T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, September 28, 2005, Vol. 9, No. 230 Headlines 360NETWORKS: Settles Dispute Over AboveNet Communications' Claims ACTIVANT SOLUTIONS: Plans $140-Mil. Private Senior Debt Placement ACTIVANT SOLUTIONS: S&P Affirms B+ Sr. Secured Debt Rating ADELPHIA COMMS: MacKay Shields Resigns from Creditors Committee ADELPHIA COMMS: Stipulation on Transfer Accounting Dispute Okayed ADELPHIA COMMS: Sells Three Real Estate Parcels for $721,000 ALLIED HOLDINGS: Equity Deficit Triples to $127.4MM in Six Months AMERICAN EASTERN: Case Summary & 20 Largest Unsecured Creditors ANCHOR GLASS: Panel Opposes Glenshaw's Bid to Recover Glass Molds APARTMENTS AT TIMBER: Pleiss Okayed as Ch. 11 Trustee's Accountant AQUILA INC: Selling Selected Utility Assets for $896.7 Million ASARCO LLC: Wants Lehman as Financial Advisor & Investment Banker ASARCO LLC: Wants HR&A as Tort Claims Consultant ASARCO LLC: Govt. Wants CERLA Trial Upheld in Idaho District Court ATA AIRLINES: Wants Court Nod on Goodrich Corp. Settlement BEAZER HOMES: Registers $3M+ Convertible Senior Notes for Resale BELDEN & BLAKE: Extends Tender Offer for Sr. Sec. Notes to Oct. 12 BUDGET GROUP: Administrator Asks for Decree Closing Ch. 11 Case CAPELLA HEALTHCARE: Moody's Junks $58 Million Sr. Sec. Term Loan CAPELLA HEALTHCARE: S&P Junks $58 Mil. Proposed Sr. Secured Debt CATHOLIC CHURCH: Court Sets Status Conference Schedule in Portland CENTURY/ML: Century & ML Media Inks Estate Administration Accord CENTURY/ML: Court OKs Stipulation on Transfer Accounting Dispute CERVANTES ORCHARDS: Deere Credit Won't Allow Cash Collateral Use CHOICE FINANCIAL: Case Summary & 13 Largest Unsecured Creditors COIN BUILDERS: Case Summary & 20 Largest Unsecured Creditors COLLINS & AIKMAN: GM Wants to Recover Tooling Equipment COMPOSITE TECH: Selling $6 Million Notes Via Private Placement CORNERSTONE PRODUCTS: Panel Taps FTI as Financial Advisor CUMMINS INC: Plans to Repay $250 Million 9-1/2% Notes in Dec. 2006 DAP HOLDING: Section 304 Petition Summary DRUGMAX INC: Wells Fargo Commits $65 Million in New Financing DRUGMAX INC: Has Until Oct. 24 to Comply with Nasdaq Requirements DURANGO GEORGIA: Paper Mill & Timberland to be Auctioned on Dec. 6 DURA OPERATING: Moody's Junks $856 Million Senior Notes' Ratings ELITE GAMING: Case Summary & 8 Largest Unsecured Creditors ENRON CORP: Agrees to Allow ECP Claims for $12 Million ENRON CORP: Wants Court Nod on Potomac Settlement Agreement ENTERGY NEW ORLEANS: Court Approves Interim DIP Facility ESCHELON TELECOM: Registers 1.6-Mil Common Shares for Distribution FEDERAL-MOGUL: Inks Pact Resolving Dispute with UK Administrators FEDERAL-MOGUL: Alan Haughie Appointed as Chief Accounting Officer FIBERMARK INC: Files Revised Plan to Reflect New Bondholders Pact FIDELITY NATIONAL: Schedules Equity Distribution on Oct. 17 FLYI INC: Cuts Service & Scours for Financing to Avert Bankruptcy FOAMEX INT'L: Final DIP Financing Hearing Set for October 17 FOAMEX INT'L: Court Allows Continued Use of Existing Bank Accounts FOAMEX INT'L: Court Okays Continued Use of Cash Management System GENERAL MOTORS: Fitch Lowers Rating One Notch to BB From BB+ GMAC: Fitch Downgrades Senior Unsecured Rating to BB HEILIG-MEYERS: Wachovia Bank Says Plan Shouldn't Be Confirmed HILLMAN COS: AMEX Accepts Plan for Continued Listing Compliance HOME PRODUCTS: McGladrey & Pullen Replaces KPMG as Auditors HORNBECK OFFSHORE: Selling Debt & Equity in Private & Public Deals INSEQ CORP: Acquires Separation and Recovery in All-Stock Deal INTERNATIONAL PAPER: Sells Carter Holt Equity Stake for $1.14B INTERSTATE BAKERIES: Asks Court to Okay Nestle Purina Agreement JACOBS INDUSTRIES: Case Summary & 80 Largest Unsecured Creditors JERNBERG INDUSTRIES: Retiree Panel Taps Fagelhaber LLC as Counsel KAIRE HOLDINGS: Registers 84 Million Common Shares for Resale KAISER ALUMINUM: Asks Court to Extend Deadline to Remove Actions KEY3MEDIA GROUP: Wants Until Dec. 31 to Object to Claims LEINER HEALTH: Completes Credit Agreement Amendment with Lenders LIN TV: Subsidiary Selling $190 Mil. Notes Via Private Placement MD BEAUTY: S&P Revises Outlook to Negative from Stable MEDICALCV INC: Files Supplemental Prospectus on 63 Million Shares MELLON RESIDENTIAL: Fitch Junks Rating on Class B-5 Certificates METALFORMING TECHNOLOGIES: Court Approves $25 Mil. Sale to Zohar METALFORMING TECH: Creditors Must File Proofs of Claim By Oct. 20 METROPOLITAN MORTGAGE: Court Approves Amended Disclosure Statement METROPOLITAN MORTGAGE: SEC Sues Four Former Executives for Fraud METROPOLITAN MORTGAGE: Sues PwC for Negligence in Audit Work MIRANT CORP: Selling Washington Power Unit to Longview for $17.2M MIRANT CORP: Bowline Gets Court OK to Recover $4.9M from Insurer MOLECULAR DIAGNOSTICS: CFO Dennis L. Bergquist Resigns NATIONAL BENEVOLENT: Sues Weil Gotshal to Reduce Bankruptcy Costs NAVIGATORS GROUP: S&P Assigns Preliminary BB+ Pref. Stock Rating NEIMAN MARCUS: Fitch Places Issuer Default Rating at B- NORTH AMERICAN: Files Amended Plan & Disclosure Statement NORTHWEST AIRLINES: Common Stock Stops Trading on NASDAQ NORTHWEST AIRLINES: UST Meeting to Form Committees Friday Morning NORTHWEST AIRLINES: Adjusts CEO Steenland Employment Agreement NRG ENERGY: Continues Stock Repurchase Program ON TOP: Gets Court Nod to Employ Thomas Lackey as Local Counsel PIPE CREEK: Case Summary & 34 Largest Unsecured Creditors PROTOCOL SERVICES: Unsecured Creditors May Recover 7.5% of Claims PROTOCOL SERVICES: Gets Court Nod to Use $3.3 Mil. Cash Collateral PROTOCOL SERVICES: Wants Until Nov. 30 to Assume or Reject Leases RAVEN MOON: Registers 3.7 Billion Common Shares for Resale RELIANCE GROUP: Court OKs Gage Spencer as Panel's Special Counsel RIVER CITY: Case Summary & 20 Largest Unsecured Creditors RUSSELL CORP: Moody's Downgrades Sr. Unsecured Debt Rating to B2 SAINT VINCENTS: Has Full Access to $100 Million HFG DIP Facility SANDERS FARMS: Case Summary & 10 Largest Unsecured Creditors SILICON GRAPHICS: Wants to Save $100 Million Through Restructuring SILICON GRAPHICS: Balance Sheet Upside-Down by $191MM by June 24 TECHNEGLAS INC: Ohio EPA Wants Chapter 11 Plan Rejected TOWER AUTOMOTIVE: Inks Settlement Agreement With UNOVA Industrial TOWER AUTOMOTIVE: Two Utility Companies Press for Deposits TRAINER WORTHAM: Fitch Affirms BB Rating on $16 Mil. Pref. Shares UAL CORP: Contrarian Funds Buys Air Serv's $450,000 Claim USA MOTOR: Case Summary & 20 Largest Unsecured Creditors US AIRWAYS: Completes Merger With America West Airlines WESTPOINT STEVENS: Motion to Dismiss Chapter 11 Cases Draws Fire WILLIAMS COS: Inks $700-Mil Credit Pacts with Citicorp & Citibank WORLDCOM INC: Asks Court to Reject William Brown's Class Claim WORLD HEALTH: Warns of Possible Bankruptcy Due to Financial Woes * Juan Manuel Trujillo Joins Sheppard Mullin as NY Finance Partner * Upcoming Meetings, Conferences and Seminars ********* 360NETWORKS: Settles Dispute Over AboveNet Communications' Claims ----------------------------------------------------------------- Before the Petition Date, AboveNet Communications, Inc., formerly known as Metromedia Fiber Network Services, Inc., and 360networks (USA), Inc., entered into two agreements: 1. Collocation Agreement, dated July 6, 1998, as amended; and 2. Joint Build Agreement, dated May 1, 2000, together with any and all ancillary or related agreements executed by the parties. Pursuant to the Agreements, the Debtors were obligated to pay AboveNet for, among others things, the licensing of dedicated fiber optic strands upon AboveNet's fiber optic communications network, and work related to the construction of portions of a fiber optic network. On May 1, 2002, AboveNet filed Claim No. 1037. Pursuant to a previous Court order, Claim No. 1037 was allowed in a reduced amount equal to $499,173. AboveNet disputed the reduction. On October 2, 2002, the Debtors rejected the Agreements with AboveNet pursuant to a Court order. In accordance with the Debtors' Plan of Reorganization, AboveNet received 1,688 shares of the common stock of 360networks (Holdings) Ltd., on account of Claim No. 1037. AboveNet then filed two unsecured non-priority claims aggregating over $7.62 million. However, the Debtors point out that AboveNet's Additional Claims include duplicative amounts. Furthermore, the Debtors note that AboveNet's remaining claims in their Chapter 11 cases do not exceed $7.62 million. The Debtors also believe that they have other defenses to the Additional Claims. To fully resolve the disputes, the parties agree, with the Court's consent, that: (a) The Additional Claims -- Claim Nos. 1846 and Claim No. 1850 -- will be combined and will be known as Claim No. 1846; (b) Claim No. 1846 will be reduced and allowed as a General Unsecured Claim for $4,000,000; and (c) All other claims that have been or may have been asserted in the Debtors' Chapter 11 cases by AboveNet, excluding Claim No. 1037, are disallowed. Headquartered in Vancouver, British Columbia, 360networks, Inc. -- http://www.360.net/-- is a leading independent provider of fiber optic communications network products and services worldwide. The Company and its 22 debtor-affiliates filed for chapter 11 protection on June 28, 2001 (Bankr. S.D.N.Y. Case No. 01-13721), obtained confirmation of a plan on October 1, 2002, and emerged from chapter 11 on November 12, 2002. Alan J. Lipkin, Esq., and Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, represent the Company before the Bankruptcy Court. When the Debtors filed for protection from its creditors, they listed $6,326,000,000 in assets and $3,597,000,000 in liabilities. (360 Bankruptcy News, Issue No. 87; Bankruptcy Creditors' Service, Inc., 215/945-7000) ACTIVANT SOLUTIONS: Plans $140-Mil. Private Senior Debt Placement ----------------------------------------------------------------- Activant Solutions Inc. intends to privately place $140 million principal amount of floating rate senior notes due 2010, and that its parent holding company, Activant Solutions Holdings Inc., intends to privately place $40 million principal amount of senior floating rate pay-in-kind notes due 2011, in each case subject to market and other conditions and pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The proceeds of the private offerings are expected to be used to repay bridge loans incurred in connection with Activant's acquisition of Prophet 21, Inc., on Sept. 13, 2005. As reported in the Troubled Company Reporter on Sept. 22, 2005, the Company obtained the necessary funds to finance the acquisition by P21 Merger Corporation of Prophet 21 through cash on hand, a capital contribution from Activant Solutions Holdings and $140 million through borrowings under a senior unsecured bridge loan. P21 Merger is the Company's wholly owned subsidiary. The total consideration paid pursuant to the Agreement and Plan of Merger was approximately $215 million. The notes have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States, absent registration or an applicable exemption from such registration requirements. Activant Solutions Inc. -- http://www.activant.com/-- is a technology provider of vertical ERP solutions servicing the automotive aftermarket, hardware and home center, wholesale trade, and lumber and building materials industry segments. Over 20,000 wholesale, retail and manufacturing customer locations use Activant to help drive new levels of business performance. With proven experience and success, Activant is fast becoming an industry standard for companies seeking competitive advantage through stronger customer integration. * * * As reported in the Troubled Company Reporter on Aug. 22, 2005, Moody's Investors Service has placed these ratings of the Activant Solutions Inc. under review for possible downgrade. * B2 rating on $120 million senior unsecured notes, due 2010 * B2 rating on $157 million (face value) senior unsecured notes due 2011; and * B1 Corporate Family Rating As reported in the Troubled Company Reporter on Mar. 2, 2005, Standard & Poor's Ratings Services assigned its 'B+' debt rating to Austin, Texas-based Activant Solutions Inc.'s proposed $120 million senior unsecured floating rate notes. At the same time, Standard & Poor's affirmed its 'B+' corporate credit and senior unsecured debt ratings. The proposed floating rate notes are rated the same as the corporate credit rating, because of the minimal amount of secured debt, a $15 million revolving credit facility, in the capital structure. Proceeds from the proposed floating rate notes will primarily be used to fund the acquisition of Speedware Corporation, which was announced in January 2005. S&P says the outlook is stable. ACTIVANT SOLUTIONS: S&P Affirms B+ Sr. Secured Debt Rating ---------------------------------------------------------- Standard & Poor's Ratings Services announced that it affirmed its 'B+' corporate credit and senior unsecured debt ratings on Austin, Texas-based Activant Solutions Inc. The ratings were removed from CreditWatch, where they were placed with negative implications on Aug. 17, 2005, following the announcement that Activant would acquire Prophet 21, a leading technology solutions provider to the wholesale distribution market, for approximately $215 million. At the same time, Standard & Poor's assigned its 'B+' debt rating to the proposed $140 million senior unsecured floating rate notes, which will have essentially the same terms as the existing floating rate notes, and its 'B-' debt rating to the proposed $40 million senior PIK notes, which will be an obligation of Activant Solutions Holdings Inc., and will be structurally subordinated to all indebtedness of Activant Solutions Inc. The outlook is now negative. "The ratings affirmation reflects Standard & Poor's expectation that Activant's highly visible and recurring revenue base, combined with consistent EBITDA margins in the mid-20% area, will lead to continued modest free operating cash flow generation and an improved financial profile over the intermediate term," said Standard & Poor's credit analyst Ben Bubeck. The negative outlook, however, reflects the increased pace of acquisition activity and inherent integration risks, combined with debt leverage that is high for the current rating level. The ratings on Activant reflect its narrow business profile, acquisitive growth strategy and limited liquidity. These are only offset partly by a leading position in its addressed vertical markets, a significant amount of recurring revenue, and consistent profitability. Activant is a leading provider of business management software and solutions to the retail hardware and home centers, lumber and building materials, and wholesale trade markets, along with the automotive aftermarket. Following the Prophet 21 acquisition (and the Speedware acquisition earlier this year) the company has established a solid presence in the wholesale trade vertical. Pro forma for the proposed floating rate notes and senior subordinated PIK notes, the company had approximately $473 million of operating lease- adjusted total debt as of June 2005. ADELPHIA COMMS: MacKay Shields Resigns from Creditors Committee --------------------------------------------------------------- Deirdre A. Martini, the United States Trustee for Region 2, advises the U.S. Bankruptcy Court for the Southern District of New York that MacKay Shields, LLC, is no longer a member of the Official Committee of Unsecured Creditors of Adelphia Communications Corp., et al. The Creditors Committee is now composed of eight members: 1. Appaloosa Management, LP 26 Main Street Chatham, NJ 07928 Attn: James Bolin Phone: (973) 701-7000 Fax: (973) 701-7309 2. W. R. Huff Asset Management Co., LLC 67 Park Place Morristown, NJ 07960 Attn: Edwin M. Banks, Senior Portfolio Manager Phone: (973) 984-1233 Fax: (973) 984-5818 3. Law Debenture Trust Company of New York 767 Third Avenue, 31st Floor New York, New York 10017 Attn: Daniel R. Fisher, Senior Vice President Phone: (212) 750-6474 Fax: (212) 750-1361 4. U.S. Bank National Association, as Indenture Trustee One Federal Street Boston, Massachusetts 02110 Attn: Laura L. Moran Phone: (617) 603-6429 Fax: (617) 603-6640 - and - U.S. Bank National Association, as Indenture Trustee 60 Livingstone Avenue St. Paul, Minnesota 55107 Attn: Timothy J. Sandell Phone: (651) 495-3959 Fax: (651) 495-8100 5. Sierra Liquidity Fund, LLC 2699 White Road, Suite 255 Irvine, CA 92614 Attn: Jim Riley, Esq. Phone: (949) 660-1144 Fax: (949) 660-0632 6. Wilmington Trust Company, as Indenture Trustee 1100 North Market Street Wilmington, Delaware 19890 Attn: Suzanne J. MacDonald Phone: (302) 636-6000 Fax: (302) 636-4143 7. Tudor Investment Corporation 15303 Ventura Boulevard, Suite 900 Sherman Oaks, CA 91403 Attn: Mr. Darryl A. Schall Phone: (818) 380-3065 Fax: (203) 552-6248 8. Highfields Capital Management 200 Clarendon Street, 51st Floor Boston, MA 02116 Attn: Mr. Richard Grubman Phone: (617) 850-7500 Fax: (617) 850-7610 Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 107; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMS: Stipulation on Transfer Accounting Dispute Okayed ----------------------------------------------------------------- Adelphia Communications Corp., its wholly owned, indirect subsidiary Debtor Century Communications Corp., Debtor Century/ML Cable Venture, Century/ML Cable Corporation and ML Media Partners, L.P., want to complete the consolidated audited financial statements of Century/ML, which include the accounts of Cable Corp. On March 28, 2002, approximately $25 million was transferred from the bank accounts of Cable Corp. to the bank accounts of Century and ACOM. At the time of the Transfer, Century/ML and Cable Corp. had consolidated liabilities to Century and ACOM of at least $25 million. Disputes have arisen between Century and ACOM, on one side, and ML Media, on the other, regarding: -- how to account for the Transfer, -- the effect of the Transfer on the Financial Statements, and -- other matters accounted for in the Financial Statements. Century and ML Media, as owners of Century/ML, agreed to adopt certain proposed accounting treatments in the Financial Statements for the Transfer Accounting Dispute and the Other Disputed Matters, subject to, among others, the preparation of language to be included in the notes to the Financial Statements reasonably acceptable to Adelphia and to ML Media. In a stipulation Judge Gerber of the U.S. Bankruptcy Court for the Southern District of New York approved, the parties agree that: 1. The Financial Statements, and the representation letters to be delivered by Century, ACOM and ML Media to Century/ML auditors in connection with the Financial Statements, are not intended to and will not preclude any of the parties from maintaining or asserting any claim, defense, or liability against each other; and 2. ML Media, Century and ACOM agree to the Proposed Accounting Treatment for the Transfer Accounting Dispute and waive all claims against each other, Cable Venture or Cable Corp. arising out of the adoption of the Proposed Accounting Treatment for the Transfer Accounting Dispute. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMS: Sells Three Real Estate Parcels for $721,000 ------------------------------------------------------------ Pursuant to the Court-approved Excess Assets Sale Procedures, Adelphia Communications Corporation and its debtor-affiliates inform Judge Gerber of the U.S. Bankruptcy Court for the Southern District of New York that they will sell these real estate parcels for $721,000: 1. Property: Lot 376 in the Long Cove development at Hilton Head in South Carolina 29928 Purchaser: Sean Lewis Agent: Charter One Realty Company Amount: $340,000 Deposit: $2,000 Appraised Value: $290,000 2. Property: Lot 461, in the Long cove development at Hilton Head in South Carolina 29928 Purchaser: Robert Blumber Agent: Charter One Realty Company Amount: $340,000 Deposit: $5,000 Appraised Value: $270,000 3. Property: Real Property at 746 North Main St., Coudersport, Pennsylvania 16915 Purchaser: Gary and Jennifer Grupp Agent: Field and Stream Real Estate Amount: $41,000 Deposit: $1,000 Appraised Value: $41,000 Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 105; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Equity Deficit Triples to $127.4MM in Six Months ----------------------------------------------------------------- Allied Holdings, Inc., delivered its quarterly report on Form 10-Q for the quarter ending June 30, 2005, to the Securities and Exchange Commission on Sept. 22, 2005. For the second quarter of 2005, the Company recorded a $75.1 million net loss compared to a net loss of $3.8 million in the second quarter of 2004. Revenues were $232.6 million in the second quarter of 2005 versus revenues of $236.6 million in the second quarter of 2004, a decrease of 1.7% or $4.1 million. This decrease was due primarily to a 9.5% reduction in the number of vehicles delivered in the second quarter of 2005 versus the second quarter of 2004. Salaries, wages and fringe benefits decreased from 54.1% of revenues in the second quarter of 2004 to 50.8% of revenues in the second quarter of 2005 due primarily to a reduction in workers' compensation costs. In the second quarter of 2005, workers' compensation costs were 4% of revenues whereas in the second quarter of 2004, workers' compensation costs were 6.4% of revenues. Operating supplies and expenses increased from 17.5% of revenues in the second quarter of 2004 to 19.0% of revenues in the second quarter of 2005. The increase is due primarily to an increase in fuel expense, which increased from 5.8% of revenues in the second quarter of 2004 to 7.7% of revenues in the second quarter of 2005. At June 30, 2005, the Company's balance sheet shows $352,931,000 in total assets. Stockholders' deficit tripled to $127,443,000 at June 30, 2005, from a $41,549,000 deficit at Dec. 31, 2004. DIP Pays Defaulted Facility As of June 30, 2005, based on the financial reports delivered on July 29, 2005, to the Company's lenders under its Prepetition Facility, the Company was in default of its Prepetition Facility due to a violation of the financial covenant in its Prepetition Facility related to the minimum consolidated earnings before interest, taxes, depreciation, and amortization, as defined in the Pre-petition Facility. Because the violation of the financial covenant as of June 30, 2005, made the Prepetition Facility callable, the Prepetition Facility is considered a short-term obligation and is classified as current portion of long-term debt as of June 30, 2005. On Aug. 1, 2005, the Company obtained DIP Facilities to provide debtor-in-possession financing in connection with its Chapter 11 filing. On Aug. 2, 2005, using funds received from its DIP Facilities, the Company repaid all obligations outstanding under the Prepetition Facility, including the $1.9 million premium due for prepayment of the facility prior to maturity. Going Concern Allied's management said the Company's ability to continue as a going concern is predicated on, among other things: (1) the confirmation of a plan of reorganization; (2) compliance with the provisions of the DIP Facilities; (3) its ability to generate cash flows from operations; and (4) its ability to obtain financing sufficient to satisfy its future obligations. A full-text copy of Allied's latest quarterly report is available at no charge at http://ResearchArchives.com/t/s?1db Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. AMERICAN EASTERN: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: American Eastern Builders, Inc. 3820 Miriam Drive Charlotte, North Carolina 28205 Bankruptcy Case No.: 05-34053 Type of Business: The Debtor is a general building contractor. See http://www.americaneastern.net/ Chapter 11 Petition Date: September 26, 2005 Court: Western District of North Carolina (Charlotte) Judge: George R. Hodges Debtor's Counsel: James H. Henderson, Esq. James H. Henderson, P.C. 1201 Harding Place Charlotte, North Carolina 28204-2248 Tel: (704) 333-3444 Fax: (704) 333-5003 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Edward Calkins Shareholders loans, $1,692,204 7129 Elkston Drive rent, salary, & Charlotte, NC 28210 indemnity claims BB&T of NC Business Loan Business loan $237,982 Center P.O. Box 580003 Charlotte, NC 282580003 Ford Motor Credit Company Lease of two 2003 $60,879 Commercial Lending Services Ford F350 4X2 trucks P.O. Box 472687 Charlotte, NC 282472684 Port City Electric Company Electrical supplies $59,982 Southeastern Plumbing & Plumbing heating $33,426 Heating service/supplies Binswanger Glass Inc. Supplies $19,265 Carolina Sheet Metal Supplies $17,153 Century Contracting Inc. Supplies $15,900 Besco Electric Corporation Electrical services $11,579 Charlotte Glass Cont Supplies $10,695 Southern Mechanical Supplies $9,951 CM Steel Inc. Supplies $9,074 Selective Insurance Insurance $8,968 Joe H. Ervin Grading Grading $7,492 Johnston Allison & Hord Legal services $7,730 Lowes Credit card $6,893 Propst Construction Open account $6,669 Empire Concrete Construction Conrete supplies $5,790 Hartsell Bros Fence Co. Supplies $5,596 Weathergard Inc. Open account $5,350 ANCHOR GLASS: Panel Opposes Glenshaw's Bid to Recover Glass Molds ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Anchor Glass Container Corporation asks the U.S. Bankruptcy Court for the Middle District of Florida to deny GGC LLC's, fka as Glenshaw Glass Company, request to compel the Debtor to return some molds that it allegedly owns. The Committee asserts that GGC, LLC, has not shown that cause exists to lift the stay in the Debtor's bankruptcy case. Apparently, says Marcy E. Kurtz, Esq., at Bracewell & Guiliani LLP, in Dallas, Texas, no cause exists. GGC has asserted that the lack of adequate protection of its interests is a cause to modify the automatic stay. Subsequently, in response to the Court's Order requiring it to identify what it believes to be adequate protection of interest, GGC stated that it is not seeking adequate protection with respect to the molds. Ms. Kurtz contends that by GGC's own admission, no amounts are due on any of the property it identified as being subject to the Motion. GGC has no use for the property or the glass molds it seeks to recover as its production aspect has been discontinued, and it continues now solely for the purpose of liquidating its bankruptcy estate. Furthermore, Ms. Kurtz adds that GGC remains in possession of similar property belonging to the Debtor. The glass molds are essential to the effective reorganization of the Debtor, Ms. Kurtz argues. Unlike GGC, the Debtor's manufacturing operations continue and the molds are still used in those operations. Lifting the stay at this time to allow GGC to recover and sell property on which no debt is owed and that is currently used by the Debtor in its operations is not appropriate. Ms. Kurtz believes that the GGC Motion is an attempt to collect on prepetition debt against the Debtor. GGC does not demonstrate through its Motion that cause exists to allow it to circumvent the Bankruptcy Code and the priority scheme set out. According to Ms. Kurtz, requiring the Debtor to relinquish possession of property of a third party to GGC would expose the Debtor to unnecessary litigation. Furthermore, the Debtor cannot turn over property that is not in its possession. Allowing GGC to seek sanctions in the Court for the Debtor's failure to turn over a property that is not in the Debtor's possession is not appropriate and will certainly result in unnecessary expense to the Debtor should the Court require it to defend against the sanctions by lifting the stay. Judge Paskay will convene a hearing on October 12, 2005, at 11:00 a.m., to consider the Committee's response. Anchor Glass Continues to Defend Right Monica Marselli, the Debtor's Associate General Counsel, discloses that in a telephone conversation on July 13, 2005, GGC's counsel, Ronald Roteman, agreed to extend the time for the Debtor to respond to GGC's Turnover Complaint. Pursuant to an order entered by the Pennsylvania Bankruptcy Court, Anchor was to file an answer to the Turnover Complaint by July 15, 2005. Ms. Marselli says that Mr. Roteman granted the extension so that the Debtor and GGC could negotiate a resolution to the matter and save the Debtor the expense of engaging counsel in Pennsylvania. Ms. Marselli, however, says that she did not understand the extension of time to have a finite deadline. During the conversation, she proposed to resolve the dispute and maintained correspondence with Mr. Roteman. Ms. Marselli has continued to believe that the Debtor is not required to file a response to the Turnover Complaint because of the extension and because of the fact that settlement discussions were still ongoing. Ms. Marselli asserts that the Debtor would have vigorously contested GGC's Turnover Action if the parties did not reach an agreement through negotiation. Moreover, the molds are integral to the Debtor's recovery from the Chapter 11 case. 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. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) APARTMENTS AT TIMBER: Pleiss Okayed as Ch. 11 Trustee's Accountant ------------------------------------------------------------------ The Honorable Timothy J. Mahoney gave Thomas D. Stalnaker, the Chapter 11 Trustee appointed in Apartments at Timber Ridge, LP's chapter 11 case, permission to employ Daniel T. Pleiss as his accountant. Mr. Pleiss will prepare all necessary tax returns and reports. He will also provide other services that may be proper and necessary for Mr. Stalnaker's duties as Trustee. Judge Mahoney approved Mr. Stalnaker's request but points out that: (a) this order is not a determination that the services are necessary; (b) no determination is made that Mr. Pleiss represents no adverse interest; and (c) no fee agreement between Mr. Stalnaker and Mr. Pleiss is binding on the Court. Mr. Stalnaker is responsible for giving notice to parties-in- interest as required by rule or statute. Headquartered in Dallas, Texas, Apartments 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. AQUILA INC: Selling Selected Utility Assets for $896.7 Million -------------------------------------------------------------- Aquila Inc. (NYSE:ILA) signed definitive agreements to sell four utility businesses identified for potential sale on March 14, 2005, for a total of $896.7 million. Proceeds from the transactions will be used to reduce debt and other liabilities. The sale agreements mark a significant advance in Aquila's previously announced repositioning plan. The plan seeks to strengthen Aquila's balance sheet, improve its credit profile, and position the company to invest in utility infrastructure to provide safe and reliable service to customers as an integrated natural gas and electric utility. The transactions include: -- WPS Resources Corporation, a publicly-traded holding company for a number of energy-related subsidiaries based in Green Bay, Wisconsin, will purchase the assets and liabilities of Aquila's natural gas operations in Michigan and Minnesota for a base purchase price of $269.5 million and $288 million, respectively, plus working capital and subject to net plant adjustments. -- The Empire District Electric Company, a publicly-traded electric utility based in Joplin, Missouri, will purchase the assets and liabilities of Aquila's natural gas operations in Missouri for a base purchase price of $84 million, plus working capital and subject to net plant adjustments. -- Mid-Kansas Electric Company (MKEC), a coalition of six consumer-owned cooperatives that also own Sunflower Electric Power Corporation, a regional generation and transmission service provider, will purchase the assets and liabilities of Aquila's electric operations in Kansas for a base purchase price of $255.2 million, plus working capital and subject to net plant adjustments. Following the completion of these sales, Aquila will operate in five states, with natural gas operations in Kansas, Colorado, Nebraska and Iowa and electric operations in Missouri and Colorado. Of the utilities identified for potential sale on March 14, Aquila will retain ownership of its St. Joseph Light & Power electric operations in Missouri as well as its electric operations in Colorado as part of its ongoing business. Aquila continues to consider the sale of its three merchant peaking plants and Everest Connections, as well as a settlement of its Elwood toll contracts. "The execution of these agreements marks a major milestone in our program to reposition Aquila, strengthen the company's financial condition and improve the financial performance of our regulated utility business," said Richard C. Green, Aquila chairman and chief executive officer. "Upon completion of these sales, Aquila should be stronger financially than it has been in recent years. The proceeds are expected to allow us to significantly reduce our debt, improve our credit profile and put Aquila on a path to reaching an annual EBIT growth rate of 3 percent to 5 percent on our post-divestiture rate base." Mr. Green said the key elements of Aquila's strategy remain to: -- Maintain its focus on operating an integrated, multi-state utility. -- Significantly reduce Aquila's debt levels and strengthen its credit profile. -- Gain access to the capital markets on improved terms, allowing the company to cost-effectively fund investments in its rate base to meet customer needs. -- Continue to improve operational efficiency and lower earnings variability. -- Actively work with regulators and legislators to address rate and fuel cost issues. HSR Waiting Period Completion of each of these transactions is subject to certain closing conditions, including the non-occurrence of a material adverse event, the approval of relevant state utility commissions, the expiration or early termination of any waiting period under the Hart-Scott-Rodino Antitrust Act, and other closing conditions set forth in each asset purchase agreement. The closing of the Kansas electric operations transaction is also subject to the approval of the Federal Energy Regulatory Commission and the receipt of third-party financing by the acquirer. Aquila anticipates receiving timely regulatory approvals for these transactions within approximately 12 months. Mr. Green added: "We maintained a disciplined strategic sales approach that resulted in strong interest from a wide range of potential buyers. This allowed us to select offers from financially sound buyers with strong utility experience and a commitment to customer service and reliability. We are confident that the quality and commitment of these buyers will set the stage for a timely and orderly regulatory review and approval process." The Blackstone Group and Lehman Brothers Inc. served as advisors to Aquila. About the Buyers Based in Joplin, Missouri, The Empire District Electric Company (NYSE:EDE) is an investor-owned utility providing electric service to approximately 157,000 customers in southwest Missouri, southeast Kansas, northeast Oklahoma, and northwest Arkansas. The company also provides optic and Internet services, customer information software services, and has an investment in close- tolerance, customer manufacturing. Empire provides water service in three incorporated Missouri communities. Mid-Kansas Electric Company, LLC, is a coalition of six rural electric cooperatives serving in 34 western Kansas counties who organized themselves for the purpose of acquiring the assets of Aquila's Kansas electric network. The cooperatives also own Sunflower Electric Power Corporation, a generation and transmission service provider, as well as other businesses that provide a wide range of services including water supplies, satellite TV and Internet access, wireless broadband Internet access, cellular telephone service, commercial electrical services and propane delivery services. WPS Resources Corporation (NYSE:WPS), based in Green Bay, Wisconsin, is a holding company with four major subsidiaries providing electric and natural gas energy and related services in both regulated and nonregulated energy markets. Its principal subsidiary is Wisconsin Public Service Corporation, a regulated electric and natural gas utility serving northeastern Wisconsin and a portion of Michigan's Upper Peninsula. Wisconsin Public Service serves more than 421,000 electric customers and 305,000 natural gas customers. Another subsidiary, Upper Peninsula Power Company, is a regulated electric utility serving Michigan's Upper Peninsula. Upper Peninsula Power serves approximately 52,000 electric customers. WPS Resources' major non-regulated subsidiaries consist of WPS Energy Services, Inc. and WPS Power Development, LLC. WPS Energy Services is a diversified non-regulated energy supply and services company serving commercial, industrial and wholesale customers and aggregated groups of residential customers. Its principal market is the northeast quadrant of the United States and adjacent portions of Canada. Its principal operations in the United States are in Illinois, Maine, Michigan, Ohio, Virginia and Wisconsin. Its principal operations in Canada are in Alberta, Ontario, and Quebec. WPS Power Development owns and/or operates non-regulated electric generation facilities in Wisconsin, Maine, Pennsylvania, New York and New Brunswick, Canada; steam production facilities in Arkansas and Oregon; a partial interest in a synthetic fuel processing facility in Kentucky; and steam production facilities located in Arkansas and Oregon. Headquartered in Kansas City, Mo., Aquila Inc. (NYSE:ILA) - http://www.aquila.com/-- provides electricity and natural gas service to 1.3 million customers in Colorado, Iowa, Kansas, Michigan, Minnesota, Missouri and Nebraska. * * * As reported in the Troubled Company Reporter on Sept. 26, 2005, Standard & Poor's Ratings Services placed its ratings on Aquila Inc. on CreditWatch with positive implications. As of June 2005, the Kansas City, Missouri-based energy provider had about $2.35 billion in total debt. "The placement follows the company's announcement that it has signed definitive agreements to sell four utility businesses, for a total of $897 million, plus working capital and subject to net plant adjustments," said Standard & Poor's credit analyst Jeanny Silva. ASARCO LLC: Wants Lehman as Financial Advisor & Investment Banker ----------------------------------------------------------------- By this application, ASARCO LLC, asks the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ Lehman Brothers Inc. as its financial advisor and investment banker under the terms of an engagement letter entered into between the parties. Pursuant to the Engagement Letter, dated as of Aug. 30, 2005, ASARCO employed Lehman Brothers to provide financial advisory and investment banking services in connection with the assessment of the Debtor's financial restructuring or other strategic alternatives, and ASARCO's financial restructuring, which includes the plan of reorganization process and a possible sale, merger, consolidation or other transaction involving the transfer of ASARCO's business, assets or equity interests. Specifically, Lehman Brothers has agreed to: (a) advise and assist ASARCO in formulating a Plan, and analyzing any proposed Plan, including assisting in the Plan negotiation and confirmation process of a restructuring transaction under Chapter 11; (b) provide financial advice and assistance to ASARCO in structuring any new securities to be issued in a restructuring transaction; (c) participate in negotiations among ASARCO and its creditors, unions, suppliers, lessors and other interested parties relating to the reorganization cases; (d) participate in hearings before the Bankruptcy Court with respect to the matters upon which Lehman Brothers has provided advice, including, as relevant, coordinating with ASARCO's counsel with respect to testimonies; (e) provide expert witness testimony concerning any of the subjects encompassed by the other financial advisory services; (f) upon request, review and analyze any proposals ASARCO receives from third parties in connection with a transaction, including any proposals for debtor-in- possession financing and exit financing; (g) assist ASARCO in connection with its liquidity analysis; (h) review and analyze ASARCO's business, operations, properties, financial condition and prospects and financial projections; (i) evaluate ASARCO's debt capacity in light of its projected cash flows and assist in the determination of an appropriate capital structure; (j) analyze various restructuring scenarios and the potential impact of these scenarios on the recoveries of those stakeholders impacted by any transaction; (k) provide strategic advice with regard to restructuring or refinancing ASARCO's financial obligations; (l) assist in the drafting, preparation and distribution of selected information and other related documentation describing ASARCO and the terms of a potential transaction; (m) assist ASARCO in identifying, contacting and evaluating potential purchasers for any sale transaction; and (n) provide other advisory services as are customarily provided in connection with the analysis and negotiation of a restructuring or sale transaction, as will be requested. ASARCO relates that Lehman Brothers has significant experience and extensive knowledge in the fields of bankruptcy and mining. ASARCO selected Lehman Brothers after interviewing a number of investment banking firms. Mark Shapiro and Gil Sanborn, the managing directors of Lehman Brothers who are part of the Global Restructuring Group, and who will manage the ASARCO assignment, each have over 15 years of experience in assisting companies, creditors and others in bankruptcy cases. Moreover, Richard Tory, an executive director in the firm's Natural Resources Group, has extensive knowledge of the global metals and mining business. ASARCO will pay Lehman Brothers in accordance with these terms: (1) Commencing as of Aug. 30, 2005, and ending as of the termination of the firm's engagement, Lehman Brothers will be entitled to receive a monthly cash fee. The Advisory Fee is equal to $100,000 per month, payable in advance upon execution of the Engagement Letter and on the first day of each succeeding month for 24 months. Thereafter, the Advisory Fee will be reduced to $75,000 per month. If Lehman Brothers' engagement is terminated, the firm will be entitled to any Advisory Fees that are due and owing as of the effective date of the termination. However, in the event Lehman Brothers will terminate the Engagement Letter, the Advisory Fee will be pro-rated for any incomplete monthly period of service, in which case the firm agrees to promptly reimburse ASARCO for any portion of an Advisory Fee paid to Lehman Brothers that is in excess of the pro-rated amount of the Advisory Fee to which Lehman would be entitled for an incomplete monthly period of service. (2) If (i) a Sale Transaction occurs pursuant to which less than all of ASARCO's assets are sold or transferred, or (ii) an agreement is entered into that subsequently results in a Partial Assets Sale Transaction either during the term of Lehman Brothers' engagement or at any time during a period of 12 months following the effective date of termination of Lehman Brothers' engagement, other than termination as a result of Lehman Brothers' material breach, gross negligence or willful misconduct, ASARCO will pay Lehman Brothers a fee equal to 1% of the transaction value, payable in cash on the closing date of the Partial Assets Sale Transaction. (3) If (i) a Sale Transaction occurs pursuant to which all or substantially all of the assets of the company are sold or transferred, or (ii) an agreement is entered into that subsequently results in a Sale of All Assets either during the term of Lehman Brothers' engagement or at any time during the 12-month period following the effective date of termination, other than termination as a result of Lehman Brothers' material breach, gross negligence or willful misconduct, the company will pay Lehman Brothers a fee equal to 1% of the transaction value, payable in cash on the closing date of the Sale of All Assets, provided, however, that the Sale Transaction Fee will not exceed $4 million. (4) If a restructuring effective date occurs during the term of Lehman Brothers' engagement or at any time during the 12-month Tail Period, ASARCO will pay Lehman Brothers a $4 million fee, payable in cash on the Restructuring Effective Date. (5) All Advisory Fees paid, for up to 24 months, and 50% of all Advisory Fees paid subsequently, will be creditable against any Sale Transaction Fee or any Restructuring Transaction Fee paid or payable to Lehman Brothers. Any Sale Transaction Fee paid to Lehman Brothers in a Partial Assets Sale or a Sale of All Assets will be creditable against the Restructuring Transaction Fee paid to Lehman Brothers. However, in the case of a Partial Assets Sale Transaction, only 50% of the Sale Transaction Fee will be creditable against any Restructuring Transaction Fee paid to Lehman Brothers. Mr. Shapiro assures the Court that the firm does not have or does not represent any interest materially adverse to the interests of the Debtors or their estates, creditors, or interest holders. Moreover, Lehman Brothers is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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 through 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. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Wants HR&A as Tort Claims Consultant ------------------------------------------------ Hamilton, Rabinovitz & Alschuler, Inc., is a consulting firm that provides analytical services focused on the estimation of claims and the development of claims procedures with regard to payments and assets of a claims resolution trust. ASARCO LLC and its debtor-affiliates believe that HR&A is well qualified to serve as their consultant in that, among other things, its members have assisted and advised numerous chapter 11 debtors and creditors in the estimation of the value of claims in other mass tort reorganizations. By this application, the Debtors ask Judge Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ HR&A to provide consulting services needed throughout the course of their bankruptcy, including: (a) estimating the number and value of present and future asbestos personal injury claims and silica personal injury claims; (b) formulating the Asbestos and Silica Trust Distribution Procedures; (c) formulating financial models of payments and assets of the Asbestos PI Trust and Silica PI Trust; (d) analyzing and responding to issues related to the provision of notice to asbestos and silica claimants, and assisting in the development of those notice procedures; (e) assisting in negotiations with various parties; (f) rendering expert testimony as required by the Debtors; (g) assisting the Debtors in preparing expert testimony or reports and in the evaluation of those reports by other experts and consultants; and (h) providing other advisory services as may be requested by the Debtors from time to time. The Debtors will pay HR&A on an hourly basis, in accordance with the firm's normal billing practices: Position Charge per hour -------- --------------- Senior Partners $550 Junior Partners $450 Managing Directors $400 Principals $300 Directors $275 Managers $250 Senior Analysts $200 Analysts $150 Research Associates $100 The Debtors will also reimburse the firm for reasonable out-of- pocket expenses incurred in connection with its employment. Francine F. Rabinovitz, a member of HR&A, assures the Court that the firm does not have or represent any interest materially adverse to the interests of the Debtors or their estates, creditors, or interest holders. Moreover, HR&A is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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 through 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. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Govt. Wants CERLA Trial Upheld in Idaho District Court ------------------------------------------------------------------ On March 22, 1996, the United States Government filed an action against ASARCO, Inc., and several other defendants in the United States District Court for the District of Idaho pursuant to Section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act, and Section 311 of the Clean Water Act. The Idaho Action was commenced on behalf of the United States Department of the Interior, the United States Department of Agriculture, and the United States Environmental Protection Agency, and was filed in response to many decades of releases of hazardous substances from ASARCO's metals mining and smelting facilities. The Idaho Action seeks to recover around $1.5 billion in response costs and natural resource damages. By seeking to hold ASARCO accountable for the environmental damage, the suit also seeks to deter others from environmental violations. Kelly A. Johnson, Acting Assistant Attorney General of the Environment & Natural Resources Division of the U.S. Department of Justice, explains that the Idaho Action specifically concerns an area of over 800 square miles. The Idaho District Court divided the case so that liability and injury were tried first, and damages and cost issues tried if liability was found. The Phase I trial on liability and injury was held in 2001, wherein the Idaho Court ruled that certain natural resources were lost or injured and that ASARCO and Hecla Mining Company -- the remaining non-debtor defendant in the Idaho Action -- were liable for response costs and natural resource damages arising from mining contamination in the Coeur d'Alene Basin. Discovery is almost complete on Phase II issues, and hearings are currently scheduled to begin on Jan. 17, 2006, to determine the amount of response costs and natural resource damages for which the Defendants are liable. Essentially, therefore, the Idaho Action is mid-trial. According to Ms. Johnson, response costs recovered will be paid to the Hazardous Substances Superfund to finance response actions at the Site or other sites. Any sums recovered for natural resource damages will be used to restore, replace or acquire equivalent natural resources. After ASARCO LLC's bankruptcy filing, the Idaho Court issued an order staying the CERLA action against ASARCO because the Bankruptcy Court had not yet ruled whether the police and regulatory exception applies. Ms. Johnson notes that Section 362(b)(4) of the Bankruptcy Code provides that the automatic stay does not apply to the "commencement or continuation of an action or proceeding by a governmental unit . . . to enforce such governmental unit's . . . police and regulatory power, including the enforcement of a judgment other than a money judgment." The regulatory exception is based on the "compelling need for the government to continue to protect the public when a debtor files for bankruptcy and to "prevent a debtor from frustrating necessary governmental functions by seeking refuge in bankruptcy court." By this motion, the U.S. Government asks Judge Schmidt to issue a declaration that the Idaho Action is not subject to the automatic stay imposed by the Bankruptcy Code because the Action constitutes an exercise of the government's police and regulatory power. Ms. Johnson contends that, regardless of the applicability of the automatic stay to the U.S. Government's claims against ASARCO, the Idaho Action will proceed against Hecla. The Idaho Court has already ruled on the issue of divisibility between the two companies, finding Hecla responsible for 31% of damages and ASARCO for 22%. The issues in Phase II of the trial are essentially identical for ASARCO and Hecla, which issues primarily concern the amount of damages and response costs that are recoverable. Therefore, Ms. Johnson believes that it would be much more efficient to hold a single trial to determine those issues as to both Defendants as currently scheduled, rather than staying the trial as to ASARCO and requiring a second, duplicative trial later. Ms. Johnson relates that the Idaho Court is quite familiar with the detailed history of the CERCLA case and the issues related specifically to the upcoming Phase II trial. The Bankruptcy Court, on the other hand, would need to ascend the learning curve of the CERCLA case that the Idaho Court has spent nearly a decade mastering. Under the circumstances, it makes most sense for the Idaho Court to proceed with its trial as planned. This is especially true because the determination of the amount of ASARCO's damages and response costs likely would be referred back to the Idaho Court in any event. 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 through 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. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000). ATA AIRLINES: Wants Court Nod on Goodrich Corp. Settlement ---------------------------------------------------------- ATA Airlines, Inc., and Goodrich Corporation are parties to a wheel and brake service and purchase agreement dated June 23, 2000. Goodrich filed Claim Nos. 69, 1354 and 2071, asserting certain amounts the Debtor owed Goodrich under the Agreement. Goodrich also commenced an adversary proceeding against the Debtor, asserting various causes of action. Moreover, Goodrich filed a $2,242,380 administrative expense claim against the Debtor. The Debtor argued that Goodrich owed them certain amounts under the Agreement. The Debtor asserted that it may seek to avoid certain prepetition payment to Goodrich as preferences. After engaging in arm's-length negotiations, the Debtor and Goodrich agree that: a. They will mutually terminate the prior Agreement and execute a new agreement for the inspection, repair, and replacement of ATA wheels and brakes for all or a portion of ATA's existing or future fleet; b. They will file a joint motion for an order to dismiss with prejudice the Adversary Proceeding; c. They will file a joint motion for an order resolving the Administrative Expense Motion; d. ATA will transfer to Goodrich ownership and possession of: * 737-800 Nose Wheels - 39 units of P/N 3-1559, * 737-800 Main Wheels - 52 units of P/N 3-1558, * 737-800 Brakes - 26 units of P/N 2-1587, * 757-300 Nose Wheels - 9 units of P/N 3-1423-2, * 757-300 Main Wheels - 24 units of 3-1581, and * 757-300 Brakes - 12 units of P/N 2-1617, 2-1617-1; e. Goodrich will withdraw the Wheel and Brake Claims; and f. They will exchange releases of claims and liabilities. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, ATA Airlines ask the Court to approve its settlement agreement with Goodrich. Terry E. Hall, Esq., at Baker & Daniels, in Indianapolis, Indiana, asserts that absent settlement, ATA may be compelled to expend substantial resources and incur unnecessary expenses in defending its disputes with Goodrich. Debtors File New Agreement Under Seal Ms. Hall tells the Court that the parties' new wheel and brake agreement contains confidential and proprietary information. Pursuant to Section 107(b)(1) of the Bankruptcy Code and Bankruptcy Rule 9018, the Debtors seek the Court's permission to file the agreement under seal. 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. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) BEAZER HOMES: Registers $3M+ Convertible Senior Notes for Resale ---------------------------------------------------------------- Beazer Homes USA, Inc., filed a Registration Statement with the Securities and Exchange Commission for the resale of $3,042,000 of 4-5/8% Convertible Senior Notes due 2024 held by Goldman Sachs & Co. The Notes The Convertible Senior Notes bear interest at the rate of 4-5/8% per year. Interest on the notes is payable on June 15 and December 15 of each year. Beginning with the six-month interest period commencing on June 15, 2009, the Company will pay contingent interest during a six-month interest period if the average trading price is above a specified level during a specified period prior to such six-month interest period. The notes are convertible by holders into shares of the Company's common stock at an initial conversion rate of 6.48 shares of common stock per $1,000 principal amount of notes (subject to adjustment in certain events), which is equal to an initial conversion price of $154.32 per share, under these circumstances: (1) during any calendar quarter, if the price of the Company's common stock issuable upon conversion reaches specified thresholds during the previous calendar quarter; (2) subject to certain limitations, during the five business day period after any five consecutive trading day period in which the trading price per note for each day of that period was less than 98% of the product of the last reported sales price of the Company's common stock and the conversion rate of the notes for each such day; (3) if the Company calls the notes for redemption; (4) upon the occurrence of specified corporate transactions; (5) during any period in which the credit ratings assigned to the notes are below certain levels. The notes mature on June 15, 2024. The Company may redeem some or all of the notes at any time on or after June 15, 2009. A full-text copy of the Prospectus is available for free at http://ResearchArchives.com/t/s?1d8 The Convertible Notes carry these ratings: Rating Agency Rating ------------- ------ Fitch BB+ Moody's Ba1 S&P BB The common stock is listed on the New York Stock Exchange under the symbol "BZH." The Company's common shares traded around $66 per share in early August and have traded between $55.83 and $62.39 this month. A full-text copy of the Registration Statement is available for free at http://ResearchArchives.com/t/s?1d9 Headquartered in Atlanta, Beazer Homes USA, Inc., -- http://www.beazer.com/-- is one of the country's ten largest single-family homebuilders with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Mississippi, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia and also provides mortgage origination and title services to its homebuyers. Beazer Homes, a Fortune 500 company, is listed on the New York Stock Exchange under the ticker symbol "BZH." * * * As reported in the Troubled Company Reporter on June 7, 2005, Fitch Ratings has assigned a 'BB+' rating to Beazer Homes USA, Inc. (NYSE: BZH) $300 million, 6.875% senior unsecured notes due July 15, 2015. The Rating Outlook is Stable. The issue will be ranked on a pari passu basis with all other senior unsecured debt, including the company's unsecured bank credit facility. A portion of the offering proceeds will be used to repay the company's existing $200 million term loan due 2008, with the remainder to be used for general corporate purposes. Ratings for Beazer are influenced by the company's operational record during the past decade and the financial progress that the company has achieved. Since Beazer went public in 1994, it has been an active consolidator in the homebuilding industry which has contributed to its above average growth. As a consequence, it has realized higher debt levels than its peers in recent years, especially following the Crossmann Communities acquisition. BELDEN & BLAKE: Extends Tender Offer for Sr. Sec. Notes to Oct. 12 ------------------------------------------------------------------ Belden & Blake Corporation has extended the expiration of its tender offer to purchase for cash any and all of its outstanding 8.75% Senior Secured Notes due 2012 in the aggregate principal amount of $192,500,000 (CUSIP Number 077447AE0). The Tender Offer will expire at 9:00 a.m., New York City time on Wednesday, Oct. 12, 2005, unless Belden & Blake extends it further. Requests for documentation may be directed to Global Bondholder Services Corporation, at (212) 430-3774 (collect; for banks and brokers) or (866) 795-2200 (toll free; for all other than banks and brokers). Belden & Blake engages in the exploitation, development, production, operation and acquisition of oil and natural gas properties in the Appalachian and Michigan Basins (a region which includes Ohio, Pennsylvania, New York and Michigan). Belden & Blake is a subsidiary of Capital C Energy Operations, LP, an affiliate of Carlyle/Riverstone Global Energy and Power Fund II, L.P. * * * As reported in the Troubled Company Reporter on Apr. 7, 2005, Moody's downgraded Belden & Blake's senior implied rating from B3 to Caa1 and its note rating from B3 to Caa2. The outlook is changed to negative. The downgrade, which concludes Moody's review that commenced on December 28, 2004, is a result of Moody's review of the company's 10-K which confirmed the credit deterioration through a combination of: * a greater than expected reserve revision; * poor capital productivity evidenced by drillbit F&D of $62.23/boe (excluding revisions) and only replacing 15% of production through extensions and discoveries; * very high leverage on the proved developed (PD) reserves of $7.64/boe; * B&B's very high full cycle costs that are unsustainable long- term; and * the free cash flow drain from currently out-of-the-money hedging that could otherwise be used for debt repayment or reinvestment. The notes are notched down from the senior implied rating due a combination of: * asset deterioration which impacts the coverage for the bondholders; * the increased use of the credit facilities (including L/C's) to support underwater hedging; and * the carveouts in the indenture that could permit additional secured debt to be layered in ahead of the notes. BUDGET GROUP: Administrator Asks for Decree Closing Ch. 11 Case --------------------------------------------------------------- Walker, Truesdell & Associates, the Plan Administrator for BRAC Group, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to enter a final decree closing the Reorganized Debtor's chapter 11 case. BRAC Group is the reorganized entity created pursuant to the merger of Budget Group, Inc., and its debtor-affiliates following the confirmation of their Second Amended Joint Liquidating Plan of Reorganization. The Plan Administrator reports that it has distributed approximately $81 million since the effective date of the Plan and holds approximately $1.1 million in reserves. The Plan Administrator adds that all claims asserted against the Reorganized Debtor have either been adjudicated by the Court or resolved by the parties involved, except for: a) Jaeban (U.K.) Limited's $4 million asserted cure claim. The claim is subject to a cure reserve maintained by the U.K. Administrator with Harris Bank having a balance of approximately $4.5 million. The U.K. Administrator is prosecuting defenses to the cure claims and certain counter-claims; and b) four cure claims, covered by a cure reserve with a balance of $927,000 at Sept. 12, 2005, subject to negotiations between the claim holders and Cendant Corporation, the buyer of the Reorganized Debtor's North American assets. 1) $70,000 cure claim of Cintas Corp. 2) $15,000 cure claim of IBM 3) $22,693 cure claim of Jani King 4) $299,000 cure claim of PeopleSoft The Plan Administrator tells the Bankruptcy Court that the Plan has been substantially consummated and that it does not anticipate filing any further motions, applications or pleadings except to the extent necessary to resolve the remaining claims and effect a turnover of the cure reserve to Cendant Corporation. A summary of professional fees paid and distributions made by the Plan Administrator is available for free at: http://researcharchives.com/t/s?1e0 A list of outstanding adversary proceedings commenced by the Plan Administrator and handled by Brown Rudnick Berlack Israels LLP and Ashby & Geddes, PA, is available for free at: http://researcharchives.com/t/s?1e1 A list of outstanding adversary proceedings commenced by the Plan Administrator and handled by Gazes LLC and Young Conaway Stargatt & Taylor, LLP, is available for free at: http://researcharchives.com/t/s?1e4 Headquartered in Daytona Beach, Florida, Budget Group, Inc., operates under the Budget Rent a Car and Ryder names -- is the world's third largest car and truck rental company. The Company filed for chapter 11 protection on July 29, 2002 (Bankr. Del. Case No. 02-12152). Lawrence J. Nyhan, Esq., and James F. Conlan, Esq., at Sidley Austin Brown & Wood and Robert S. Brady, Esq., and Edward J. Kosmowski, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,047,207,133 in assets and $4,333,611,997 in liabilities. On April 20, 2004, the Court confirmed the Debtors' Joint Liquidation Plan, as modified, in accordance with Sections 1129(a) and (b) of the Bankruptcy Code. CAPELLA HEALTHCARE: Moody's Junks $58 Million Sr. Sec. Term Loan ---------------------------------------------------------------- Moody's Investors Service assigned first-time ratings to Capella Healthcare, a start up operator of acute care hospitals. Despite the strength of the management team, their familiarity with the acquired assets, and opportunities to improve the operating results of the company's hospital base, the ratings are constrained by: * high financial leverage and the expectation of future debt-financed acquisitions; * the absence of a track record of positive free cash flow; * significant concentration of EBITDA in one of the acquired facilities; and * the lack of any meaningful scale or geographic diversity. The proceeds of the proposed offering, along with $66 million of common equity contributed by GTCR Golder Rauner L.L.C. (GTCR) and management, will be used to acquire four hospitals from HCA, Inc. (HCA). Capella was formed through a partnership between senior members of the former Province Healthcare management team and GTCR for the purpose of acquiring and operating non-urban hospitals. Management will own 21% of Capella and made a cash contribution of approximately $2 million. The equity will be contributed to Capella Holdings, Inc., a holding company and ultimate parent of Capella. The debt will be issued by Capella, an intermediate holding company. Ratings assigned to Capella Healthcare: * $40 million senior secured revolving credit facility due 2011, rated B3 * $97 million senior secured 1st lien term loan due 2012, rated B3 * $58 million senior secured 2nd lien term loan due 2013, rated Caa2 * B3 corporate family rating The outlook for the ratings is stable. The ratings reflect the company's high leverage after the transaction. Moody's estimates that pro forma lease-adjusted debt to adjusted EBITDA will be high at 5.8 times by the end of fiscal 2005 if expected improvements in EBITDA are realized. Further, Moody's considered the high likelihood that the company will add to this base of hospitals through additional debt-financed acquisitions. The credit facilities allow for up to $60 million of additional borrowings, which are not yet committed and are subject to compliance with financial covenants. The ratings also reflect the absence of meaningful cash flow from these four facilities in prior periods, and constraints on near- term free cash flow due to the capital investments required to increase market share and facilitate physician recruiting. Further, the ratings consider: * the concentration of company pro forma EBITDA, as one of the four acquired facilities generates approximately 44% of total EBITDA; * the lack of significant scale, both in total and in any service area, that could improve operating results by leveraging costs and enhancing the company's position in managed care contracting and physician recruiting; and * the lack of geographic diversity. The four acquired facilities are in Tennessee, Washington and Oklahoma. Moody's considers Tennessee and Oklahoma particularly susceptible to changes in Medicaid reimbursement due to initiatives in those states to reduce the burden of Medicaid coverage on state budgets. Approximately 71% of the company's total net revenue is generated from facilities in Tennessee and Oklahoma. The ratings also reflect management's significant experience in acute care hospital operations and in many cases, first-hand experience with the assets being acquired and the markets in which they operate. Capella's management team consists predominantly of former management of Province Healthcare. Further, the expectation of continued support of the equity sponsor, GTCR, could limit acquisition-driven increases in leverage. Integration of the four acquired facilities should not present any significant risks since the hospitals have been operating on the HCA systems that Capella will initially use. The stable outlook reflects a stable environment with respect to Medicare reimbursement. Additionally, Moody's believes the company will be able to improve the operations of the acquired facilities by providing a level of focus that was not provided while the facilities operated as part of the much larger HCA system. Moody's believes that some of these improvements may require additional investment and time to be realized. However, in the near term, Moody's would not expect any deterioration of the historical operating performance of the acquired facilities. If the company shows stability in its operations over the next 12- 18 months and does not enter into a transaction that would significantly increase financial leverage or represent substantial integration risk, there could be upward pressure on the ratings. For example, if the company is expected to generate sustainable operating cash flow to adjusted debt in the range of 8%-10% and free cash flow to adjusted above 6%, Moody's would consider changing the ratings outlook to positive. However, many factors currently constraining the ratings are non-financial measures such as size and concentration. These factors would also be given significant consideration in any rating action. The ratings could come under pressure if Capella were to incur additional indebtedness for acquisitions or development beyond our expectations. If additional financial leverage resulted in the expectation of a prolonged period of negative free cash flow, Moody's would consider changing the ratings outlook to negative. Pro forma for the proposed transaction, Capella's cash flow coverage of debt would have been weak. Moody's estimates that for the year ended December 31, 2004, adjusted operating cash flow to adjusted debt would have approximated break even and adjusted free cash flow to adjusted debt would have been approximately -5%. Pro forma EBIT coverage of interest would have been weak at approximately 0.2 times for the year ended December 31, 2004. Adjusted debt to adjusted book capitalization pro forma for the transaction would have approximated 71% at December 31, 2004, and debt to revenues would have been approximately 83%. Moody's expects Capella to have adequate liquidity pro forma for the transaction. Capella will have approximately $2 million of cash on hand and access to a $40 million revolving credit facility that will be undrawn at closing. As noted above, free cash flow will be constrained in the near term due to service enhancement initiatives designed to increase market share and aid in physician recruitment. Moody's does not expect the company's access to the undrawn revolver to be constrained by financial covenants established in the new facilities. The B3 rating on the revolver and term loan B reflect the first lien priority of these instruments and the expectation of adequate collateral coverage. The term loan B amortizes 1% annually in quarterly installments with the remainder payable in the final year. The facility also calls for a 50% excess cash flow sweep with stepdowns if leverage reaches certain levels. Collateral includes a first priority security interest on all assets of the borrower (Capella) and guarantors and a first priority pledge of all capital stock of the borrower. The guarantors include Capella Holdings and all existing and subsequently acquired or organized wholly owned subsidiaries of Capella or Capella Holdings. The Caa2 rating on the term loan C, two notches below the corporate family rating, reflects: * the second lien position of the instrument; * the effective subordination to a sizable amount of first lien debt; and * the likely impairment to holders of the tranche in a distress scenario. Collateral and guarantees are the same as the first lien facility. Headquartered in Brentwood, Tennessee, Capella Healthcare, after the closing of the proposed transaction, will operate four acute care hospitals in three states. For the twelve months ended June 30, 2005, the facilities to be acquired generated revenues of approximately $198 million. CAPELLA HEALTHCARE: S&P Junks $58 Mil. Proposed Sr. Secured Debt ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to hospital company Capella Healthcare, Inc. The rating outlook is negative. In addition, Capella's proposed $137 million senior secured first- lien credit facility due in 2012 was rated 'B' with a recovery rating of '2', indicating the expectation for a substantial (80%- 100%) recovery of principal in the event of a payment default. The company's proposed $58 million senior secured second-lien term loan due in 2013 was rated 'CCC+' with a recovery rating of '4', indicating the expectation for a marginal (25%-50%) recovery of principal in the event of a payment default. These ratings are based on preliminary documentation. The company will use the proceeds from the senior secured loans, as well as $66 million in new equity to be provided by GTCR Golder Rauner LLC, to finance the purchase of four hospitals from HCA Inc. Pro forma for the bank loan transaction, outstanding debt will be $155 million. "The low-speculative-grade ratings reflect the numerous risks that Capella's experienced management team will have in operating a small start-up hospital company with no record as an independent entity," said Standard & Poor's credit analyst David Peknay. "The ratings also reflect the company's high debt burden." Capella's small, undiversified portfolio of only four hospitals and disproportionate dependence on one facility for nearly half of its EBITDA is characteristic of the company's vulnerable business risk profile. This lack of diversity presents a large risk, particularly because Capella also will be challenged to establish a corporate infrastructure capable of operating a hospital portfolio that is now located in only three states (though it will inevitably grow with additional acquisitions). The company will be highly leveraged following the bank loan transaction, with pro forma lease-adjusted debt to EBITDA at about 6.0x. Standard & Poor's expects Capella to remain highly leveraged for the next several years -- even if it has some success in improving the operating performance of its hospitals -- as future expansion will likely be financed heavily with debt. CATHOLIC CHURCH: Court Sets Status Conference Schedule in Portland ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Oregon sets this schedule for the status conference regarding the topic listing for "pattern and practice" witnesses: Date Event ---- ----- September 30, 2005 Deadline for Tort Claimants to amend Topic List October 21, 2005 Levada Scope Objections Due November 18, 2005 Tort Claimant Response Due December 5, 2005 Replies Due December 16, 2005 9:30 a.m. hearing The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTURY/ML: Century & ML Media Inks Estate Administration Accord ---------------------------------------------------------------- Under the terms of Century/ML Cable Venture's confirmed Plan of Reorganization, on the Effective Date, the management, control and liquidation of the Transferred Assets will become the responsibility of Century Communications Corp. and ML Media Partners, L.P. In their desire to establish a Plan Administration Board to manage, control and liquidate the Transferred Assets and to otherwise administer the estate in lieu of a Plan Administrator, Century and ML Media entered into an Estate Administration Agreement on September 7, 2005. The salient terms of the Estate Administration Agreement are: A. Plan Administration Board Century and ML Media will each be entitled to appoint two representatives to the Board, which will administer the estate in accordance with the Century/ML Plan and will perform all duties necessary or appropriate to manage, control and liquidate the Transferred Assets and the Excluded Liabilities and to otherwise administer the estate. Century designates Murray Flanigan and Mark Spiecker to act as initial representatives on the Board. ML Media designates I. Martin Pompadur and Elizabeth McNey Yates. B. Retained Cash Prior to the Effective Date, Century and ML Media will agree on the amount of cash to be initially designated as Retained Cash for the Plan Funding Reserve. C. Century and ML Media will provide or cause its affiliates or third-party service providers to provide transition services including preparation of tax returns, preparation of financial statements, audit of financial statements, management of liabilities of the estate and management of certain lawsuits. Each of the Transition Services will be provided under the overall supervision of the Plan Administration Board. The Third-Party Service Providers are: Third-Party Service Provider Services ---------------------------- -------- Morgan Lewis & Bockius LLP Legal representation Quinones Sanchez & Guzman Legal representation Rodriquez-Parissi Vazquez & Co. Tax representation Fisher & Phillips LLP Legal representation Schuster Usera & Aguilo Legal representation Andrea McDermott Accounting Shawn Gallagher Accounting Frank Lavalle Accounting D. Termination Except as otherwise agreed in writing by Century and ML Media, the Estate Administration Agreement will terminate upon the later to occur of the closing of Century/ML's Chapter 11 case, or the completion of all of the Transition Services as determined by the Administration Board. A full-text copy of the Estate Administration Agreement is available for free at http://ResearchArchives.com/t/s?1e7 Century Communications Corporation filed for Chapter 11 protection on June 10, 2002. Century's case has been jointly administered to proceedings of Adelphia Communications Corporation. Century operates cable television services in Colorado, California and Puerto Rico. CENTURY is an indirect wholly owned subsidiary of ACOM and an affiliate of Adelphia Business Solutions, Inc. Lawyers at Willkie, Farr & Gallagher represent CENTURY. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTURY/ML: Court OKs Stipulation on Transfer Accounting Dispute ---------------------------------------------------------------- Adelphia Communications Corp., its wholly owned, indirect subsidiary Debtor Century Communications Corp., Debtor Century/ML Cable Venture, Century/ML Cable Corporation and ML Media Partners, L.P., want to complete the consolidated audited financial statements of Century/ML, which include the accounts of Cable Corp. On March 28, 2002, approximately $25 million was transferred from the bank accounts of Cable Corp. to the bank accounts of Century and ACOM. At the time of the Transfer, Century/ML and Cable Corp. had consolidated liabilities to Century and ACOM of at least $25 million. Disputes have arisen between Century and ACOM, on one side, and ML Media, on the other, regarding: -- how to account for the Transfer, -- the effect of the Transfer on the Financial Statements, and -- other matters accounted for in the Financial Statements. Century and ML Media, as owners of Century/ML, agreed to adopt certain proposed accounting treatments in the Financial Statements for the Transfer Accounting Dispute and the Other Disputed Matters, subject to, among others, the preparation of language to be included in the notes to the Financial Statements reasonably acceptable to Adelphia and to ML Media. In a stipulation Judge Gerber of the U.S. Bankruptcy Court for the Southern District of New York approved, the parties agree that: 1. The Financial Statements, and the representation letters to be delivered by Century, ACOM and ML Media to Century/ML auditors in connection with the Financial Statements, are not intended to and will not preclude any of the parties from maintaining or asserting any claim, defense, or liability against each other; and 2. ML Media, Century and ACOM agree to the Proposed Accounting Treatment for the Transfer Accounting Dispute and waive all claims against each other, Cable Venture or Cable Corp. arising out of the adoption of the Proposed Accounting Treatment for the Transfer Accounting Dispute. Century Communications Corporation filed for Chapter 11 protection on June 10, 2002. Century's case has been jointly administered to proceedings of Adelphia Communications Corporation. Century operates cable television services in Colorado, California and Puerto Rico. CENTURY is an indirect wholly owned subsidiary of ACOM and an affiliate of Adelphia Business Solutions, Inc. Lawyers at Willkie, Farr & Gallagher represent CENTURY. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., 215/945-7000) CERVANTES ORCHARDS: Deere Credit Won't Allow Cash Collateral Use ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Washington approved the request of Deere Credit, Inc., to prohibit Cervantes Orchards and Vineyards LLC's continued access to cash collateral securing its prepetition debt. Deere Credit, a secured creditor, holds a fully secured claim for approximately $4.2 million. The claim arises under several notes executed on July 8, 2003, by the Debtor and various non-debtor entities. The notes are currently in default. To secure repayment of notes, the Debtor granted Deere Credit a s