet data services over Lightpath's fiber infrastructure. The improvements in operating loss and AOCF reflect the growth in Ethernet revenue as well as certain expense savings resulting primarily from staff reductions implemented earlier in the year and the timing of advertising spending. Lightpath revenue also includes Optimum Voice call completion activity, which has no impact on AOCF. Rainbow Rainbow consists of our AMC, IFC and WE national programming services as well as Other Programming which includes: FSN Chicago, FSN Bay Area, fuse, MagRack, Sportskool, News 12 Networks, IFC Entertainment, VOOM HD Networks, Metro Channels, Rainbow Network Communications, Rainbow Advertising Sales Corp. and other Rainbow developmental ventures. Second quarter Rainbow net revenues decreased 17% to $204.2 million, operating income decreased $24.0 million to an operating loss of $8.3 million and AOCF decreased 37% to $29.4 million, all compared to the year-earlier period. AMC/IFC/WE Second quarter net revenues increased 5% to $135.4 million, operating income decreased 16% to $32.7 million and AOCF decreased 15% to $49.9 million, each compared to the prior year period. The second quarter results reflect: -- increased programming costs and marketing expense, reflecting the networks' strategy to grow ratings; -- higher advertising revenue driven by continued ratings growth, with AMC recording a primetime ratings increase of 7% season-to-date, offset in part by lower affiliate revenue; -- viewing subscriber increases of 10% at IFC, 3% at WE and 3% at AMC as compared to June 2004; Other Programming Second quarter net revenues decreased 36% to $76.7 million, operating loss increased $17.7 million to $41.0 million, and the AOCF deficit increased $8.8 million to $20.5 million, all as compared to the prior year period. The decrease in net revenue is primarily driven by lower affiliate revenue at FSN Chicago resulting from the termination of contracts after losing professional sports content and from payments not being made in accordance with an existing affiliate agreement. To a lesser extent, the net revenue decline also results from lower theatrical and home video revenue at IFC Films. The increases in operating loss and AOCF deficit primarily reflect the net revenue losses, offset in part by expense savings at FSN Chicago and reduced contractual rights expenses at VOOM HD Networks. Madison Square Garden Madison Square Garden's businesses include: MSG Network, FSN New York, the New York Knicks, the New York Rangers, the New York Liberty, the MSG Arena complex and Radio City Music Hall. Madison Square Garden's second quarter net revenue declined 9% to $151.6 million compared to the second quarter of 2004. Operating income decreased to $10.5 million from $107.7 million and AOCF decreased to $29.8 million from $119.9 million in the second quarter, both as compared to the year-earlier period. The 2004 period included $106.1 million of payments and credits relating to the termination of the New York Mets rights agreement and NBA expansion revenue. Excluding these items, net revenue would have declined 3%, operating income would have increased $8.9 million and AOCF would have increased $16.0 million. MSG's second quarter results are primarily impacted by: -- the loss of NHL hockey games during the period which resulted in reduced revenues, offset by certain expense savings; -- higher affiliate revenue primarily related to retroactive rate adjustments, offset by the lack of Knicks playoff revenue in the 2005 period; Results from Continuing Operations Consolidated results exclude FSN Ohio, FSN Florida, and Rainbow DBS's distribution operations, which are reflected in discontinued operations for all periods presented. Consolidated second quarter results compared to the prior year period are as follows: -- net revenues increased 6% to $1.2 billion. This was the result of continued customer growth in Cable Television as well as net revenue growth at AMC, IFC and WE networks, which was partially offset by lower net revenues in Rainbow's Other Programming and at Madison Square Garden. Excluding certain items recorded at Madison Square Garden in 2004, net revenue would have increased 7%. -- operating income totaled $107.6 million compared to $198.2 million and consolidated AOCF decreased 14% to $401.0 million. As discussed above, certain items totaling approximately $106.1 million at Madison Square Garden favorably impacted operating income and AOCF in 2004. Excluding these items, operating income and AOCF would have increased 17% and 12% as a result of continued revenue growth in cable television and expense savings at Madison Square Garden and Lightpath, offset somewhat by lower net revenue and higher expenses at Rainbow. Cablevision Systems Corporation -- http://www.cablevision.com/-- is one of the nation's leading entertainment and telecommunications companies. Its cable television operations serve more than 3 million households in the New York metropolitan area. The company's advanced telecommunications offerings include its iO: Interactive Optimum digital television offering, Optimum Online high-speed Internet service, Optimum Voice digital voice- over-cable service, and its Lightpath integrated business communications services. Cablevision's Rainbow Media Holdings LLC operates several successful programming businesses, including AMC, IFC, WE and other national and regional networks. In addition to its telecommunications and programming businesses, Cablevision is the controlling owner of Madison Square Garden and its sports teams, the New York Knicks, Rangers and Liberty. The company also operates New York's famed Radio City Music Hall, and owns and operates Clearview Cinemas. As of June 30, 2005, Cablevision Systems' equity deficit narrowed to $2.48 billion compared to a $2.63 billion deficit at Dec. 31, 2004. * * * As reported in the Troubled Company Reporter on June 22, 2005, Standard & Poor's Ratings Services placed its long-term ratings for Bethpage, N.Y.-based cable TV operator Cablevision Systems Corp. on CreditWatch with negative implications, including the 'BB' corporate credit rating. Standard & Poor's also placed its ratings on Cablevision's Rainbow Media Enterprises Inc. unit on CreditWatch, with negative implications, including the 'BB' corporate credit rating. However, our "1" recovery rating of the bank loan at unit Rainbow National Services LLC is not on Watch. CARL YERKEL: Wants to Hire Eric Liepins as Bankruptcy Counsel ------------------------------------------------------------- Carl Yerkel asks the U.S. Bankruptcy Court for the Northern District of Texas to employ Eric A. Liepins, P.C., as his bankruptcy counsel. The Debtor chose the Firm because it is an expert in bankruptcy matters and has represented debtors in numerous proceedings in the Bankruptcy Courts. The Debtor wants to hire Eric Liepins to defend him in various matters and to propose a plan of reorganization. Eric A. Liepins, Esq., discloses that his Firm has received a $15,000 retainer. The current hourly rates of professionals who will work in the engagement are: Professional/Designation Hourly Rate ------------------------ ----------- Eric A. Liepens, Esq. $185 Paralegals & Legal Assistants $30 - $50 The Debtor assures the Court that Eric A. Liepens, P.C., in Dallas, Texas, is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Court. Residing in Dallas, Texas, Carl Yerkel filed for bankruptcy protection on August 12, 2005 (Bankr. N.D. Tex. Case No. 05- 39136). Eric A. Liepins, Esq., at Eric A. Liepins, P.C., in Dallas, Texas, represents the Debtor in his restructuring efforts. When the Debtor filed for protection from his creditors, he estimated assets between $1 million to $10 million and debts between $10 million to $50 million. CENTENNIAL COMMS: Equity Deficit Narrows to $482 Million at May 31 ------------------------------------------------------------------ Centennial Communications Corp. (NASDAQ: CYCL) reported its fourth-quarter and full-year fiscal 2005 results. The Company reported a loss from continuing operations of $13.6 million for the fiscal fourth quarter of 2005 as compared to income from continuing operations of $3.3 million in the fiscal fourth quarter of 2004. This includes a $36.3 million pre-tax charge for accelerated depreciation on the Company's wireless network in Puerto Rico, which has been replaced and upgraded. Consolidated adjusted operating income from continuing operations for the fiscal fourth quarter was $94.1 million, as compared to $84.1 million for the prior year quarter. "Our strong fourth quarter and full-year results validate the ongoing success of our local market strategy and clear brand message," said Michael J. Small, Centennial's chief executive officer. "We believe we win with our customers because our way of doing business remains centered on tailoring the ultimate customer experience." Centennial reported fiscal fourth-quarter consolidated revenue from continuing operations of $229.7 million, which included $100.8 million from U.S. wireless and $128.9 million from Caribbean operations. Consolidated revenue from continuing operations grew 13 percent versus the fiscal fourth quarter of 2004. The Company ended the quarter with 1.24 million total wireless subscribers, which compares to 1.06 million for the year-ago quarter and 1.20 million for the previous quarter ended February 28, 2005. The Company reported 299,100 total access lines and equivalents for the fiscal fourth quarter. "We reached important milestones in our deleveraging progress during fiscal 2005, significantly improving our financial flexibility and strength to support future success," said Centennial chief financial officer Thomas J. Fitzpatrick. "We reduced net debt by over $175 million during the fiscal year, affirming our commitment to deliver shareholder value by balancing growth and debt reduction." Full-Year Fiscal 2005 Results For the full year, the Company reported income from continuing operations of $19.6 million, as compared to a loss from continuing operations of $17.0 million, for fiscal year 2004. The Company's net income from continuing operations for fiscal 2005 includes a $72.7 million pre-tax charge for accelerated depreciation on the Company's wireless network in Puerto Rico. Centennial reported full-year 2005 consolidated revenue from continuing operations of $882.4 million, which included $399.0 million from U.S. wireless and $483.4 million from Caribbean operations. This represents a consolidated revenue increase of 13 percent versus fiscal 2004, primarily driven by strong wireless subscriber growth and strong access line growth. The Company's fiscal 2005 consolidated AOI from continuing operations was $366.4 million, representing an AOI margin of 42 percent. This compares to consolidated AOI from continuing operations of $315.5 million and an AOI margin of 40 percent in fiscal 2004. Other Highlights: -- On April 25, 2005, the Company redeemed $40 million aggregate principal amount of its $185 million outstanding 10-3/4 percent Senior Subordinated Notes due Dec. 15, 2008. -- On May 16, 2005, the Company expanded its wireless network in Michigan, launching service in Grand Rapids and Lansing with its popular Blue RegionSM Plans. Centennial continues to expand and improve its network in the Midwest, leveraging the strength of its Trusted Advisor brand and tailored customer experience. -- On June 24, 2005, the Puerto Rico Chamber of Commerce awarded Centennial its Zenit Award for its commitment to understanding local market needs and its network and technology leadership on the island. -- In July 2005, the Company completed the replacement and upgrade of its wireless network in Puerto Rico, and also began installing Evolution Data Optimized (EV-DO) functionality to bring a broadband wireless data experience to its customers. Fiscal 2006 Outlook The Company expects consolidated AOI from continuing operations between $370 million and $390 million for fiscal 2006, including an approximately $9 million startup loss related to our recent launch of service in Grand Rapids and Lansing, Michigan. Consolidated AOI from continuing operations for fiscal year 2005 was $366.4 million, including non-recurring USF revenue related to a prior year of $5.5 million in U.S. Wireless and $3.6 million of non-recurring items related to inter-carrier compensation adjustments in Caribbean broadband. The Company has not included a reconciliation of projected AOI because projections for some components of this reconciliation are not possible to forecast at this time. The Company expects consolidated capital expenditures of approximately $160 million for fiscal 2006. Centennial Communications (NASDAQ:CYCL), based in Wall, New Jersey, is a leading provider of regional wireless and integrated communications services in the United States and the Caribbean with approximately 1.2 million wireless subscribers and 300,000 access lines and equivalents. The U.S. business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Caribbean business owns and operates wireless networks in Puerto Rico, the Dominican Republic and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson, Anderson & Stowe and an affiliate of the Blackstone Group are controlling shareholders of Centennial. For more information regarding Centennial, please visit Centennial's websites at: http://www.centennialwireless.com/http://www.centennialpr.com/ and http://www.centennialrd.com/ As of May 31, 2005, Centennial Communications' equity deficit narrowed to $481,955,000 from a $548,641,000 deficit at May 31, 2004. CHYRON CORP: June 30 Balance Sheet Upside-Down by $1.8 Million -------------------------------------------------------------- Chyron Corporation (OTCBB: CYRO) said that for its second quarter, the Company generated revenues of $5.8 million and incurred a net loss of $200,000. For the first half of 2005 the Company generated revenues of $11.8 million and incurred a net loss of $400,000. Expenses associated with the Company's new microcasting and digital displays product, ChyTV, accounted for the losses, with the remainder of the Company's business generating positive results. Revenues for the second quarter were $5.8 million, an increase of $900,000 or 18% over the $4.9 million reported for the same quarter last year. The revenues included approximately $100,000 in sales from the new ChyTV product, which debuted in March at the NSCA Show in Orlando and in April at the Las Vegas annual meeting of the National Association of Broadcasters, where it met with considerable enthusiasm and won a prestigious "Pick Hit" of the Show award from Video Systems Magazine. Revenues of $11.8 million for the first six months were $1.2 million or 11% higher than the $10.6 million reported for the first six months of 2004. CEO and President Michael Wellesley-Wesley commented, "The year over year increase in second quarter revenues of 18 percent and the 300 basis point gross margin pickup that we experienced in the quarter are encouraging signs for future growth. Both of these key measures should continue to improve in the second half of the year as ChyTV products begin to gain market acceptance and we gain broadcast graphics market share." The $200,000 net loss for the second quarter represented an improvement compared to a net loss of $400,000 for the second quarter of 2004. The $400,000 net loss for the first six months was larger than the $100,000 net loss for the comparable 2004 period, and included a net loss from the new microcasting and digital displays business of $500,000. Gross margins for this year's second quarter were 65 percent compared to 62 percent in last year's comparable quarter, and for the first six months were 62 percent compared to 61 percent for the same period in 2004. The gross margin increases were primarily due to differences in product mix, with newer products providing higher average gross margins in 2005 and lower overhead. Operating expenses of $3.9 million for the second quarter of 2005 were $500,000 higher than the second quarter of 2004, primarily due to expenditures of $300,000 related to the microcasting and digital displays business, and consulting fees for Sarbanes-Oxley compliance and new systems implementation of $100,000. Operating expenses of $7.6 million for the first half of 2005 were $900,000 higher than the first half of 2004, primarily due to expenditures of $600,000 related to the microcasting and digital displays business, $100,000 in consulting fees for Sarbanes-Oxley compliance and new systems implementation, and $200,000 higher employee benefits costs. At June 30, 2005 the Company had cash on hand of $700,000 and working capital of $2.2 million. For the second quarter of 2005 net cash of $1.1 million was used by operations, including $700,000 from changes in operating assets and liabilities. Net cash of $300,000 was provided by investing activities, including receipt of $400,000 as the final payment from the Company's sale of its Pro-Bel business in late 2003. Covenant Waiver While the Company had been in compliance with its bank covenants since the April 2004 inception of its line of credit with its bank through June 30, 2005, at July 31, 2005 the Company fell short of its tangible net worth covenant requirement of $2 million by approximately $100,000. The Company's bank has granted a covenant waiver and lowered the covenant's tangible net worth requirements for the remainder of 2005. Details will be provided in the Company's quarterly filing on Form 10-Q for the period ended June 30, 2005. The Company has had no borrowings under the line of credit from its inception through the present time, but the bank's granting of the waiver and revision of the covenant will allow the Company to borrow if needed. With unwavering clarity of vision, Chyron continues to define and dominate the world of broadcast graphics. Winner of numerous awards, including two Emmys, Chyron has proven itself as the undisputed leader in the industry. From the compact Micro-X to the blazing Hyper-X SD/HD, Chyron's exceptional Duet product line brings unmatched, 2D and 3D graphics creation and performance to the most demanding studio and mobile operations. Rounding out Chyron's graphics offerings are still and clip servers, ticker and telestration systems, and MOS newsroom integration solutions. The ChyTV product line leverages Chyron's broadcast expertise with video graphics devices for microcasting and digital displays. Chyron has a unique, 30-year history of service and support for its products that far exceeds that of most manufacturers. For more information about Chyron products and services, please visit the company website at www.chyron.com (OTC BB: CYRO). At Jun. 30, 2005, Chyron Corporation's balance sheet showed a $1,761,000 stockholders' deficit, compared to a $1,321,000 deficit at Dec. 31, 2004. COLLINS & AIKMAN: Committee Objects to Lazard Freres' Fees ---------------------------------------------------------- The Official Committee of Unsecured Creditors of Collins & Aikman Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to deny the proposed payment of a Transaction and Financing Fee to Lazard Freres & Co., LLC. On August 5, 2005, the Debtors amended the provisions governing payment of a Transaction Fee to Lazard Freres & Co., LLC. Lazard has added a sliding-scale M&A transaction fee in addition to the flat $8 million Transaction Fee. The total fee is calculated by breaking down the Aggregate Consideration and multiplying each increment by the corresponding incremental the fee would be $1,000,000 + $750,000 + $600,000 which totals $2.35 million. Aggregate Consideration (in millions) Incremental Fee % ----------------------- ----------------- $0 - $50 2.00% $50 - $100 1.50% $100 - $200 1.20% $200 - $300 1.00% $300 - $400 0.90% $400 - $500 0.80% $500 - $600 0.75% $600 - $700 0.70% $700 - $800 0.65% $800 - $900 0.625% $900 + 0.60% The Committee asserts that it is fundamentally unfair to pre-approve success fees in the Debtors' Chapter 11 cases due, in part, to the Debtors' ongoing liquidity crisis. The Committee asserts that the severe financial challenges faced by the Debtors in their Chapter 11 proceedings have by no means lessened. All other financial advisors retained by the Debtors and the Committee have acknowledged these concerns and agreed to wait until the writing of a success story before seeking approval of any type of transaction or success fee. Thus, while the Committee still does not oppose the Debtors' retention of Lazard, the Committee argues that pre-approval of the M&A Transaction Fee is premature. The Committee notes that pre-approval of the M&A Transaction Fee, which is limitless and could exceed the amount any Transaction Fee will turn Lazard's focus to a premature sale of the Debtors' assets and away from reorganizing the Debtors as a going concern. Moreover, the Committee asserts that the M&A Transaction Fee formula is significantly flawed because: * it provides insufficient incentive for Lazard to work to achieve a transaction that provides meaningful and appropriate recoveries to unsecured creditors; * the formula leads to patently absurd results including, but not limited to, Lazard's ability to accrue unlimited fee amounts as there is no cap on the incurrence of the M&A Transaction Fee; and * the proposed structure is not sufficiently tied to recoveries of unsecured creditors. Additionally, it is unclear whether Lazard intends to credit its Monthly Fees and any Transaction Fees against an M&A Fee. To the extent any M&A Transaction Fee is approved, it should be credited against Lazard's Monthly Fees and Transaction Fees. The Committee maintains its position that approval of any form of back-end success fee should be deferred until the occurrence of one or more events that would warrant the allowance and payment of such a fee. Only at that time can parties in interest meaningfully evaluate whether the award and payment of such fees are appropriate and in the best interests of these estates and their creditors. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) CONSUMERS ENERGY: Sells $175 Million First Mortgage Bonds --------------------------------------------------------- Consumers Energy Company issued and sold $175 million principal amount of its 5.80 percent First Mortgage Bonds due 2035 on August 11, 2005, pursuant to an effective shelf Registration Statement on Form S-3 (No 333-120611) and a Prospectus Supplement dated August 8, 2005 to a Prospectus dated December 1, 2004. Consumers will use the proceeds to redeem, through a legal defeasance, the aggregate outstanding balance of $125 million of its 9.00 percent Trust Originated Preferred Securities due 2031, including the payment of interest on these securities to the first call date, and for general corporate purposes. Consumers Energy Company, the primary subsidiary of CMS Energy, is a combination electric and natural gas utility that serves more than 3.3 million customers in Michigan's Lower Peninsula. * * * As reported in the Troubled Company Reporter on Aug. 16, 2004, Fitch Ratings has assigned 'BB+' ratings to Consumers Energy Co.'s $150 million issuance of 4.40% first mortgage bonds (FMBs) due Aug 15, 2009, $300 million issuance of 5% FMBs due Feb.15, 2012, and $350 million issuance of 5.50% FMBs due Aug. 15, 2016. Fitch says the Rating Outlook for Consumers is Stable. COUNSEL CORP: Equity Deficit Widens to $50.8 Million at June 30 --------------------------------------------------------------- Counsel Corporation (TSX:CXS) reported its financial results for the three and six months ended June 30, 2005. For the second quarter ended June 30, 2005, the Company's consolidated revenue from continuing operations was $33.1 million, a decrease of 13% from $38.0 million in the same period in 2004. The decrease in revenue is attributable to both subscriber attrition and lower average revenue per minute of the Company's communications business. The Company incurred a loss from continuing operations of $6.1 million in the three months ended June 30, 2005, compared with a loss of $9.7 million in the three months ended June 30, 2004. Including discontinued operations, the Company incurred a net loss of $6.0 million for the three months ended June 30, 2005, compared with a net loss of $4.9 million for the three months ended June 30, 2004. For the six months ended June 30, 2005, consolidated revenues decreased 18% to $67.8 million from $82.7 million in the same period last year. The net loss was $13.9 million for the first six months of 2005 compared to $7.5 million in the first six months of 2004. Recent significant events: -- On August 5, 2005, the shareholders of Acceris Communications Inc., a 92% owned subsidiary of Counsel, approved the change of the name of the company to C2 Global Technologies Inc. -- On May 19, 2005, C2 entered into an agreement to sell substantially all of the assets and to transfer certain liabilities of its Telecommunications business to Acceris Management and Acquisition LLC, an arm's length Minnesota limited liability company, which is a wholly-owned subsidiary of North Central Equity LLC. The transaction is expected to close during the third quarter of 2005. The sale of C2's telecommunications business will allow management of C2 to focus on the growing Voice over Internet Protocol market. -- On July 19, 2005, Counsel entered into an agreement to sell seven of its eight income producing properties, including its 13 acres of vacant land, to Huntingdon Real Estate Investment Trust. The sale of these properties is expected to close during the third quarter of 2005, subject to due diligence and satisfaction of certain conditions normal in this type of transaction. The completion of the sale will result in the realization of a substantial return on the Company's investment in these properties. "Counsel will continue to focus on value creation opportunities in real estate and on maximizing the value of C2's VoIP patents," said Allan Silber, Chairman and CEO of Counsel. Counsel Corporation (TSX: CXS) -- http://www.counselcorp.com/-- is a diversified company focused on the acquisition of businesses in diverse industry sectors and at various stages of their business life cycles. Its goal for acquired businesses is to create value within these businesses and to realize on the value creation at the appropriate time. Counsel presently holds assets in three specific sectors: communications in the United States and real estate and long-term care in Canada. As of June 30, 2004, Counsel Corporation's equity deficit widened to $50,768,000 from a $36,726,000 deficit at Dec. 31, 2004. DEEP RIVER: Files Disclosure Statement in New Jersey ---------------------------------------------------- Deep River Development Group, L.L.C., delivered a Disclosure Statement explaining its chapter 11 Plan of Reorganization to the U.S. Bankruptcy Court for the District of New Jersey. Treatment of Claims Under the Plan, these secured claims will be paid in full: Secured Creditor Claim Amount ---------------- ------------ Lee County Tax Assessor $23,783 G.P.G. Development, LLC $3,884,000 John and Lisa Schmidlin $683,683 Sea Jade Holding, LLC $364,208 LaRue Management, Inc. $125,894 Sycamore/Custom Living LLC $644,462 Valley Club Investment Group $462,887 Custom Living Investment Group I, LLC $167,009 Al Prince & Associates $35,952 General unsecured creditors, owed $1,039,695, are impaired. The Disclosure Statement does not discuss how the Debtor will pay unsecured claims, nor does the Debtor indicate what creditors could expect to receive if the estate were liquidated under chapter 7 of the Bankruptcy Code. The Debtor's two equity holders -- Valley Club Investment Group III, LLC (1%), and Custom Living Investment Group I, LLC (99%) -- will retain their equity interests in the Reorganized Debtor. Plan Funding The Debtor obtained a $29 million real estate construction loan commitment from Long Ridge Capital Associates LLC. The loan will refinance the development of the Debtor's property to attract a higher market value. Alternative to Restructuring The Debtor received an initial offer from an interested buyer to purchase its property for $8,000,000. Additionally, the proposed purchase includes that Deep River will receive $2,000 per unit for each residential lot or unit sold to a third party. Headquartered in Chester, New Jersey, Deep River Development Group, L.L.C., filed for chapter 11 protection on June 29, 2005 (Bankr. D.N.J. Case No. 05-31279). Morris S. Bauer, Esq., at Ravin Greenberg PC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $10,630,651 in assets and $7,259,431 in debts. DELTA AIR: Selling Airline Subsidiary to SkyWest for $425 Million ----------------------------------------------------------------- Delta Air Lines, Inc. (NYSE: DAL) entered into a definitive agreement to sell its wholly owned regional airline subsidiary Atlantic Southeast Airlines, Inc., to SkyWest, Inc. (Nasdaq: SKYW) for a purchase price of $425 million cash. ASA will continue to serve Delta customers under a new 15-year Delta Connection agreement, with ASA's fleet of more than 150 aircraft flying Delta routes. "We are pleased to strengthen our long-time relationship with Delta Connection partner SkyWest and believe the transaction will be mutually beneficial to our customers and our companies," Delta Chief Executive Officer Gerald Grinstein said. "This transaction provides for a long-term competitive cost structure as well as appropriate incentives to reward ASA for operational excellence and cost improvement. Delta has extensive experience working with SkyWest and other regional carriers under capacity purchase arrangements." He continued, "This transaction achieves important operational and financial objectives, while enabling our customers to continue to benefit from ASA's commitment to operational excellence and Delta's broad network reach." ASA President Skip Barnette said, "ASA has long been an integral part of the Delta Connection carrier network and we are pleased with this opportunity to grow our service while we will continue to serve Delta customers. We also look forward to the new opportunities this transaction creates for ASA and its employees. The people of ASA will continue to focus on providing efficient, reliable service to our customers during the transition and in the years ahead." Customer Service and Routes In conjunction with the sale transaction, Delta will enter into two new Delta Connection agreements under which ASA and SkyWest Airlines will continue to serve as Delta Connection regional carriers through 2020. Delta's agreement with ASA includes strong incentives for ASA to meet or exceed specific performance benchmarks and enhance cost efficiency. Current plans are for ASA and SkyWest Airlines to operate as wholly owned subsidiaries of SkyWest, Inc. As a result, the sale transaction is not expected to result in any significant changes in ASA's flight schedules or locations served. Since the time of Delta's purchase in 1999, ASA has more than doubled in size and significantly improved customer service. Under Delta's ownership, ASA has added more than 100 new regional jets, serving 126 destinations, while at the same time adding nearly 3,000 employees to support the growing business. Terms of the Agreement The sale of ASA to SkyWest is subject to certain closing conditions, including regulatory reviews, and is expected to close in September. As per the terms of the agreement, $350 million in cash will be payable at closing, representing $330 million of the purchase price and $20 million relating to certain aircraft financing deposits. Should Delta file for chapter 11 protection or four years after the closing of the transaction, an additional $125 million representing: -- $95 million of the purchase price, and -- $30 million relating to certain aircraft financing deposits is payable to Delta upon the earlier assumption by Delta of the ASA and SkyWest Airlines Delta Connection agreements. Conversely, SkyWest shall be entitled to retain $125 million if Delta were to reject its Delta Connection agreement with either ASA or SkyWest Airlines in a Chapter 11 proceeding prior to the fourth anniversary of the closing of this transaction. "I think it's clear that there's some risk that Delta will file for bankruptcy, and we had to protect ourselves," Jerry C. Atkin, SkyWest's chief executive told Micheline Maynard of The New York Times. "We've given Delta a lot of reason to want to retain us in bankruptcy." The purchase price is also subject to adjustment based on ASA's levels of cash and working capital as of the closing date. The transaction, which is subject to regulatory reviews and other conditions, is currently expected to close during September 2005. The proceeds from this transaction will be used by Delta for general corporate purposes and to pay down $100 million of outstanding borrowings under its credit facility with GE Commercial Finance and other lenders. "As we continue to implement Delta's transformation plan, this transaction not only enhances our ability to operate our business as efficiently and cost effectively as we can, it also improves Delta's liquidity position," Mr. Grinstein said. "As Delta takes steps to secure its future as a competitive airline, we will continue to take a hard look at all of our operations and assets to identify opportunities to strengthen our financial position in the face of continuing market pressures and factors outside of our control, including fuel prices." Delta and SkyWest agree to indemnify the other from damages suffered due to breaches of representations, warranties or covenants made in the agreement, subject to customary minimum and maximum amounts. Unless the parties mutually agree otherwise, the obligations of the parties under the acquisition agreement will automatically terminate if the transactions contemplated have not closed by October 31, 2005. At closing, the parties intend to enter into various other agreements, including with respect to certain services that Delta will provide to ASA for a transition period following closing. The acquisition will result in the creation of the largest U.S. regional airline operating primarily state-of-the-art regional jet aircraft. The combined companies currently fly 372 aircraft, employ approximately 13,400 employees, and are expected to carry an estimated 28 million passengers during 2005. Combined revenues of the two companies are estimated to be approximately $2.5 billion during 2005. Mr. Atkin sees the ASA acquisition as an opportunity to strengthen SkyWest's partnership with Delta. "Through this acquisition, our company will enter into long-term agreements with initial terms of 15 years with Delta at both ASA and SkyWest Airlines, making SkyWest the most significant regional relationship in the Delta Connection program. Moreover, we believe that ASA is well- positioned to pursue additional code sharing relationships." Bradford R. Rich, SkyWest's Executive Vice President and Chief Financial Officer, anticipates significant benefits as a result of the transaction. "The proposed transaction will provide substantial benefits for SkyWest, including greater geographical presence, diversification and access to the largest airport hub in the world, Atlanta. It also provides us better balance in available seat mile production among our existing major code- sharing partners and utilizes our capital resources more efficiently," said Mr. Rich. ASA and SWA Delta Connection Agreements As a condition of closing to the transaction, each of SkyWest Airlines and ASA will enter into new 15-year Delta Connection operating agreements with Delta. Both Delta Connection agreements will continue to be capacity purchase agreements with both carriers being compensated in a manner substantially similar to their current agreements. In connection with the ASA and SkyWest Airlines contract carrier agreements, Delta or Comair, Inc., a wholly owned subsidiary of Delta, will lease or sublease 40 regional jet aircraft in total to ASA and SkyWest Airlines. If either ASA or SkyWest Airlines terminates its contract carrier agreement as a result of a material breach by Delta, the aircraft leases and subleases to ASA or SkyWest Airlines, as applicable, will terminate at the same time. The boards of directors of both companies have approved this transaction. Goldman, Sachs & Co., and Davis Polk & Wardwell served as financial and legal advisers, respectively, to Delta for this transaction. Merrill Lynch and Parr Waddoups Brown Gee and Loveless served as financial and legal advisors, respectively, to SkyWest, Inc. DIP Financing Ms. Maynard reported Saturday that the Company has started arranging debtor-in-possession financing. Ms. Maynard identifies GE Commercial Finance, a current lender to Delta, as a likely source of a DIP financing facility to fund the carrier's on-going working capital needs during a chapter 11 restructuring. In a regulatory filing with the Securities and Exchange Commission last week, Delta said negotiations with a new Visa and Mastercard credit card processor continue. The carrier's existing Visa and MasterCard processing contract expires on Aug. 29, 2005. Based in Atlanta, Atlantic Southeast Airlines, Inc. -- http://www.flyasa.com/-- is a leading member of the Delta Connection program, operating more than 900 flights each day to 126 airports in 38 states, the District of Columbia, Canada, Mexico and the Caribbean. The airline operates a fleet of 151 aircraft and employs nearly 6,000 aviation professionals across its route system. Founded in 1979, ASA has operated as a Delta Connection carrier since 1984. Delta acquired a 20 percent ownership stake in ASA in 1984, and purchased the remaining stake in 1999. Headquartered in St. George, Utah, SkyWest, Inc. -- http://www.skywest.com/-- is the parent company of SkyWest Airlines, which operates as an independently owned partner carrier to Delta and United Airlines. SkyWest has been a Delta Connection carrier since 1987. SkyWest currently serves 59 Delta Connection locations with approximately 480 daily departures, primarily from Delta's hub in Salt Lake City, Utah. SkyWest's Delta Connection fleet currently consists of 56 50-seat Canadair Regional Jets and 13 30- seat Embraer EMB- 120 turboprops. Delta Air Lines -- http://delta.com/-- is the world's second- largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 490 destinations in 85 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles on more than 14,000 flights offered by SkyTeam and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. DELTAGEN INC: Exclusive Plan Filing Period Intact Until Oct. 18 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California extended Deltagen, Inc., and its debtor-affiliates' exclusive plan filing period until Oct. 18, 2005. The Court also gave the Debtors the exclusive right to solicit acceptances of that plan from their creditors until Dec. 13, 2005. Ramon M. Naguiat, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., told the Court that over the last few months, the Debtors have made significant progress in moving their cases to conclusion. The Debtors have: * commenced the claims administration process, * filed two omnibus objections to claims, and * asserted various additional "one off" claims objections. The Debtors also continued dealing with their various contractual and licensing relationships by: * modifying, assuming, and rejecting existing contracts, * resolving the Debtor's licensing disputes with Lexicon Incorporated, and * entering into new licensing arrangements. Mr. Naguiat reports that the Debtors have begun the process of drafting a plan of reorganization and disclosure statement in support of the plan, which the Debtors intend to file within the next few months. To allow the Debtor to complete the formulation and negotiation of a plan of reorganization and to address certain remaining operational and claims issues in their cases in advance of exiting bankruptcy, the Debtors ask the Court to approve the extension. Committee Shares Exclusive Periods Mr. Naguiat tells the Court that although the Debtors will endeavor to propose a plan that has the support of the Committee, the Debtors are willing to continue to share the proposed extended Exclusive Periods with the Committee in the event that the Committee is dissatisfied with the contours of the plan formulated by the Debtors. The Debtors may file and solicit acceptances of a plan, provided that the plan has the Committee's support, or the Committee may file and solicit acceptances of a plan, provided that the plan has the Debtors' support. Deltagen Inc. provides essential data on the in vivo mammalian functional role of newly discovered genes. The Company and its debtor-affiliates filed for chapter 11 protection on June 27, 2003 (Bankr. N.D. Calif. Case No. 03-31906). Alan Talkington, Esq., and Frederick D. Holden, Esq., at Orrick, Herrington and Sutcliffe, and Henry C. Kevane, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. DOUBLE JS: Case Summary & 19 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Double JS Corp., Inc. P.O. Box 273 Patagonia, Arizona 85624 Bankruptcy Case No.: 05-04531 Chapter 11 Petition Date: August 15, 2005 Court: District of Arizona (Tucson) Judge: Eileen W. Hollowell Debtor's Counsel: Eric Slocum Sparks, Esq. Eric Slocum Sparks PC 110 South Church Avenue #2270 Tucson, Arizona 85701 Tel: (520) 623-8330 Fax: (520) 623-9157 Total Assets: $1,254,274 Total Debts: $1,263,340 Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Texas Shorline Development Loan $318,571 Inc. P.O. Box 952 Rockport, TX 78381 Beach Club, Inc. Loan $101,214 P.O. Box 952 Rockport. TX 78381 Ford Motor Credit Lease deficiency $5,366 4742 North 24th Street Suite 215 Phoenix, AZ 85016 Golden Eagle Insurance Property insurance $4,746 American Family Insurance Vehicle insurance $1,327 Tribune Trade debt $1,257 DLCLine Videos Trade debt $1,000 High Desert Refrigeration Trade debt $767 Carondelet Trade debt $520 Canyon Disposal Trade debt $446 KGB Communications LLC Trade debt $170 National Revenue Corp. First National $90 Bank of Nevada Ecolab Trade debt $65 Collection Bureau of America DS Waters - $61 trade debt Tucson Tallow Trade debt $38 Pitney Bowes Stamp Machine $27 Sierra Vista Herald Trade debt $18 DS Waters Debt Unknown First National Bank of Debt Unknown Nevada DYNEGY HOLDINGS: Fitch Lifts Secured Debt Rating One Notch to B+ ---------------------------------------------------------------- Fitch Ratings has taken the following action on Dynegy Inc. and Dynegy Holdings Inc. outstanding credit ratings: DYNH -- Secured revolving credit facility and term loan upgraded to 'BB-' from 'B+'; -- Second priority secured notes upgraded to 'B+' from 'B'; -- Senior unsecured debt affirmed at 'CCC+'. DYN -- Indicative senior unsecured debt and convertible debentures affirmed at 'CCC+'. Dynegy Capital Trust I -- Trust preferred stock affirmed at 'CC'. The ratings are removed from Rating Watch Positive where they were placed on May 9, 2005 following the announcement that the company was exploring strategic alternatives for its midstream natural gas business. The Rating Outlook for the DYN and DYNH securities is Stable. Approximately $4.14 billion of securities is affected. The new ratings reflect Fitch's current assessment of the company's future operating performance, the ranking of the securities within its capital structure, and the incorporation of Fitch's recovery analysis to the existing debt instruments. Considered in the analysis is the expectation that DYN will complete the sale of its natural gas liquids business to Targa Resources, Inc. for $2.475 billion cash, including $125 million in a return of cash collateral. Following the earlier sale of Illinova Corp. Dynegy's sole business will be power generation. DYNH is expected to repay its $593 million secured term loan and $189 million Riverside project debt in the 4th quarter of 2005 following the close of the mid- stream transaction. Further debt reduction is expected in 2006 with utilization of the remaining net proceeds that should approximate $1.6 billion after fees and taxes. While the company has some flexibility under its debt covenants to reinvest asset sale proceeds in replacement assets, given its financial priorities, a more likely scenario is application of all or most of the available cash to strengthen its balance sheet and reduce interest expense. In evaluating the company's ability to meet its financial commitments, Fitch prepared updated financial projections reflecting the expected lower debt levels. Future financial performance will rely on the cash generating ability of its approximately 13,000 megawatt power generation fleet. While balance sheet ratios improve, cash derived credit measures remain weak for the near term and are consistent with the ratings. Also considered in the rating was the adequacy of liquidity, which remains good, and manageable refinancing requirements. Material improvement in the company's credit profile will be dependent on a power market recovery, which Fitch does not expect to occur for the next several years and may not occur in some regions if new capacity is constructed or demand growth slows. New management has made important strides in resolving legacy issues, most notably in 2005, including two significant legal settlements with the Environmental Protection Agency and the Regents of the University of California. The company's contract with Ameren Corp. to provide energy and capacity to serve the Ameren IP's load expires at the end of 2006. Fitch considers the re-contracting exposure as modest and this risk has been reflected in the company's ratings. Fitch also recognizes that following the sale of its midstream operations there is a high likelihood that the company will pursue strategic alternatives including a sale or consolidation to provide benefits of scale. Given current rating levels such prospects do not elevate risk. Fitch rating analysis incorporates an independent wholesale power market model that calculated a value for each generating asset based on the net present value of its projected merchant revenue stream. Fitch also matched the results of this evaluation with other appraisal techniques, including value based on EBITDA multiples and value per kilowatt based on individual plant characteristics. The base case evaluation assumed reasonably conservative operating conditions, while higher enterprise values would result from an improvement in power market fundamentals. The derived valuation has been applied on a water-fall basis to the different classes of debt by priority. EDWARD ARNOLD: List of 11 Largest Unsecured Creditors ------------------------------------------------------ Edward Harold Arnold released a list of his 11 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Taxes $2,803,548 Department of Treasury IRS Philadelphia, PA 19255-0010 General Electric Capital Judgment lien $1,150,000 Corp. against primary 44 Old Ridgebury Road residence and Danbury, CT 06810 Eisenhower Road Value of security: $3,700,000 Senior lien: $3,500,000 Business Air Contract $200,000 288 Chrisitan Street Oxford, CT 06478 Goldstein, Tanen & Trench Legal bills $22,000 MBNA America Credit card $18,986 Service Mark Home repair bill $11,900 Salmon, Ricchezza, Singer $11,738 & Turchi Fine, Kaplan and Black Legal bills $10,000 Lamb McErlane Legal bill $10,000 Ralph S. Gordon, Esq. Legal bills $5,000 American Express Credit card $4,131 Edward Harold Arnold filed for chapter 11 protection on June 2, 2005 (Bankr. E.D. Pa. Case No. 05-17702). Dimitri L. Karapelou, Esq., at Ciardi & Ciardi, P.C., represents Mr. Arnold. Mr. Arnold estimates his assets and liabilities between $1 Million and $10 Million. ENRON CORP: Court Allows Southaven Claims for $56 Million --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved a settlement agreement between Enron Corporation and its debtor-affiliates and Southaven Power, LLC. The salient terms of the Settlement are: a. Claim No. 12195 is disallowed in full for all purposes in the Enron Bankruptcy Cases; b. Claim No. 21120 is allowed against NEPCO as a class 67 claim under the Plan for $27,916,488; c. Claim No. 11937 is allowed against Enron as a class 185 claim under the Plan for $27,916,488; and d. All scheduled liabilities to Southaven in the Enron Bankruptcy Cases arising from the Southaven Facility, the Claims or the Contracts are expunged, to the extent applicable; and e. The parties waive and release each other from all claims in connection with the Southaven Facility, the Claims or the Contracts. On October 11, 2002, Southaven filed three claims asserting contingent and liquidated liability against the Debtors: -- Claim No. 11937 against Enron Corp.; -- Claim No. 12195 against NEPCO Power Procurement Company; and -- Claim No. 21120 against EPC Estate Services, Inc., formerly known as National Energy Production Corporation. The Claims arise from four contracts, each dated December 22, 2000, concerning the engineering and construction of an electrical generating facility in Southaven, Mississippi: 1. Construction Agreement between NEPCO and Southaven; 2. Engineering and Equipment Procurement Agreement between NEPCO Procurement Company, a division of Enron Equipment Procurement Company, and Southaven; 3. Coordination Agreement among NPC, NEPCO and Southaven; and 4. Guaranty Agreement between Enron and Southaven. Pursuant to the Construction Agreement, NEPCO agreed to construct the Southaven Facility on a fixed-price basis, and pursuant to the EEP Agreement, NPC agreed to engineer and procure equipment for the Southaven Facility, also on a fixed-price basis. Under the Coordination Agreement, NEPCO and NPC agreed to coordinate their efforts and be jointly responsible for completing the Southaven Facility. NEPCO and NPC were both obligated to complete the Southaven Facility in exchange for the fixed price under the Construction Agreement plus the fixed price under the EEP Agreement. Enron guaranteed the obligations of NEPCO and NPC under the Agreements. As of the Petition Date, construction of the Southaven Facility had not been completed and a dispute arose as to whether NEPCO and NPPC had sufficient financial resources to perform their contractual obligations. On May 14, 2002, Southaven terminated both the Construction Agreement and the EEP Agreement before NEPCO and NPPC filed for Chapter 11 on May 20. In the Claims, Southaven contends that NPPC, Enron and NEPCO are jointly and severally liable for amounts in excess of the Contract Price expended in completing the Southaven Facility, which is alleged to be no less than $38,525,715. Southaven also seeks reimbursement for costs allegedly incurred in replacing the Construction Agreement and EEP Agreement for about $1,121,142, making the total amount specified in the Claims no less than $39,646,857. Pursuant to the Estimation Procedures approved by the Court, the Debtors proposed that Claims be estimated at $14,443,892. The Debtors note that Southaven had not provided a legal basis, invoices or other information necessary to support recovery of other amounts asserted in the Claims. After exchanging information pertaining to the Claims, the parties have reached a settlement resolving the Claims and the Estimation Objection. 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. (Enron Bankruptcy News, Issue No. 152; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: SourceNet Holds Allowed $1.08 Million Unsecured Claim ----------------------------------------------------------------- On Oct. 15, 2002, SourceNet Solutions, Inc., filed a general unsecured claim -- Claim No. 1578 -- against Enron Corp. for $1,081,677. On November 14, 2003, Enron commenced an adversary proceeding to avoid and recover preferential or fraudulent transfers made prepetition to SourceNet aggregating $969,301. On July 6, 2004, SourceNet filed its answer to the complaint. In January 2005, SourceNet filed an application seeking allowance of a $953,786 administrative expense for amounts allegedly due under a master service agreement with Enron. Pursuant to the terms of the Master Service Agreement, in exchange for certain services, Enron agreed to pay certain fees to SourceNet based on the software SourceNet provided to Enron and the actual services rendered by SourceNet. Enron objected to the Administrative Expense Application contending that: -- SourceNet had been paid in full under the Master Service Agreement; and -- the Administrative Claim is subject to disallowance because SourceNet is the recipient of preferential or constructively fraudulent transfers. Enron disputes the validity and merits of Claim No. 1578 and the Administrative Claim, as well as SourceNet's alleged defenses to the Adversary Proceeding. To avoid litigation costs, uncertainty and delay, the parties negotiated a consensual resolution of their dispute. In a Court-approved stipulation, the parties agree that: 1. Claim No. 1578 will be allowed as an Allowed General Unsecured Claim against Enron (Class 4) for $1,081,677. 2. The Administrative Expense Claim will be reduced and allowed at $15,000 as an Allowed Administrative Expense Claim against Enron. 3. The Objection will be deemed withdrawn. 4. The Adversary Proceeding will be deemed dismissed. 5. Enron represents that the Software provided under the Master Service Agreement was previously destroyed and that Enron did not transfer the Software to any third party. 6. The parties will release each other from all claims and causes of action relating to the Administrative Claim, Claim No. 1578 or the Adversary Proceeding. 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. (Enron Bankruptcy News, Issue No. 152; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON: Parties Settle Cornerstone Propane Claims Dispute -------------------------------------------------------- Cornerstone Propane, L.P. (Coast Energy Group) filed Claim No. 12842 for $10,803,316 against Enron North America Corp. relating to an ISDA Agreement they entered into before the Petition Date. On January 21, 2004, ENA filed a complaint against Cornerstone and objection to the Claim. On June 3, 2004, Cornerstone, its affiliates and subsidiaries filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of New York. The Enron Debtors filed proofs of claim in the Cornerstone Debtors' Chapter 11 cases. On July 27, 2004, ENA filed: (i) Claim No. 1402 for $4,464,022 in the Cornerstone Chapter 11 case; (ii) Claim No. 1161 for $4,900,298 in the Cornerstone Propane Partners, L.P., Chapter 11 case, and (iii) Claim No. 1393 for $436,276 in the Coast Energy Canada, Inc., Chapter 11 case. In addition, Enron Gas Liquids, Inc., filed: (i) Claim No. 1436 for $479,920 in the Cornerstone Chapter 11 case, and (ii) Claim No. 1345 for $479,920 in the CP Partners Chapter 11 case. The Cornerstone Debtors dispute the ENA and the EGLI Claims. To resolve the claims between them, the Reorganized Debtors and the Cornerstone Debtors agree that: (1) ENA Claim No. 1393 will be reduced and allowed as a Class 6 general unsecured claim against Cornerstone for $25,194; (2) ENA Claim No. 1402 will be reduced and allowed as a Class 6 general unsecured claim against Cornerstone for $2,544,886; (3) ENA Claim No. 1161 will be reduced and allowed as a Class 7 general unsecured claim against CP Partners for $2,570,080 less distributions received on account of the distribution of ENA Claim Nos. 1393 and 1402; (4) EGLI Claim No. 1436 will be reduced as a Class 6 general unsecured claim against Cornerstone for $479,920 and will be treated as an allowed claim pursuant to the Cornerstone Plan; (5) EGLI Claim No. 1345 will be reduced and allowed as a Class 7 general unsecured claim against CP Partners for $479,920 less distributions received on account of the distribution of EGLI Claim No. 1436; (6) the Cornerstone Claim will be disallowed and expunged in its entirety; (7) the Cornerstone Scheduled Liability and the ENA/EGLI Scheduled Liability will be expunged; (8) the ENA Complaint is withdrawn with prejudice; (9) the Cornerstone Objections are resolved; and (10) the parties will be deemed to have released and discharged one another from the Claims between them. 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. (Enron Bankruptcy News, Issue No. 152; Bankruptcy Creditors' Service, Inc., 15/945-7000) ERIE TOBACCO: Fitch Rates Subordinated Asset-Backed Bonds at BB --------------------------------------------------------------- Fitch Ratings assigns ratings to the Erie Tobacco Asset Securitization Corporation's issuance of tobacco settlement asset- backed bonds: -- Series 2005A and series 2005E 'BBB'; -- First subordinate series 2005B 'BBB-'; -- Second subordinate series 2005C 'BB'. The series 2005 bonds will total approximately $318.8 million of taxable and tax-exempt bonds. The series 2005A bonds are to be issued as tax-exempt current interest turbo term bonds and are due on June 1, in years 2031, 2038, and 2045. The series 2005E bonds are to be issued as taxable current interest turbo term bonds that are due on June 1, 2028. The first subordinate series 2005B and the second subordinate series 2005C bonds are to be issued as tax-exempt capital appreciation bonds and are due on June 1, 2047 and June 1, 2050, respectively. The third subordinate series 2005D tax-exempt capital appreciation bonds will not be rated. The series 2005 bond proceeds will be used to refund the corporation's series 2000 bonds, pay certain costs of issuance of the series 2005 bonds, provide funds to Erie County as the sole beneficiary of the residual trust, and fund capital interest on series 2005 bonds through Dec. 1, 2005. The ratings of the bonds address the issuer's ability to make timely payment of interest and pay principal on each bond's respective maturity date. The ratings are based on the senior subordinate structure of the bonds issued and the credit quality of the collateral securing the bonds, which consists of annual payments and strategic contribution payments by the three largest domestic tobacco manufacturers - Philip Morris Inc., Reynolds American Inc., and Lorillard Tobacco Co. (the original participating manufacturers) - under a master settlement agreement entered into with the attorneys general of 46 states, the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, the Commonwealth of Northern Mariana Islands, American Samoa, and Guam. Fitch's view of the credit quality of the collateral takes into account two fundamental characteristics of the MSA: since payments under the MSA are based on the relative market share of the domestic tobacco manufacturers, the payment obligation can be considered an industry obligation, which Fitch currently deems to be rated 'BBB-' on an unsecured basis; and the MSA should survive the bankruptcy of a domestic tobacco manufacturer, making it more likely that the manufacturer would continue to make payments under the MSA ahead of its unsecured indebtedness. These are the major characteristics of the MSA that support and, at the same time, limit the rating of the tobacco settlement senior bonds to 'BBB'. Accordingly, the rating on this transaction is linked to and will move with Fitch's future assessment of the tobacco industry's overall credit quality. The credit quality of the industry, in turn, will be significantly influenced by the underlying ratings of the three major domestic tobacco manufacturers and Fitch's view of the relative strength of those three manufacturers within the overall domestic tobacco industry. For a more detailed discussion of the industry, see Fitch Research on 'U.S. Tobacco Industry Report - All Eyes on Mid-2005; Arguments Presented in November, What's Next?' dated Dec. 8, 2004, available on the Fitch Ratings web site at http://www.fitchratings.com/ In addition, since payments under the MSA are subject to various adjustments and offsets based on several factors, including cigarette consumption, Fitch developed a series of cash flow stresses to determine the transaction's ability to make timely payments of interest and to pay principal on the bond's maturity dates. Therefore, the rating is also based on the transaction's ability to withstand cash flow stresses commensurate with a 'BBB' rating for the series 2005A and 2005E bonds, a 'BBB-' rating for series 2005B bonds, and a 'BB' rating for series 2005C bonds. Finally, the ratings reflect the transaction's sound legal and financial structures. FEDDERS CORP: Expects To Report $600,000 Second Quarter Loss ------------------------------------------------------------ Fedders Corporation (NYSE: FJC) reiterated that as has been previously reported, the company has not yet filed its Annual Report on Form 10-K for 2004 or its Quarterly Report on Form 10-Q for the first quarter of 2005. Until those two filings are completed, the company will not be able to file its report for the second quarter and six months of 2005. The Company anticipates that, as a result of increased inventory of room air conditioners in key North American markets carried over from 2004, which was caused by cooler than normal weather in 2004, net sales in the second quarter ended June 30, 2005 will decrease 29% to approximately $127 million from net sales of $178.1 million in the second quarter of 2004. It is anticipated that this inventory has also caused a reduction in net sales for the six months ended June 30, 2005 of 31% to approximately $205 million from net sales of $297.4 million in the six months ended June 30, 2004. The more favorable weather in key North American markets during 2005 is having the effect of clearing inventories through distribution channels and positioning the industry well going into 2006. During the second quarter and six months ended June 30, 2005, the company manufactured fewer room air conditioners than in the prior year in order to reduce inventories. Reduced production has the effect of increasing costs as a result of lower overhead absorption. The company anticipates that, despite increased costs related to lower overhead absorption and inflationary pressures on raw materials, its gross profit margin as a percentage of net sales has increased as a result of more favorable product mix and price increases initiated to offset material cost increases realized during 2004. It is anticipated that the gross margin for the 2005 second quarter increased to approximately 20% versus 16.2% in the prior year period and for the 2005 six-month period to approximately 20% versus 17.0% in the prior year period. The company anticipates a net loss of approximately $600,000 during the quarter ended June 30, 2005, compared to net income of $2.3 million in the quarter ended June 30, 2004. For the six- month period ended June 30, 2005, the company anticipates a loss of $5.4 million versus a loss of $2.9 million in the six months ended June 30, 2004, which included a charge related to the extinguishment of debt of $8.1 million. Fedders Corporation manufactures and markets worldwide air treatment products, including air conditioners, air cleaners, gas furnaces, dehumidifiers and humidifiers and thermal technology products. * * * As reported in the Troubled Company Reporter on Jul. 05, 2005, Fedders Corporation has outstanding $155 million in principal amount of 9-7/8% Senior Notes due 2014, which are governed by an indenture between the Company and U.S. Bank National Association, a national banking association, as trustee. The Company has not yet filed with the Securities and Exchange Commission, its Annual Report on Form 10-K for the fiscal year ended December 31, 2004 or its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005, the filing of which are required under the Indenture. On May 25, 2005, the Trustee issued a notice that the Company's failure to file the Form 10-K is a default under the Indenture and that the Company was required to file the Form 10-K as required under the Indenture no later than June 24, 2005, the thirtieth day following receipt of the Trustee's notice, in order to avoid an event of default on the Senior Notes. The Company was unable to file the Form 10-K on or prior to June 24, 2005, and therefore an event of default has occurred under the Indenture. Upon the occurrence of an event of default, the Trustee or holders of at least 25% of the aggregate principal amount of the Senior Notes outstanding can declare all Senior Notes to be due and payable immediately. Such acceleration would require an additional notice to the Company. The Company is in contact with the Trustee on a periodic basis to advise the Trustee of the status of the filing of its Annual Report. The Company believes it is in compliance with all other terms of the Senior Notes. FEDERAL-MOGUL: Asks Court to Okay Envirochem Settlement Agreement ----------------------------------------------------------------- Pursuant to an Environmental Conservation and Chemical Corporation Site Trust Fund Agreement executed in 1991, the Environmental Conservation and Chemical Corporation Fund was established to hold assets that would be used to fulfill the requirements of certain Consent Decrees entered into by: -- the United States Environmental Protection Agency; -- the Indiana Department of Environmental Management; and -- certain settling defendants, including Federal-Mogul Corporation, in connection with environmental liabilities at the Environmental Conservation and Chemical Corporation Superfund Site in Zionsville, Indiana. Under the EnviroChem Trust Agreement, the various settling defendants would make contributions to the Trust based on periodic assessments levied by the trustees of the Environmental Conservation and Chemical Corporation Site Fund. The Trust uses these contributions to pay cleanup costs relating to the EnviroChem Site. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., relates that on November 3, 2004, the EnviroChem Trustees filed an objection to the confirmation of the Debtors' Third Amended Joint Plan of Reorganization. The EnviroChem Objection alleges that the EnviroChem Trust Agreement is not an executory contract and should not have been included under the Debtors' Plan as an executory contract to be rejected. As part of the EnviroChem Objection, the EnviroChem Trustees asserted an informal claim for $62,003 relating to Federal- Mogul's proportionate share of the 2003 assessments and anticipated future assessments under the EnviroChem Trust Agreement. The Debtors, according to Mr. O'Neill, dispute both the EnviroChem Objection and the EnviroChem Claim. The Debtors eventually entered into negotiations with the EnviroChem Trustees to achieve a global resolution of the issues between them. As a result, the parties entered into a Settlement Agreement, whereby they agree that: (i) the EnviroChem Claim will be allowed as a general unsecured non-priority claim against Federal-Mogul for $62,003; and (ii) the EnviroChem Trustees will withdraw their Objection and file no other objections to the Debtors' Plan or any similar succeeding plan of reorganization. The Debtors ask the U.S. Bankruptcy Court for the District of Delaware to approve their Settlement Agreement with the EnviroChem Trustees. 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. 90; Bankruptcy Creditors' Service, Inc., 215/945-7000) FINOVA CAPITAL: U.S. Trustee Appoints 3-Member Equity Committee --------------------------------------------------------------- Kelly Beaudin Stapleton, the United States Trustee for Region 3, appoints three equity security holders to serve as members of the Official Committee of Equity Security Holders in Finova Capital Corp. and its debtor-affiliates' Chapter 11 cases: (1) First Carolina Investors Attn: Brent D. Baird 9347-A Founders Street Fort Mill, South Carolina 29709 Phone: (803) 802-0890 Fax: (803) 802-0893 (2) Eugene Linden 2821 Chesterfield Place N.W. Washington, D.C. 20008 Phone: (202) 966-9531 Fax: (202) 966-9532 and (203)353-3113 (3) Marvis Owen 811 Brandy Circle Birmingham, Alabama 35214 Phone:(205) 798-6879 Headquartered in Scottsdale, Arizona, The Finova Group, Inc., provides commercial financing to small and mid-sized businesses; other services include factoring, accounts receivable management, and equipment leasing. The firm has three segments: Commercial Finance, Specialty Finance, and Capital Markets. FINOVA targets such markets as transportation, wholesaling, communication, health care, and manufacturing. Loan write-offs had put the firm on shaky ground. The Company and its debtor-affiliates and subsidiaries filed for Chapter 11 protection on March 7, 2001 (U.S. Bankr. Del. 01-00697). Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., represents the Debtors. FINOVA has since emerged from Chapter 11 bankruptcy. Financial giants Berkshire Hathaway and Leucadia National Corporation (together doing business as Berkadia) own FINOVA through the almost $6 billion lent to the commercial finance company. (Finova Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INT'L: Considering Prepackaged Chapter 11 Filing ------------------------------------------------------- Foamex International Inc. (NASDAQ:FMXI) disclosed in a regulatory filing with the Securities and Exchange Commission that it is considering filing for a prepackaged chapter 11 protection, in order to restructure its balance sheet. The Company's primary operating subsidiary, Foamex L.P., has reached an agreement with its senior lender groups led by Bank of America, N.A. and Silver Point Finance, LLC, to amend its credit agreements. The amendments will: -- give Foamex access to the remaining proceeds from the sale of its Rubber & Felt businesses; and -- waive certain default provision in the agreements. Foamex is also engaged in discussions with representatives of an ad hoc committee representing: -- holders of a significant majority, in amount, of its Senior Secured Notes due 2009; and -- holders of a majority, in amount, of its Senior Subordinated Notes due Aug. 15, 2005 and in 2007. The amendments will give the Company more time to continue these ongoing negotiations. These discussions relate to a possible conversion of a substantial portion of the Company's indebtedness into equity. Also, in consideration of its best long-term interest, Foamex did not make the $51.6 million principal payment on its 13-1/2% senior subordinated notes that matured yesterday. DIP Financing In the event the Company commences a chapter 11 case, Bank of America and Silver Point have committed to provide debtor-in- possession financing, which will roll the existing pre-petition facilities, subject to court approval. Bank of America and Silver Point have also agreed to commitments for exit financing upon the Company's emergence from chapter 11, subject to an acceptable plan of reorganization and other standard requirements for similar financing proposals. "[Yester]day's actions are consistent with our plans to position Foamex for future success," said Tom Chorman, President and Chief Executive Officer. "We are pleased to have the ongoing support of our senior lenders and we will continue to negotiate with our other debtholders to achieve a solution to our legacy balance sheet issues that will result in a much stronger company able to generate long-term value. "Importantly, these steps and our ongoing negotiations should have no effect on Foamex's day-to-day operations. We remain committed to continuing to provide our customers with the high level of service and products to which they are accustomed and to maintaining strong supplier relationships," Mr. Chorman continued. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. At Apr. 3, 2005, Foamex International's balance sheet showed a $369.2 million stockholders' deficit, compared to a $358.3 million deficit at Jan. 2, 2005. FOAMEX INT'L: Delays Form 10-Q Filing & Names New CRO ----------------------------------------------------- Foamex International Inc. (NASDAQ: FMXI) notified the Securities and Exchange Commission that its Form 10-Q for the quarter ended July 3, 2005, will be delayed while it is considering a debt restructuring via a prepackaged chapter 11 plan. As a result of Foamex's restructuring talks, the Company's quarterly report on Form 10-Q could not be filed on time because: (i) management had to devote substantial time and effort in connection with the restructuring and, as a result, has been unable to devote adequate time to the completion of the Form 10-Q; (ii) Foamex was not able to finalize its results of operations for the quarter; and (iii) the delay is necessary for Foamex to appropriately consider its restructuring disclosures. The Company expects to report net loss significantly greater than the $2.6 million reported in the same period in 2004. The operating results for the quarter ended July 3, 2005, will reflect gross profit that is approximately $21 million less than in the quarter ended June 27, 2004, as it has been only partially successful at recovering large chemical cost increases through selling price increases. In addition, Foamex is in the process of performing goodwill impairment tests. The Company says that it may be appropriate to take a goodwill impairment charge of up to $35 million in the quarter ended July 3, 2005. Foamex will also report a gain from the previously announced sale of its rubber and felt carpet cushion businesses of approximately $30 million. Foamex had entered into agreements with the lenders under its senior secured credit facility and secured term loan which will allow for the amendments of both facilities. The amendments would give the Company additional liquidity and would waive certain events of default under its facilities. New Chief Restructuring officer The Company has named Gregory J. Christian, Executive Vice President, General Counsel and Secretary, as its new Chief Restructuring Officer. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. At Apr. 3, 2005, Foamex International's balance sheet showed a $369.2 million stockholders' deficit, compared to a $358.3 million deficit at Jan. 2, 2005. GENEVA STEEL: Ch. 11 Trustee Wants to Probe Albert Fried & Co. -------------------------------------------------------------- James T. Markus, the chapter 11 trustee of Geneva Steel LLC, asks the U.S. Bankruptcy Court for the District of Utah, Central Division, for permission to conduct an examination of Albert and Christina Fried under Rule 2004 of the Federal Rules of Bankruptcy Procedure. The Frieds' are principals of Albert Fried & Co., and hold a secured claim against the Debtor. Mr. Markus will investigate the Frieds' past dealings with the Debtor. The nature of these relationships may determine the ultimate treatment of Albert Fried & Co.'s claims. Mr. Fried served as a member of the Debtor's Board of Directors and had an important role in the Debtor's operations for several years. In addition, Mr. Fried managed the activities of Steelman, Inc., Steelman Realty, LLC, Al Fried & Co., and Fried Group, LLC. The Debtor had dealt with these companies in the past. Williams Farm Property In 2001, the Debtor transferred its Williams Farm property to Steelman, Inc., pursuant to a purchase option agreement with the Debtor and Albert Fried & Co., Steelman's affiliate. Albert Fried & Co. had the option to purchase the property for $1 million. At the time of the actual purchase, the purchase option price had been reduced to $75,000. The Trustee claims that the $1 million purchase option granted to Albert Fried & Co. was far less than the market value of the property. An independent appraisal of Williams Farm pegs the value of the property at $4.9 million. The Trustee further claims that: a) the Debtor did not receive any valid consideration for granting the purchase option to Albert Fried & Co.; and b) the Debtor did not receive any equivalent consideration for the reduction of the purchase option price from $1 million to $75,000. Other Matters Albert Fried & Co.'s claims against the Debtor may be also be affected by these matters: a) a business relationship, established in Nov. 2003, between The Fried Group, LLC, and the Debtor's CEO Ken C. Johnsen, Debtor's counsel Stephen Garcia, and Joseph Cannon. Mr. Johnsen and Mr. Cannon were given a profits interest for their in-kind contributions to this business. b) a consulting agreement between with the Debtor's former CEO Ken Johnsen and Joseph Cannon. c) a repricing of the exit financing loan to be provided by Albert Fried Co., wherein the Debtor did not receive any valid consideration. As part of his examination, the Trustee wants the Frieds to deliver a laundry list of documents. A copy of that laundry list is available at no charge at http://researcharchives.com/t/s?c8 Headquartered in Provo, Utah, Geneva Steel LLC owns and operates an integrated steel mill. The Company filed for chapter 11 protection on January 25, 2002 (Bankr. Utah Case No. 02-21455). Andrew A. Kress, Esq., Keith R. Murphy, Esq., and Stephen E. Garcia, Esq., at Kaye Scholer LLP, represent the Debtor in its chapter 11 proceedings. When the Company filed for protection from its creditors, it listed $262 million in total assets and $192 million in total debts. GLOBAL CROSSING: June 30 Balance Sheet Upside-Down by $71 Million ----------------------------------------------------------------- Global Crossing (NASDAQ: GLBC) reported financial results for the second quarter of 2005, including progress on core revenue growth, cash management and margins. "We're proud of the results we're announcing, which validate our strategy and underscore our execution," said John Legere, Global Crossing's chief executive officer. "Our success in expanding the 'invest and grow' portion of our business -- which targets global enterprise and carrier customers with the converged IP services in which we specialize -- plus strong gross margins and cash performance demonstrate our increasing competitiveness in the marketplace. We'll continue on this focused path." Revenue Revenue for the second quarter of 2005 was $499 million, representing growth in the company's "invest and grow" category and expected declines in the "manage for margin" and "harvest and exit" business areas. Revenue declined approximately 5 percent compared with the first quarter of 2005, when revenue was reported at $526 million, and 21 percent compared with second quarter of 2004, when revenue was reported at $628 million. "We are very pleased with our progress, as we continue to concentrate on 'invest and grow' revenue and as the associated gross margins grow," continued Mr. Legere. "Our core business is growing as we de-emphasize the lower margin services." Revenue in the company's "invest and grow" category -- that is, Global Crossing's core businesses serving global enterprises, collaboration and carrier data customers through direct and indirect channels -- was $274 million in the second quarter of 2005, roughly flat compared to $273 million in the first quarter of 2005 and up from $263 million in the second quarter of 2004. The year-over-year increase in the "invest and grow" category included a $16 million increase in revenues generated outside of Global Crossing (UK) Telecommunications Ltd., partially offset by a revenue decline of $5 million for GCUK. Second quarter revenue in the "invest and grow" category was reduced by $3 million as a result of a one-time, non-cash revenue adjustment on a deferred revenue contract. Without this adjustment, "invest and grow" revenue would have grown 5 percent year over year. New contracts signed or announced for the "invest and grow" business in the second quarter included the UK's Forestry Commission, which utilizes Global Crossing's managed IP solutions, and MT Contact Center, a leading contact center services and solutions provider based in Chile, which is leveraging Global Crossing's advanced voice solutions to expand its offering to international companies. Global Crossing announced during the second quarter that it deployed global IP VPNs for Serta Mattresses and Sonus Networks, delivering seamless converged features, scalability and lowered total cost of ownership to these global enterprises. And Loral Skynet signed an agreement for expanded Fast-Track service capabilities, enabling the leading satellite communications provider to deliver total converged IP solutions to its customers around the world. Contract renewals and extensions also included Lockheed Martin and Panavision. During the second quarter of 2005, the company's GCUK subsidiary completed a final, planned review according to its contract with its largest customer, the Foreign and Commonwealth Office. The review secures the remaining revenue from the contract through May 2010. The review confirmed that Global Crossing continues to deliver managed services at competitive rates. In line with the company's decisive actions to improve profitability, wholesale voice or Global Crossing's "manage for margin" business saw a 10 percent sequential reduction in revenue to $197 million in the second quarter of 2005, from $219 million in the first quarter. When compared to the second quarter of 2004, this revenue declined 39 percent from $323 million. Gross Margin Gross margin as a percentage of revenue was 38 percent in the second quarter of 2005, roughly flat compared to 39 percent reported for the first quarter of 2005 and up from 28 percent for the second quarter of 2004. Gross margin dollars were $188 million, a 9 percent sequential decline from the first quarter of 2005, when gross margin dollars were $206 million. The sequential decline comprised $1 million from "invest and grow," $13 million from wholesale voice and $4 million from the company's "harvest or exit" revenue category. Compared year over year, gross margin dollars improved 6 percent from $178 million, despite a revenue decline of $129 million. Within the "invest and grow" category, gross margins were $148 million or 54 percent of "invest and grow" revenue in the second quarter of 2005. This compares with $149 million or 54 percent of such revenue in the first quarter of 2005 and $130 million or 49 percent of revenue in the second quarter of 2004. Excluding a one-time, non-cash revenue adjustment of $3 million, "invest and grow" gross margins would have been $151 million for the second quarter. This strong margin performance demonstrates the company's focus on its higher-margin core business, which includes premium products and managed services. Gross margin for the "manage for margin" category was $25 million or 13 percent of revenue, compared to 17 percent or $38 million in the first quarter of 2005 and 8 percent or $27 million in the second quarter of 2004. The sequential decline in absolute gross margin was driven by the planned reduction of wholesale voice revenue and some fluctuations in the company's cost of access expenses. Global Crossing reduced its cost of access charges by 3 percent sequentially to $311 million in the second quarter of 2005, from $320 million in the first quarter of 2005. Cost of access declined 31 percent year over year, from $450 million in the second quarter of 2004. As in the first quarter, sequential and year-over-year reductions in access costs resulted primarily from lower wholesale voice volume, continued improvement in access costs associated with all business categories, and the company's strategic shift toward a greater ratio of higher-margin, IP and managed services revenue. The company continues to aggressively manage access spending by optimizing its access network and extending the access network closer to the customer. Operating Expenses Operating expenses for the second quarter of 2005 were $191 million, compared with $208 million in the first quarter of 2005 and $189 million for the second quarter of 2004. The $17 million sequential improvement was primarily driven by first quarter items including a one-time $24 million increase in Global Crossing's real estate restructuring reserve, a $2 million legal settlement gain and an increase of $5 million in excess medical benefits. Third-party maintenance costs for the second quarter of 2005 were $24 million, compared with $26 million in the first quarter of 2005 and $27 million for the second quarter of 2004. Earnings For the second quarter of 2005, Adjusted EBITDA was reported at a loss of $27 million, compared with a loss of $28 million in the first quarter of 2005 and a loss of $38 million in the second quarter of 2004. Without unusual items in the second quarter, Adjusted EBITDA would have been a loss of $26 million. In the first quarter of 2005, unusual operating expense items mentioned above would have improved Adjusted EBITDA to a loss of $12 million. Absent the unusual items for both quarters, Adjusted EBITDA would have declined by $14 million sequentially, primarily as a result of reduced gross margin. The year-over-year improvement in Adjusted EBITDA was primarily attributable to gross margin increases. Consolidated loss applicable to common shareholders in the second quarter of 2005 was $76 million, compared to losses of $107 million in both the first quarter of 2005 and the second quarter of 2004. The sequential improvement primarily comprised $25 million of other income including gains from sales of assets, $8 million from pre-confirmation contingencies, and $4 million in depreciation and amortization. These gains were offset by a $6 million increase in income tax. The year-over-year variance resulted from Adjusted EBITDA improvements of $11 million, $6 million of depreciation and amortization, $11 million in other income, $10 million in gains from pre-confirmation contingencies and $10 million in income from discontinued operations. These gains were offset by a $15 million increase in net interest expense and a $2 million increase in income taxes. Capital Expenditures For the second quarter of 2005, cash paid for capital expenditures and capital leases was $26 million, compared with $27 million in the first quarter of 2005 and $27 million in the second quarter of 2004. Strategic investments during the second quarter included deployment of state-of-the-art transport equipment, and installation of next-generation audio conferencing bridges and IP core and edge platforms. Global Crossing's IP traffic volume stood at 105 gigabits per second at the end of the second quarter, and 56 percent of the company's voice traffic was carried on its Voice over Internet Protocol backbone. Global Crossing also decommissioned one of its time division multi-plexing switches located in Newark, New Jersey. At the same time, Global Crossing increased its VoIP capacity, paving the way toward an all-IP voice network. Cash and Liquidity As of June 30, 2005, unrestricted cash and cash equivalents were $305 million. Restricted cash was $23 million. The company generated $28 million of cash in the quarter. Of this amount, $22 million in net proceeds was from the sale of its Trader Voice business. An additional $32.5 million was prepayment for Global Crossing's Small Business Group, representing a portion of the purchase price. Global Crossing anticipates the completion of the SBG sale and receipt of the remaining proceeds in the third quarter. Global Crossing's net cash used in operating and financing activities in the second quarter of 2005 totaled $3 million, compared to $57 million in the first quarter. GCUK's net cash provided by operating and financing activities was $12 million, after paying $21 million in interest associated with the company's high yield debt. Global Crossing's business excluding GCUK used $15 million in operating and financing activities. This cash flow was driven by net loss from operations and repayment of capital leases. Net cash provided by investing activities amounted to $33 million in the second quarter of 2005, specifically resulting from asset sales proceeds, purchases of property and equipment, and changes in restricted cash. Excluding asset sales proceeds in the second quarter, the company would have used $22 million in investing activities for capital expenditures. This compares to $29 million cash used in investing activities for the first quarter. Finally, the company experienced a $2 million reduction in cash as a result of the effect of exchange rate changes on cash and cash equivalents. The company's cash burn has slowed since the first quarter as a result of working capital timing and improvements both in operating cash flow and in "days of sales outstanding" on accounts receivable. Global Crossing provides a summary of the specific financial guidance for 2005 that it provided on March 16, 2005, and a comparison to results during the first half of the year: 2005 Guidance First Half Metric (in millions) Performance ------ ------------- ----------- Revenue $1,800-$1,950 $1,025 "Invest and Grow" Revenue $1,120-$1,195 547 Wholesale Voice Revenue $615-$685 416 Harvest/Exit Revenue $65-$70 62 Gross Margin % 36%-41% 38% Adjusted EBITDA ($145-$115) (55) Cash Use ($180-$150) (60) Capital Expense/Leases $95-$100 53 Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on December 9, 2003. At June 30, 2005, Global Crossing's total liabilities exceed its total assets by $71 million. GLOBAL CROSSING: Representative Settles Claims Totaling $81.6 Mil. ------------------------------------------------------------------ Pursuant to certain settlement agreements, the GX Representative informs the Court that it has resolved 26 claims aggregating $81,637,722, which claims were covered in previously filed omnibus objections. The GX representative resolved 16 claims pursuant to certain settlement terms: Claim Claim Claimant Number Amount Settlement Terms -------- ------ ------ ---------------- WXIII/PHL 1209 $2,821,861 WXIII will be deemed to Real Estate Ltd. hold an Allowed General Partnership Unsecured Claim for $2,571,209. New England 5071 unknown Claim will be deemed an Digital Allowed Administrative Distribution Inc. Expense Claim for $35,000. Blufftone 3977 83,986 Claim Nos. 3977 and 3978 Telephone Co. 3978 481,652 will be allowed for and Hargray $45,000 and $255,000. Telephone Co. GX will pay Hargray and Bluffton affiliates $80,500, consisting of 24 equal installments of $3,354, payable on each month starting on July 1, 2005. Gaedeke Holdings 363 8,942 Claim No. 11148 will be Holdings Ltd. 5436 3,786 deemed an Allowed 9905 8,942 Convenience Claim for 11148 8,942 $8,942. Gaedeke will be entitled to a distribution on Claim No. 11148. Claim Nos. 363, 5436, and 9905 will be expunged and disallowed. National Assoc. 5051 160,000 Claimant will be deemed of Manufacturers to hold an Allowed General Unsecured Claim for $166,254. Citizens 9628 58,534,556 Claimant will be deemed Communication Co. to hold an Allowed General Unsecured Claim of $21,890,150. Park Centre 5924 250,000 Claim Nos. 5924 and 5923 Properties, LLC 5923 121,304 will be deemed as Allowed General Unsecured Claims for $250,000 and $121,304. Carlyle Market 7435 413,878 Claimant will be deemed Post Tower, LLC to hold an Allowed General Unsecured Claim for $295,032. John Burns 1906 600,341 Claimant will be deemed Construction Co. to hold an Allowed General Unsecured Claim for $300,000. Teligent Estate 9731 10,000,000 Claimant will be deemed Representative to hold a General Unsecured Claim for $2,875,000. PWREF/MCC-China 4107 256,113 Claimant will be deemed Basin L.L.C. to hold an Allowed General Unsecured Claim for $221,714. Furthermore, the GX Representative informs Judge Gerber that seven administrative expense claims have been settled or withdrawn by claimants: Claimant Claim No. Asserted Amount -------- --------- --------------- Gila Valley Resources 9922 $5,983 Jennings 10151 636 Aspect Communications 10192 30,844 Wil Bijil 10579 undetermined AT&T Corporation 10601 7,381,068 Avaya Inc. 10602 214,394 Winstar Holdings, Inc. 10678 149,002 The GX Representative also resolved three tax claims: Claimant Claim No. Asserted Amount -------- --------- --------------- South Carolina Dep't. of Revenue 10178 $2,225 Clark County, Indiana 10571 2,500 Ohio Dep't. of Taxation 11127 96,769 Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on December 9, 2003. At June 30, 2005, Global Crossing's total liabilities exceed its total assets by $71 million. GS MORTGAGE: Fitch Affirms Low-B Rating on Six Certificate Classes ------------------------------------------------------------------ Fitch Ratings affirms GS Mortgage Securities Corp. II Series 2004- C1: -- $406.3 million class A-1 at 'AAA'; -- $190.5 million class A-2 at 'AAA'; -- $168.4 million class A-1A at 'AAA'; -- Interest only classes X-1 and X-2 at 'AAA'; -- $20.1 million class B at 'AA'; -- $7.8 million class C at 'AA-'; -- $16.7 million class D at 'A'; -- $12.3 million class E at 'A-'; -- $13.4 million class F at 'BBB+'; -- $7.8 million class G at 'BBB'; -- $7.8 million class H at 'BBB-'; -- $5.6 million class J at 'BB+'; -- $3.3 million class K at 'BB'; -- $3.3 million class L at 'BB-'; -- $4.4 million class M at 'B+'; -- $3.3 million class N at 'B'; -- $3.3 million class O at 'B-'. Fitch does not rate the $13.4 million class P. The rating affirmations reflect the minimal reduction of the pool collateral balance since issuance. As of the June 2005 distribution date, the pool has paid down 0.5%, to $887.9 million from $892.3 million at issuance. There are no delinquent or specially serviced loans. Three loans were credit assessed by Fitch at issuance: Water Tower Center (6.2%), The DDR Portfolio (5.4%), and The Inland Portfolio (2.6%). Fitch maintains the investment grade credit assessment on these loans. The Water Tower Place loan is secured by a regional anchored shopping mall located in Chicago, IL. There are a total of six pari passu notes A-1 through A-6 with the A-3 and A-4 pieces included in the trust. The year-end 2004 Fitch stressed debt service coverage ratio has increased to 1.44 times (x) compared to 1.38x at issuance. The occupancy remains strong at 97%. The DDR Portfolio loan is secured by 10 anchored retail malls located in eight states. There are three pari passu notes A-1, A- 2, and A-3 with the A-2 piece included in the trust. The YE 2004 Fitch stressed DSCR has slightly decreased to 1.52x compared to 1.55x at issuance. Occupancy as of YE 2004 the property was 95%. The Inland Portfolio consists of three cross-collateralized and cross-defaulted loans secured by three anchored retail properties. The YE 2004 Fitch stressed DSCR decreased to 1.33x compared to 1.44x at issuance due to an increase in tenant improvements in the Meadowmont Village property. Raw space, formerly under a master lease, was built out to make the space more marketable. In addition, four new tenants were signed at the end of 2003 with the majority of the improvements paid in 2004. Occupancy as of YE 2004 was 89.1%. HAYES LEMMERZ: Will Discuss 2nd Quarter Earnings on Sept. 8 ----------------------------------------------------------- Hayes Lemmerz International, Inc. (Nasdaq: HAYZ) reported that it will host a telephone conference call to discuss the Company's fiscal year 2005 second quarter financial results on Thursday, September 8, 2005, at 10:00 a.m. (ET). To participate by phone, please dial 10 minutes prior to the call: (800) 399-3882 from the United States and Canada (706) 643-7483 from outside the United States Callers should ask to be connected to Hayes Lemmerz earnings conference call, Conference ID#8307804. The conference call will be accompanied by a slide presentation, which can be accessed that morning through the Company's Web site, in the Investor Kit presentations section at: http://www.hayes-lemmerz.com/investor_kit/html/presentations.html A replay of the call will be available from 1:00 p.m. (ET), September 8, 2005 until 11:59 p.m. (ET), September 15, 2005, by calling (800) 642-1687 (within the United States and Canada) or (706) 645-9291 (for international calls). Please refer to Conference ID#8307804. An audio replay of the call is expected to be available on the Company's Web site beginning Tuesday, September 13, 2005. Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Del. Case No. 01-11490) and emerged in June 2003. Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meager & Flom represent the Debtors. (Hayes Lemmerz Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on April 11, 2005, Moody's Investors Service assigned a B2 rating for HLI Operating Company, Inc.'s proposed $150 million guaranteed senior secured second-lien term loan facility. HLI Opco is an indirect subsidiary of Hayes Lemmerz International, Inc. The rating outlook remains stable. While the company has reaffirmed its earning guidance and the senior implied and guaranteed senior secured first-lien facility ratings remain unchanged at B1, Moody's determined that widening of the downward notching of HLI Opco's guaranteed senior unsecured notes was necessary to reflect additional layering of the company's debt. The senior unsecured notes are effectively subordinated to the proposed new senior secured second-lien term facility, and approximately $75 million of higher-priority debt will be added to the capital structure. These specific rating actions were taken by Moody's: * Assignment of a B2 rating for HLI Operating Company, Inc.'s proposed $150 million guaranteed senior secured second-lien credit term loan C due June 2010; * Downgrade to B3, from B2, of the rating for HLI Operating Company, Inc.'s $162.5 million remaining balance of 10.5% guaranteed senior unsecured notes maturing June 2010 (the original issue amount of $250 million was reduced as a result of an equity clawback executed in conjunction with Hayes Lemmerz's February 2004 initial public equity offering); * Affirmation of the B1 ratings for HLI Operating Company, Inc.'s approximately $527 million of remaining guaranteed senior secured first-lien credit facilities, consisting of: * $100 million revolving credit facility due June 2008; * $450 million ($427.3 million remaining) bank term loan B facility due June 2009 (which term loan is still expected to be partially prepaid through application of about half of the net proceeds of the proposed incremental debt issuance); * Affirmation of the B1 senior implied rating; * Downgrade to Caa1, from B3, of the senior unsecured issuer rating (which rating does not presume the existence of subsidiary guarantees). INTERSTATE BAKERIES: Gets Court Nod to Reject 7 Real Estate Leases ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of Missouri gave Interstate Bakeries Corporation and its debtor-affiliates permission to reject non-residential real property leases for seven locations effective as of July 27, 2005, to reduce postpetition administrative costs. The seven Real Property Leases to be rejected are: Landlord Address of Leased Premise Lease Date -------- ------------------------- ---------- Mary Grady 415 South Hancock, 03/23/1981 Rockingham, North Carolina TRICO THC II, LTD. 1251-K SO Beach Boulevard, 04/16/1986 La Habra, California John E. Craig and 3018 Charlotte Highway, 11/18/1987 Altie R. Craig Monroe, North Carolina Homer Cox 724 4th Street, Salem, 11/07/1988 Virginia Harvey Morris c/o 4911 Rozelles Ferry, 10/02/1992 Stock Yard Charlotte, North Carolina Restaurant Steve Massengale 3398 Anderson Road, 10/15/1993 Greenville, South Carolina Priscilla Lockhart 150 Fairplains Road, North 08/15/1994 Wilkesboro, North Carolina 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. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) JAMES KENNEDY: List of 8 Largest Unsecured Creditors ------------------------------------------------------ James J. Kennedy released a list of his 8 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Claudia J. Kennedy $1,248,000 52 Cheyenne Drive Nashua, NH 03063 IRS $225,000 JFK Building P.O. Box 9112 Boston, MA 02203 Massachusetts Department of Revenue $30,000 Bankruptcy Unit P.O. Box 9564 Boston, MA 02114-9564 Michael Donovan $20,000 American Express $5,936 Roland Millard $5,750 Bill Barry $1,500 American Express $157 James J. Kennedy filed for chapter 11 protection on May 19, 2005 (Bankr. D. Mass. Case No. 05-43405). Joseph H. Baldiga, Esq., at Mirick, O'Connell, DeMallie, Lougee, represents Mr. Kennedy. Mr. Kennedy estimates his assets and liabilities between $1 million and $10 million. JENNINGS OF MICHIGAN: Case Summary & 20 Largest Creditors --------------------------------------------------------- Debtor: Jennings of Michigan, Inc. 5903 Andrew Drive Metamora, Michigan 48455 Bankruptcy Case No.: 05-34106 Type of Business: The Debtor offers products and services for outdoor recreation. See http://www.jenningsmi.com/ Chapter 11 Petition Date: August 15, 2005 Court: Eastern District of Michigan (Flint) Judge: Walter Shapero Flint Debtor's Counsel: Ryan D. Heilman, Esq. Schafer and Weiner, PLLC 40950 Woodward Avenue, Suite 100 Bloomfield Hills, Michigan 48304 Tel: (248) 540-3340 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Qualite Sports Lighting, $165,788 Inc. 250 Industrial Drive Hillsdale, MI 49242 Park Structures, Inc. $137,854 430 Chestnut Street Chattanooga, TN 37402 Burk Company, LLC $107,570 660 Van Dyne Road Fond Du Lac, WI 54936 National Recreation Systems $62,960 Inc. Wabash Manufacturing, Inc. $55,699 Unique Surfacing $44,387 Mitch Burley Enterprises Sub-contract $39,886 installer Connely Crane Rental Sub-contract $13,453 equipment Roberts & Joan Nagle Covenant not to $13,333 compete Park Structures, LLC Catalog mailing $12,454 National Recreation Systems Sub-contract $9,500 installation American Flagpole $8,963 Americana Building Products $8,475 Belding Bleacher Erectors Sub-contract $8,150 installation U.S. Bank VISA Credit card $6,997 PW Athletic Co. $6,284 Janice B. Wiley Commission $5,850 Barazsu & Cross Professional services $4,000 Denman Contracting Sub-contract $4,000 installation Tessier Recreo-Parc, Inc. Vendor $3,612 KEYSTONE CONSOLIDATED: Gets Court Nod to Reimburse Exit Lender -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Wisconsin gave Keystone Consolidated Industries, Inc., and its debtor- affiliates permission to reimburse two groups of exit lenders for costs and expenses paid in putting together an exit facility package. The Court allows the Debtors to reimburse up to $250,000 to each of the two lender groups. As reported in the Troubled Company Reporter yesterday, Keystone obtained a commitment from a group of exit lenders for an $80 million credit facility. This credit facility will be used to extinguish the portion of Keystone's existing debtor-in-possession credit facilities that will not be converted to equity and to provide working capital upon emergence from bankruptcy. Headquartered in Dallas, Texas, Keystone Consolidated Industries, Inc., makes carbon steel rod, fabricated wire products, including fencing, barbed wire, welded wire and woven wire mesh for the agricultural, construction and do-it-yourself markets. The Company and its affiliates filed for chapter 11 protection on February 26, 2004, (Bankr. E.D. Wisc. Case No. 04-22422). Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., and David L. Eaton, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, it listed $196,953,000 in total assets and $365,312,000 in total debts. LAC D'AMIANTE: Wants Until November 8 to File Chapter 11 Plan ------------------------------------------------------------- Lac D'Aminate Du Quebec Ltee and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, for an extension of their time until Nov. 8, 2005, to file a chapter 11 plan. The Debtors tell the Court that they are currently negotiating with all parties-in-interest to come up with a viable and confirmable plan. Lac D'Amiante tells the Court that it's not aware of any opposition to the requested extension. Headquartered in Tucson, Arizona, Lac d'Amiante Du Quebec Ltee, fka Lake Asbestos of Quebec, Ltd., and its affiliates, are all non-operational and dormant subsidiaries of ASARCO Inc., nka ASARCO LLC. ASARCO mines, smelts and refines copper and molybdenum in the United States and Peru. The Company and its debtor-affiliates filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case No. 05-20521). Nathaniel Peter Holzer, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they each estimated assets and debts of more than $100 million. ASARCO filed for chapter 11 protection on August 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207) and has asked Judge Schmidt to jointly administer the subsidiary cases with its chapter 11 proceeding. MAYTAG CORP: Board Recommends Whirpool's $2.7 Bil. Merger Proposal ------------------------------------------------------------------ Maytag Corporation's (NYSE: MYG) Board of Directors has withdrawn its recommendation of the pending $14 cash merger deal with Triton Acquisition Holding, the acquisition vehicle formed by the Ripplewood Holdings led investor group. Maytag said that its Board has determined that in light of the $21 per share Whirlpool Corporation binding, irrevocable proposal, which was announced on Aug. 10, 2005, it would be inconsistent with the Maytag Board's exercise of its fiduciary duty for the Board to fail to withdraw its recommendation of the Triton $14 per share deal. The Maytag Board now recommends a vote against the Triton deal. In making these determinations, the Maytag Board was assisted by Lazard, its financial advisor, and by Wachtell, Lipton, Rosen & Katz and Cleary Gottlieb Steen & Hamilton, its special legal counsel. Whirlpool Corp., increased its bid three times to a top-dollar takeout valued at $2.7 billion. Whirlpool will pay $1.7 billion in equal amounts of cash and stock for Maytag, as well as assuming $977 million of Maytag's debt. Whirlpool made its latest offer on August 10, unexpectedly raising its bid to $21 for each Maytag share from $20 each. $40 Million Termination Fee Maytag gave notice to Triton of the Maytag Board's determinations. As a result, Maytag will be entitled to terminate the existing Triton merger agreement if the Maytag Board makes similar determinations (taking into account any revised proposal Triton may make) at least five business days following Triton's receipt of such notice. In addition to Maytag's termination right, as a result of the change in recommendation by the Maytag Board, Triton has the right to terminate the Triton merger agreement immediately. In the event of such a termination by Maytag or by Triton, Triton will be entitled to a $40 million fee from Maytag, which Whirlpool has agreed to pay. Whirlpool can afford to pay more for its smaller rival because of hundreds of million of dollars in expected cost savings, on everything from raw materials to manufacturing to advertising, The Deal reports. $15 Million for Retention As previously reported, in addition to its agreement to pay the $40 million break-up fee payable to Triton, Whirlpool has also agreed to provide Maytag with up to $15 million for retention of Maytag employees and has agreed to pay a "reverse break-up fee" of $120 million if the transaction cannot be closed due to an inability to obtain regulatory approval. The merger of the nations No. 1 and No. 3 appliance makers is expected to draw close regulatory scrutiny. Aug. 30 Shareholder Meeting Maytag also announced that as a result of Whirlpool's August 10, 2005, proposal and related developments, Maytag is postponing the special meeting of stockholders scheduled for Friday, August 19, 2005, to August 30, 2005, in order to permit Maytag to file and distribute updated proxy materials and to allow time for adequate dissemination and absorption of information concerning these important developments. If the merger agreement between Maytag and Triton is terminated, the postponed special meeting will be cancelled. About Whirlpool Whirlpool Corporation -- http://www.whirlpoolcorp.com/-- is the world's leading manufacturer and marketer of major home appliances, with annual sales of over $13 billion, 68,000 employees, and nearly 50 manufacturing and technology research centers around the globe. The company markets Whirlpool, KitchenAid, Brastemp, Bauknecht, Consul and other major brand names to consumers in more than 170 countries. About Maytag Maytag Corporation is a leading producer of home and commercial appliances. Its products are sold to customers throughout North America and in international markets. The corporation's principal brands include Maytag(R), Hoover(R), Jenn-Air(R), Amana(R), Dixie- Narco(R) and Jade(R). At July 2, 2005, Maytag Corp.'s balance sheet showed a $77.4 million of stockholders' deficit, compared to a $75 million deficit at Jan. 1, 2005. * * * As reported in the Troubled Company Reporter on July 21, 2005, Fitch Ratings placed Maytag Corporation's approximately $969 million of 'BB' rated senior unsecured notes on Rating Watch Evolving. This action followed the July 17, 2005 announcement that Whirpool Corporation has made a proposal to acquire Maytag for $2.3 billion in cash and stock and reflects the potential for either an upgrade or downgrade given the various competing offers for Maytag and the credit profile that could result. Whirlpool Corporation has made a proposal to acquire Maytag for $17 per share plus the assumption of $969 million of Maytag's debt for a total transaction valued at $2.3 billion. This bid follows two other bids: Initially, on May 19, 2005, Maytag entered into a definitive agreement to be acquired by a private investor group led by Ripplewood Holdings LLC for $14 per share cash. Subsequently, on June 21, 2005, Maytag announced that it had 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 July 20, 2005, Standard & Poor's Ratings Services placed its 'BBB+' long-term and 'A-2' short-term corporate credit and other ratings on home appliance manufacturer Whirlpool Corp. on CreditWatch with negative implications. At the same time, Standard & Poor's revised its CreditWatch status of home and commercial appliance manufacturer Maytag Corp. to developing from CreditWatch negative. 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. MIRANT CORP: Mirant Bowline to Recover $4.9 Mil. from Insurer ------------------------------------------------------------- On January 17, 2004, Unit 2 at the facility of Mirant Bowline, LLC, suffered a serious equipment failure that forced the unit offline. Bowline submitted a claim pursuant to its all risk property insurance policy to certain insurers, including Underwriters at Lloyd's and Companies Collective. An adjuster was assigned to evaluate the claim. Michelle C. Campbell, Esq., at White & Case LLP, in Miami, Florida, relates that the Adjuster's March 10, 2004, report to the Insurers estimated repair costs at $2,000,000, which is below the Policy's $5,000,000 property damage deductible. Thus, repair costs sought in the Claim were determined to be unrecoverable. However, the time required to repair and restore the unit to service exceeded the Policy's 60-day business interruption deductible, Ms. Campbell relates. So, Bowline also submitted an interruption claim for losses suffered in excess of the 60-day deductible to the Insurers. The claim was assigned to the Adjuster. In January 2004, the Debtors began meeting with the Adjuster to discuss the validity and amount of the Interruption Claim. Ms. Campbell reports that the Debtors were successful in demonstrating to the Adjuster an Interruption Claim for $6,537,022, representing: -- $1,086,145 in energy payment losses; -- $120,504 in ancillary service payment losses; and -- $5,330,373 in capacity payment losses. The Adjuster issued a report to the Insurers recommending payment of the entire amount without reduction. Underwriters at Lloyd's, as Lead Insurer, accepted and approved the Adjuster's recommendation on July 13, 2005. Ms. Campbell notes that the Insurers have tendered to Bowline a $1,647,259 partial payment. Therefore, Bowline seeks the Court's permission to execute documents necessary and proper to secure payment of $4,889,764, representing the outstanding sum of the covered losses. 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. 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Wants to Enter into New Consent Decree with DEC ------------------------------------------------------------ New York Debtors Mirant Corporation, Mirant New York, Inc., Mirant Lovett, LLC, and Mirant Bowline, LLC, ask the U.S. Bankruptcy Court for the Northern District of Texas for permission to enter into, and perform obligations under, a new Consent Decree with the New York State Department of Environmental Conservation. The Lovett and Bowline Plants In July 1999, Mirant Americas Generation, LLC, purchased various energy producing assets from Orange & Rockland Utilities, Inc., including three power plants -- "Lovett 4", "Lovett 5" and the Bowline generating facility. The Lovett plants are coal-burning power plants used to produce electric energy located on the Hudson River in New York. Lovett 5 can be converted from a coal burning power plant to a natural gas fired power plant. The Bowline plant, a 1,133-MW dual fueled facility comprising of two intermediate units, is located in Haverstraw, New York. Department of Environmental Conservation According to Jason D. Schauer, Esq., at White & Case LLP, in Miami, Florida, the DEC is responsible for the enforcement of the Environmental Conservation Law of the State of New York and Title 6 of the New York State Official Compilation of the Codes, Rules and Regulations. One of the DEC's specific responsibilities is to maintain the air quality of New York and to abate and control air pollution pursuant to ECL Article 19. Mr. Schauer reports that the Lovett and the Bowline plants are "stationary source[s]," as defined under the Clean Air Act and Section 200.1(cf) of 6NYCRR, and therefore must meet the standards for smoke emissions under ECL Sections 19-0301 and 19- 0303, and Section 227-1.3 of the 6NYCRR. Among other things, the Lovett and the Bowline plants must self- report excess opacity incidents pursuant to Section 227-1.4(c), Mr. Schauer informs the Court. Mr. Schauer relates that as required under 6NYCRR Part 227, the New York Debtors have installed and certified a Continuous Emissions Monitoring System to monitor emissions, including opacity, at its facilities. 2003 Consent Decree The New York Debtors and the DEC, Mr. Schauer notes, previously entered into a consent decree with respect to the emissions of SO2 and NOx from the Lovett and the Bowline plants. The 2003 Consent Decree related to the alleged violations of the New Source Review Provisions of the Clean Air Act, which became effective December 31, 2002, and certain "repair or replacement" actions taken by Orange and Rockland while it owned the Lovett and the Bowline plants, Mr. Schauer recounts. The Court subsequently approved the 2003 Consent Decree. New Consent Decree According to Mr. Schauer, the Debtors received a notice of violation from the DEC for failure to comply with the self- reporting requirements with respect to excess opacity emissions at the Lovett and the Bowline plants. In October 2004, the DEC commenced a formal action against the New York Debtors, seeking fines totaling $1,960,000. The Debtors began negotiations with the DEC to: -- resolve past violations of the CAA; -- develop a method for preventing future violations; and -- establish appropriate penalties for any future violations. Through negotiations, the parties agreed to another Consent Decree. Mr. Schauer notes that in contrast to the 2003 Consent Decree, the current Consent Decree: -- relates to the self-reporting requirements of excess opacity emissions at the New York Debtors' facilities; and -- does not in any manner seek to modify or cure the New York Debtors' obligations pursuant to the 2003 Consent Decree. Terms of the Current Consent Decree The New York Debtors' excess opacity incidents must be reported pursuant to Section 227-1.4(c). The New York Debtors will pay penalties calculated on a unit-by-unit basis for "exceedances" incurred on or after January 1, 2005. For purposes of assessing stipulated opacity penalties for the period commencing January 1, 2005, except for the one six-minute average per hour of up to 27%, each six-minute period, in which the average opacity emissions from a stack equals or exceeds 20%, will constitute a separate violation. The New York Debtors' Continuous Emission Monitoring Systems will determine compliance with the opacity standard. Penalties will not be assessed for unavoidable excess opacity emission events as stated in the Consent Decree. In full satisfaction of emission violations occurring prior to January 1, 2005, the New York Debtors will be penalized for $44,100. 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. 72; Bankruptcy Creditors' Service, Inc., 215/945-7000) MOVIE GALLERY: Posts $12.2 Million Net Loss in Second Quarter ------------------------------------------------------------- Movie Gallery, Inc. (Nasdaq: MOVI) reported financial results for the second quarter of 2005, which ended July 3, 2005. Movie Gallery's second quarter results include the results of operations from Hollywood Entertainment Corporation, which Movie Gallery acquired on April 27, 2005. Accordingly, Movie Gallery's second quarter results include approximately 10 weeks of Hollywood's results and 13 weeks of Movie Gallery's results. In the quarter, total revenues for the combined Company were $504.7 million as compared to Movie Gallery's stand-alone revenues of $189.6 million in the second quarter of 2004. Net loss for the 2005-second quarter was $12.2 million, which included: (a) one-time special items on a net of tax basis; (b) a $6.6 million reduction in extended viewing fee revenues related to the purchase accounting effects of conforming Hollywood's revenue recognition method to Movie Gallery's Method; (c) a $5.9 million charge related to a change in accounting estimate for VHS residual value; (d) one-time cash charges of $2.5 million related to the write-off of merger-related bridge financing fees, (e) $900,000 for a merger-related transaction bonuses; (f) other charges of $200,000 related to stock based compensation; and (e) equity losses of $300,000 related to investments in alternative delivery vehicles for movie content. These items total $16.4 million. Excluding these items, net income in the 2005-second quarter would have been $4.3 million on an on- going basis. For the 2004-second quarter, the Company's net income was $10.6 million. Operating income for the 2005-second quarter was $2.0 million and was adversely affected by $23.2 million, which represents the pre- tax effect of the special items described in the preceding paragraph. Excluding these items, operating income in the 2005- second quarter would have been $25.2 million. For the 2004-second quarter, the Company's operating income was $19.8 million. In addition, net loss for the second quarter includes $10.0 million after- tax, in interest expense related to the new credit agreement to fund the acquisition of Hollywood and other smaller business acquisitions. "During the quarter, we were delighted to complete our acquisitions of both Hollywood Entertainment and VHQ," said Joe Malugen, Chairman, President and Chief Executive Officer of Movie Gallery. "Having said that, we were disappointed to see that our same-store revenues in both the rural and urban markets were adversely impacted by what many experts are now characterizing as the worst box-office slump in more than two decades. Coming into the quarter, we were expecting our same-store revenues to be down slightly. However, with the month of June down considerably more than anticipated, we experienced a 5.5% decrease in same-store revenues for the second quarter of 2005. "In this business our results are driven largely by the quality and quantity of movie titles, which continue to be weaker than we would like. However, we believe that this softness is temporary and expect rental demand to rebound in the fourth quarter. In the fourth quarter of 2005 some of the year's biggest titles and likely best sellers, including Batman Begins, Star Wars Episode 3, War of the Worlds, Mr. and Mrs. Smith, and Fantastic Four, will be released. While we expect challenging conditions to persist in the third quarter, we are optimistic that conditions will improve by the end of the year," Mr. Malugen concluded. Integration Update Mr. Malugen stated, "We have already made significant progress in integrating the two companies and we remain committed to moving quickly to realize the benefits of this winning combination. While it is premature to give specific guidance at this time, we continue to believe in our ability to generate sustainable growth while producing consistent profitability now that the acquisition is complete." As previously announced, Movie Gallery intends to maintain the Hollywood store format and brand separately from the Movie Gallery business. Integration efforts to date have focused primarily on selecting a leadership team for and consolidating the support functions in all three operating segments. This top-level consolidation is complete for the Human Resources, Real Estate, Legal, Lease Administration, Finance, Information Systems, Loss Prevention and Distribution functions. Almost 60 positions were eliminated by the end of the second quarter. Movie Gallery is also evaluating opportunities to leverage best practices and generate general and administrative cost savings while undertaking initiatives to reap the benefit of the combined company's increased purchasing leverage for non-content merchandise to reduce costs. Movie Gallery has closed 50 unprofitable Game Crazy stores and is now beginning to re-brand Movie Gallery's 23 Game Zone(R) stores under the Game Crazy brand. Under the leadership of Thomas Johnson, Movie Gallery's Senior Vice President of Corporate Finance and Business Development who is managing the integration, Movie Gallery expects to undertake other strategic initiatives and believes that it will realize significant synergies as a result of the combination. Mr. Malugen added, "I want to thank the associates and partners of Movie Gallery and Hollywood for their continued hard work and dedication through the ongoing integration process, especially in the current soft business environment. We believe that our combined company is well positioned for long-term success and, with the continued focus of our dedicated employees, we are confident in our ability to create significant value for our shareholders." Second Quarter Results For the thirteen weeks ended July3, 2005, consolidated total revenue increased 166.2% from the comparable period in 2004. Same store total revenue was negative 5.5% for the second quarter. Same-store rental revenue declined 8.4% while same-store product revenue grew 10.6%, driven principally by the sale of new and used game hardware, software and accessories in Hollywood's Game Crazy business. For the thirteen weeks ended July 3, 2005, the Movie Gallery operating segment total revenues increased 5.0% from the comparable period in 2004. The increase was due to an increase of 14.3% in the average number of stores operated the quarter of 2005, offset by same-store revenue decreases of 8.1%. Same-store rental revenue declined 8.7% in the second quarter of 2005 and same- store product sales declined 1.2%. The addition of Hollywood operating segment revenue for the thirteen weeks ended July 3, 2005 accounted for 97.0% and of the total revenue increases. Hollywood total same- store revenues were negative 4.4% for the second quarter. Same-store rental revenue declined 8.2% in the second quarter of 2005 and same-store product sales increased 12.9%. The growth in Hollywood same-store product sales is primarily driven by the strength of the in-store Game Crazy departments. The following factors contributed to a decrease in the Company's total same-store revenues for the second quarter of 2005 versus 2004: (1) Movie rental revenue, including previously viewed sales, declined and was adversely impacted by the weak home video release schedule during the quarter. (2) Game rental revenue declined reflecting the weakness of the new game titles currently being released and the industry softness that occurs in anticipation of the introduction of new game platforms currently scheduled for late 2005 and early 2006 release. Gross margin on rental revenue for the second quarter of 2005 was 66.0% versus 71.5% for the comparable quarter period of 2004. This included the $10.1 million non-cash charge for a change in accounting estimate on Movie Gallery's VHS inventory. Excluding the VHS write-off in the second quarter, gross margin on rental revenue would have been 68.4% for the thirteen weeks ending July 3, 2005, respectively. The remaining decrease versus prior comparable periods is primarily the result of the acquisition of the Hollywood Video stores, as their gross margins are historically lower than those of Movie Gallery stores because Hollywood generally invests proportionally more in rental inventory (as a percentage of revenue) to effectively compete in urban markets. Higher than expected same-store revenue declines for movie rental revenue and higher than normal promotional activity of previously viewed products also contributed to the reduced rental gross margins. The gross margin on product sales for the thirteen weeks ended July 3, 2005 was 29.6% compared to 29.4% for the comparable quarter period of 2004. Movie Gallery is the second largest North American video rental company with annual revenue in excess of $2.5 billion and approximately 4,700 stores located in all 50 U.S. states, Canada and Mexico. Since the Company's initial public offering in August 1994, Movie Gallery has grown from 97 stores to its present size through acquisitions and new store openings. The combined company is the second largest North American video rental company with annual revenue in excess of $2.5 billion and approximately 4,500 stores located in all 50 U.S. states, Mexico and Canada. Since the company's initial public offering in August 1994, Movie Gallery has grown from 97 stores to its present size through acquisitions and new store openings. * * * As reported in the Troubled Company Reporter on Apr. 20, 2005, Moody's Investors Services confirmed the debt ratings of Hollywood Entertainment. Moody's said the outlook is stable. In addition, Moody's assigned first time ratings to Movie Gallery, Inc., in connection with its proposed acquisition of Hollywood Entertainment. On January 9, 2005, Movie Gallery executed a merger agreement to acquire Hollywood Entertainment for $13.25 per share or approximately $1 billion (including the retirement of $384.2 million of debt but net of cash). The acquisition will be financed with $795 million of senior secured bank facilities, $325 million of senior unsecured notes, and $185 million of on balance sheet cash. As a part of the acquisition, Movie Gallery will tender for Hollywood Entertainment's $225million of senior subordinated notes. Shortly after this transaction, Movie Gallery will also be acquiring VHQ Entertainment for $19.2 million. VHQ operates 61 stores in Canada as well as a website VHQonline.ca. These ratings are assigned: -- Movie Gallery, Inc. * Senior Implied of B1; * $870 Million of Senior Secured Credit Facilities of B1; * $325 Million of Guaranteed Senior Notes of B2; * Issuer Rating of B3; * Speculative Grade Liquidity Rating of SGL-2. These ratings are confirmed: -- Hollywood Entertainment Corp. * Senior Implied of B1; * Senior Secured Credit Facilities of Ba3; * Senior Subordinated Notes of B3; * Issuer Ratings of B2. At the same time, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Movie Gallery Inc. S&P said the outlook is stable. At the same time, Standard & Poor's assigned its 'B+' rating to Movie Gallery's proposed $870 million credit facility due in 2010 and 2011. A recovery rating of '3' also was assigned to the credit facility, indicating the expectation for meaningful recovery of principal (50%-80%) in the event of a payment default. In addition, a 'B-' rating was assigned to the company's proposed $325 million senior unsecured floating-rate notes due 2012. The unsecured notes are rated two-notches below the corporate credit rating because the holders are disadvantaged by the substantial amount of priority debt ahead of the notes. Proceeds from the transactions will be used to finance the acquisition of Hollywood Entertainment, to refinance existing indebtedness, and for general corporate purposes. "The ratings on Movie Gallery Inc. reflect the risks of operating in a mature and declining video rental industry, the company's dependence on decisions made by movie studios, increased operating risk due to its acquisition of Hollywood Entertainment, its high leverage, and the technology risks associated with delivery of video movies to the home," said Standard & Poor's credit analyst Diane Shand. NANOMAT INC: U.S. Trustee Wants to Hire Harry Davis as Auctioneer ----------------------------------------------------------------- Joseph L. Cosetti, the chapter 11 Trustee in Nanomat, Inc.'s chapter 11 case, asks the U.S. Bankruptcy Court for the Western District of Pennsylvania for approval to hire Harry Davis & company as its auctioneer. Mr. Cosetti also wants the Court to authorize the Firm to conduct a public auction of the Debtor's assets free and clear of liens, claims, interests and encumbrances. The Chapter 11 Trustee proposes: 1) the auction property will be sold to the highest bidder for cash on an "as is where is" basis without representation or warranty, express or implied; 2) the auction property may be sold in whore or in part; 3) Harry Davis will receive a buyer's premium of 10%, which will be added to the final sales price of each item and paid by the buyers as compensation for its services for the sale of the auction property; 4) Harry Davis will be paid a 6% commission of the sale price, plus reimbursement of agreed upon expenses in the event of a prior sale of all, or substantially all, of the auction property by the trustee, at least two weeks prior to the auction; 5) Harry Davis will receive a $35,000 fee plus reimbursement of agreed upon expenses in the event the Trustee concludes a sale of all, or substantially all, of the assets at least two weeks prior to the scheduled auction date with any of certain individuals or entities named and filed under seal with Court at the time of the motion hearing; 6) Harry Davis will advance an all out-of-pocket expenses to prepare, promote and conduct the auction. Advertising expenses are budgeted at $18,000 and labor expenses are at $27,000. Harry Davis will be reimbursed for advertising and labor expenses from the proceeds of the sales prior to remittance to the Trustee; and 7) Harry Davis will provide an itemized accounting for all sales and remit the amount due the Trustee within 30 days after the completion of the auction. The Trustee will retain 10% of the net proceeds from the auction in the estate for administrative claims, priority claims and unsecured claims. To the best of Mr. Cosetti's knowledge, Harry Davis is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in North Huntingdon, Pennsylvania, Nanomat, Inc. -- http://www.nanomat.com/-- is a leading manufacturer of nanomaterials, powders, and technologies. Nanomat filed for chapter 11 protection on March 18, 2005 (Bankr. W.D. Pa. Case No. 05-23245). Donald R. Calaiaro, Esq., at Calaiaro, Corbett & Brungo, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its estimated assets and debts from $10 million to $50 million. NETEXIT INC: Excl. Plan Solicitation Period Extended Until Dec. 25 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware extended the time period during which Netexit, Inc., and its debtor- affiliates have the excusive right to solicit acceptances of their proposed First Amended and Restated Liquidating Plan of Reorganization from their creditors. The Debtor's exclusive solicitation period now runs through Dec. 25, 2005. The Debtors filed their Amended Plan on July 28, 2005. The Debtors explain that they've worked diligently and focused their efforts on administering their chapter 11 cases and dealing with a multitude of important issues. The Debtors have met with and responded to extensive informal and formal discovery from the Unsecured Creditors Committee and the Lead Plaintiffs in the litigation styled as In re: NorthWestern Corporation Securities Litigation, Case No CIV-03-4049 (D. S.D.). The Debtors gave the Court four reasons in support of the extension: 1) their chapter 11 cases are large and complex, with assets in excess of $60 million, hundreds of creditors and a complex group of claims; 2) since the proposed Plan is a liquidating plan, it is important for them to resolve as may claims as possible prior to the confirmation hearing for that plan; 3) the extension will give them more opportunity to continue the consensual mediation negotiations with the Creditors Committee and the Lead Plaintiffs in connection with the distributions in the proposed Plan, the NorthWestern Claims and the Securities Class Action Claim; and 4) the extension will not prejudice their creditors and other parties-in-interest. Headquartered in Sioux Falls, South Dakota, Netexit, Inc., fka Expanets, Inc., is a nationwide provider of networked communications and data services to small and mid-sized businesses. The Company and its debtor-affiliates filed for chapter 11 protection on May 4, 2004 (Bankr. D. Del. Case No. 04- 11321). Jesse H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul, Hastings, Janofsky & Walker LLP, and Scott D. Cousins, Esq. Victoria Watson Counihan, Esq., and William E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, represent the Debtors. When the Debtors filed for chapter 11 protection, they estimated $10 million to $50 million in assets and more than $100 million in liabilities. NEWS CORP: Earns $717 Million of Net Income in Fourth Quarter ------------------------------------------------------------- News Corporation (NYSE: NWS, NWSA; ASX: NWS, NWSLV) reported fourth quarter consolidated revenues of $6.1 billion, a 12% increase over the $5.5 billion in the prior year, and full year revenues of $23.9 billion, an increase of 15% over the $20.8 billion in fiscal 2004. Consolidated operating income for the fourth quarter of $955 million was up 42% over the $674 million a year ago. For the full year, operating income was $3.6 billion, an increase of 22% over the $2.9 billion reported in fiscal 2004. The operating income growth during the fourth quarter and full year was driven by double-digit percentage increases at the Filmed Entertainment, Cable Network Programming, Magazines and Inserts and Newspaper segments, as well as by significant improvement at SKY Italia. Net income for the fourth quarter was $717 million, an increase of $288 million from the $429 million reported in the fourth quarter a year ago. For the full year net income was $2.1 billion, an increase of $595 million from the $1.5 billion reported in fiscal 2004. Fourth quarter and full year increases were primarily driven by higher consolidated operating income and an improvement in equity earnings of affiliates, while also reflecting the inclusion of an unrealized gain on the change in fair value of certain outstanding exchangeable debt securities included in Other expense. Commenting on the results, Chairman and Chief Executive Officer Rupert Murdoch said: "We are extremely pleased with the continued growth we achieved during fiscal 2005-our third consecutive year of record profits. What is pleasing about this past year is not just that we once again delivered double-digit revenue and operating income growth across nearly all of our businesses but perhaps more significantly many of our developing businesses turned profitable. "SKY Italia delivered its first profitable quarter with the addition of 650,000 subscribers over the past 12 months. STAR received approval to launch a DTH service in India and doubled its earnings contributions. DIRECTV grew its subscriber base by 1.6 million and aggressively expanded its product offerings with the roll out of additional local channels and enhanced high definition and digital video recorder capabilities. And BSkyB announced a new pricing and package structure while adding more than 400,000 subscribers and generating substantial profit growth. "Over the past year we also completed our reincorporation to the United States, as well as obtained full ownership of several key assets, including Queensland Press, the Fox Entertainment Group, SKY Italia and several regional sports networks. And we finished the year in our strongest financial position ever with over $6 billion in cash facilitating our $3 billion dollar stock buyback program and enabling us to make strategic investments, especially in new media. So while we generated record financial results this past year, I believe we have made the right strategic and operational moves to secure our momentum heading into fiscal 2006." A full text copy of the Company's disclosure to the Securities and Exchange Commission is available for free at: http://ResearchArchives.com/t/s?c7 News Corporation had total assets as of March 31, 2005 of approximately US$56 billion and total annual revenues of approximately US$23 billion. News Corporation is a diversified international media and entertainment company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers; book publishing; and other. The activities of News Corporation are conducted principally in the United States, Continental Europe, the United Kingdom, Australia, Asia and the Pacific Basin. * * * As reported in the Troubled Company Reporter on Jan. 27, 2005, Moody's Investors Service confirmed News Corporation's debt ratings of Baa3 senior unsecured. The rating outlook was changed to positive. This rating action concludes the review initiated on April 26, 2004. NVE INC: Asks Court to Extend Schedule-Filing Deadline ------------------------------------------------------ NVE Inc., asks the U.S. Bankruptcy Court for the District of New Jersey to extend the time period within which it must file its Schedules of Assets and Liabilities, Statement of Financial Affairs and Lists of Executory Contracts required under Section 521(1) of the U.S. Bankruptcy Code. The Debtor tells the Court it was unable to file its Schedules and Statement of Affairs when it filed for bankruptcy, because of other pressing chapter 11 matters. The Debtor believes it can file its schedules and statements by September 24, 2005. Headquartered in Andover, New Jersey, NVE Inc. dba NVE Pharmaceuticals, NVE Pharmaceuticals, Inc., NVE Enterprises, NVE Enterprises, Inc., manufactures dietary supplements. The Debtor is facing lawsuits about its weight-loss products which contain the now-banned herbal stimulant, ephedra. The Debtor filed for chapter 7 liquidation proceeding on August 10, 2005 (Bankr. D. N.J. Case No. 05-35692). When the Debtor filed for chapter 7, it listed $10,966,522 in total assets and $14,745,605 in total debts. OWENS CORNING: Third Circuit Rejects Substantive Consolidation -------------------------------------------------------------- The United States Court of Appeals has rejected Owens Corning's bid to "Communize" the assets of each separate estate to one survivor to feed all creditors. The Appeals Court says no principled, or even plausible, reason exists to undo Owens Corning's and the Banks' arms-length negotiation and lending arrangement, especially when to do so punishes the very parties that conferred the prepetition benefit of $2 billion in unsecured loans. To overturn this bargain, set in place by Owens Corning's own pre-loan choices of organizational form, would cause chaos in the marketplace, "as it would make this case the Banquo's ghost of bankruptcy," Judge Ambro says, writing for the three-judge panel. The Third Circuit finds there is no meaningful evidence supporting substantive consolidation in Owens Corning's chapter 11 cases, and will not let Owens Corning use the substantive consolidation tactic as a sword in its reorganization. A full-text copy of the Third Circuit's 51-page opinion, released this morning, is available at no charge at: http://www.ca3.uscourts.gov/opinarch/044080p.pdf Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. PLYMOUTH RUBBER: Delphi Corp. Wants Setoff Rights Protected ----------------------------------------------------------- Plymouth Rubber Company, Inc., manufactures plastic and rubber products, including automotive, electrical and industrial tapes. Delphi Corporation is Plymouth's largest customer, purchasing tapes for use in automotive wire harnesses. Delphi owed the Debtor approximately $1,710,821 when Plymouth filed for chapter 11 protection. That payment is due and owing on August 2, 2005. Currently, Delphi has not filed a prepetition claim against Plymouth. The Debtor believes Delphi might do so in the event that their business contracts are rejected. With respect to their prepetition contracts, the Debtor says it intends to assume the agreements but has yet to consult with its creditors. Delphi asserts that making the payment now might cause it to lose or otherwise impair its setoff rights with respect to its potential claim against Plymouth. Based on this concern, Delphi is withholding the payment. Accordingly, the Debtor asks the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, for an order approving a stipulation with Delphi Corporation that will allow Plymouth to receive the payment and adequately protect Delphi's prepetition setoff rights. Headquartered in Canton, Massachusetts, Plymouth Rubber, Inc., manufactures and distributes plastic and rubber products, including automotive tapes, insulating tapes, and other industrial tapes, mastics and films. Through its Brite-Line Technologies subsidiary, Plymouth manufactures and supplies highway marking products. The Company and its subsidiary filed for chapter 11 protection on July 5, 2005 (Bankr. D. Mass. Case Nos. 05-16088 through 05-16089). Victor Bass, Esq., at Burns & Levinson LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated $1 million to $50 million in assets and debts. PROVIDIAN MASTER: Fitch Places BB Rating on $85.1 Million Notes --------------------------------------------------------------- The first issuance from the Providian Master Note Trust, the ProvidianSeries $643.6 million class 2005-A1 floating-rate notes, are rated 'AAA' by Fitch Ratings. In addition, Fitch rates the corresponding notes: -- $90.4 million class 2005-M1 'AA'; -- $87.8 million class 2005-B1 'A'; -- $93.1 million class 2005-C1 'BBB'; -- $85.1 million class 2005-D1 'BB'. The $63.838 million class E notes were not rated. The class E notes are unoffered and will be retained by Providian. class A and M noteholders will receive monthly interest payments of 1- month LIBOR (1mL) + 0.06% and 1mL+0.17% per annum, respectively, and class B and C noteholders will receive monthly interest payments of 1mL+0.30% and 1mL+0.55% per annum respectively. The coupon on the class D notes is 1mL+1.72%; the class E notes have a 0% coupon. All noteholders will receive monthly interest payments paid on the 15th business day of each month or the next business day, commencing Sept. 15, 2005. The ratings reflect the credit quality of the collateral certificate, which is based on the quality of the receivables that make up Providian Gateway Master Trust, available credit enhancement, the servicing expertise of Providian National Bank, and the transaction's legal and financial structures. Credit enhancement for the 'AAA' rated class A notes is provided through subordination of classes M, B, C, D, and E totaling 39.50%. The 'AA' rated class M notes draw on the 31.0% subordination of classes B, C, D, and E notes as credit enhancement. The 'A' rated class B notes receive credit enhancement from 22.75% of classes C, D, and E notes. Class C notes are enhanced by 14.0% of subordinate class D and E notes; class D notes are enhanced by 6.00% of subordinate class E notes. Additionally, a spread account has been established for the benefit of all classes. The ratings address the likelihood of investors receiving timely interest payments in accordance with the terms of the underlying documents and full repayment of principal by the Nov. 15, 2011 legal final termination date. They do not address the likelihood of principal repayment by the expected note payment date of July 15, 2008 for classes A, M, B, C, and D notes. PUBLICARD INC: June 30 Balance Sheet Upside-Down by $6.3 Million ---------------------------------------------------------------- PubliCARD, Inc. (OTCBB:CARD) reported its financial results for the three and six months ended June 30, 2005. Revenues for the second quarter of 2005 decreased to $909,000, compared to $1,028,000 in 2004. Foreign currency changes had the effect of increasing revenues by 2%. Excluding the impact of foreign currency changes, revenues in 2005 decreased by 13% driven by a decline in direct sales to customers located in the United Kingdom as well as a decline in shipments to non-U.S. distribution partners. The Company reported a net loss for the quarter ended June 30, 2005 of $453,000, compared with a net loss of $783,000 a year ago. As of June 30, 2005, cash and short-term investments totaled $1,173,000. For the six months ended June 30, 2005, sales were $1,660,000 compared to $1,856,000 a year ago. Foreign currency changes had the effect of increasing revenues by 2%. Excluding the impact of foreign currency changes, revenues in 2005 decreased by 13%. The decline was also driven by weaker performance in direct sales and shipments to non-U.S. distribution partners. The Company reported a net loss of $1,172,000, or $.05 per share for the six months ended June 30, 2005 compared to a net loss of $1,286,000, or $.05 per share, in 2004. The 2004 results include a gain of $477,000 relating to an agreement to assign to a third party certain insurance claims against a group of historic insurers. The claims involved several historic general liability policies of insurance issued to the Company. Liquidity The Company has incurred operating losses, a substantial decline in working capital and negative cash flow from operations for a number of years. The Company has also experienced a substantial reduction in its cash and short-term investments, which declined from $17 million at Dec. 31, 2000, to $1.2 million at June 30, 2005. At June 30, 2005, PubliCard's balance sheet showed a $6,304,000 stockholders' deficit, compared to a $5,159,000 deficit at Dec. 31, 2004. The Company sponsored a defined benefit pension plan that was frozen in 1993. In January 2003, the Company filed a notice with the Pension Benefit Guaranty Corporation seeking a "distress termination" of the Plan. In September 2004, the PBGC proceeded to terminate the Plan and was appointed as the Plan's trustee. As a result of the Plan termination, the Company's 2003 and 2004 funding requirements due to the Plan amounting to $3.4 million through Sept. 15, 2004 were eliminated. As such, management believes that existing cash and short-term investments may be sufficient to meet the Company's operating and capital requirements at the currently anticipated levels through Dec. 31, 2005. However, additional capital will be necessary in order to operate beyond December 31, 2005 and to fund the current business plan and other obligations. Going Concern Doubt While the Company is considering various funding alternatives, the Company has not secured or entered into any arrangements to obtain additional funds. There can be no assurance that the Company will be able to obtain additional funding on acceptable terms or at all. If the Company cannot raise additional capital to continue its present level of operations it is not likely to be able to meet its obligations, take advantage of future acquisition opportunities or further develop or enhance its product offering, any of which would have a material adverse effect on its business and results of operations and is likely to lead the Company to seek bankruptcy protection. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The independent auditors' reports on the Company's Consolidated Financial Statements for the years ended Dec. 31, 2004, 2003 and 2002 contained emphasis paragraphs concerning substantial doubt about the Company's ability to continue as a going concern. Headquartered in New York, NY, PubliCARD -- http://www.publicard.com/-- through its Infineer Ltd. subsidiary, designs smart card solutions for educational and corporate sites. The Company's future plans revolve around a potential acquisition strategy that would focus on businesses in areas outside the high technology sector while continuing to support the expansion of the Infineer business. However, the Company will not be able to implement such plans unless it is successful in obtaining additional funding, as to which no assurance can be given. QWEST COMMS: Resumes Talks with Workers Union After Pact Expired ---------------------------------------------------------------- Qwest Communications International Inc. and The Communications Workers of America, the union representing 25,000 Qwest workers, resumed talks on the evening of Aug. 14 after their old contract expired without a new agreement, Reuters reports. CWA reported that 91% of Qwest members voted in favor of strike authorization in balloting conducted by CWA local unions. For a strike to take place, the next step would be for CWA's executive board to authorize President Morton Bahr to set a strike date. But the union later told its members enough progress had been made to resume negotiations. Talks halted early Sunday after a 20-hour bargaining session. On Aug. 5, 2005, at the bargaining table, the CWA bargaining team delivered petitions from more than 10,000 active and retired workers calling on the company to maintain health care benefits. It was the first full contract bargaining session since 1998. Two contract extensions were approved by CWA members in 2001 and 2003 as an investment in the company's future in the wake of Qwest's serious financial difficulties caused by the previous management team headed by Joseph Nacchio. Mr. Nacchio and other executives have been charged with fraud and illegal business practices by the Securities and Exchange Commission; the current management team took over in July 2002. About CWA The Communications Workers of America represents Qwest workers in 13 states: Arizona, Colorado, Iowa, Idaho, Minnesota, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. About Qwest Communications Qwest Communications International Inc. (NYSE:Q) -- http://www.qwest.com/-- is a leading provider of high-speed Internet, data, video and voice services. With approximately 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. At June 30, 2005, Qwest Communications' balance sheet showed a $2,663,000 stockholders' deficit, compared to a $2,612,000 deficit at Dec. 31, 2004. REDDY ICE: 99.9% of Noteholders Tender 8-7/8% Sr. Sub. Notes ------------------------------------------------------------ Reddy Ice Group, Inc., a wholly owned subsidiary of Reddy Ice Holdings, Inc. (NYSE: FRZ), completed its previously announced tender offer and consent solicitation for its outstanding 8-7/8% senior subordinated notes due 2011. The offer expired at 5:00 p.m., New York City time, on Aug. 12, 2005. Reddy Ice has accepted for payment all Notes validly tendered on or prior to the Expiration Date. As of the Expiration Date, tenders and consents had been received with respect to $151,974,000, or more than 99.9%, of the outstanding principal amount of the Notes. The consent condition has been satisfied with respect to the Notes. Reddy Ice also disclosed that all conditions, including having available funds sufficient to pay the aggregate Total Consideration from the proceeds of a new senior credit facility and from an offering of equity by Reddy Ice Holdings, Inc., in connection with the initial public offering of its common stock have been satisfied. Reddy Ice has accepted for payment all Notes validly tendered on or prior to the Expiration Date and, assuming a Payment Date of Aug. 15, 2005, the first business day after the Expiration Date, the Total Consideration for each $1,000 principal amount of Notes validly tendered and not validly withdrawn prior to the Expiration Date is $1,113.63. In addition, each tendering holder of Notes will be paid accrued and unpaid interest from the last interest payment date up to, but not including, the Payment Date. The Total Consideration was determined based on the formula set forth in the Offer to Purchase with a Price Determination Date of April 13, 2005. The Total Consideration may be higher or lower, based on this formula, depending on the actual Payment Date. The Notes were tendered pursuant to Reddy Ice's Offer to Purchase and Consent Solicitation Statement dated March 22, 2005, as amended by the Supplement and Amendment to the Offer to Purchase and Consent Solicitation Statement, dated April 5, 2005, which more fully sets forth the terms and conditions of the cash tender offer to purchase any and all of the outstanding principal amount of the Notes as well as the consent solicitation to eliminate substantially all of the restrictive covenants and certain events of default contained in the Indenture. Credit Suisse First Boston LLC is the sole Dealer Manager and Solicitation Agent for the tender offer and consent solicitation. Questions regarding the tender offer and consent solicitation may be directed to Credit Suisse First Boston LLC, Liability Management Group, at (800) 820-1653 (US toll-free) and (212) 538- 0652 (collect). Copies of the Offer to Purchase and Consent Solicitation Statement and related documents may be obtained from the Information Agent for the tender offer and consent solicitation, Morrow & Co., Inc., at (800) 654-2468 (US toll-free) and (212) 754-8000 (collect). Headquartered in Dallas, Texas, Reddy Ice Holdings, Inc., and its subsidiaries manufacture and distribute packaged ice in the United States serving approximately 82,000 customer locations in 32 states and the District of Columbia under the Reddy Ice brand name. The company is the largest of its kind in the United States. Typical end markets include supermarkets, mass merchants, and convenience stores. For the last twelve months ended June 30, 2004, consolidated revenue was approximately $260 million. * * * Reddy Ice Group's 8-7/8% senior subordinated notes due Aug. 11, 2011, carry Moody's B3 rating and Standard & Poor's B- rating. REVLON CONSUMER: Selling $75MM Senior Notes in Private Placement ---------------------------------------------------------------- Revlon, Inc.'s (NYSE: REV) wholly owned subsidiary, Revlon Consumer Products Corporation, intends to privately place approximately $75 million in aggregate principal amount of senior notes due 2011. RCPC currently intends the issuance of the notes to be a reopening of and or the same terms as the 9-1/2% senior notes due 2011 issued by RCPC under an indenture dated as of March 16, 2005. If the issuance of the notes is not a reopening, the notes are expected to be issued under a new indenture containing substantially the same terms as the March 16, 2005 indenture. The net proceeds from the private placement are expected to be used: (1) to help fund the Company's previously announced strategic growth initiatives and for general corporate purposes, and (2) to pay fees and expenses incurred in connection with the private placement. The notes will be sold only to qualified institutional buyers in reliance on Rule 144A, and outside the United States in compliance with Regulation S under the Securities Act of 1933, as amended. The proposed issuance of the new RCPC notes will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The private placement is expected to be consummated within the month, subject to market and other customary conditions. There can be no assurances that the private placement will be consummated. Revlon Consumer Products Corporation is a wholly owned subsidiary of Revlon, Inc., a worldwide cosmetics, skin care, fragrance, and personal care products company. The Company's vision is to become the world's most dynamic leader in global beauty and skin care. Websites featuring current product and promotional information can be reached at http://www.revlon.com/and http://www.almay.com/ Corporate investor relations information can be accessed at http://www.revloninc.com/ The Company's brands, which are sold worldwide, include Revlon(R), Almay(R), Ultima(R), Charlie(R), Flex(R), and Mitchum(R). * * * As reported in the Troubled Company Reporter on March 10, 2005, Moody's Investors Service assigned a Caa2 rating to the proposed $205 million senior notes offering by Revlon Consumer Products Corporation. In addition, Moody's affirmed Revlon's existing ratings and its negative rating outlook. The affirmation and assignment of long-term ratings reflect the company's continued operational and financial progress, including the prospective improvement in Revlon Consumer's near-term liquidity profile as proceeds from the notes are used to refinance bonds maturing as early as February 2006. However, the continuation of a SGL-4 speculative grade liquidity rating and a negative long-term rating outlook reflect the company's ongoing negative free cash flow profile and ongoing liquidity concerns beyond the near term. The ratings affected by this action are: * New $205 million senior notes due 2011, assigned at Caa2; * Senior implied rating, affirmed at B3; * $160 million senior secured revolving credit facility due 2009, affirmed at B2; * $800 million senior secured term loan facility due 2010, affirmed at B3; * $116 million 8.125% senior notes due 2006, affirmed at Caa2; * $76 million 9% senior notes due 2006, affirmed at Caa2; * $327 million 8.625% senior subordinated notes due 2008, affirmed at Caa3; * Speculative grade liquidity rating, affirmed at SGL-4; * Senior unsecured issuer rating, affirmed at Caa2. At the same time, Standard & Poor's Ratings Services affirmed its ratings on Manhattan-based cosmetics manufacturer Revlon Consumer Products Corp., including its 'B-' corporate credit rating. At the same time, Standard & Poor's assigned a 'CCC' senior unsecured debt rating to Revlon's planned $205 million senior unsecured note offering due 2011. S&P says the outlook is negative. RUFUS INC: Wants to Assume Management Agreement With Hunte Corp. ---------------------------------------------------------------- Rufus, Inc., asks the Honorable Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware for permission to assume a management services agreement with the Hunte Corporation. Hunte Corporation owns and operates two retail outlets in southwest Missouri supplying animals to pet stores throughout the United States and abroad. Hunte is also the Debtor's: * exclusive supplier of dogs since 2000; * shareholder holding approximately 8% of Preferred B shares; * largest unsecured creditor; and * potential purchaser of the business. The Debtor wants Hunte to continue providing the same managerial support services it has been providing before the start of the bankruptcy case. Hunte Corporation will continue to: (a) receive, review, process, and pay accounts payable on behalf of the Debtor; (b) receive, review, process, and pay customer care and warranty claims, if applicable; (c) receive, process, and fulfill purchase orders and other sales requests; (d) process payroll, administer employee benefit plans, and perform other human resource services; (e) negotiate contracts, leases, releases, assignments and any other agreements, in behalf of the Debtor, as appropriate, and any amendments for the purchase, lease, license or use of properties and rights as may be necessary or reasonably desirable in connection with the reorganization, ownership, operation or maintenance of the stores; (f) evaluate new equipment, materials and purchase of live animal inventory and make recommendations in accordance with its evaluations; (g) purchase and install software to upgrade the accounting systems of the Debtor, if required; (h) supervise the: (1) purchase of property, real, personal or mixed and all materials and supplies, to operate the stores, if necessary; and (2) the sale, lease, trade, exchange or other disposal of the Debtor's assets in the ordinary course of business, provided that for each sale, lease, trade, exchange or other disposal event, the manager will be required to report and account for each asset sold, leased, traded, exchanged or otherwise disposed of, including the value and the purchase price or other revenue received, and to the extent the proceeds of the purchase price exceeds the sum of all costs and expenses of the manager, the manager will remit the excess amount to the Debtor's account; (i) formulate and supervise all advertising, marketing and sales programs; (j) supervise sales training and merchandising; (k) supervise performance of all aspects of the daily operation and maintenance of the stores, including the employment, training, instruction and supervision of all personnel necessary to conduct daily operations of the stores; (l) supervise the maintenance of all accounting, bookkeeping, billing, collections and other financial records relating to the stores; (m) prepare and file all necessary applications, filings, reports, statements and other documents as required in connection with the ownership and operation of the stores with governmental and regulatory agencies and pay any costs and expenses; provided that the manager will provide to the Debtor a copy of all applications, filings, reports, statements or other documents before those documents are filed or submitted; (n) ensure that the live animal inventory of the stores is appropriately cared for and treated in a humane manner; (o) cause the stores to comply in all material respects with the requirements of the statutes, ordinances, laws, rules, regulations, applicable to, or order of any governmental or regulatory body having jurisdiction over the stores; and (p) take any other action in connection with the ownership, operation, and maintenance of the stores that is commercially reasonable, appropriate and necessary in order to manage and operate the stores. The Debtor's Board of Directors will continue to direct operations and will supervise Hunte's actions. Hunte Corporation has agreed to perform the management services without payment of fees. The Debtor's sole financial obligation under the Agreement will be to reimburse Hunte for reasonable out-of-pocket expenses incurred in connection with its duties. To monitor Hunte's reimbursement requests, Hunte and the Debtor have agreed that Hunte will submit a monthly report of those expenses to: -- the Debtor; -- the United States Trustee; and -- Counsel to the Official Committee of Unsecured Creditors. Hunte wants the expenses incurred be treated as administrative expense in the Debtor's bankruptcy case. Headquartered in Meriden, Connecticut, Rufus, Inc., sells dogs, dog food, supplies and accessories. The Debtor also operates a chain of six retail stores in the Northeastern United States. The Company filed for chapter 11 protection on Aug. 10, 2005 (Bankr. D. Del. Case No. 05-12218). Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its bankruptcy proceeding. When the Debtor filed for protection from its creditors, it listed $1.8 million in total assets and $12.7 million in total debts. SALON MEDIA: Reports $100,000 Loss in First Fiscal Quarter ---------------------------------------------------------- Salon Media Group, Inc. (SALN.OB) reported a $100,000 net loss attributable to common stockholders for its first quarter ended June 30, 2005, compared to a net loss attributable to common stockholders of $1.2 million for its first quarter the year before. Total revenues for the quarter ended June 30, 2005 were $1.6 million, a decrease of 6% from $1.7 million a year ago, with advertising revenues decreasing to $0.9 million from $1.0 million a year ago. The decline in advertising revenues is attributed to the departure of the VP of Advertising Sales for an extended medical leave, and the corresponding short-term reduction in staff to sell advertising on the Salon website. On a non-GAAP pro forma basis, excluding non-cash and non- recurring charges, Salon recorded a near-breakeven three thousand dollar loss attributable to common stockholders for the quarter compared to a profit of $0.2 million in the prior year period. "Overall, we were disappointed in our first quarter fiscal year 2006 results," stated Elizabeth Hambrecht, Salon's CEO and President. "Although we managed a breakeven quarter, we failed to capitalize on the robust Internet advertising market, primarily due to the temporary departure of a key salesperson. We have recently added two salespeople to the team to fill a short-term gap and build the team long-term," she continued. A reconciliation of net profit calculated in accordance with generally accepted accounting principles in the United States of America (GAAP) and pro forma net income (loss) is provided immediately following the consolidated statements of operations. These pro forma measures are not in accordance with, or an alternative for, GAAP and may be different from pro forma measures used by other companies. Salon believes that the presentation of pro forma results provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. Readers of Salon's consolidated financial statements are advised to review and carefully consider the financial information prepared in accordance with GAAP contained in this press release and Salon's periodic filings with the Securities and Exchange Commission. Future Periods Guidance Salon does not believe that the quarter ending June 30, 2005 GAAP and non-GAAP financial results should be considered predictive of future quarter or year results. Salon forecasts that it will report a net loss for its quarter ending September 30, 2005, and cannot accurately predict its results for future quarters. Due to seasonality, Salon estimates that total revenues for its quarter ending September 30, 2005, will be $1.4 - $1.6 million, with advertising sales comprising $0.7 to $0.9 million of the total. Currently, Salon has $0.7 million of firm commitments to serve advertisements during the quarter ending September 30, 2005. Salon cannot predict total revenues after September 30, 2005 owing to the relatively short time frame in which advertising orders are secured and when they run on our Website and the lack of significant long-term advertising orders. Salon anticipates that overall Salon Premium revenues will be approximately $0.5 million for the quarter ending September 30, 2005, approximately the same as the June quarter despite a decline in membership. Salon has experienced a drop in overall membership, which has declined from approximately 84,500 at March 31, 2005, to approximately 80,600 at June 30, 2005, primarily a result of greater emphasis being placed on serving advertising units, rather than marketing the Premium membership service. Founded in 1995, Salon is an Internet publishing company. Salon's award-winning journalism combines original investigative stories and provocative personal essays along with quick-take commentary and staff-written Weblogs about politics, technology, culture and entertainment. Committed to interactivity, the Website also hosts two online communities, Table Talk and The Well, a user blogging program and recently added two popular features, the daily music download column Audiofile, and the Daou Report, an opinionated guide to the blogosphere. As reported in the Troubled Company Reporter on July 27, 2005, Burr, Pilger & Mayer LLP, expressed substantial doubt about Salon Media Group, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended March 31, 2005. The firm points to the Company's losses from operations and working capital deficit. The Company previously received a going concern opinion in its 2004 financial statements from PricewaterhouseCoopers LLP. Salon's June 30, 2004, balance sheet shows $6.6 million in assets and $5.7 million in liabilities. Salon has incurred losses and negative cash flows from operations since inception and has an accumulated deficit at June 30, 2004, of more than $92 million. SENECA GAMING: Posts $17.9 Million Net Loss in Third Quarter ------------------------------------------------------------ Seneca Gaming Corporation reported its third quarter financial results for the three months ended June 30, 2005. Consolidated Results For the third quarter 2005 and 2004, total consolidated net revenues were $115.1 million and $94.5 million, respectively, or a 22% increase. This overall increase was primarily due to a $20.2 million increase in net gaming revenues, from $88.8 million for the Third Quarter 2004 to $109.0 million for the third quarter 2005, or a 23% increase. SGC's consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) was $46.8 million for the Third Quarter 2005 compared to $33.8 million for the Third Quarter 2004, or a 38% increase. The primary reason for the increases in consolidated net revenues and consolidated EBITDA was due to the additional 30 days of operation of the Seneca Allegany Casino compared to the prior comparative period. SGC reported a net loss of $17.9 million for the third quarter 2005 against net income of $18.8 million in the third quarter 2004. The net loss for Third Quarter 2005 includes a non- recurring charge of $49.2 million, included as Interest Expense in the accompanying Condensed Consolidated Statements of Income. The overall revenue increase at the Seneca Niagara Casino is primarily attributable to an increase in net slot revenue from $62.7 million in the Third Quartet 2004 compared to $65.3 million in the Third Quarter 2005, or an increase of 4%. This increase was partially offset by a $0.6 million or 5% decrease in table games revenue during the comparative periods. The amount of money wagered, or dropped, at the Seneca Niagara Casino table games during the comparative periods declined from $78.0 million to $74.3 million with a consistent hold percentage for both periods. In early June 2005, the number of table games was reduced from 97 to 79. During this time the existing slot floor was reconfigured, we believe making it more inviting and comfortable for slot patrons. "I am pleased with the operating results of both our properties in the third quarter," John Pasqualoni, President and Chief Executive Officer of SGC, said. "Seneca Niagara Casino showed substantial improvement for the three months ended June 30, 2005, increasing EBITDA by 8% over the comparative period. Seneca Allegany Casino continues its excellent performance, generating EBITDA of $14.2 million in the third quarter. Although our net income was negatively impacted by the $49.2 million charge against earnings as a result of the early termination of the Freemantle Term Loan, I believe this termination and the elimination of senior secured indebtedness provides SGC with increased financing flexibility, as evidenced by our issuance of $200 million of 7-1/4% senior notes, and improves operating capabilities by eliminating certain restrictive covenants. We are better prepared for the future growth of our existing properties, as well as potential opportunities for our third casino in Erie County." Senior Notes On May 23, 2005, SGC issued an additional $200 million in 7-1/4% senior notes due 2012. Gross proceeds from the senior notes approximated $193.0 million, and the effective interest rate, taking into account the original issue discount, approximates 8%. The 2005 senior notes are treated as a single class with the $300 million 7-1/4% senior notes due 2012, issued in May 2004, and are identical to the 2004 senior notes except for certain tax attributes and, prior to November 1, 2005 the amount of interest accrued thereon. These notes are currently guaranteed by SNFGC, STGC and Seneca Erie Gaming Corporation. A portion of the proceeds of the 2005 senior notes were used to prepay the outstanding principal amount of $80 million under the Freemantle Term Loan, along with a negotiated settlement of the interest payable on the Term Loan, as if the Term Loan had been paid 8-1/2 months prior to its November 22, 2007 stated maturity, which approximated $46.7 million. The remainder will be used to continue to fund certain costs associated with the expansion of our operations, to pay fees and expenses associated with the offering of senior notes (including the expected registration of the senior notes in connection with an exchange offer), and for general corporate purposes. Freemantle Term Loan In May 2005, SNFGC, the Nation and Freemantle Limited terminated the Term Loan Agreement, dated as of November 22, 2002, between SNFGC, as Borrower, and Freemantle Limited, as Lender, as amended on Dec. 6, 2002, allowing SNFGC to pay in full the Term Loan at a negotiated amount as described above. As a result of the termination and payment in full, the Company recorded a non- recurring charge of $49.2 million included as Interest Expense in the accompanying Condensed Consolidated Statements of Income. As of June 30, 2005, the Company had cash and cash equivalents of $140.2 million and short-term investments of $120.9 million. "During the third quarter of fiscal 2005, substantial progress was made on the construction of Seneca Niagara Casino's luxury hotel, and the Seneca Allegany Casino's garage was opened to the public for use on July 1, 2005," Barry E. Snyder, Sr., President of the Nation and Chairman of the SGC Board of Directors, said. "We have invested $124.2 million in capital expenditures, including $76 million for Seneca Niagara Casino's luxury hotel and $29.2 million for Seneca Allegany Casino's garage and resort hotel. These investments clearly demonstrate the Nation's commitment to develop its properties and to be the premier gaming operations in the Western New York region. In May 2005, SGC issued an additional $200 million of 7-1/4% senior notes in a difficult financial market. The completed offering, I believe, demonstrates the confidence the public bond investors have in our operations and growth potential." Seneca Gaming Corporation is a wholly owned, tribally chartered corporation of the Seneca Nation of Indians that operates all of the Nation's Class III gaming operations in Western New York. SGC, through its wholly owned subsidiaries, Seneca Niagara Falls Gaming Corporation and Seneca Territory Gaming Corporation, operates two casinos in Niagara Falls, New York and Salamanca, New York, respectively. SGC was chartered by the Nation in August 2002 and opened the Seneca Niagara Casino and Seneca Allegany Casino on December 31, 2002 and May 1, 2004, respectively. Since the Seneca Allegany Casino was open for only two months during the three and nine months ended June 30, 2004, the comparisons discussed below between the Third Quarter 2005 and the three months ended June 30, 2004 (Third Quarter 2004), and comparisons between the nine months ended June 30, 2005 and the nine months ended June 30, 2004, are less meaningful in some respects. * * * As reported in the Troubled Company Reporter on May 18, 2005, Moody's Investors Service confirmed Seneca Gaming Corporation's: * Ba3 senior implied rating, * B2 long-term issuer rating, and * SGL-2 speculative grade liquidity rating. The confirmation concludes the review that began April 7, 2005. At the same time, Moody's raised the rating on SGC's outstanding $300 million 7-1/4% senior note due 2012 to B1 from B2 (which had been on review for downgrade), and assigned a new B1 rating to the company's $200 million 7-1/4% senior note add-on. The ratings outlook is stable. SIGNATURE POINTE: Wants Access to HUD's Cash Collateral ------------------------------------------------------- Signature Pointe Investors, L.P., asks the U.S. Bankruptcy Court for the Western District of Texas, Austin Division, for authority to access cash collateral securing its indebtedness to the U.S. Department of Housing and Urban Development. The U.S. Department of Housing and Urban Development holds a Note for an undisclosed amount secured by a Deed of Trust against the Debtor's 284-unit residential apartment complex and recreational facilities located in Austin, Texas. The Debtor tells the Court it needs access to cash collateral to meet payroll, taxes, maintenance, advertisement and insurance. In addition, the Debtor is responsible for its tenants' utility services. Without access to the encumbered cash, the Debtor says that these vital services will be interrupted. The Debtor proposes to use the cash collateral in accordance with a monthly budget through December 2005, projecting: August September October November December ------ --------- ------- -------- -------- Projected Revenue $170,000 $171,000 $172,000 $173,000 $174,000 Projected Expenses $122,000 $127,000 $166,000 $113,000 $114,000 Signature Pointe assures the Court that HUD's collateral is adequately protected and the value of its interest will be preserved by the Debtor's use of the cash collateral to continue its operations. In addition, the Debtor will continue to remit to HUD $30,000 per month to be escrowed for payment of property taxes. Headquartered in Los Angeles, California, Signature Pointe Investors, L.P., operates a 284-unit apartment complex in Austin, Texas. The Debtor filed for chapter 11 protection on July 1, 2005 (Bankr. W.D. Tex. Case No. 05-13819). Patrick J. Neligan, Jr., Esq., at Neligan Andrews Bryson Foley LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated $10 million to $50 million in assets and debts. SIGNATURE POINTE: Taps Neligan Tarpley as Bankruptcy Counsel ------------------------------------------------------------ Signature Pointe Investors, L.P., asks the U.S. Bankruptcy Court for the Western District of Texas, Austin Division, for permission to employ Neligan Tarpley Andrews & Foley LLP as its counsel during its restructuring. Neligan Tarpley is expected to: a) advise the Debtor of its rights, powers, and duties as debtor-in-possession; b) take all necessary action to protect and preserve the Debtor's estate, including the prosecution of actions on the Debtor's behalf, the defense of actions commenced against the Debtor, the negotiation of disputes in which the Debtor is involved and the preparation of objections to claims filed against the estate; c) prepare on behalf of the Debtor, all necessary motions, applications, answers, orders, reports and papers in connection with the administration of the estate; d) propose on behalf of the Debtor a plan of reorganization, related disclosure statement, and any revisions, amendments, relating to the foregoing documents, and all related materials; and e) perform all other necessary legal services in connection with the Debtor's chapter 11 case and any other bankruptcy related representation that the Debtor requires. The Debtor discloses it paid Neligan Tarpley a $230,327 retainer. Neligan Tarpley's professionals who will represent the Debtor and their current hourly billing rates are: Professional Designation Rate ------------ ----------- ---- Patrick J. Neligan, Jr. Partner $475 Cynthia Williams Cole Associate $200 Carolyn Perkins Legal Assistant $115 To the best of the Debtor's knowledge, Neligan Tarpley is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Los Angeles, California, Signature Pointe Investors, L.P., operates a 284-unit apartment complex in Austin, Texas. The Debtor filed for chpater 11 protection on July 1, 2005 (Bankr. W.D. Tex. Case No. 05-13819). When the Debtor filed for protection from its creditors, it estimated $10 million to $50 million in assets and debts. SIMTEK CORPORATION: Posts $2.9 Million Net Loss in Second Quarter ----------------------------------------------------------------- Simtek Corporation (OTC Bulletin Board: SRAM) reported its financial results for the second quarter ended June 30, 2005. Revenue for the second quarter of 2005 was $2.2 million compared to $3.7 million in the second quarter of 2004, and $3.0 million in the first quarter of 2005. Net loss for the second quarter of 2005 was $2.9 million. The net loss in the current quarter compares with a net loss of $800,000 in the second quarter of 2004, and with a net loss of $900,000 in the first quarter of 2005. Q-Dot Sale Simtek said that it intends to raise working capital by selling its Q-Dot subsidiary. In accordance with FAS 144 Q-Dot will be treated as an asset held for sale in the financial reporting for this fiscal period and year. In the quarter the company included a $49,000 expense to Cypress Semiconductor as part of the company's process development agreement. In addition, the company recorded charges totaling $1.5 million in connection with significant design and process revisions of the company's 0.25 micron product family and costs associated with the management restructuring announced in May. Excluding the effect of the $1.5 million charges and the expenses related to the Cypress Semiconductor development, adjusted-GAAP net loss for the second quarter of 2005 was $1.4 million, compared with adjusted-GAAP net loss of $.8 million, in the second quarter of 2004, and with adjusted-GAAP net losses of $.9 million, in the first quarter of 2005. There was no difference between GAAP and adjusted-GAAP net income/loss in the first quarter of 2005 or in the second quarter of 2004. The book to bill ratio for the quarter was 1.23 representing strong orders for legacy and 0.25 micron devices in the company's traditional RAID controller market as well as expansion of adoption of products into more diverse market segments. Harold A. Blomquist, president, chairman, and chief executive officer, stated, "Simtek has embarked on a plan to raise working capital through the sale of Q-Dot, and to significantly improve operating efficiencies and cost of manufacturing through an expansion of the relationship with Amkor (NASDAQ:AMKR), outsourcing back end operation, and through improved management of fab processes by both primary fab partners, Chartered Semiconductor (NASDAQ:CHRT) and DongbuAnam Semiconductor. Early test results show yields on the new 0.25 micron products are now at levels that make this a very cost effective product. Yields on legacy products have stabilized and are significantly improved in Chartered's Fab 2. We expect to see improvement in the gross margins from these products in the third and fourth quarters." "First time production orders were received in the quarter from two of the world's leading RAID controller companies, building on the long-time relationships with these customers in the past. Initial revenue from these orders will be realized in the third and fourth quarters. New orders for 1 megabit products booked in June were more than $200,000, representing an increase of more than 175% over any single month so far this year," Blomquist went on to say. Thomas Surrette, managing director of the non-volatile memory business at Cypress Semiconductor Corp. (NYSE:CY), and a director of Simtek stated, "Cypress is excited about the early results achieved with Simtek as a process development partner. On July 1st, we jointly achieved the first of several major process and product development milestones on the 0.13-micron Silicon-Oxide- Nitride-Oxide-Silicon nonvolatile memory process targeted for 2006 production in our Minnesota fab. We are also pleased with the developing business relationship with Simtek and are confident that by combining our strengths in the market, both Simtek and Cypress can enjoy significantly improved business prospects." Annual Meeting Simtek anticipates holding its 2005 Annual Shareholder's Meeting on Thursday, October 27th, 2005. Further information will be announced separately. Simtek Corporation -- http://www.simtek.com/-- designs and markets fast, re-programmable, nonvolatile semiconductor memory products, for use in a variety of systems such as High Performance Workstations, GPS Navigational Systems, Robotics, Copiers and Printers, Broadcast Equipment and many others. The company is headquartered in Colorado Springs, Colorado, with international sales and marketing channels. Simtek is listed under the symbol SRAM on the OTC Electronic Bulletin Board. * * * As reported in the Troubled Company Reporter on Jul. 07, 2005, Simtek Corporation received a waiver from affiliates of RENN Capital Group, Inc., extending until July 1, 2006, the commencement date for principal payments on the $3 million aggregate principal amount 7.5% convertible debentures issued by Simtek in 2002. The extension will provide the company with additional near term operating capital. The original terms of the debentures required the company to make monthly principal payments of $30,000, beginning on June 28, 2005. The company will still be required to make interest payments. Under the terms of the waiver, monthly principal payments of $40,000 will commence on July 1, 2006. The final maturity date remains as June 28, 2009. As consideration for the extension, Simtek has issued to RENN warrants to purchase 200,000 shares of Simtek common stock at $0.50, a premium to the current market price. "We are pleased with the support provided by RENN Capital, and the favorable terms of their offer to waive near term payments to provide additional working capital," said Harold A. Blomquist, Simtek's President and CEO. "Allowing the company to postpone the next twelve months of principal payments will provide $360,000 of working capital to continue the ramp into volume production of our flagship 0.25 micron (1 Megabit) product line, and will help us fund initial product development of our next generation products in collaboration with Cypress Semiconductor," Mr. Blomquist said. "RENN Capital is pleased to offer our continuing financial support to Simtek," said Robert Pearson, Sr. Vice President of RENN Capital. "We believe that the actions presently being undertaken by the Company are moving Simtek in a very positive direction and we are especially enthused by the partnership between Simtek and Cypress Semiconductor. We, at RENN Capital see that the technology and product development roadmap enabled with this partnership will provide Simtek with access to leading edge manufacturing technology for years to come." SOLUTIA INC: Has Until Nov. 11 to Make Lease-Related Decisions -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extends the period within which Solutia Inc. and its debtor- affiliates can assume, assume and assign or reject unexpired leases and executory contracts to November 11, 2005, without prejudice to their right to seek further extensions. The Debtors are parties to about 33 unexpired nonresidential property leases to evaluate whether to assume or reject them. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. (Solutia Bankruptcy News, Issue Nos. 43 & 44; Bankruptcy Creditors' Service, Inc., 215/945-7000) TELEGLOBE COMMS: Has Until Nov. 25 to Object to Proofs of Claim --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Teleglobe Communications Corporation and its debtor-affiliates and the Plan Administrator appointed under the confirmed First Amended Joint Plan of Reorganization of the Reorganized Debtors, a further extension, until Nov. 25, 2005, to object to proofs of claim filed against the Debtors' estates. The Court confirmed the Debtors' Amended Plan on Feb. 11, 2005, and the Plan took effect on March 2, 2005. The Reorganized Debtors and Plan Administrator explain that they have been working diligently to review and reconcile approximately 1,000 claims filed against the Debtors' estates and they have made significant progress to date. The Reorganized Debtors gave the Court three reasons in support of the extension: a) they have filed over 40 omnibus objections to claims and expect to file any remaining objections prior to the Nov. 25, 2005, extension deadline; b) the extension is necessary to allow them and the Plan Administrator more opportunity to finalize their analysis of all proofs of claims and interests filed against the estates; c) the extension was not sought for purposes of delay and it will not prejudice the claimants and other parties-in- interest. Headquartered in Reston, Virginia, Teleglobe Communications Corporation is a wholly owned indirect subsidiary of Teleglobe Inc., a Canadian Corporation. Teleglobe currently provides services in more than 220 countries via a fully integrated network of terrestrial, submarine and satellite capacity. During the calendar year 2001, the Teleglobe Companies generated consolidated gross revenues of approximately $1.3 billion. As of December 31, 2001, the Teleglobe Companies has approximately $7.5 billion in assets and approximately 44.1 billion in liabilities on a consolidated book basis. The Debtors filed for chapter 11 protection on May 28, 2002 (Bankr. D. Del. Case No. 02-11518). Cynthia L. Collins, Esq., and Daniel J. DeFranceschi, Esq., at Richards Layton & Finger, PA, represent the Debtors in their restructuring efforts. The Court confirmed the Debtors' Amended Chapter 11 Plan on Feb. 11, 2005, and the Plan took effect on March 2, 2005. TIMES SQUARE: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Times Square Enterprises, LLC 210 West 42nd Street New York, New York 10022 Bankruptcy Case No.: 05-16502 Chapter 11 Petition Date: August 15, 2005 Court: Southern District of New York (Manhattan) Debtor's Counsel: Mark A. Frankel, Esq. Backenroth Frankel & Krinsky, LLP 489 Fifth Avenue New York, New York 10017 Tel: (212) 593-1100 Fax: (212) 644-0544 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Boston Properties LP Rent $250,000 599 Lexington Avenue New York, NY 10022 Stareshefsky, Joseph Loan $200,000 22 Scher Plaza Passaic, NJ 07055 Capri Construction Construction $170,000 c/o John Capri 5 Pound Hollow Road Glen Head, NY 11545 City of New York Sales Tax $170,348 New York City Law Department 100 Church Street New York, NY 10007 Sylvan, Rose Loan $150,000 44 Coconut Row Palm Beach, FL 33480 Total Dollar Management Effort Loan $150,000 c/o Arther Burhr 325 Lexington Avenue New York, NY 10016 Lauster & Radu $130,000 104 West 27 Street New York, NY 10001 Binky Beer on Broadway LLC Loan $100,000 Donno, Robert Loan $100,000 Feddis, Frank Loan $100,000 Advance Me Loan $94,715 Irving Haase & Co. Construction $92,237 Atlas Acon Electrical Work $80,000 Total Dollar Insurance Insurance $79,873 Denton, Harold $70,000 Center Street Systems Inc. Construction $70,000 City of New York Commercial Rent Tax $57,223 Lappin, Dorothy $50,000 Weiss, Leonard Loan $50,000 Wong, Ronald Loan $50,000 TITANIUM METALS: Board Okays Two-for-One Split of Common Stock -------------------------------------------------------------- Titanium Metals Corporation's Board of Directors has approved a two-for-one split of its common stock, $.01 par value per share. The stock split will be effected in the form of a stock dividend. The Record Date for the stock split has been set as the close of business on Thursday, August 25, 2005. Holders of record on the Record Date will receive one additional share for each share held on that date. The additional shares will be distributed on Tuesday, Sept. 6, 2005 by the Company's transfer agent American Stock Transfer and Trust Company, and the shares are expected to trade on a post-split basis on Wednesday, Sept. 7, 2005. As a result of the stock split, the conversion rate of the Company's 6-3/4 % Series A Preferred Stock will be changed to three and one-third shares of common stock for each share of Series A Preferred Stock, and the conversion rate of the of 6-5/8% Convertible Preferred Securities, Beneficial Unsecured Convertible Securities (BUCS) issued by TIMET Capital Trust I will be changed to 1.339 shares of common stock for each BUCS. TIMET's board of directors has declared a quarterly dividend of $0.84375 per share on its 6-3/4% Series A Preferred Stock, payable on Sept. 15, 2005, to stockholders of record as of the close of business on Sept. 1, 2005. Headquartered in Denver, Colorado, Titanium Metals Corporation -- http://www.timet.com/-- is a leading worldwide producer of titanium metal products. * * * As reported in the Troubled Company Reporter on Mar. 18, 2005, Standard & Poor's Ratings Services raised its corporate credit rating on Denver, Colorado-based Titanium Metals Corp., to 'B+' from 'B'. Standard & Poor's also raised its preferred stock rating to 'CCC+' from 'CCC'. S&P says the outlook is stable. TRUMP HOTELS: Wants to Disallow 426 Claims ------------------------------------------ Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc., found 61 claims that either have been filed after the Bar Date, paid in full or otherwise satisfied in the ordinary course of their businesses, or were never due to the claimant. Among the largest of the Post Bar Date Claims are: Claim Claimant Number Claim Amount -------- ------ ------------ Butts, Joan 2093 $77,623 Caesar's Atlantic City Casino 2177 50,000 Campan, Ana 2003 22,250 Castle, Anthony 2005 25,000 Daimler, Chrysler Services 1985 83,098 Ericson, Dennis 2157 250,000 Gary, City of 2132 4,723,319 Kent, Thadeus 2131 38,196 Pote, Helen 2037 20,000 Scopino, Mary Ellen 2002 25,000 Williams, Brenda 2094 30,000 Xerox Corporation 2222-4 41,236 The Debtors ask the Court to disallow each of the Post Bar Date Claims. No Amount Due Claims The Debtors further ask the U.S. Bankruptcy Court for the District of New Jersey to disallow 189 claims that they believe no amount is due and owing to the claimants. According to Charles A. Stanziale, Jr., Esq., at McElroy, Deutsch, Mulvaney & Carpenter, LLP, in Newark, New Jersey, the No Amount Due Claims have either been paid in full or otherwise satisfied. The No Amount Due Claims include: Claim Claimant Number Claim Amount -------- ------ ------------ Bally Gaming, Inc. 1435 $1,039,924 Boeing Capital Corp. 1887 1,063,798 Buffington Harbor 1630 1,193,302 Central Leasing Co. of NJ, LLC 283 773,496 Dept. of Treasury 2204 8,642,236 First Insurance Funding 1124 383,340 Hotel & Restaurant Employees 1498 231,360 Marcus, Joyce & Raymond 2243 8,000,000 Mercantile Bank 1437 1,078,117 Otis Elevator Co. 1798 152,651 Par-4, Inc. 1884 2,348,372 Smith, Jacqueline 1286 125,000 Vuong, Ben 1330 606,492 The Debtors also ask Judge Wizmur to disallow 29 claims pursuant to Section 502(b)(1) of the Bankruptcy Code. Charles A. Stanziale, Jr., Esq., at McElroy, Deutsch, Mulvaney & Carpenter, LLP, in Newark, New Jersey, asserts that none of those claims provides any supporting evidence or documentation. The Debtors also found out that the claims were filed after the Bar Date. Among the largest No Support Claims are: Claim Claimant Number Claim Amount -------- ------ ------------ Gionnotta, Michael 2092 $5,000,000 Golfieri, Amedio 2052 90,000 Gorman, Dolores 1977 250,000 Hulme, Joanne 2078 25,000 Martini, Maryanne 2259 250,000 Sameruk, Helen 1955 2,000 Semola, Lena 2053 50,000 No Amount Due Claims The Debtors deem it appropriate to eliminate 147 claims from their claims register. According to Mr. Stanziale: -- none of those claims provides any supporting documentation; and -- there is no amount due and owing by the Debtors on account of any of the claims. Thus, the Debtors ask the Court to disallow the No Amount Due Claims, including: Claim Claimant Number Claim Amount -------- ------ ------------ Chimento, Luciano 735 $4,000,000 Cortes, Pablo Molino 1362 2,000,000 Demarco, Angelo 1554 500,000 Enderly, Margaret 1679 500,000 Faicco, Donna 1769 500,000 Hackney, Joanne 616 1,000,000 Hirsch, Diane 305 1,000,000 Nistico, Antionette 368 1,000,000 Nolan, Vincent 1752 500,000 Penuela, Mary 1609 1,000,000 Scherr, Beatrice 328 100,000,000 Sepyashvily, Aron 1626 1,000,000 Skelly, Catherine 719 500,000 Steigelman, Louis 1810 1,000,000 Teamer, Ollie 1233 1,000,000 Trincanello, Karla 1259 1,500,000 Tubman, Margaret 632 500,000 Willingham, Michael 207 500,000 Willingham, Michael 813 500,000 Responses A. Mary Davis Mary Davis asks the Court to overrule the Debtors' Objection to her claim. Robert J. Varga, Esq., in Munster, Indiana, relates that Ms. Davis' claim arose from a personal injury action against the Debtors. The lawsuit was filed in Lake Superior Court, Lake County, Indiana. The amount of the claim could not be reasonably ascertained as it may be ultimately decided by a jury. At the time of the accident, the Debtors were insured by Management Services USA. Ms. Davis filed a timely notice of claim and thus insists that her claim should be allowed. B. Tammi Laster Contrary to the Debtors' allegation of lack of adequate support and documentation, Tammi Laster contends that all necessary medical records were provided to the Debtors. C. Jennie Walters Alan J. Cohen, Esq., at McAllister, Hyberg, White & Cohen, at Northfield, New Jersey, relates that claimant Jennie Walters was injured in an accident at the Trump Plaza. Fully responsive notices and questionnaires relating to Ms. Walter's claim were submitted to the Debtors. An application for permission to remove the stay of bankruptcy has also been submitted to the Debtors. Mr. Cohen argues that the Debtors' allegation that they are not on notice of the nature and character of Ms. Walter's claim is baseless. D. Mary Huff Mary Huff was injured in an incident at the Trump Plaza in March 2004. Ms. Huff believes that the Debtors' grounds to have her claim expunged are unclear. Notices and questionnaires were submitted back to the Debtors in accordance with the Plan, Ms. Huff says. An application to lift automatic stay was also submitted to the Court. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their successful chapter 11 restructuring. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005, and the plan took effect on May 20, 2005. (Trump Hotels Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000). UAL CORP: Court Authorizes 1997-1 EETC Senior Tranche Purchase -------------------------------------------------------------- UAL Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois for permission to purchase the Senior Tranche of the 1997-1 EETC Transaction and pay certain fees to JPMorgan Chase Bank. The Debtors finalized a financial commitment with JPMorgan by adding a third tranche to the Club DIP Facility, secured by up to 14 of the 1997-1 EETC aircraft. The Debtors have already purchased the Junior Tranches of the 1997-1 EETC Transaction in preparation for the purchase of the Senior Tranche, relates James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois. The contractual documents render the Debtors' purchase of the Senior Tranche a mechanical, non- discretionary process that will occur on the date the Debtors transfer the Purchase Price of $292,787,446. Given that the aircraft are a primary source of security, JPMorgan will not fund the Loan until the aircraft are free and clear of all liens, and first priority liens in favor of JPMorgan can be granted. The Debtors do not have the authority to instruct the 1997-1 EETC Trustee to release the current liens on the aircraft until they own the Senior Tranche and become the 1997-1 EETC controlling party. To avoid this "Catch-22," the Debtors will fund the Purchase with their own funds, making them the owner of the Senior Tranche with the authority to instruct the Trustee to release the liens on the aircraft. Once the liens are released, JPMorgan will fund the Loan. The Debtors have sufficient liquidity to temporarily fund the Purchase, but to avoid the impact on cash reserves and liquidity, the Debtors will need the Loan. The Debtors will pay JPMorgan $1,458,333 in fees upon Court approval. Mr. Sprayregen acknowledges the unique mechanics of the proposal, but assures the Court it is in the Debtors' best interest. Purchase Price Calculation 12/02/02 Pool Balance $380,454,920 Plus: Fees, Expenses and Costs 20,750,239 Interest on Pool Balance 14,486,923 Accrued Interest thru 08/12/05 (LIBOR at 3.3375 + 22 bps for 71 days) 1,895,364 ------------ Gross Pool Balance 417,587,446 Less: Debtors' Payments Thru 08/12/05 (124,800,000) ------------ Total Pool Balance Reduction 292,787,446 ------------ Total Purchase Price $292,787,446 ============ Wells Fargo Objects Ann Acker, Esq., at Chapman and Cutler, in Chicago, Illinois, representing Wells Fargo Bank, argues that the proposed transaction violates Section 316(b) of the Trust Indenture Act, which holds that the Senior Tranche has an absolute right to the benefits in the 1997 EETC Trust Agreement. According to Ms. Acker, the Debtors propose a purchase price utilizing a below market interest rate that is less than their prior public proposals for the Senior Tranche. Under Section 316(b), the Debtors may not modify the Senior Tranche's right to the full payment of interest and principal. Contrarily, the contemplated purchase price is less than the amount due on the Senior Tranche. The Debtors are attempting to deprive the Senior Tranche of full satisfaction of interest and principal, in violation of Section 316(b). The request constitutes an impermissible plan of reorganization for the Senior Tranche without their consent, alleges Ms. Acker. The Debtors seek to satisfy the Senior Tranche without the protection of a plan and disclosure statement. Since the Senior Tranche is oversecured, under Section 1126(g) of the Bankruptcy Code, holders are entitled to retain the property that secures their claims. As a result, the Debtors are trying to define the rights of the matured Senior Tranche in a vacuum. Since a plan that proposes to pay the Senior Tranche less than the full amount could not be confirmed, the Court should not grant the request. * * * Judge Wedoff authorizes the Debtors to purchase the Senior Tranche and to pay the necessary fees to JPMorgan Chase Bank. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Wants to Amend Club DIP Facility to Control EETC ---------------------------------------------------------- UAL Corporation and its debtor-affiliates have obtained the U.S. Bankruptcy Court for the Northern District's permission to purchase the Senior Tranche of the 1997-1 EETC Transaction. The Debtors currently need outside financing to complete the purchase, James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, informs the Court. The Debtors made inquiries of financial institutions capable of making a loan to fund the Purchase on an expedited basis. After evaluating proposals and conducting discussions with potential lenders, the Debtors exercised their sound business judgment, and as a result of arm's-length discussions, agreed on an amendment to the Club DIP Facility. By this motion, the Debtors seek the Court's authority to: * amend the Club DIP Facility to purchase the Senior Tranche of the 1997-1 EETC Transaction; * pay certain fees in connection with the Amendment; and * modify the automatic stay to allow certain liens to be placed on property. Loan Terms The Club DIP Facility will be amended to add a Tranche C Term Loan. The Tranche C Term Loan will be structured as a senior secured superpriority DIP term loan facility up to $320,000,000, with an interest rate of LIBOR plus 4.75%, and ABR plus 3.75%. JPMorgan Chase will syndicate all or part of the Loan. The Loan will be secured by 10 of the Debtors' aircraft. The principal may be increased to $350,000,000 if, prior to funding of the Loan, the Debtors obtain title to all 14 aircraft within the EETC. The superpriority claims will be pari passu with the superpriority claims granted in favor of the Club DIP Tranche A and Tranche B Lenders. The Tranche C Term Loan will be secured by: 1) a first priority lien on up to 14, but no fewer than 10 aircraft, owned by the Debtors that currently secure the 1997-1 EETC's outstanding obligations; and 2) junior liens on the collateral securing the Debtors' Club DIP Facility. The Loan will mature on December 30, 2005, subject to automatic extension at the Debtors' option, through March 31, 2005. The Debtors will pay a maximum of $6,575,000 in fees for underwriting and administration of the Loan and the waiver and amendment to the Club DIP Facility. The Facility will be a single-draw term loan as a separate tranche under the Credit Agreement. The Amendment includes waivers from the Tranche A and Tranche B Lenders of the terms and conditions of the Club DIP Facility to: 1) allow the superpriority claim of the Loan to be pari passu with the superpriority claims granted in favor of the Tranche A and B Lenders; 2) allow senior liens to be placed on the aircraft to secure the Loan; 3) allow junior liens to be placed on collateral securing the Debtors' Club DIP Facility to secure the Loan; 4) grant junior liens on the aircraft to further secure the Tranche A and B Loans under the Club DIP Facility; and 5) allow the Debtors to use their cash collateral for the direct purchase of the A, B and C Tranches. Additionally, the Debtors need the stay modified to permit first priority and junior liens to be placed on the aircraft. Waivers by the Club DIP Lenders Section 4(b)(ii) of the Final Club DIP Order does not explicitly authorize (i) an increase in the principal of the facility like by adding another debt tranche, or (ii) the Debtors to pay any fees associated with the increase. Accordingly, the Debtors seek the Court's authority to amend the Club DIP Facility to add the C Tranche Loan, and to pay the necessary fees. Mr. Sprayregen tells the Court that the Tranche C Term Loan could not have been obtained on an unsecured, standalone basis, given the advanced stage of the Debtors' bankruptcy. There are few financial institutions capable of making a DIP Loan commitment the size of the Tranche C Term Loan, especially on an expedited basis. Since the Lenders are familiar with the Debtors' business, the most logical and attractive option was to add another tranche to the existing Club DIP Facility. No institution was willing to refinance the Transaction with an unsecured loan -- either on a standalone basis or as part of the Club DIP Facility. Mr. Sprayregen asserts that the Amendment is necessary for the Debtors to complete their strategy to obtain a controlling position in the 1997-1 EETC. The financing will enable the Debtors to utilize their cash for other restructuring and business purposes. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Taps Mayer Brown as Special Litigation Counsel -------------------------------------------------------- UAL Corporation and its debtor-affiliates hired Mayer, Brown, Rowe & Maw as special litigation counsel way back in 1998 when Irene Tan Cheng Hua and Michael Sum filed a lawsuit against the Debtors and Quest Diagnostics Inc. MBR&M defended the Debtors against the Tan Claimants' claims and causes of action. On the Petition Date, the Tan Litigation was dismissed by the U.S. District Court for the Northern District of Illinois and was pending as a third amended complaint in the Circuit Court of Cook County, Illinois. On May 9, 2003, the Tan Claimants filed Claim No. 35778 in excess of $11,300,000. Two days after, Quest filed Claim No. 39143 for contribution. James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, notes that the Debtors have numerous objections to the Tan Claim and Quest Claim, and believe that both Claims should be disallowed. Mr. Sprayregen asserts that since MBR&M garnered invaluable insight into and experience defending the Debtors in the Tan Litigation in the past seven years, MBR&M should continue to litigate the objections to the Tan Claim and Quest Claim. For this reason, the Debtors seek the Court's authority to employ MBR&M on a nunc pro tunc basis with respect to the Claims Objection Litigation. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Expects to Close Virginia Headquarters by Jan. 2006 --------------------------------------------------------------- US Airways Group will close its headquarters in Arlington, Virginia, "in three to six months or less," after consummation of its merger with America West Airline, USAir Chief Executive Officer Bruce Lakefield said in an interview by The Pittsburgh Tribune-Review. USAir will consolidate its headquarters into America West's headquarters in Tempe, Arizona, by January 2006. The merger is expected to close by September 2005. Mr. Lakefield did not say how many of the workers would lose their jobs, according to Tribune writer Thomas Olson. The Virginia headquarters employs nearly 600 and occupies six of the 10 floors of the glass-and-concrete office building. It is located a few miles from the Ronald Reagan Washington National Airport in Arlington. 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. 99; Bankruptcy Creditors' Service, Inc., 215/945-7000) VARTEC TELECOM: Court Approves Asset Sale to Comtel for $82.1MM --------------------------------------------------------------- The Honorable Harlin DeWayne Hale of the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, gave his stamp of approval to the sale of VarTec Telecom Inc.'s assets to privately- owned ComTel Investment, LLC, for $82.1 million. ComTel won the Court-approved auction held on July 25, besting Leucadia National Corp.'s $61.5 million offer. The Asset Purchase Agreement specifically excludes all of Vartec's cash, insurance policies, avoidance actions and other causes of action of the estates not related to the Acquired Assets. 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 LLP, 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. VIVENTIA BIOTECH: June 30 Balance Sheet Upside-Down by C$34.6 Mil. ------------------------------------------------------------------ Viventia Biotech Inc. (TSX:VBI) reported financial and operational results for the second quarter ended June 30, 2005. For the second quarter ended June 30, 2005, Viventia reported total expenditures of $8.4 million, compared to $4.4 million for the second quarter of the previous year. For the first six months of 2005, expenditures were $13.8 million compared to $7.7 million for the corresponding period in 2004. "Our primary goal is to aggressively advance the clinical development of our lead drug, Proxinium(TM)," said Dr. Nick Glover, President and CEO of Viventia. "We are now actively preparing to file, initiate and implement a late-stage pivotal clinical trial with Proxinium(TM) for the treatment of head and neck cancer. Our Proxinium(TM) bladder cancer trial remains on track to complete enrolment of the Phase I arm by the third quarter of 2005 and to initiate the Phase II roll-in arm by the end of the year." Total research, development and operating expenditures for the second quarter of 2005 increased to $6.7 million compared to $3.8 million for the second quarter of 2004. For the first six months of 2005, total research, development and operating expenditures were $10.6 million compared to $6.5 million for the corresponding period in 2004. Of these expenditures, research related activities increased to $4.4 million for the second quarter of 2005 compared to $1.5 million for the corresponding period last year, primarily due to increased clinical trial activity associated with Proxinium(TM). Salaries and benefits were $1.8 million for the second quarter of 2005 compared with $1.8 million for the second quarter of 2004. The balance of research, development and operating expenditures were related to occupancy costs for the Company's Winnipeg manufacturing facility and other operating expenses. General and administrative expenditures increased to $0.7 million for the second quarter of 2005 compared to $300,000 for the second quarter of 2004. General and administrative expenditures for the first six months of 2005 were $1.6 million compared to $0.6 million for the first six months of 2004. These increases were primarily attributable to additional professional costs due to regulatory requirements in connection with the Company's intention to seek a U.S. listing as well as costs associated with increased staff levels. Interest expense increased to $0.4 million for the second quarter of 2005 compared to $0.2 million for the second quarter of 2004. Interest expense increased to $0.6 million for the first six months of 2005 compared to $0.3 million for the corresponding period in 2004. These increases were primarily attributable to interest amounts on convertible debt issued in November 2004. For the second quarter ended June 30, 2005 Viventia reported a net loss of $8.3 million, compared with a net loss of $5.5 million for the same period in 2004. The financial results for the six months ended June 30, 2005 reflect a net loss of $13.8 million, compared to $8.8 million for the same six month period in 2004. As at June 30, 2005 the Company had cash and short-term deposits totaling approximately $195,000 and current liabilities of $16.4 million compared to $2.7 million and $3.8 million respectively at December 31, 2004. Since January 1, 2000, Viventia has financed substantially all of its operations through: -- the sale of equity securities; -- bridge loan financings from the Company's principal shareholder, Mr. Leslie Dan, or entities affiliated with Mr. Dan; and -- the issuance of secured convertible debentures to the Dan Group. Although Viventia actively continues to seek additional sources of funding to finance its operations into the future, the Company can not provide assurances that additional financing sources will be available. If adequate funds are not available from additional sources, the Company will be required to seek continued funding for its operations from Mr. Dan or entities affiliated with Mr. Dan. During the three months ended June 30, 2005, the Company received $6 million in bridge financing loans from Leslie Dan. Subsequent to June 30, 2005 Viventia received $4.4 million in bridge financing loans from Mr. Dan and an entity controlled by him. These loans bear interest at 4.5% per annum and are repayable on demand. The Board of Directors of the Company has determined not to pursue the AMEX Stock Exchange listing at this time. Viventia Biotech Inc. (TSX:VBI) is a biopharmaceutical company developing Armed Antibodies(TM), powerful and precise anti-cancer drugs designed to overcome various forms of cancer. Viventia's lead product is Proxinium(TM), which combines a cytotoxic protein payload significantly more powerful than traditional chemotherapies with the highly precise tumour-targeting characteristics of a monoclonal antibody. Proxinium(TM) is in clinical development for the treatment of head and neck cancer and bladder cancer, and is expected to enter advanced clinical trials in 2005. At June 30, 2005, Viventia's balance sheet showed a C$34,623,000 stockholders' deficit, compared to a C$21,255,000 deficit at Dec. 31, 2004. VIVENTIA BIOTECH: Board Ratifies $3.3 Million Interim Financing --------------------------------------------------------------- Viventia Biotech Inc. (TSX:VBI) disclosed that its board of directors has ratified two interim bridge loans: -- $900,000 obtained on July 26, 2005; and -- $2 million obtained on Aug. 3, 2005 respectively, from Mr. Leslie Dan, the Company's Chairman and an entity controlled by him. In addition, the Board of Directors approved and authorized the Company to obtain an additional interim bridge loan of $400,000 from Mr. Dan to fund ongoing operations. All of the loans are unsecured, have an interest rate of 4.5% per year and are repayable on demand. The board of directors determined, after receiving the recommendation of a special committee, that the loan arrangements entered into between the Company and Mr. Dan are reasonable given the circumstances of the Company and were obtained on reasonable commercial terms that are not less advantageous to the Company than if the loans were obtained from a person dealing at arm's length with the Company. The loans were arranged by Mr. Dan in his personal capacity in order to fund ongoing operations. The special committee, composed of independent directors of the Company, was formed and authorized by the board to review and consider the terms of the loan and to provide the board with its recommendation. Viventia Biotech Inc. (TSX:VBI) is a biopharmaceutical company developing Armed Antibodies(TM), powerful and precise anti-cancer drugs designed to overcome various forms of cancer. Viventia's lead product is Proxinium(TM), which combines a cytotoxic protein payload significantly more powerful than traditional chemotherapies with the highly precise tumour-targeting characteristics of a monoclonal antibody. Proxinium(TM) is in clinical development for the treatment of head and neck cancer and bladder cancer, and is expected to enter advanced clinical trials in 2005. At June 30, 2005, Viventia's balance sheet showed a C$34,623,000 stockholders' deficit, compared to a C$21,255,000 deficit at Dec. 31, 2004. WELLINGTON PROPERTIES: Wants to Use LaSalle Bank's Cash Collateral ------------------------------------------------------------------ Wellington Properties, LLC, asks the U.S. Bankruptcy Court for the Middle District of North Carolina for permission to use Cash Collateral securing repayment of pre-petition obligations to LaSalle Bank National Association. The Debtor's primary asset is a 501-unit apartment complex known as Wellington Place, located at 4230 Garrett Road, Durham, North Carolina. That apartment complex was damaged by fire on Nov. 13, 2004, resulting in substantial damage that prevents occupancy of a number of units pending repairs, for which insurance proceeds are available. Under various pre-petition promissory notes and loan agreements, the Debtor owes approximately $12.5 million to LaSalle Bank. LaSalle Bank is the Trustee for the Registered Holders of LB Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 1998-C1, for whom GMAC Commercial Mortgage Corporation has been designated as Servicer and as Special Servicer. LaSalle therefore has a valid lien and security interest in substantially all of the Debtor's real property and tangible personal property, including accounts receivable and rents. The Debtor will use the Cash Collateral to meet payroll and tax deposits, as well as the other expenditures necessary to operate and preserve the apartment complex. The Debtor's request for authority to use the Cash Collateral is in accordance with a Six-Month Budget, from April 5, 2005, through Sept. 6, 2005. A full-text copy of the Six-Month Budget is available for free at http://ResearchArchives.com/t/s?c9 To adequately protect the interests of LaSalle Bank, the Debtor will grant LaSalle replacement liens and a continuing post- petition lien and security interest in all of the Debtor's assets and property, including its post-petition accounts receivable and rents. Additionally, the Debtor will also limit the use of Cash Collateral to fund its operations as projected in the Budget, and limit the use of the insurance proceeds to the costs of making necessary repairs to the fire-damaged units of the apartment complex. The Court has continued the cash collateral hearing until Nov. 15, 2005, at 9:30 a.m., to consider the Debtor's request. Headquartered in Durham, North Carolina, Wellington Properties, LLC, owns and operates a 501-unit apartment complex known as Wellington Place located in Durham, North Carolina. The Company filed for chapter 11 protection on March 29, 2005 (Bankr. M.D.N.C. Case No. 05-80920). John A. Northen, Esq., at Northen Blue, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $11,625,087 and total debts of $12,632,012. WELLINGTON PROPERTIES: Wants Excl. Period Extended Until Sept. 12 ----------------------------------------------------------------- Wellington Properties, LLC, asks the U.S. Bankruptcy Court for the Middle District of North Carolina, to extend, until Sept. 12, 2005, the time period within which it alone can file a chapter 11 plan. The Debtor also asks the Court for more time to solicit acceptances of that plan from its creditors, until Nov. 11, 2005. The Debtor explains that since the Petition Date, it has engaged in negotiations with its primary secured creditor, LaSalle Bank National Association in its capacity as trustee for the holders of certain indebtedness, regarding the potential consensual sale of the Debtor's primary asset, the 501-unit apartment complex known as Wellington Place and located in Durham, North Carolina. Despite good faith negotiations and best efforts between the Debtor and LaSalle Bank, they did not reach an agreement on how to proceed, and in the absence of a final and definitive agreement on the issues regarding the sale of Wellington Place, the Debtor intends to propose a traditional plan of reorganization based upon the retention of that apartment complex and a restructuring of its secured and unsecured obligations. The Debtor believes that an extension of the exclusivity periods is reasonable and necessary to allow it to project the administrative expenses, assess the claims asserted against its estate, project the long-term cash flow of the property, and formulate a chapter 11 plan and an accompanying disclosure statement that will provide adequate information to creditors. The Debtor assures the Court that the requested extension will not prejudice the rights of any creditors and other parties-in- interest. Headquartered in Durham, North Carolina, Wellington Properties, LLC, owns and operates a 501-unit apartment complex known as Wellington Place located in Durham, North Carolina. The Company filed for chapter 11 protection on March 29, 2005 (Bankr. M.D.N.C. Case No. 05-80920). John A. Northen, Esq., at Northen Blue, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $11,625,087 and total debts of $12,632,012. WESTERN WATER: Brings-In Garald Barber & General Capital Partners ----------------------------------------------------------------- Western Water Company sought and obtained permission from the U.S. Bankruptcy Court for the Northern District of California to employ Garald L. Barber as its real estate broker and General Capital Partners, LLC, as its restructuring advisor. Mr. Barber and General Partners will: (a) prepare a program which will include locating interim financing through newspapers, magazines, journals, letters, fliers, signs, telephone solicitation, or other methods as General Capital may deem appropriate; (b) prepare advertising letters, fliers and similar sales materials which will include information regarding the financing requirements; (c) locate parties who might have an interest in providing interim financing to the Company; (d) locate parties who might have an interest in refinancing the Cherry Creek Project or acquiring the real property assets of the Debtor; (e) circulate materials to interested parties regarding the requested interim financing, after completing confidentiality documents with those interested parties, and if necessary such circulation may be in conjunction with a third party Investment Bank; (f) respond, provide information to, communicate and negotiate with and obtain offers from interested parties and make recommendations to the Company as to whether or not a particular offer should be accepted, and if necessary, such communications and negotiations may be in conjunction with a third party Investment Bank; (g) communicate regularly with the Company in connection with the status of the efforts made by General Capital with respect to the refinancing; (h) recommend to the Company the proper method of handling any specific problems encountered with respect to the marketing, restructuring, and refinancing; and (i) advise the Company in any restructuring, plan of organization or liquidation. Terms of Payment Mr. Barber tells the Court that he will be paid jointly with General Capital for services rendered under these terms: -- Monthly Retainer Mr. Barber and General Capital will be paid a total of $10,000 per month until the time the Debtor is able to secure and receive Gross Proceeds from Interim Financing. Upon receipt of Gross Proceeds from interim financing, Mr. Barber and General Capital will be paid a total of $15,000 per month. Monthly fees will only be due and payable for the first three months of the agreement and shall be credited back 100% against any transaction fee. There shall be no credit back against any interim financing fee received by Mr. Barber and General Capital -- Interim Financing Mr. Barber and General Capital will receive 2% of the Gross Proceeds received by the Debtor from an interim fthrough the efforts of General Capital and MR. Barber. -- Transaction Fee The fee to be paid to Mr. Barber and General Capital will be derived from the aggregate of gross proceeds from all transactions, equivalent to: Gross Proceeds Percent -------------- ------- Below $10 Million 2% $10 Million to $15 Million 3% $15 Million to $20 Million 4% $20 Million to $25 Million 5% More than $25 Million 6% Mr. Barber and J. Gregory Barrow at General Capital assure the Court that they are "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Point Richmond, California, Western Water Company manages, develops, sells and leases water and water rights in the western United States. The Company filed for chapter 11 protection on May 24, 2005 (Bankr. N.D. Calif. Case No. 05-42839). Adam A. Lewis, Esq., at the Law Offices of Morrison and Foerster , represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts between $10 Million and $50 Million. WESTPOINT STEVENS: Asks Bankr. Court to Dismiss Chapter 11 Cases ---------------------------------------------------------------- WestPoint Stevens, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New York to dismiss their chapter 11 cases. The Debtors inform the Court that they have no ongoing business operations and are administratively insolvent, thus, confirmation of a chapter 11 plan is impossible in accordance with the Bankruptcy Code. The Debtors believe that a chapter 7 conversion is not advisable because it will increase administrative cost to the estate and require the appointment of a chapter 7 trustee. As previously reported in the Troubled Company Reporter on August 11, 2005, the Debtors sold almost all of its assets to billionaire investor Carl Icahn's American Real Estate Holding Ltd. for $703.5 million. The Debtors reported that its remaining assets are worth $6.2 million. The remaining assets, the excluded assets and avoidance actions, are de minimis and cannot be liquidated for any substantial recovery. They have over $75 million in administrative claims. The Debtors seek other related relief to assist in winding down their estates: 1) rejection of unassumed executory contracts and nonresidential real property leases; 2) abandonment of excluded certain properties; 3) payment of professional fees and wind-down costs; 4) termination of the Debtors' employee and retiree benefit plans; 5) filing of final tax returns and dissolution of corporate entity; 6) dismissal of the avoidance actions; 7) injunctive relief; 8) record retention; 9) waiver of requirements of section 349(b) of the bankruptcy code; 10) appointment of Lester D. Sears as the responsible officer; 11) retention of jurisdiction; The Debtors have set aside $5 million to pay professionals who worked on its bankruptcy case. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. WESTPOINT STEVENS: Files List of Contracts Assigned to Textile -------------------------------------------------------------- WestPoint Stevens, Inc. and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the Southern District of New York a schedule setting forth the executory contracts and unexpired nonresidential real property leases to be assumed and assigned to Textile Co., Inc., the purchaser of substantially all of their assets. The Schedule provides the cure amounts associated with each contract or lease. As of August 2, 2005, seven parties have objected to the information listed in the Schedule: (1) Birch Run Outlets II, LLC, (2) The CIT Group/Equipment Financing, Inc., (3) BVT/WELP Pigeon Forge, L.P., (4) Federal Express Corp., (5) CPG Partners, L.P., (6) NMGH Financial Services Inc., and (7) General Electric Capital Corporation. A full-text copy of the leases and contracts to be assumed and assigned is available for free at: http://bankrupt.com/misc/wspt-executory-contracts.pdf Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) WILLIAM HECKSTEDEN: Case Summary & 15 Largest Unsecured Creditors ----------------------------------------------------------------- Debtors: William G. Hecksteden & Deborah A. Hecksteden 3 Marigold Lane Califon, New Jersey 07830 Bankruptcy Case No.: 05-36175 Type of Business: The Debtors have an interest in Vendor Management Integrity. Chapter 11 Petition Date: August 15, 2005 Court: District of New Jersey (Trenton) Debtors' Counsel: Daniel M. Eliades, Esq. Forman, Holt & Eliades LLC 218 Route 17 North Rochelle Park, New Jersey 07662 Tel: (201) 845-1000 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 15 Known Creditors: Entity Claim Amount ------ ------------ 1st Trust Bank Unknown P.O. Box 600 Memphis, TN 38101-0600 All Modes Transport, Inc. Unknown 1 Corey Road Fairfield, NJ 07004-1540 American Express Unknown P.O. Box 360001 Fort Lauderdale, FL 33336-0001 American Express (Blue) Unknown P.O. Box 360001 Fort Lauderdale, FL 33336-0001 American Express (Gold Card) Unknown P.O. Box 360001 Fort Lauderdale, FL 33336-0001 American Express (Platinum) Unknown P.O. Box 360001 Fort Lauderdale, FL 33336-0001 BMW Financial Services Unknown P.O. Box 3608 Dublin, OH 43016-0306 Capital One Unknown P.O. Box 708844 Charlotte, NC 28272-0884 Charles R. Cohen, Esq. Unknown 710 Route 46 East, Suite 101 Fairfield, NJ 07004-1540 CHASE Master Card Unknown P.O. Box 15153 Wilmington, DE 19886-5153 David B. Nasta, Esq. Unknown 525 Palmer Avenue Maywood, NJ 07607 PNC Bank Unknown P.O. Box 747032 Pittsburgh, PA 15274-7032 PNC Bank Unknown P.O. Box 747066 Pittsburgh, PA 15274-7066 Volkswagen Credit Unknown P.O. Box 72470136 Philadelphia, PA 19170-0136 Wachovia Bank, N.A. Unknown P.O. Box 96074 Charlotte, NC 28296-0074 WINFIELD CAPITAL: SBA Default Triggers Going Concern Doubt ---------------------------------------------------------- Winfield Capital Corp. (OTCBB: WCAP) reported a net loss of $460,358 for the quarter ended June 30, 2005, versus a net loss of $547,500 for the quarter ended June 30, 2004. The net loss in the quarter ended June 30, 2005, included a net investment loss of $287,413 and a realized net capital loss of $391,170 on the sale of a debt security compared with a net investment loss of $295,114 and a realized net capital gain of $314,213 for the quarter ended June 30, 2004. The net loss for the three months ended June 30, 2005 was partially offset by a decrease in unrealized depreciation on investments of $218,225 (principally related to the increase in fair value of three portfolio companies, offset by the decrease in fair value of two portfolio companies). There was an increase in unrealized depreciation on investments of $566,599 for the three months ended June 30, 2004. The Company's investment income decreased by $289,820, or a decrease of 77.6%, from $373,267 for the three-month period ended June 30, 2004 to $83,447 for the three-month period ended June 30, 2005. This primarily reflected a decrease in interest from small business concerns of $281,027 as a result of the Company's sale of loan investments. Interest from idle funds decreased by $8,793 during this period as a result of a decrease in idle funds that were invested. Interest expense decreased by $281,613, or a decrease of 77.9%, from $361,448 for the three-month period ended June 30, 2004 to $79,835 for the three-month period ended June 30, 2005 as a result of the repayment of certain debentures to the U.S. Small Business Administration. The Company's operating expenses decreased by $15,908, or a decrease of 5.2%, from $306,933 for the three months ended June 30, 2004 to $291,025 for the three months ended June 30, 2005. Legal fees decreased by $29,675, insurance expense decreased by $6,202, stock record costs increased by $15,125 due to the Annual Meeting of Shareholders and state tax increased by $5,115. There were miscellaneous decreases of $271. SBA Regulation Impairment According to the SBA Regulations, the Company is required to be in compliance with the capital impairment rules, as defined by regulation 107.1830 of the SBA Regulations. The Company was notified by the SBA on April 30, 2003, that the Company was no longer in compliance with the SBA's capital impairment requirements and that the SBA had accelerated the maturity date of the Company's debentures. The aggregate principal, interest and fees due under the debentures totaled approximately $25.6 million as of April 30, 2003, including interest and fees due through the next semi-annual payment date. As a result of subsequent repayments by the Company, the aggregate principal, interest and fees due under the debentures totaled approximately $3.7 million as of June 30, 2005, including interest and fees due through the next semi-annual payment date. The SBA has transferred Winfield Capital's account to liquidation status where any new investments and material expenses are subject to prior SBA approval. Based on discussions and meetings that the Company has had with the SBA to date, the SBA will not afford the Company the flexibility of a self-managed liquidation to repay its indebtedness. As a result, the Company anticipates that it will be required to repay all or substantially all of the principal and interest owing to the SBA on a schedule acceptable to the SBA. Forbearance Agreement On April 6, 2005, the Company entered into a Forbearance Agreement with the SBA whereby the maturity date of the Company's remaining principal indebtedness to the SBA was extended until June 30, 2005, subject to a cure period of fifteen days. In connection with the Forbearance Agreement, the Company entered into a Stipulated Settlement and a Consent and Judgment whereby the SBA may pursue any remedies it deems appropriate under the law or the instruments evidencing the Company's indebtedness, including, without limitation, initiating proceedings for the appointment of the SBA or its designee as receiver to the extent that the Company defaults under its obligations pursuant to the Forbearance Agreement. The Company is in default pursuant to the terms of the Forbearance Agreement that required the repayment in full of all of the Company's outstanding indebtedness to the SBA including accrued interest on July 15, 2005, after giving effect to a fifteen-day cure period. To date, the SBA has refused to grant the Company an extension of the maturity under the Forbearance Agreement. The SBA has yet to formally accelerate its indebtedness, although the SBA is now entitled to pursue any remedies, including, without limitation, seeking a receivership of the Company. Going Concern Doubt If the SBA were to require the Company to immediately pay back the entire indebtedness including accrued interest, certain private security investments may need to be disposed of in a forced sale that may result in proceeds less than their carrying value at June 30, 2005. As such, this impairment could have a material adverse effect on the Company's financial position, results of operations and cash flows that raises substantial doubt about the Company's ability to continue as a going concern. The Company continues to explore various strategic alternatives, including a third party equity infusion, although there can be no assurance that it will be successful in its ability to consummate or implement these or any other strategic alternatives. Winfield Capital is a small business investment company that makes loans and equity investments pursuant to funding programs sponsored by the SBA. The Company is also a non-diversified, closed-end investment company that is a business development company under the Investment Company Act of 1940. The Company's common stock is traded on the Over the Counter Bulletin Board under the symbol "WCAP". WINFIELD CAPITAL: Posts $460,358 Net Loss for Qtr. Ended June 30 ---------------------------------------------------------------- Winfield Capital Corp. (OTCBB: WCAP) reported a net loss of $460,358 for the quarter ended June 30, 2005 versus a net loss of $547,500 for the quarter ended June 30, 2004. The net loss in the quarter ended June 30, 2005 included a net investment loss of $287,413 and a realized net capital loss of $391,170 on the sale of a debt security compared with a net investment loss of $295,114 and a realized net capital gain of $314,213 for the quarter ended June 30, 2004. The net loss for the three months ended June 30, 2005 was partially offset by a decrease in unrealized depreciation on investments of $218,225 (principally related to the increase in fair value of three portfolio companies, offset by the decrease in fair value of two portfolio companies). There was an increase in unrealized depreciation on investments of $566,599 for the three months ended June 30, 2004. The Company's investment income decreased by $289,820, or a decrease of 77.6%, from $373,267 for the three-month period ended June 30, 2004 to $83,447 for the three-month period ended June 30, 2005. This primarily reflected a decrease in interest from small business concerns of $281,027 as a result of the Company's sale of loan investments. Interest from idle funds decreased by $8,793 during this period as a result of a decrease in idle funds that were invested. Interest expense decreased by $281,613, or a decrease of 77.9%, from $361,448 for the three-month period ended June 30, 2004 to $79,835 for the three-month period ended June 30, 2005 as a result of the repayment of certain debentures to the U.S. Small Business Administration. The Company's operating expenses decreased by $15,908, or a decrease of 5.2%, from $306,933 for the three months ended June 30, 2004 to $291,025 for the three months ended June 30, 2005. Legal fees decreased by $29,675, insurance expense decreased by $6,202, stock record costs increased by $15,125 due to the Annual Meeting of Shareholders and state tax increased by $5,115. There were miscellaneous decreases of $271. SBA Notification As previously disclosed in the Company's public filings and in press releases, according to the SBA Regulations, the Company is required to be in compliance with the capital impairment rules, as defined by regulation 107.1830 of the SBA Regulations. The Company was notified by the SBA on April 30, 2003 that the Company was no longer in compliance with the SBA's capital impairment requirements and that the SBA had accelerated the maturity date of the Company's debentures. The aggregate principal, interest and fees due under the debentures totaled approximately $25.6 million as of April 30, 2003, including interest and fees due through the next semi-annual payment date. As a result of subsequent repayments by the Company, the aggregate principal, interest and fees due under the debentures totaled approximately $3.7 million as of June 30, 2005, including interest and fees due through the next semi-annual payment date. The SBA has transferred Winfield Capital's account to liquidation status where any new investments and material expenses are subject to prior SBA approval. Based on discussions and meetings that the Company has had with the SBA to date, the SBA will not afford the Company the flexibility of a self-managed liquidation to repay its indebtedness. As a result, the Company anticipates that it will be required to repay all or substantially all of the principal and interest owing to the SBA on a schedule acceptable to the SBA. SBA Forbearance Agreement Default On April 6, 2005, the Company entered into a Forbearance Agreement with the SBA whereby the maturity date of the Company's remaining principal indebtedness to the SBA was extended until June 30, 2005, subject to a cure period of fifteen days. In connection with the Forbearance Agreement, the Company entered into a Stipulated Settlement and a Consent and Judgment whereby the SBA may pursue any remedies it deems appropriate under the law or the instruments evidencing the Company's indebtedness, including, without limitation, initiating proceedings for the appointment of the SBA or its designee as receiver to the extent that the Company defaults under its obligations pursuant to the Forbearance Agreement. The Company is in default pursuant to the terms of the Forbearance Agreement that required the repayment in full of all of the Company's outstanding indebtedness to the SBA including accrued interest on July 15, 2005 after giving effect to a fifteen-day cure period. To date, the SBA has refused to grant the Company an extension of the maturity under the Forbearance Agreement. The SBA has yet to formally accelerate its indebtedness, although the SBA is now entitled to pursue any remedies, including, without limitation, seeking a receivership of the Company. Going Concern Doubt If the SBA were to require the Company to immediately pay back the entire indebtedness including accrued interest, certain private security investments may need to be disposed of in a forced sale that may result in proceeds less than their carrying value at June 30, 2005. As such, this impairment could have a material adverse effect on the Company's financial position, results of operations and cash flows that raises substantial doubt about the Company's ability to continue as a going concern. The Company continues to explore various strategic alternatives, including a third party equity infusion, although there can be no assurance that it will be successful in its ability to consummate or implement these or any other strategic alternatives. Winfield Capital -- http://www.winfieldcapital.com/-- is a small business investment company that makes loans and equity investments pursuant to funding programs sponsored by the SBA and is a non-diversified, closed-end investment company that is a business development company under the Investment Company Act of 1940. The Company's common stock is traded on the Over the Counter Bulletin Board under the symbol "WCAP". WORLDCOM INC: Court Approves PSInet Settlement Agreement -------------------------------------------------------- WorldCom, Inc. and its debtor-affiliates sought and obtained the U.S. Bankruptcy Court for the Southern District of New York's authority to enter into a settlement agreement with PSINet Liquidating LLC, as successor-in-interest to PSINet, Inc., and its affiliates. PSINet, Inc., and its subsidiaries filed bankruptcy petitions in the United States Bankruptcy Court for the Southern District of New York on May 31, 2001. Anastasia Kelly, MCI, Inc. executive vice president and general counsel, relates that on July 8, 2002, the WorldCom Debtors filed various proofs of claim in the PSINet bankruptcy cases. The PSINet Debtors objected to the WorldCom Debtors' claims. On November 20, 2002, the PSINet Debtors filed Claim No. 1616 against the WorldCom Debtors, asserting preference claims. To resolve their claims dispute, the parties agree that: (a) The PSINet Claim will be withdrawn, with prejudice; (b) The WorldCom Claim will be allowed in the PSINet bankruptcy cases as an administrative claim for $2,000,000; (c) The settlement will not be construed as an admission of any liability, wrongdoing or responsibility of the parties; and (d) The WorldCom Debtors and the PSINet Debtors will exchange mutual releases. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM INC: Balks at Mississippi Power's Move for Claim Payment ----------------------------------------------------------------- As previously reported in the Troubled Company Reporter on February 21, 2005, Mississippi Power Company and Southern Company Services, Inc., as agent for Mississippi Power and each of the other Southern Company operating companies, asked the United States Bankruptcy Court for the Southern District of New York to compel MCI Telecommunications, Inc., to satisfy its cure obligations pursuant to Section 365(b) of the Bankruptcy Code. MCI's predecessor-in-interest and Southern Company entered into an agreement for the provision of fiber optic facilities and services on August 12, 1991. Pursuant to a stipulation resolving Mississippi Power's limited objection to WorldCom, Inc. and its debtor-affiliates' Plan of Reorganization, MCI assumed the Agreement on April 20, 2004. The stipulation provides that: "[T]he Debtors shall cure any and all undisputed defaults under the Agreement in accordance with Section 8.05 of the Plan. The Debtors and MPC . . . shall negotiate in good faith to determine the nature and amount of any and all disputed defaults under the Agreement. Should the parties not be able to reach agreement on any disputed default, the parties shall promptly submit such dispute to the Bankruptcy Court for adjudication. . . ." Debtors Object David A. Handzo, Esq., at Jenner & Block LLP, in Washington, D.C., argues that Mississippi Power Company failed to consider three key issues: (a) MPC's indemnity claim is contrary to Alabama law, which governs the parties' agreement and forbids, as a matter of public policy, indemnification for intentional torts like trespass. (b) Under the parties' agreement and settled principles of Alabama contract law, the Debtors are obligated to indemnify MPC only on timely notice. However, the notice provided by MPC was untimely. (c) MPC cannot in any event obtain indemnification for pre- notice damages or for punitive damages. MPC's attempt to shift the third-party liability onto the Debtors should be rejected, Mr. Handzo contends. Mississippi Power Replies "The [Debtors'] argument cannot be reconciled with the plain meaning of the [parties'] Agreement," Jonathan S. Krueger, Esq., at Vinson & Elkins, L.L.P., in New York, asserts. Mr. Krueger tells the Court that the Debtors agreed to be responsible for any and all costs associated with the Cable, from construction throughout the multi-decade period during which they have been granted use of the telecommunications system. The Debtors offered no evidence that the parties chose to shift to MPC the cost of any liabilities owed to landowners after construction. Alabama public policy precludes indemnification only where there is proof that the indemnitee engaged in intentionally wrongful conduct. Mr. Krueger points out that the undisputed record establishes that at the time it constructed the Cable, MPC reached a good faith conclusion that additional easements were not required. Furthermore, the potential liabilities at issue arise from the Debtors', not MPC's, conduct in continuing to make use of the Cable without authorizing MPC to purchase additional easements. Mr. Krueger also argues that the Debtors' argument that MPC waived its right to reimbursement on account of "late" notice of a litigation by landowners that did not involve the Cable, is without merit. MPC had no right or obligation to provide the Debtors with notice of the litigation at issue under the terms of the Agreement. The lawsuits at issue did not involve the Cable and therefore, did not implicate the Debtors' reimbursement obligations. Furthermore, MPC had a contractual right to give notice to the Debtors only if MPC had a basis to judge that additional easements should be acquired. The Debtors' attempt to hold MPC responsible for their own deliberate contractual default is without basis in law or indeed in common sense, Mr. Krueger argues. The Debtors contended that MPC breached its obligation of good faith and fair dealing by informing them that MPC had substantial defenses to the landowner actions. According to the Debtors, MPC's expressions of optimism respecting its litigation position encouraged them to violate its contractual obligations by refusing to purchase additional easements. Furthermore, the Debtors argued that MPC should be required to satisfy all or most of the cost of any settlements with landowners with respect to the Debtors' use of the Cable. Mr. Krueger notes that the cost of any settlements is not even before the Bankruptcy Court. Those settlements will constitute post-reorganization obligations that will be the subject of separate actions in Mississippi Court. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) WYNDHAM INTERNATIONAL: Stockholders Approve Blackstone Merger ------------------------------------------------------------- Wyndham International, Inc. (AMEX: WBR) reported that its stockholders have adopted the Agreement and Plan of Merger, dated as of June 14, 2005, among Wyndham and affiliates of The Blackstone Group at its annual stockholders meeting today. The Company expects the Blackstone merger to close next week, subject to the satisfaction or waiver of all the conditions set forth in the Blackstone merger agreement. Under the terms of the Blackstone merger agreement, the Company's common stockholders will receive $1.15 in cash, without interest. The holders of shares of Series A and Series B Preferred Stock will receive $72.17 per share in cash, without interest. In addition, the stockholders of the Company adopted the Recapitalization and Merger Agreement, dated as of April 14, 2005, among Wyndham and certain investors in the Company's Series B Preferred Stock, pursuant to which all outstanding shares of Series A and Series B Preferred Stock would be converted into common stock and the existing common stockholders would continue to hold shares of common stock. The recapitalization merger will only occur if the Blackstone merger is not consummated. Other actions taken at the annual meeting included the election of directors and the ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm. Blackstone Group Merger On June 14, 2005, the Company entered into a definitive Merger Agreement to be acquired by an affiliate of The Blackstone Group. Under the terms of the Merger Agreement, Blackstone will acquire all of the Company's outstanding shares of common stock for $1.15 per share in cash. Under the terms of the Merger Agreement the holders of shares of series A and series B Preferred Stock will receive $72.17 per share in cash, subject to potential adjustment to reflect additional shares issued as dividends after June 30, 2005. The Company's board of directors unanimously approved the Merger Agreement and recommended approval by its stockholders. The completion of the Merger Agreement is conditioned, among other things, on the approval by our stockholders and the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The completion of the Merger Agreement is not subject to the receipt of financing by Blackstone. The closing of the Merger Agreement is expected to occur as soon as practicable following the annual stockholder meeting. The Company previously entered into a definitive Recapitalization Agreement, dated as of April 14, 2005, with certain investors of our series B Preferred Stock in which all outstanding shares of series A and series B Preferred Stock would be converted into common stock. The transactions contemplated by the Recapitalization Agreement will occur only if the Merger Agreement is terminated prior to the completion of the merger with Blackstone. Wyndham International, headquartered in Dallas Texas, owns, leases, manages, and franchises hotels primarily in the upper- upscale and luxury segments of the hotel and resorts industry in North America, Mexico, the Caribbean, and Europe. * * * As reported in the Troubled Company Reporter on Jun. 17, 2005, Moody's Investors Service affirmed all ratings of Wyndham International, Inc. In addition, Moody's changed the outlook to developing from stable. Ratings Affirmed: * Senior implied - B3 * Senior unsecured issuer rating - Ca * $50 million guaranteed senior secured letter of credit facility, due May 10, 2011, rated B3 * $530 million guaranteed first lien senior secured term loan B, due May 10, 2011, rated B3 * $175 million guaranteed first lien senior secured revolver, due May 10, 2011, rated B3 * $140 million guaranteed second priority term loan, due December 10, 2011, rated Caa1 * Speculative Grade Liquidity rating rated SGL-3 The ratings outlook has been changed to developing from stable. The change in outlook was prompted by the recent announcement that Wyndham has agreed to be acquired by an affiliate of the Blackstone Group for approximately $3.2 billion. The outlook reflects the uncertainty surrounding the timing of the transaction and how the acquisition will be financed, in addition to the ultimate impact it will have on current lenders. YUKOS OIL: Alvarez & Marsal Gets Reimbursement from Yukos --------------------------------------------------------- Alvarez & Marsal LLC, the restructuring advisor of Yukos Oil Company, sought and obtained the U.S. Bankruptcy Court for the Southern District of Texas' approval to direct Yukos to pay $277,867 on account of the firm's professional fees and $86,675 for its out-of-pocket expenses. As previously reported in the Troubled Company Reporter on June 16, 2005, Dean E. Swick, a managing director at Alvarez & Marsal, told the Court that the firm rendered services for the period January 18, 2005, through February 24, 2005. 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 $30,790,000,000 in total debts. On Feb. 24, 2005, Judge Letitia Z. Clark dismissed the Chapter 11 case. (Yukos Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Abraxas Petro ABP (43) 106 (5) Alliance Imaging AIQ (52) 621 43 Amazon.com Inc. AMZN (64) 2,601 782 AMR Corp. AMR (615) 29,494 (2,230) Atherogenics Inc. AGIX (76) 234 213 Biomarin Pharmac BMRN (110) 167 (4) Blount International BLT (220) 446 126 CableVision System CVC (2,430) 10,111 (1,607) CCC Information CCCG (107) 96 20 Centennial Comm CYCL (486) 1,467 124 Choice Hotels CHH (185) 282 (36) Cincinnati Bell CBB (625) 1,891 (18) Clorox Co. CLX (346) 3,756 (158) Compass Minerals CMP (81) 667 129 Conjuchem Inc. CJC (22) 32 28 Crown Media HL-A CRWN (34) 1,289 (130) Delphi Corp. DPH (4,392) 16,511 256 Deluxe Corp DLX (124) 1,508 (276) Denny's Corporation DENN (260) 494 (73) Domino's Pizza DPZ (574) 420 (21) Echostar Comm-A DISH (972) 7,281 269 Emeritus Corp. ESC (133) 716 (106) Foster Wheeler FWLT (490) 2,012 (175) Freightcar Amer. RAIL (23) 208 8 Graftech International GTI (34) 1,006 264 Guilford Pharm GLFD (20) 136 60 I2 Technologies ITWO (153) 386 124 ICOS Corp ICOS (57) 243 160 IMAX Corp IMAX (38) 241 27 Intermune Inc. ITMN (7) 219 133 Investools Inc. IED (22) 56 (47) Isis Pharm. ISIS (124) 146 46 Kulicke & Soffa KLIC (44) 365 182 Lodgenet Entertainment LNET (72) 275 15 Maxxam Inc. MXM (681) 1,024 103 Maytag Corp. MYG (77) 3,019 398 McDermott Int'l MDR (140) 1,488 123 McMoran Exploration MMR (39) 377 135 Nexstar Broadc - A NXST (30) 700 16 Northwest Airline NWAC (3,563) 14,352 (1,392) NPS Pharm Inc. NPSP (98) 310 215 ON Semiconductor ONNN (346) 1,132 270 Owens Corning OWENQ (8,225) 7,766 1,391 Primedia Inc. PRM (771) 1,506 16 Quality Distrib. QLTY (26) 381 18 Qwest Communication Q (2,663) 24,070 1,248 Revlon Inc. - A REV (1,102) 925 70 Riviera Holdings RIV (27) 216 5 Rural/Metro Corp. RURL (184) 221 18 SBA Comm. Corp. A SBAC (50) 857 19 Sepracor Inc. SEPR (201) 1,175 717 St. John Knits Inc. SJKI (52) 213 80 Tivo Inc. TIVO (1) 151 48 US Unwired Inc. UNWR (76) 414 56 Vector Group Ltd. VGR (33) 527 173 Verifone Holding PAY (120) 267 30 Vertrue Inc. VTRU (50) 451 (81) Warner Music Group WMG (137) 4,742 (506) Worldspace Inc.-A WRSP (1,698) 592 47 Weight Watchers WTW (36) 938 (266) WR Grace & Co. GRA (605) 3,423 811 ********* 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. 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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 ***