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/raid1/www/Hosts/bankrupt/TCR_Public/050930.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, September 30, 2005, Vol. 9, No. 232 Headlines A.B. DICK: Wants Open-Ended Retention Period for TRG ACE SECURITIES: Fitch Rates $15.5 Mil. Subordinate Certs. at BB+ AMERICAN WAGERING: Bankruptcy Court Closes Chapter 11 Cases ARLINGTON HOSPITALITY: Committee Wants Winston & Strawn as Counsel ARLINGTON HOSPITALITY: Committee Wants Huron as Financial Advisor ATA AIRLINES: Inks Four Boeing Aircraft Subleases with Continental BANC OF AMERICA: Fitch Puts B- Rating on $6MM Class O Certificates BANC OF AMERICA: Fitch Assigns B Rating on $1.2MM Class B-5 Certs. BANC OF AMERICA: Fitch Places Low-B Rating on Two Cert. Classes BOWATER INC: Appoints Ruth R. Harkin to Board of Directors BP INTERNATIONAL: Accumulated Deficit Prompts Going Concern Doubt CELESTICA INC: Completes Redemption of LYONs for $1.2 Million CHAMPION ENTERPRISES: Refinancing Senior Bank Debt with New Loan CHARTER COMMS: Closing Private Debt Exchange Offers CHARYS HOLDING: Earns $1.2 Million of Net Income in First Quarter CITICORP MORTGAGE: Fitch Puts B Rating on $602K Class B-5 Certs. COMDIAL COMMS: Completes $20 Million 363 Sale to Vertical Comms. CONMED CORP: Registers $150M Convertible Sr. Sub. Notes for Resale CONSTELLATION BRANDS: Offers to Buy Vincor Stock for $1.2 Billion DELTA AIR: Taps Stroock & Stroock as Conflicts Counsel DELTA AIR: Brings-In Giuliani Capital as Restructuring Advisor DOANE PET: Adopts Cost Saving Initiatives & Adjusts Q3 Guidance ELECTROPURE: Hein & Associates Raises Going Concern Doubt ENERGY & ENGINE: Losses & Deficits Fuel Going Concern Doubts ENTERGY GULF: Moody's Reviews Ba3 Preferred Stock Rating ENTERGY NEW ORLEANS: Gets Interim OK for $100 Mil. DIP Borrowing ENTERGY NEW ORLEANS: Gets Interim Order to Use Cash Collateral EXIDE TECH: Closes Senior Secured & Convertible Debt Offerings EXIDE TECH: Names Kevin McMahon as Audit Vice President FOAMEX INT'L: Court Enters Order to Say Automatic Stay is Real FORD CREDIT: Fitch Places BB+ Rating on $40.2 Mil Class D Certs. FOSS MANUFACTURING: Gets 2nd Interim Order on Cash Collateral Use FOSS MANUFACTURING: U.S. Trustee Appoints 7-Member Creditors Panel GB HOLDINGS: Files for Chapter 11 Protection in New Jersey GB HOLDINGS: Case Summary & 20 Largest Unsecured Creditors HAO QUANG: Wants Smith Lease as Special Counsel HEATING OIL: Wants Access to Cash Collateral & DIP Loan HEATING OIL: Wants Zeisler & Zeisler as Bankruptcy Counsel HONEY CREEK: Files Schedules of Assets and Liabilities in Texas HONEY CREEK: Section 341(a) Meeting Slated for Oct. 18 HORNBECK OFFSHORE: Moody's Rates Planned $75 Million Notes at Ba3 HYDROCHEM INDUSTRIAL: S&P Junks $150 Million Sr. Sub. Notes INSIGHT COMMS: Soliciting Consent from 12-1/4% Noteholders INSIGHT HEALTH: S&P Affirms B Corporate Credit & Sr. Debt Ratings INTEGRATED HEALTH: Wants Until January 4 to Object to Claims INTRAWEST CORP: Earns $32.6MM of Net Income in FY Ending June 30 INTRAWEST CORP: Sells Beachfront Property in Maui for $25 Million KAISER ALUMINUM: Wants Modified USWA Settlement Agreement Approved KAISER ALUMINUM: Claims Reps Want Insurers' Objection Overruled KANSAS CITY: S&P Assigns BB+ Rating to $125 Million Facilities KCMC CHILD: Case Summary & 20 Largest Unsecured Creditors KEY ENERGY: Default Spurs Noteholders' Valid Acceleration Notices KMART CORP: Objects to Dutch Farms' $2,311,710 Claim KMART CORP: SEC Settles Charges Against Four Former Execs MASTR ASSET: Fitch Puts BB Rating on $5.5 Mil. Class M10 Certs. MERIDIAN AUTOMOTIVE: Panel Wants Sanchez-DeVanny as Mexico Counsel MERIDIAN AUTOMOTIVE: Has Until Jan. 25 to Decide on Leases MERIDIAN AUTOMOTIVE: Proofs of Claims Must be Filed by Dec. 1 MICROISLET INC: Files Tardy SEC Reports & AMEX Compliance Restored MIRANT CORP: U.S. Bank Wants to Propose Ch. 11 Plan for MirMA MIRANT CORP: Court Okays Bid Procedures for Washington Unit Sale MOUNTAIN TERRACE: Voluntary Chapter 11 Case Summary NEIMAN MARCUS: Newton Acquisition Issues $1.2 Bil. of Merger Bonds NEWPAGE CORP: Moody's Affirms Junks Sr. Sub. Notes' Junk Rating NORTHWEST AIRLINES: Wants Existing Business Forms Unchanged NORTHWEST AIRLINES: Paying Maintenance & Service Providers OFFICEMAX INC: S&P Lowers Corporate Credit Rating to B+ from BB ONESOURCE TECH: Merger Talks Failed; Comerica Appoints Receiver PARKWAY HOSPITAL: Thelen Reid Approved as Committee Counsel PARMALAT USA: Asks Court to Determine Tax Liability & Refund PATCH INTERNATIONAL: Losses Trigger Going Concern Doubt PCA LLC: S&P Lowers Senior Unsecured Debt Rating to C from CC PIKNIK PRODUCTS: Voluntary Chapter 11 Case Summary POLYMER GROUP: S&P Affirms Corporate Credit Rating at B+ PROTOCOL SERVICES: FTI Consulting & RJM Approved as Fin'l Advisors PROTOCOL SERVICES: Wants to Walk Away from 10 Contracts & Leases PROTOCOL SERVICES: Court Okays Buchalter Nemer as Local Counsel RADIANT COMMS: Gets $7.92 Million in Private Equity Placement REGAL GREETINGS: Deloitte Appoints Century Services as Liquidator REGIONAL DIAGNOSTICS: Files Liquidation Plan in Ohio RODNEY WILLIAMS: Case Summary & 20 Largest Unsecured Creditors ROGERS TELECOM: Receives $200.9MM of Senior Notes in Tender Offer ROUNDY'S SUPERMARKETS: S&P Puts Corporate Credit Rating on Watch RURAL/METRO: Appoints Conrad A. Conrad to Board of Directors SEPRACOR INC: Registers $75M Convertible Sr. Sub. Notes for Resale SMARTVIDEO TECH: June 30 Balance Sheet Upside-Down by $694,966 STELCO INC: Wants Ontario Court to Approve Tricap Agreement SURGE GLOBAL: Defaults on Farmout Agreement with Deep Well THERMAL ENERGY: Incurs $1.42 Million Net Loss in FY Ending May 31 THERMOVIEW: Wants Until Oct. 26 to File Schedules & Statements TRUDY DEVELOPMENT: Sellers Want Case Dismissed or Stay Lifted TRUDY DEVELOPMENT: Section 341(a) Meeting Slated for October 25 TURBOSONIC TECHNOLOGIES: Auditor Expresses Going Concern Doubt UNIFIED HOUSING: Judge Lynn Dismisses Chapter 11 Case US AIRWAYS: Air Canada Expresses Interest to Merge with US Air VERILINK CORP: Ehrhardt Keefe Raises Going Concern Doubt VINTAGE PETROLEUM: S&P Affirms BB- Corporate Credit Rating WCI STEEL: Panel Calls Noteholders' Disclosure Statement Deficient WELLS FARGO: Fitch Rates $276,000 Class B-5 Certificates at B WELLS FARGO: Fitch Assigns Low-B Rating to Two Class B Certs. WERNER HOLDING: Moody's Junks Corporate Family & All Debt Ratings WHITING PETROLEUM: Prices 5 Million-Plus Shares of Common Stock WHITING PETROLEUM: Prices $250 Million of Senior Sub. Notes WHITING PETROLEUM: Moody's Rates Proposed $250 Million Notes at B2 WINN-DIXIE: Has Until Dec. 19 to File Plan of Reorganization WINN-DIXIE: Has Until Dec. 19 to Decide on Leases WINN-DIXIE: Two Commercial Net Leases Rejected Effective Today * Corporate Revitalization Partners Absorbs RKG Osnos in Merger * Paul Miltonberger Joins Epstein Becker's Litigation Practice * BOOK REVIEW: The Turnaround Manager's Handbook ********* A.B. DICK: Wants Open-Ended Retention Period for TRG ---------------------------------------------------- A.B. Dick Company and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to extend their retention of The Recovery Group, Inc., until the conclusion of their bankruptcy cases or until TRG's services are no longer necessary. TRG serves as the Debtors' turnaround and crisis manager. As reported in the Troubled Company Reporter, the Debtors hired TRG as their turnaround and crisis manager subsequent to their bankruptcy filing in July 2004. TRG designated Stephen S. Gray and John Calabrese as the Debtors' Chief Restructuring Officer and Assistant Chief Restructuring Officer. The Debtors have sought and obtained a number of short-term extensions of that original engagement during the chapter 11 proceedings. The Debtors seek to extend TRG's retention so the Firm can continue managing the wind-down of their estates. TRG will continue to: a) pursue and liquidate potential assets such as vendor debits, insurance refunds, workers' compensation audits and tax refunds; b) provide financial and other data necessary to support confirmation of the Plan; c) manage the estates' cash and oversee the winding down of A.B. Dick and its Canadian subsidiary; d) comply with the United States Trustee's reporting requirements during the remainder of the cases; and e) provide litigation support; and f) oversee the payments of post-petition administrative expenses, to the extent possible. The Debtors want to specifically retain: Professional Hourly Rate ------------ ----------- Stephen S. Gray $490 John Calabrese $395 Cynthia Chan $150 Linda Hein $150 Another TRG Consultant $300 to $365 TRG has provided turnaround and crisis management services to businesses, creditors, lenders and investors for more than 20 years. With a experienced senior management team and a staff of 40 consultants, TRG specializes in delivering comprehensive solutions for troubled mid to large-cap businesses. Headquartered in Niles, Illinois, A.B. Dick Company -- http://www.abdick.com/-- is a global supplier to the graphic arts and printing industry, manufacturing and marketing equipment and supplies for the global quick print and small commercial printing markets. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Del. Lead Case No. 04-12002) on July 13, 2004. Frederick B. Rosner, Esq., at Jaspan Schlesinger Hoffman, LLP, and H. Jeffrey Schwartz, Esq., at Benesch, Friedlander, Coplan & Aronoff, LLP, represent the Debtors in their restructuring efforts. Richard J. Mason, Esq., at McGuireWoods, LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed over $50 million in estimated assets and over $100 million in estimated liabilities. A.B. Dick Company changed its name to Blake of Chicago, Corp., on Dec. 8, 2004, as required by the terms of the APA with Presstek. The Debtors delivered their Liquidating Plan of Reorganization and an accompanying Disclosure Statement explaining that Plan to the U.S. Bankruptcy Court for the District of Delaware on Feb. 10, 2005. ACE SECURITIES: Fitch Rates $15.5 Mil. Subordinate Certs. at BB+ ---------------------------------------------------------------- ACE Securities Corp. Home Equity Loan Trust, asset-backed pass- through certificates, series 2005-HE6, are rated by Fitch Ratings: -- $1.184 billion class A ('senior certificates') 'AAA'; -- $59.8 million class M-1 'AA+'; -- $55.2 million class M-2 'AA'; -- $37.3 million class M-3 'AA-'; -- $26.4 million class M-4 'AA-'; -- $27.2 million class M-5 'A+'; -- $23.3 million class M-6 'A'; -- $24.1 million class M-7 'A-'; -- $17.9 million class M-8 'BBB+'; -- $17.9 million class M-9 'BBB'; -- $12.4 million class M-10 'BBB-'; -- $15.5 million class M-11 'BB+' (collectively the 'subordinate certificates'). The 'AAA' rating on the senior certificates reflects the 23.80% initial credit enhancement provided by 3.85% class M-1, the 3.55% class M-2, the 2.40% class M-3, the 1.70% class M-4, the 1.75% class M-5, the 1.50% class M-6, the 1.55% class M-7, the 1.15% class M-8, the 1.15% class M-9, the 0.80% class M-10, the 1.00% class M-11, the 1.65% privately offered class B-1, the 1.00% privately offered class B-2 and overcollateralization. The initial and target OC is 0.75%. All certificates have the benefit of excess interest. In addition, the ratings also reflect the quality of the loans, the soundness of the legal and financial structures, and the capability of Ocwen Loan Servicing LLC as servicer, which is rated 'RPS2' by Fitch Ratings. The collateral pool consists of fixed and adjustable rate mortgage loans and totals $1.554 billion as of the cut-off date. The weighted average original loan-to-value ratio is 82.20%. The average outstanding principal balance is $193,533, the weighted average coupon is 7.329% and the weighted average remaining term to maturity is 352 months. The weighted average credit score is 631. The loans are geographically concentrated in CA (34.35%), FL (13.22%) and NY (7.64%). Fremont Investment & Loan, a California state chartered industrial bank headquartered in Brea, California originated 61.27% of the mortgage loans. Fremont currently operates five wholesale residential real estate loan production offices and conducts business in 45 states. The remainder of the mortgage loans were originated by various originators, none of which have originated more than 10% of the mortgage loans. AMERICAN WAGERING: Bankruptcy Court Closes Chapter 11 Cases ----------------------------------------------------------- The United States Bankruptcy Court for the District of Nevada issued an order closing the Chapter 11 cases of American Wagering, Inc., and its wholly owned subsidiary, Leroy's Horse Sports Place, Inc. The estates having been fully administered and all required distributions having been made. An appeal by Michael Racusin to the United States Court of Appeals for the Ninth Circuit from an April 14, 2005, ruling by the United States Bankruptcy Appellate Panel of the Ninth Circuit remains pending. As reported in the Troubled Company Reporter on April 19, 2005, the Bankruptcy Appellate Panel for the 9th Circuit Court of Appeals ruled in favor American Wagering, Inc. regarding the Racusin subordination matter. On April 14, 2005, the Panel reversed a bankruptcy court order and ruled that the debt owed to Michael Racusin dba M. Racusin & Co. is subordinated pursuant to the provisions of Section 510(b) of the U.S. Bankruptcy Code. As a result, the debt to Racusin will be paid in the form of 250,000 shares of the Company's common stock rather than $2.8 million in cash. Headquartered in Reno, Nevada, American Wagering, Inc. -- http://www.americanwagering.com/main.html-- owns and operates a number of subsidiaries including, but not limited to, (1) Leroy's Horse and Sports Place, which operates 47 race and sports books licensed by the Nevada Gaming Commission, giving it the largest number of books in the state; (2) Computerized Bookmaking Systems, the dominant supplier of computerized sports wagering systems in the state of Nevada; and (3) AWI Manufacturing (formerly AWI Keno) is licensed by the Nevada Gaming Commission as a manufacturer and distributor, and has developed a self-service race and sports wagering kiosk. The Company filed for chapter 11 protection on July 25, 2003 (Bankr. D. Nev. Case No. 03-52529). Thomas H. Fell, Esq., at Gordon & Silver, Ltd., represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed $13,694,623 in total assets and $13,688,935 in total debts. The Company and its wholly owned subsidiary, Leroy's Horse & Sports Place, Inc., consummated the Restated Amended Joint Plan of Reorganization and have formally emerged from Chapter 11 in March 2005. AWI and Leroy's officially concluded the process after completing all required actions and satisfying all remaining conditions of the Plan, which was confirmed by the U.S. Bankruptcy Court for the District of Nevada on Feb. 28, 2005. ARLINGTON HOSPITALITY: Committee Wants Winston & Strawn as Counsel ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of Arlington Hospitality, Inc., and its debtor-affiliates, asks the U.S. Bankruptcy Court for the Northern District of Illinois for permission to employ and retain Winston & Strawn LLP as its bankruptcy counsel. Winston & Strawn will: (a) consult with the Debtors' professionals or representatives concerning the administration of the chapter 11 cases; (b) prepare and review pleadings, motions and correspondence; (c) appear at and be involved in proceedings held before the Court; (d) provide legal counsel to the Committee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors' the operation of the Debtors' businesses, and any other matters relevant to the chapter 11 cases; (e) examine and investigate claims asserted against the Debtors; (f) confer and negotiate with the Debtors, other parties in interest, and their respective attorneys and other professional concerning the Debtors' businesses and properties, financing, chapter 11 plan, claims, liens, and other aspects of the chapter 11 cases; (g) confer with and assist the Debtors in the sale of the Debtors' assets; negotiate with the Debtors, and other parties in interest regarding the allocation of the purchase price for such sale, and the disposition of the proceeds from such sale; (h) examine, investigate and prosecute preference claims, fraudulent conveyance claims and other claims under sections 544 through 550 of the Bankruptcy Code; and (i) provide the Committee with other services as the Committee may request. David W. Wirt, Esq., at Winston & Strawn, is the lead attorney representing the Committee. The Committee discloses that Winston & Strawn's professionals will bill: Designation Hourly Rates ----------- ------------ Partners $360 - $765 Counsel and Associates $225 - $470 Paraprofessional $105 - $230 Mr. Wirt assures the Court that the Firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Arlington Heights, Illinois, Arlington Hospitality, Inc., and its affiliates develop and construct limited service hotels and own, operate, manage and sell those hotels. The Debtors operate 15 AmeriHost Inn Hotels under leases from PMC Commercial Trust. Arlington Hospitality, Inc., serves as a guarantor under these leases. Arlington Inns Inc., an affiliate, filed for bankruptcy protection on June 22, 2005 (Bankr. N.D. Ill. Case No. 05-24749), the Honorable A. Benjamin Goldgar presiding. Arlington Hospitality and additional debtor- affiliates filed for chapter 11 protection on Aug. 31, 2005 (Bankr. N.D. Ill. Lead Case No. 05-34885). Catherine L. Steege, Esq., at Jenner & Block LLP, provides the Debtors with legal advice and Chanin Capital LLC serves as the company's investment banker. As of March 31, 2005, Arlington Hospitality reported $99 million in total assets and $94 million in total debts. ARLINGTON HOSPITALITY: Committee Wants Huron as Financial Advisor ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Arlington Hospitality, Inc. and its debtor-affiliates, asks the U.S. Bankruptcy Court for the Northern District of Illinois for permission to employ and retain Huron Consulting Services LLC as its financial advisor. Huron Consulting will: (a) review and analyze the financial information prepared by the Debtors, its accountants and other financial advisors; (b) monitor and analyze the Debtors' operations, its cash expenditures, court filings, proposed retention programs, business plans and projected cash requirement; (c) attend meetings of the Committee, the Debtors, their respective professionals, bankruptcy court hearings and participate in such other matters and on such occasions as the Committee may, from time to time, request; (d) review and analyze the plan of reorganization proposed by the Debtors or any other party, and assist in the negotiation of a plan on behalf of the Committee; (e) review and analyze proposed transactions for which the Debtors seek Court approval; (f) provide valuation and corporate finance assistance with any assets sale and portfolio valuation matters as may be required; (g) prepare a going concern sale and liquidation value analysis of the Debtors' assets; (h) review reports as to the Debtors' business and its operations; (i) analyze with respect to the pre-petition property, liabilities and financial condition of the Debtors, and the transfers to and accounts with and among the Debtors' affiliates; (j) support any bankruptcy court proceedings necessary or appropriate to the maximization of recovery by the Committee's constituents, including expert witness and other testimony; and (k) perform other services as the Committee may deem necessary or appropriate. Steven Korf, at Huron Consulting, tells the Court that the Firm's professionals bill: Designation Hourly Rates ----------- ------------ Managing Director $575 - $650 Director $425 - $500 Manager $325 - $400 Associate $250 - $300 Analyst $175 - $225 Mr. Korf assures the Court that the Firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Arlington Heights, Illinois, Arlington Hospitality, Inc., and its affiliates develop and construct limited service hotels and own, operate, manage and sell those hotels. The Debtors operate 15 AmeriHost Inn Hotels under leases from PMC Commercial Trust. Arlington Hospitality, Inc., serves as a guarantor under these leases. Arlington Inns Inc., an affiliate, filed for bankruptcy protection on June 22, 2005 (Bankr. N.D. Ill. Case No. 05-24749), the Honorable A. Benjamin Goldgar presiding. Arlington Hospitality and additional debtor- affiliates filed for chapter 11 protection on Aug. 31, 2005 (Bankr. N.D. Ill. Lead Case No. 05-34885). Catherine L. Steege, Esq., at Jenner & Block LLP, provides the Debtors with legal advice and Chanin Capital LLC serves as the company's investment banker. As of March 31, 2005, Arlington Hospitality reported $99 million in total assets and $94 million in total debts. ATA AIRLINES: Inks Four Boeing Aircraft Subleases with Continental ------------------------------------------------------------------ On July 14, 2005, Judge Lorch authorized ATA Airlines, Inc., to enter into leases for Boeing 737-700 aircraft without further Court order, provided that the terms and conditions of the leases fell within uniform guidelines agreeable to the Court, the Debtors, the DIP Lender, and the Committee. ATA Airlines, Inc., and Continental Airlines, Inc., entered into a Letter of Intent dated September 2, 2005, for the sublease of four 737-724 aircraft. Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, tells Judge Lorch that the terms of the LOI are substantially similar to the terms of the July 14 Order, thus the Debtors may execute the LOI without further Court consent. Out of an abundance of caution, the Debtors seek the Court's permission to execute the LOI and perform the transactions contemplated therein. Mr. Nelson tells the Court that the Aircraft are important to the Debtors' business plan and future operations. The Debtors have provided copies of the LOI to Southwest Airlines Co., Air Transportation Stabilization Board, and the Official Committee of Unsecured Creditors for comment. According to Mr. Nelson, the Creditors Committee has consented to the entry of the LOI. Judge Lorch approved the Debtors' request. 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) BANC OF AMERICA: Fitch Puts B- Rating on $6MM Class O Certificates ------------------------------------------------------------------ Banc of America Commercial Mortgage Inc., series 2005-4 commercial mortgage pass-through certificates are rated by Fitch: -- $50,500,000 class A-1 'AAA'; -- $215,500,000 class A-2 'AAA'; -- $87,900,000 class A-3 'AAA'; -- $70,000,000 class A-4 'AAA'; -- $61,158,000 class A-SB 'AAA'; -- $485,931,000 class A-5A 'AAA'; -- $69,419,000 class A-5B 'AAA'; -- $228,135,000 class A-1A 'AAA'; -- $97,123,000 class A-J 'AAA'; -- $1,543,628,000 class XP* 'AAA'; -- $1,585,679,793 class XC* 'AAA'; -- $31,714,000 class B 'AA'; -- $15,857,000 class C 'AA-'; -- $29,731,000 class D 'A'; -- $17,839,000 class E 'A-'; -- $19,821,000 class F 'BBB+'; -- $17,839,000 class G 'BBB'; -- $23,785,000 class H 'BBB-'; -- $7,929,000 class J 'BB+'; -- $7,928,000 class K 'BB'; -- $7,928,000 class L 'BB-'; -- $3,964,000 class M 'B+'; -- $5,947,000 class N 'B'; -- $5,946,000 class O 'B-'; -- $23,785,793 class P 'NR'. * Notional Amount and Interest Only Classes A-1, A-2, A-3, A-4, A-SB, A-5A, A-5B, A-1A, A-J, XP, B, C, and D are offered publicly, while classes XC, E, F, G, H, J, K, L, M, N, O, and P are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 128 fixed-rate loans having an aggregate principal balance of approximately $1,585,679,793, as of the cutoff date. For a detailed description of Fitch's rating analysis, please see the report titled 'Banc of America Commercial Mortgage Inc., Series 2005-4' dated Sept. 8, 2005 available on the Fitch Ratings web site at http://www.fitchratings.com BANC OF AMERICA: Fitch Assigns B Rating on $1.2MM Class B-5 Certs. ------------------------------------------------------------------ Banc of America Mortgage Securities, Inc., mortgage pass-through certificates, series 2005-I are rated by Fitch Ratings: -- $764,288,100 classes 1-A-1, 1-A-2, 1-A-R, 2-A-1 through 2- A-5, 3-A-1, 3-A-2, 4-A-1 and 4-A-2 (senior certificates) 'AAA'; -- $15,445,000 class B-1 'AA'; -- $5,148,000 class B-2 'A'; -- $2,772,000 class B-3 'BBB'; -- $1,584,000 class B-4 'BB'; -- $1,189,000 class B-5 'B'. The 'AAA' rating on the senior certificates reflects the 3.50% subordination provided by the 1.95% class B-1, the 0.65% class B- 2, the 0.35% class B-3, the 0.20% privately offered class B-4, the 0.15% privately offered class B-5, and the 0.20% privately offered class B-6. The ratings on class B-1, B-2, B-3, B-4, and B-5 certificates reflect each certificate's respective level of subordination. Class B-6 is not rated by Fitch. The ratings also reflect the quality of the underlying mortgage collateral, the primary servicing capabilities of Bank of America Mortgage, Inc. (rated 'RPS1' by Fitch), and Fitch's confidence in the integrity of the legal and financial structure of the transaction. The transaction consists of four groups of adjustable interest rate, fully amortizing mortgage loans secured by first liens on one- to four-family properties with a total of 1,455 loans and an aggregate principal balance of $792,010,124.84 as of Sept. 1, 2005 (the cut-off date). The four loan groups are cross- collateralized. The group 1 collateral consists of 3/1 hybrid adjustable-rate mortgage loans. After the initial fixed interest rate period of three years, the interest rate will adjust annually based on the sum of one-year LIBOR index and a gross margin specified in the applicable mortgage note. Approximately 69.29% of group 1 loans require interest-only payments until the month following the first adjustment date. As of the cut-off date, the group has an aggregate principal balance of approximately $86,087,501 and an average balance of $544,858. The weighted average original loan-to-value ratio for the mortgage loans is approximately 72.54%. The weighted average remaining term to maturity is 358 months, and the weighted average FICO credit score for the group is 746. Second homes and investor-occupied properties constitute 14.22% and 1.24% of the loans in group 1, respectively. Rate/term and cashout refinances account for 23.94% and 21.55% of the loans in group 1, respectively. The states that represent the largest geographic concentration of mortgaged properties are California (47.84%) and Florida (13.05%). All other states represent less than 5% of the outstanding balance of the group. The group 2 collateral consists of 5/1 hybrid ARM mortgage loans. After the initial fixed interest rate period of five years, the interest rate will adjust annually based on the sum of one year LIBOR index and a gross margin specified in the applicable mortgage note. Approximately 71.77% of group 2 loans require interest-only payments until the month following the first adjustment date. As of the cut-off date, the group has an aggregate principal balance of approximately $451,029,038.67 and an average balance of $540,155. The weighted average OLTV for the mortgage loans is approximately 71.5%. The WAM is 359 months, and the weighted average FICO credit score for the group is 746. Second homes and investor- occupied properties constitute 8.39% and 0.57% of the loans in group 2, respectively. Rate/term and cashout refinances account for 21.55% and 13.72% of the loans in group 2, respectively. The states that represent the largest geographic concentration of mortgaged properties are California (51.32%), Florida (8.65%), and Virginia (7.43%). All other states represent less than 5% of the outstanding balance of the pool. The group 3 collateral consists of 7/1 hybrid ARM mortgage loans. After the initial fixed interest rate period of seven years, the interest rate will adjust annually based on the sum of one year LIBOR index and a gross margin specified in the applicable mortgage note. Approximately 59.56% of group 3 loans require interest-only payments until the month following the first adjustment date. As of the cut-off date, the group has an aggregate principal balance of approximately $142,694,888.28 and an average balance of $542,566. The weighted average OLTV for the mortgage loans is approximately 69.34%. The WAM is 359 months, and the weighted average FICO credit score for the group is 745. Second homes and investor- occupied properties constitute 8.30% and 0.64% of the loans in group 3, respectively. Rate/term and cashout refinances account for 26.68% and 19.68% of the loans in group 3, respectively. The states that represent the largest geographic concentration of mortgaged properties are California (44.71%), Virginia (6.54%), Florida (6.14%), and South Carolina (6.01%). All other states represent less than 5% of the outstanding balance of the pool. The group 4 collateral consists of 10/1 hybrid ARM mortgage loans. After the initial fixed interest rate period of 10 years, the interest rate will adjust annually based on the sum of one year LIBOR index and a gross margin specified in the applicable mortgage note. Approximately 80.68% of group 4 loans require interest-only payments until the month following the first adjustment date. As of the cut-off date, the group has an aggregate principal balance of approximately $112,198,696.06 and an average balance of $563,813. The weighted average OLTV for the mortgage loans is approximately 67.11%. The WAM is 360 months, and the weighted average FICO credit score for the group is 753. Second homes properties constitute 6.86%. Rate/term and cashout refinances account for 32.33% and 20.41% of the loans in group 4, respectively. The states that represent the largest geographic concentration of mortgaged properties are California (47.44%), Virginia (10.67%), and Florida (6.51%). All other states represent less than 5% of the outstanding balance of the pool. Approximately 70.01% of group 1, approximately 70.35% of group 2, approximately 67.67% of group 3, approximately 77.18% of group 4, and approximately 70.80% of all of the mortgage loans were originated under the Accelerated Processing Programs. None of group 1, approximately 0.28% of group 2, none of group 3, none of group 4, and approximately 0.16% of all of the mortgage loans were originated under the Accelerated Processing Programs of All-Ready Home and Rate Reduction Refinance. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com Banc of America Mortgage Securities, Inc., deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, elections will be made to treat the trust as two separate real estate mortgage investment conduits. Wells Fargo Bank, N.A. will act as trustee. BANC OF AMERICA: Fitch Places Low-B Rating on Two Cert. Classes --------------------------------------------------------------- Banc of America Alternative Loan Trust mortgage pass-through certificates, series 2005-9, are rated by Fitch Ratings: -- $436,200,915 classes 1-CB-1 through 1-CB-7, 1-CB-R, 2-CB- 1, 3-CB-1, CB-IO, CB-PO, 4-A-1 through 4-A-4, 5-A-1, X-IO and X-PO, ('senior certificates') 'AAA'; -- $7,257,000 class B-1 'AA'; -- $3,174,000 class B-2 'A'; -- $2,721,000 class B-3 'BBB'; -- $1,587,000 class B-4 'BB'; -- $1,360,000 class B-5 'B'. The 'AAA' ratings on the senior certificates reflect the 3.80% subordination provided by the 1.60% class B-1, 0.70% class B-2, 0.60% class B-3, 0.35% privately offered class B-4, 0.30% privately offered class B-5, and 0.25% privately offered class B- 6. Classes B-1, B-2, B-3, and the privately offered classes B-4 and B-5 are rated 'AA', 'A', 'BBB', 'BB', and 'B', respectively, based on their respective subordination. Fitch does not rate class B-6. The ratings also reflect the quality of the underlying collateral, the primary servicing capabilities of Bank of America Mortgage, Inc. (rated 'RPS1' by Fitch), and Fitch's confidence in the integrity of the legal and financial structure of the transaction. The transaction is secured by five pools of mortgage loans. Loan groups 1, 2, 3, 4, and 5 are cross-collateralized and supported by the B-1 through B-6 subordinate certificates. All mortgage loans in all 5 groups were underwritten using Bank of America's 'Alternative A' guidelines. These guidelines are less stringent than Bank of America's general underwriting guidelines and could include limited documentation or higher maximum loan-to- value ratios. Mortgage loans underwritten to 'Alternative A' guidelines could experience higher rates of default and losses than loans underwritten using Bank of America's general underwriting guidelines. Loan groups 1, 2, 3, 4, and 5 in the aggregate consist of 2,566 recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans with original terms to stated maturity ranging from 120 to 360 months. The aggregate outstanding balance of the pool as of Sept. 1, 2005 (the cut-off date) is $453,434,146, with an average balance of $176,708 and a weighted average coupon of 5.976%. The weighted average original loan-to-value ratio for the mortgage loans in the pool is approximately 71.15%. The weighted average FICO credit score is 738. Second homes and investor-occupied properties comprise 3.68% and 38.45% of the loans, respectively. Rate/Term and cash-out refinances account for 11.28% and 31.78% of the loans, respectively. The states that represent the largest geographic concentration of mortgaged properties are California (27.51%), Florida (12.86%), and Texas (6.65%). All other states represent less than 5% of the aggregate pool balance as of the cut-off date. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available on the Fitch Ratings web site at http://www.fitchratings.com Banc of America Mortgage Securities, Inc. deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, elections will be made to treat the trust as three separate real estate mortgage investment conduits. Wells Fargo Bank, N.A. will act as trustee. BOWATER INC: Appoints Ruth R. Harkin to Board of Directors ---------------------------------------------------------- Bowater Incorporated's (NYSE: BOW) Board of Directors has elected Ruth R. Harkin to the Board. Ms. Harkin recently retired from United Technologies Corporation where she served as Senior Vice President, International Affairs and Government Relations since 1997. Previously she was President and Chief Executive Officer of the Overseas Private Investment Corporation. Bowater Incorporated, headquartered in Greenville, South Carolina, is a leading producer of newsprint and coated mechanical papers. In addition, the company makes uncoated mechanical papers, bleached kraft pulp and lumber products. The company has 12 pulp and paper mills in the United States, Canada and South Korea and 12 North American sawmills that produce softwood lumber. Bowater also operates two facilities that convert a mechanical base sheet to coated products. Bowater's operations are supported by approximately 1.4 million acres of timberlands owned or leased in the United States and Canada and 30 million acres of timber cutting rights in Canada. Bowater is one of the world's largest consumers of recycled newspapers and magazines. Bowater common stock is listed on the New York Stock Exchange, the Pacific Exchange and the London Stock Exchange. A special class of stock exchangeable into Bowater common stock is listed on the Toronto Stock Exchange (TSX: BWX). * * * As reported in the Troubled Company Reporter on Apr. 22, 2005, Moody's Investors Service affirmed Bowater Incorporated's senior implied, senior unsecured and issuer ratings at Ba3, and concurrently, also affirmed the speculative grade liquidity rating as SGL-2 (indicating good liquidity). Moody's says the outlook remains negative. Ratings affirmed: -- Bowater Incorporated * Outlook: negative * Senior Implied: Ba3 * Senior Unsecured: Ba3 * Industrial and PC revenue bonds: Ba3 * Issuer: Ba3 * Speculative Grade Liquidity Rating: SGL-2 -- Bowater Canada Finance Corp. * Outlook: negative * Senior unsecured guaranteed notes: Ba3 As reported in the Troubled Company Reporter on Mar. 30, 2005, Fitch has rated Bowater's senior unsecured bonds and bank debt 'BB-'. Fitch says the Rating Outlook is Stable. Nearly $2.5 billion of debt is subject to the rating. As reported in the Troubled Company Reporter on May 14, 2004, Standard & Poor's Ratings Services assigned its 'BB' bank loan rating to newsprint producer Bowater Inc.'s $435 million senior unsecured revolving credit facility due 2007. All other ratings were affirmed at 'BB'. S&P says the outlook is stable. BP INTERNATIONAL: Accumulated Deficit Prompts Going Concern Doubt ----------------------------------------------------------------- Daszkal Bolton LLP expressed substantial doubt about BP International Inc.'s ability to continue as a going concern after it audited the Company's financial statement for the year ended May 31, 2005. The auditing firm points to the Company's losses and accumulated deficit. For the year ended May 31, 2005, the Company reported a net loss of $2,748,159 compared with a net loss of $2,601,117 for the year ended May 31, 2004. The Company's present assets have risen from $3,717,628 at May 31, 2004, to $4,075,710 at the close of May 2005. As of May 31, 2005, the Company had cash of $376,682 compared to $43,995 for the previous year. The Company's principal source of working capital has been: * income from operations, * borrowings under its revolving credit facilities, * capital investment, * and short-term loans from a company affiliate. New Auditors On April 26, 2005, Tschopp, Whitcomb & Orr, P.A., resigned as independent auditors of the Company. On May 20, 2005 the Company engaged Daszskal Bolton LLP, as its independent auditors to report on the Company's balance sheet as of May 31, 2005, and the related statements of income, stockholders' equity and cash flows for the one year period then ended. At May 31, 2005, the Company's balance sheet showed a $904,649 stockholders' deficit, compared to a $1,717,155 deficit at May 31, 2004. BP International, Inc. (f/k/a Allergy Immuno Technologies, Inc.) -- http://www.BPInternational.com/-- is a leading manufacturer of tennis court equipment, athletic field and gymnasium equipment, custom netting, and outdoor fabrics for use in privacy and construction fencing and fabric architecture shade structures and cabanas. The company recently introduced ShadeZone(TM) shade structures, an expanding line of standard and custom, permanent and portable, fabric architecture to reduce heat and block UV rays on playgrounds, golfing facilities, zoos, baseball and football complexes, theme parks, parking lots, car dealerships, outdoor concessions, pool sides, etc. CELESTICA INC: Completes Redemption of LYONs for $1.2 Million ------------------------------------------------------------- Celestica Inc. (NYSE: CLS, TSX: CLS/SV) has completed the redemption of all remaining Liquid Yield Option(TM) Notes due 2020 (Zero Coupon-Subordinated). The redemption of remaining LYONs was completed on Sept. 23, 2005, at which time there was approximately US$2.1 million principal amount at maturity of LYONs outstanding with an aggregate cash purchase price of approximately US$1.2 million. The redemption was part of Celestica's previously announced intention that it would redeem all outstanding LYONs after Aug. 1, 2005. The redemption price on Sept. 23, 2005 was US$575.84 per US$1,000 principal amount at maturity. All LYONs outstanding as of that date were deemed to have been redeemed by Celestica, whether or not they have been surrendered for redemption, and all rights of the holders thereof have terminated, with the exception of the holder's right to receive payment of the redemption price upon the presentation and surrender of their LYONs. In order for a holder to receive its payment, the holder's LYONs must be delivered to JPMorgan Chase Bank, N.A., the trustee for the LYONs. Questions and requests for assistance in connection with the process for the surrender of LYONs may be directed to JPMorgan Chase Bank, N.A., at (800) 275-2048. Celestica, Inc. -- http://www.celestica.com/-- is a world leader in the delivery of innovative electronics manufacturing services. Celestica operates a highly sophisticated global manufacturing network with operations in Asia, Europe and the Americas, providing a broad range of integrated services and solutions to leading OEMs (original equipment manufacturers). Celestica's expertise in quality, technology and supply chain management, enables the company to provide competitive advantage to its customers by improving time-to-market, scalability and manufacturing efficiency. * * * Celestica's 7-5/8% senior subordinated notes due 2013 and 7-7/8% senior subordinated notes due 2011 carry Moody's Investors Service's and Standard & Poor's single-B ratings. CHAMPION ENTERPRISES: Refinancing Senior Bank Debt with New Loan ---------------------------------------------------------------- Champion Home Builders Co., a subsidiary of Champion Enterprises, Inc. (NYSE: CHB), intends to enter into new senior secured credit facilities in an aggregate principal amount of up to $200 million. The Company plans to use the proceeds of the new credit facilities to refinance existing senior bank debt, to finance a tender offer for Champion Home Builders' 11-1/4% Senior Notes due 2007 and to provide working capital. It is anticipated that the refinancing will close in late October. On Sept. 30, 2005, Champion Home Builders intends to commence a cash tender offer for all $88,430,000 principal amount of its outstanding 11-1/4% Senior Notes due 2007. Champion Home Builders is offering to purchase the Notes at a price per $1,000 principal amount based on the sum of: (1) the present value of the scheduled payment of principal on the Notes on their maturity date, which is April 15, 2007, and (2) the present value of the scheduled interest payments through April 15, 2007. The present value will be calculated using a discount rate equal to a fixed spread of 50 basis points over the yield of the 3.625% U.S. Treasury Note due April 30, 2007. Consent Solicitation In connection with the tender offer, Champion Home Builders is soliciting consents to proposed amendments to the indenture governing the Notes, which would eliminate substantially all of the restrictive covenants and certain events of default. Holders who tender on or prior to the consent date will receive the total consideration described above, which includes a $20.00 consent payment per $1,000 principal amount of Notes. Holders who tender after the consent date will receive the total consideration minus the $20.00 consent payment. The consent date is 5:00 p.m., New York City time, on Oct. 14, 2005. In addition, Holders who validly tender and do not validly withdraw their Notes in the Offer will also be paid accrued and unpaid interest, if any, from the last interest payment date up to, but not including, the payment date. The tender offer is scheduled to expire at 12:00 midnight, New York City time, on Oct. 28, 2005, unless extended or earlier terminated. However, no consent payments will be made in respect of Notes tendered after the consent date. The tender offer and consent solicitation are subject to the satisfaction of certain conditions, including Champion Home Builders' entry into the new credit facilities, a requisite consent condition, a minimum tender condition and other general conditions. The detailed terms and conditions of the tender offer and consent solicitation will be contained in an Offer to Purchase and Consent Solicitation Statement that will be available following commencement of the tender offer. At that time, requests for documents may be directed to The Altman Group, Inc, the information agent for the offer, at (201) 806-7300 (collect) or (866) 416-0554 (U.S. toll-free). Additional information concerning the tender offer and consent solicitation may be obtained by contacting Credit Suisse First Boston, the dealer manager and solicitation agent for the offer, at (212) 325-7596 (collect) or (800) 820-1653 (U.S. toll- free). Headquartered in Auburn Hills, Mich., Champion Enterprises, Inc. is the manufactured housing industry's leading producer, with 2004 revenues of $1.15 billion. * * * As reported in the Troubled Company Reporter on June 17, 2005, Moody's Investors Services affirmed the ratings of Champion Enterprises, Inc. and changed the outlook to stable from negative to reflect the company's reduced debt balances, improvement in cash flows and margins, and recent sales growth. The speculative grade liquidity rating of SGL-2 has also been affirmed and indicates expected good liquidity for the coming 12 month period. Moody's affirmed these ratings for: Champion Enterprises, Inc.: * $89 million 7.625% senior notes, due 2009, rated B3; * Senior unsecured issuer rating, rated B3; * $400 million multiple seniority shelf registration, rated P(B3)/(P)Caa1/(P)Caa2; * Senior Implied, rated B1; * Speculative Grade Liquidity Rating, rated SGL-2. Champion Home Builders Co.: * $98 million 11.25% senior notes, due 2007, rated B2. Moody's changed Champion's ratings outlook to stable from negative. CHARTER COMMS: Closing Private Debt Exchange Offers --------------------------------------------------- Charter Communications, Inc. (Nasdaq: CHTR) disclosed the closing of the offers by its subsidiaries, CCH I, LLC, and CCH I Holdings, LLC, to exchange certain of the outstanding debt securities of Charter Communications Holdings, LLC in a private placement for new debt securities. The offers were closed and the new notes were issued as scheduled on Wednesday, Sept. 28, 2005. Charter Communications, Inc. -- http://www.charter.com/-- a broadband communications company, provides a full range of advanced broadband services to the home, including cable television on an advanced digital video programming platform via Charter Digital(TM), Charter High-Speed(TM) Internet service and Charter Telephone(TM). Charter Business(TM) provides scalable, tailored and cost-effective broadband communications solutions to organizations of all sizes through business-to-business Internet, data networking, video and music services. Advertising sales and production services are sold under the Charter Media(R) brand. * * * As reported in the Troubled Company Reporter on Aug. 29, 2005, Standard & Poor's Ratings Services placed its 'CCC+' corporate credit rating on Charter Communications Holdings LLC on CreditWatch with negative implications. Charter Holdings is a subsidiary of St. Louis, Missouri-based cable TV system operator Charter Communications Inc., which had consolidated debt of about $19.5 billion as of June 30, 2005 (pro forma for the August 2005 issue of $300 million, 8.75% senior notes). The CreditWatch listing follows Charter's announcement of an exchange offer for about $8.4 billion of various notes issued by Charter Holdings due between 2009 and 2012 for about $6.9 billion in accreted value of various new notes due in 2014 and 2015. The 'CCC-' ratings on these issues also were placed on CreditWatch with negative implications. The 'B-3' short-term rating on the parent company and other debt issues not part of the exchange offer were affirmed. "The exchange transactions will reduce onerous maturity pressure on Charter," said Standard & Poor's credit analyst Eric Geil. "However, we will view completion of any of the exchanges as tantamount to a default on the original debt issue terms because of the discount to par and the maturity extensions," he continued. Upon completion of any exchange transactions, Standard & Poor's will lower the corporate credit rating on Charter Holdings to 'SD' to indicate a selective default, and lower the ratings on the affected issues to 'D'. Subsequently, Standard & Poor's expects to reassign the corporate credit rating at 'CCC+'. The new notes would receive a 'CCC-' rating and any remaining Charter Holdings notes also would be rated 'CCC-'. CHARYS HOLDING: Earns $1.2 Million of Net Income in First Quarter ----------------------------------------------------------------- Charys Holding Company, Inc., delivered its quarterly report on Form 10-QSB for the quarter ending July 31, 2005, to the Securities and Exchange Commission on Sept. 14, 2005. The Company's net income for the three month period ended July 31, 2005 was $1,200,117 as compared to $117,536 for the three month period ended July 31, 2004 (pre-acquisition of CCI Telecom). Despite its successful refinancing and partial retirement of the debt assumed in its acquisition of CCI, at present the Company has a $2.4 million working capital deficit. Although the Company has available a $5 million asset based credit facility, its borrowing capacity is limited to the extent of the qualified accounts receivable of CCI. The present condition continues to create uncertainty as to the Company's ability to continue as a going concern in the absence of additional capital or financing from outside sources. At July 31, 2005, the Company's liquid working capital had a deficiency of $3,473,704 as compared to a deficiency of $4,717,622 at April 30, 2004. The reduction in working capital deficiency of $1,243,918 is the result of the retirement of a line of credit with Frost Bank. Debt Restructuring During the three month period ended July 31, 2005, the Company decreased its total debt outstanding to $3,592,793 from $5,421,209 at April 30, 2004. The decrease in debt is a result these two factors: (1) A net reduction in debt outstanding of $1,616,886 resulting from the CCI debt restructuring, whereby Frost Banks line of credit was replaced by a credit facility provided by CAPCO Financial Company. (2) A net repayment of short term borrowings totaling $205,000 during the period. CCI Debt Restructuring On July 29, 2005, the Company, through its subsidiary CCI, closed on a new $5 million asset based credit facility with CAPCO. The finance agreement provides for CAPCO to make cash advances to CCI based on 85% of accounts receivables that are 90 days or less from invoice date. The initial term of the agreement is 12 months from the closing date. Interest is payable on outstanding borrowings at the prime rate plus 6%. CAPCO also received a seven-year warrant to purchase up to 862,069 shares of Charys common stock at $0.35 per share. The facility is secured by a first lien position on the assets of CCI. The initial draw-down of the facility was approximately $2.6 million, of which $2.5 million was used to pay down CCI's existing line of credit with Frost Bank. Costs incurred to secure this financing, including the warrant valued at $45,027 totaled $310,224. Frost Bank Agreement Completion Concurrent with the closing on the CAPCO credit facility, on July 29, 2005 the Company completed the terms of an agreement entered into with Frost Bank on Apr. 25, 2005 to retire CCI's remaining debt with Frost Bank, consisting of a $4.55 million outstanding line of credit obligation. Also on July 29, 2005, Frost Bank released all debt security interests and liens relating to the credit line in consideration for the completion of the Agreement and having received from the Company: * a one-time cash payment of $2.5 million, * a $300,000 promissory note from the Company in favor of Frost Bank, and * 500,000 shares of Charys Series C preferred stock. The note bears interest at 12%, with accrued interest and principal due on Aug. 28, 2006. Upon completion of the transaction with Frost Bank, the Company recorded the cancellation of the remaining $2.05 million balance of the Frost Bank credit obligation. The Company also recorded debt and costs associated with the debt retirement, including the $300,000 promissory note, a fair value of $110,000 for the preferred stock issued and $43,645 in expenses associated with the retirement transaction, resulting in a net gain on the term loan retirement of $1.6 million for the three months ended July 31, 2005. In addition to the debt retirement consideration, the Company executed a $100,000 promissory note in favor of Frost Bank for unpaid interest and legal fees. The note bears interest at 12%, with accrued interest and principal due on Jan. 27, 2006. Going Concern Doubt The independent auditors' report on the Company's financial statement for the year ended Apr. 30, 2005, stated that the Company's recurring losses raise substantial doubt about the ability of the Company to continue as a going concern. The Company's revenues are currently insufficient to cover its operating costs and expenses. To the extent its revenue shortfall exceeds its expectations more rapidly than anticipated, the Company will be required to raise additional capital from outside investors or bank or mezzanine lenders. Headquartered in Atlanta, Georgia, Charys Holding Company, Inc. -- http://www.charys.com/-- is a publicly traded company focusing on the fragmented and underserved segment referred to as the Integrated Infrastructure Services segment. This segment varies widely in scope, but is fundamentally focused on upgrading the underpinning, infrastructure, and back office operations of the telecommunication, cable, electric, and Internet industries serving consumers, businesses and government entities. Charys' principal strategy is to acquire, through mergers and acquisitions, companies that support this underserved segment. CITICORP MORTGAGE: Fitch Puts B Rating on $602K Class B-5 Certs. ---------------------------------------------------------------- Citicorp Mortgage Securities, Inc.'s, REMIC pass-through certificates, series 2005-6: -- $391,829,859 classes IA-1 through IA-10, IIA-1, and A-PO certificates (senior certificates) 'AAA'; -- $5,025,000 class B-1 'AA'; -- $2,009,000 class B-2 'A' -- $1,206,000 class B-3 'BBB'; -- $603,000 class B-4 'BB'; -- $602,000 class B-5 'B'. The $603,666 class B-6 is not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 2.50% subordination provided by the 1.25% class B-1, the 0.50% class B- 2, the 0.30% class B-3, the 0.15% privately offered class B-4, the 0.15% privately offered class B-5, and the 0.15% privately offered class B-6. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and CitiMortgage, Inc.'s servicing capabilities (rated 'RPS1' by Fitch) as primary servicer. The mortgage loans have been divided into two pools of mortgage loans. Pool I, with an unpaid aggregate principal balance of $334,784,433, consists of 598 recently originated, 23-30 year fixed-rate mortgage loans secured by one- to four-family residential properties located primarily in California (30.77%) and New York (24.02%). The weighted average current loan to value ratio of the mortgage loans is 65.44%. Condo properties account for 5.61% of the total pool, and co-ops account for 8.49%. Cash- out refinance loans represent 23.29% of the pool, and there are no investor properties. The average balance of the mortgage loans in the pool is approximately $559,840. The weighted average coupon of the loans is 5.872%, and the weighted average remaining term is 359 months. Pool II, with an unpaid aggregate principal balance of $67,094,092, consists of 116 recently originated, 15-year fixed- rate mortgage loans secured by one- to four-family residential properties located primarily in California (25.51%) and New York (17.88%). The weighted average current loan to value ratio of the mortgage loans is 56.40%. Condo properties account for 11.78% of the total pool and co-ops account for 4.36%. Cash-out refinance loans and investor properties represent 43.92% and 0.29% of the pool, respectively. The average balance of the mortgage loans in the pool is approximately $578,397. The weighted average coupon of the loans is 5.401%, and the weighted average remaining term is 179 months. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com The mortgage loans were originated or acquired by CMI and in turn sold to CMSI. A special purpose corporation, CMSI, deposited the loans into the trust, which then issued the certificates. U.S. Bank National Association will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. COMDIAL COMMS: Completes $20 Million 363 Sale to Vertical Comms. ---------------------------------------------------------------- Vertical Communications (ASFT.OB) successfully completed its acquisition of substantially all of the assets of Comdial Corporation. The terms of the deal as approved by the United States Bankruptcy Court for the District of Delaware, required Vertical to provide consideration to creditors and assume liabilities of approximately $20 million. Vertical financed the acquisition through a combination of up to $9 million in lender financing and the proceeds from an approximate $12.9 million private issuance of the company's common stock, both completed simultaneously with the Comdial acquisition. "We're delighted to have completed the Comdial acquisition, and look forward to welcoming the Comdial employees and dealers to the Vertical team," said Bill Tauscher, Chairman and CEO of Vertical Communications. "With the addition of the Comdial products, channel and talent, Vertical is even better positioned to accelerate our vision of helping customers transform phone systems and voice applications from expense items to business intelligence weapons that help organizations deliver exceptional customer service, dramatically reduce communications costs and significantly improve the operational efficiency of their businesses." The combination of Vertical and Comdial has created a significant player in the phone systems and voice applications marketplace, with the momentum to make a greater impact on the IP telephony space. The combined company has shipped more than 400,000 traditional and IP-PBX phone systems, and now features more than 270 employees in five principal locations in the United States and EMEA, and an active channel of more than 1,100 value-added resellers, distributors and systems integrators worldwide. Vertical Communications, Inc. -- http://www.vertical.com/-- is a leading provider of next-generation IP-based voice and data communications systems for business. Vertical combines voice and data technologies with business process understanding to deliver integrated IP-PBX and application solutions that enhance customer service and business productivity. Vertical's customers are leading companies of all sizes - from small to large and distributed - and include CVS/pharmacy, Household International and Apria Healthcare. Vertical is headquartered in Cambridge, Mass. and delivers its solutions through a worldwide network of systems integrators, resellers and distributors. Headquartered in Sarasota, Florida, Comdial Corporation -- http://www.comdial.com/-- and its affiliates develop and market sophisticated communications products and advanced phone systems for small and medium-sized enterprises. The Company and its debtor-affiliates filed for chapter 11 protection on May 26, 2005 (Bankr. D. Del. Case No. 05-11492). Jason M. Madron, Esq., and John Henry Knight, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $30,379,000 and total debts of $35,420,000. CONMED CORP: Registers $150M Convertible Sr. Sub. Notes for Resale ------------------------------------------------------------------ Conmed Corp. filed a Registration Statement with the Securities and Exchange Commission to allow the resale of $150 million of 2.50% Convertible Senior Subordinated Notes Due 2024. The Company originally issued the notes on Nov. 10, 2004, in a private placement transaction to: * UBS Securities LLC, * Banc of America Securities LLC, * Citigroup Global Markets Inc., and * J.P. Morgan Securities Inc. The notes were resold by the initial purchasers to qualified institutional buyers within the meaning of Rule 144A under the Securities Act in transactions exempt from registration under the Securities Act. The notes and the shares of common stock issuable upon the conversion of the notes that may be offered pursuant to this prospectus are being offered by the selling securityholders, which includes their transferees, distributees, pledgees or donees or their successors. The Selling Security Holders include: Selling Security Holders Notes ------------------------ ----- Fore Convertible Master Fund $17,000,000 Quattro Fund Ltd. 10,050,000 Man Mac I Limited 10,000,000 CIBC World Markets 9,750,000 UBS Securities LLC 8,565,000 Akela Capital Master Fund, Ltd. 7,000,000 Zazove Convertible Arbitrage Fund, L.P. 6,700,000 CALAMOS Convertible Fund - Investment Trust 6,200,000 Fore Multi Strategy Master Fund 6,000,000 Vicis Capital Master Fund 6,000,000 A full list of the Selling Security Holders are available for free at http://ResearchArchives.com/t/s?1fa The Notes The notes bear interest at a rate of 2.50% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2005, to holders of record at the close of business on the preceding May 1 and November 1. The Notes bear contingent interest, commencing with the six-month period beginning Nov. 15, 2011, if the average trading price of the notes exceeds 120% of the principal amount of the note. The Notes are the Company's unsecured indebtedness and are subordinated in right of payment to its senior indebtedness and effectively subordinated to all liabilities and obligations of its subsidiaries. The Notes are redeemable, in whole or in part, by the Company at any time on or after Nov. 15, 2011, at a redemption price in cash equal to 100% of the principal amount of the notes. The Notes are subject to purchase by the Company at the option of the holder on each of Nov. 15, 2011, 2014 and 2019, at a purchase price in cash equal to 100% of the principal amount of the notes to be purchased, plus accrued and unpaid interest. The Notes mature on November 15, 2024. The Notes are convertible into cash and, if applicable, shares of our common stock based on an initial conversion rate of 26.1849 shares per $1,000 principal amount of notes (which represents an initial conversion price of approximately $38.19 per share) under certain conditions. The Company's shares of common stock trade at NASDAQ National Market under the symbol "CNMD." The Company's shares trade between $27.60 and $30.25 this month. A full-text copy of the Registration Statement is available for free at http://ResearchArchives.com/t/s?1fb A full-text copy of the Prospectus is available for free at http://ResearchArchives.com/t/s?1fd CONMED CORP. is a medical technology company with an emphasis on surgical devices and equipment for minimally invasive procedures and monitoring. The Company's products serve the clinical areas of arthroscopy, powered surgical instruments, electrosurgery, cardiac monitoring disposables, endosurgery and endoscopic technologies. They are used by surgeons and physicians in a variety of specialties including orthopedics, general surgery, gynecology, neurosurgery, and gastroenterology. Headquartered in Utica, New York, the Company's 2,800 employees distribute its products worldwide from eleven manufacturing locations. * * * As reported in the Troubled Company Reporter on Nov. 19, 2004, Moody's Investors Service assigned a rating of B2 for ConMed Corporation's $150 million senior subordinated convertible notes, due 2024. Moody's also affirmed ConMed's existing ratings. The ratings outlook remains stable. Moody's took these rating actions: (i) Assign a B2 rating on ConMed's $150 million senior subordinated convertible notes, due 2024 (ii) Affirm the Ba3 rating on ConMed's $240 million guaranteed senior secured credit facility consisting of a $100 million revolving credit facility, due 2007, and a $140 million Term Loan B, due in 2009; (iii) Affirm ConMed's Senior Implied Rating of Ba3; (iv) Affirm ConMed's Senior Unsecured (non-guaranteed exposure) Issuer Rating of B1; and (v) Affirm a stable ratings outlook. The ratings reflect steady and consistent internal revenue growth, increasing operating cash flow, and a stable level of capital expenditures required to support its business plan. Despite increased debt associated with the recent $80 million acquisition of the Endoscopic Product Line from C. R. Bard and a higher debt to capitalization ratio of 42%, ConMed's credit metrics have improved. By the end of the 2004, the ratio of earnings before interest and taxes to interest is projected to expand to over 7.5 times and the ratio of adjusted free cash flow to adjusted debt should improve to approximately 18%. CONSTELLATION BRANDS: Offers to Buy Vincor Stock for $1.2 Billion ----------------------------------------------------------------- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), has made a proposal to the Board of Directors of Vincor International Inc. (TSX: VN) of Mississauga, Ontario offering to purchase all of the outstanding common shares of Vincor for C$31.00 (US$26.45) per share in cash in a negotiated transaction. Constellation's proposal represents a premium of approximately 39% over Vincor's closing share price on Sept. 8, 2005, the day before Constellation first submitted its proposal. The transaction is valued at approximately C$1.4 (US$1.2) billion, which includes approximately C$1.1 (US$0.9) billion of equity and the assumption of approximately C$305 (US$260) million of Vincor's net debt as disclosed in the company's latest public filing dated June 30, 2005. "We are disappointed that the Vincor Board has refused to engage in meaningful discussions with Constellation regarding our premium proposal. This transaction is a unique opportunity for Vincor and its shareholders to receive a significant cash premium for their shares despite the very difficult operating conditions Vincor faces in markets such as the U.S., the U.K. and Australia where it lacks scale," said Constellation Brands Chairman and Chief Executive Officer Richard Sands. "Acceptance of our proposal by the Vincor Board would provide Vincor's shareholders with an immediate cash premium far greater than we believe the company can deliver on its own, given today's increasingly competitive and consolidating global wine industry." "Our proposal is based on publicly available information about Vincor; however, should discussions with Vincor demonstrate that additional value is warranted, Constellation would be willing to offer a higher price. This initiative is a high priority for us, and we are committed to making this combination a reality. We are prepared to begin substantive discussions with Vincor immediately to negotiate a mutually acceptable transaction based on our all-cash premium proposal. Given the significant benefits and the opportunities created by this combination for both companies, we are confident that Vincor's shareholders will find our proposal very attractive and enthusiastically support it," Sands said. "Constellation has a proven record of working successfully with management of acquired companies. We respect the talent and experience of Vincor's management team, led by Donald Triggs, and its success in making Vincor the preeminent Canadian wine company," stated Sands. "It is our desire, and in our best interests, to retain top talent and we believe there will be increased opportunities for Vincor employees as part of our larger, global organization. We appreciate Vincor's strong Canadian heritage and its commitment to the communities in which it operates," he concluded. Constellation noted that its Board of Directors unanimously supports this proposal. Constellation's proposal is not conditional on financing and would be subject to customary closing conditions. Constellation has received commitments for an all- debt financing that would be sufficient to consummate the transaction. Vincor has wineries throughout Canada in British Columbia, Ontario, Quebec and New Brunswick. In addition, Vincor has small operations in the U.S., Western Australia and New Zealand, and is an importer, marketer and distributor in the U.K. Vincor's premium brands include Inniskillin, Jackson-Triggs, R.H. Phillips, Toasted Head, Hogue, Goundrey, Amberley, Sumac Ridge, Hawthorne Mountain, Kim Crawford, Kumala, Ancient Coast and Sawmill Creek. Vincor's popular priced wines include Entre-Lacs, L'Ambiance, Sola Nero and Notre Vin Maison. Constellation Brands, Inc. -- http://www.cbrands.com/-- is a leading international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Corona Extra, Corona Light, Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl, Tsingtao, Black Velvet, Fleischmann's, Mr. Boston, Paul Masson Grande Amber Brandy, Chi- Chi's, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Stowells, Blackthorn, Almaden, Arbor Mist, Vendange, Woodbridge by Robert Mondavi, Hardys, Nobilo, Alice White, Ruffino, Robert Mondavi Private Selection, Blackstone, Ravenswood, Estancia, Franciscan Oakville Estate, Simi and Robert Mondavi Winery brands. * * * As reported in the Troubled Company Reporter on June 23, 2005, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating and other ratings on alcoholic beverage producer and distributor Constellation Brands Inc. At the same time, ratings were removed from CreditWatch where they were placed with negative implications on April 28, 2005. The CreditWatch listings followed the company's confirmation that it was part of a consortium considering a potential takeover of Allied Domecq PLC (BBB+/Watch Neg/A-2). The ratings affirmation and removal from CreditWatch follows Constellation's recent announcement that it is no longer planning to pursue an offer for Allied Domecq. S&P said the outlook is negative. At Feb. 28, 2005, Fairport, New York-based Constellation had about $3.29 billion of total debt outstanding. DELTA AIR: Taps Stroock & Stroock as Conflicts Counsel ------------------------------------------------------ Delta Air Lines Inc. and its debtor-affiliates ask permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Stroock & Stroock & Lavan LLP as counsel with respect to conflict and other designated matters for which Davis, Polk & Wardwell and Debevoise & Plimpton LLP cannot represent the Debtors because of a conflict. Edward H. Bastian, executive vice president and chief financial officer of Delta Air Lines, Inc., relates that they have selected Stroock because of its longstanding representations of the Debtors in creditors rights and financial restructuring matters, and because of its extensive experience in Chapter 11 reorganization cases and other debt restructuring proceedings. Stroock's rates at present are: Professional Hourly Rate ------------ ----------- Partners $550 to $950 Associates $260 to $595 Special Counsel $260 to $595 Paralegals $170 to $275 Clerks $170 to $275 The attorneys who will primarily provide services to the Debtors are: Partner Rates ------- ----- Lawrence M. Handelsman $795 Robin E. Keller, $735 Kristopher M. Hansen $625 Associate Rates ------- ----- Sherry Millman, $550 Harold Olsen $495 Anna Taruschio $425 James Gutierrez $320 Stroock will charge the Debtors for reasonable out-of-pocket expenses incurred in connection with its representation. Stroock, within the one-year period prior to the Petition Date, received $426,000 from the Debtors for services rendered. Prior to the Petition Date, Stroock received $300,000 in retainer payments for services to be rendered and for expenses to be incurred in connection with the Debtors' Chapter 11 Cases. Stroock will hold the unused portion of the retainer for postpetition services and expenses. Lawrence M. Handelsman, Esq., partner at Stroock, assures the Court that the Firm does not hold or represent any interest that is adverse to the Debtors' estates, and that the Firm is a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. Mr. Handelsman discloses that, over the past 12 months, Stroock represented these entities and their affiliates that account for more than 1% of the Firm's revenues: (i) American Express Company; (ii) JPMorgan Chase & Co.; and (iii) Lehman Brothers Holdings, Inc. * * * The Court approves the Application on an interim basis. Timely filed objections to the Application will be considered at the hearing on Oct. 6, 2005. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Brings-In Giuliani Capital as Restructuring Advisor -------------------------------------------------------------- Delta Air Lines Inc. and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's permission to employ Giuliani Capital Advisors LLC as their restructuring advisors. Formerly known as Ernst & Young Corporate Finance LLC, Giuliani Capital has been providing restructuring advisory services to the Debtors since July 2004. Since its initial retention, Giuliani Capital has acquired considerable knowledge of the Debtors' business and financial affairs. Giuliani Capital's expertise in providing restructuring advisory services is widely recognized, and the firm regularly provides those services to large and complex business entities, both in and out of bankruptcy proceedings. Giuliani Capital is an affiliate of Giuliani Partners LLC. Giuliani Partners is a privately owned advisory firm founded in 2002 by Rudolph Giuliani, the former mayor of New York City and is headquartered in New York City. Pursuant to a Professional Services Agreement, dated Sept. 13, 2005, Giuliani Capital agrees to: (1) advise and assist the Debtors' management with respect to the restructuring of the Debtors, including the development of information and analyses which may be required by the Debtors' legal counsel, the Bankruptcy Court, or other parties-in-interest; (2) advise and assist the Debtors' management with the interface with constituencies and their respective advisors throughout the bankruptcy process and attend meetings and participate in calls with the constituencies; (3) advise and assist the Debtors' management in cash flow and liquidity forecasting and reporting; (4) advise the Debtors' management on its development of the Debtors' financial projections. The financial projections, including business plans, strategic content, specific action plans and related assumptions will be the responsibility of and be prepared by the Debtors' management; and (5) provide other services as may be requested in writing from time to time by the Debtors or its counsel, and agreed to by Giuliani Capital, and approved by Bankruptcy Court if appropriate. Upon execution of the Agreement, Delta Air Lines, Inc., agrees to pay Giuliani Capital $200,000, and commencing on the first business day of each calendar month thereafter, a $400,000 advisory fee. Upon the termination of the Engagement, a prorated portion of the Monthly Advisory Fee will be returned by Giuliani Capital to Delta to adjust for any partial month period in the month of termination. The Debtors will reimburse Giuliani Capital for reasonable out- of-pocket expenses incurred in connection with its activities under the Engagement. The Debtors and Giuliani Capital agree to indemnify each other for claims and damages. For the past 12 months, the firm received $2,369,768 as compensation and reimbursement of expenses for services rendered during that period. David S. Miller, managing director of Giuliani Capital, tells the Court that neither the firm nor Giuliani Partners was a creditor of the Debtors as of the Petition Date. After performing conflicts checks, the Firms have determined that they have transacted with parties-in-interest in matters unrelated to the Debtors. These entities each contributed at least 1% of the Firms' revenues for 2004: -- Avianca, -- Bank of America, -- Congress Financial, -- Deutsche Bank AG, -- Fleet Bank, -- General Electric, -- U.S. Bank, and -- Wachovia Bank. Mr. Miller also discloses that, because Giuliani Capital and Giuliani Partners have numerous professional employees, it is possible that certain employees of the Firms have business associations with parties-in-interest in the Debtors' Chapter 11 cases or hold interests in mutual funds or other investment vehicles that may own securities of the Debtors and their affiliates. However, no Giuliani Capital Engagement Managing Directors or his or her immediate family member, or partner of Giuliani Partners, owns Delta stock, are separately employed by, or are otherwise a creditor of, the Debtors. Moreover, certain partners in Giuliani Partners are partners in the law firm of Bracewell & Giuliani, formerly known as Bracewell & Patterson. While clients of Bracewell & Giuliani could be creditors of the Debtors or otherwise parties-in-interest, Bracewell & Giuliani does not currently represent those clients in the Debtors' Chapter 11 cases. Giuliani Capital is a disinterested person within the meaning of Section 101(14), as modified by Section 1107(b) of the Bankruptcy Code, Mr. Miller asserts. * * * Judge Beatty approves the Application on an interim basis. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) DOANE PET: Adopts Cost Saving Initiatives & Adjusts Q3 Guidance --------------------------------------------------------------- Doane Pet Care Company disclosed several cost savings initiatives to reduce its cost structure and to increase operating efficiencies. The Company also provided sales and Adjusted EBITDA guidance for the fiscal 2005 third quarter. The Company said that these initiatives include the closure of its 95,000 square foot Hillburn, N.Y., biscuit plant and its 55,000 square foot Delavan, Wisconsin, semi-moist plant, as well as the permanent shutdown of its dry dog and cat food production lines at its Portland, Indiana plant. Biscuit production will still continue at the Portland plant. These initiatives were based upon a number of factors including manufacturing and supply chain costs, as well as the Company's ongoing efforts to optimize operating efficiencies. Workforce Reduction The Company expects these initiatives to be completed during the fiscal 2005 fourth quarter. The Company does not anticipate any disruption in service to customers currently being served by these facilities. These actions will result in a workforce reduction of 91 manufacturing employees. The Company also reported that it will reduce its U.S. corporate salaried workforce by approximately 7%. In addition, as part of an ongoing strategy to focus on manufactured products, the Company says it will discontinue providing distribution services for its non-manufactured products in the U.S., which is expected to reduce annualized revenues by approximately $50 million. However, this action will allow for more efficient distribution of the Company's manufactured products and an increased focus on higher margin, value-added business such that the Company expects the impact on Adjusted EBITDA will not be material. This transition would be completed by the end of the first quarter in 2006. In connection with these initiatives, the Company said that it expects to incur non-cash asset impairment charges of approximately $5.2 million in the 2005 third quarter. In addition, the Company expects to incur severance and other cash restructuring charges of approximately $2.7 million, of which approximately $2.3 million will be recorded in the third quarter of 2005. The Company said it expects annualized savings of between $2.5 million and $3 million and also expects to receive cash proceeds of approximately $2.5 million from the eventual sale of the closed facilities. "These initiatives are consistent with our ongoing efforts to reduce operating and administrative costs and optimize manufacturing performance," said Doug Cahill, the Company's President and CEO. "We will continue to closely monitor business conditions, operating costs, future customer requirements and ongoing production capacity to ensure that we exceed our customers' expectations while remaining competitive in our industry." Third Quarter 2005 Business Update and Guidance Based on its current business outlook, Doane expects to report 2005 third quarter net sales in the range of approximately $220 million to $230 million and Adjusted EBITDA in the range of approximately $18.5 million to $20.5 million. For the 2004 third quarter, Doane recorded sales of $251 million and Adjusted EBITDA of $17.1 million. The Company expects to release 2005 third quarter results in mid November. Doane Pet Care Company -- http://www.doanepetcare.com/-- based in Brentwood, Tennessee, is the largest manufacturer of private label pet food and the second largest manufacturer of dry pet food overall in the United States. The Company sells to approximately 550 customers around the world and serves many of the top pet food retailers in the United States, Europe and Japan. The Company offers its customers a full range of pet food products for both dogs and cats, including dry, semi-moist, soft-dry, wet, treats and dog biscuits. * * * As reported in the Troubled Company Reporter on Sept. 2, 2005, Moody's Investors Service placed the ratings of Doane Pet Care Company and Doane Products Company under review for possible upgrade. This follows Doane's announcement that it has entered into a definitive agreement in which its parent company -- Doane Pet Care Enterprises, Inc., will be acquired by Teachers' Private Capital for $840 million. Doane has stated that as part of the transactions, Teachers will make a substantial equity investment into Doane, allowing it to retire all of its outstanding preferred stock and reduce the amount of funded debt on its balance sheet. As reported in the Troubled Company Reporter on Aug. 31, 2005, Standard & Poor's Ratings Services placed its ratings on private- label pet food manufacturer, Doane Pet Care Co., on CreditWatch with positive implications. This includes the 'B' corporate credit rating and other ratings on the company. CreditWatch with positive implications means that the ratings could be affirmed or raised following the completion of Standard & Poor's review. T he Brentwood, Tennessee-based company's total debt outstanding (including preferred stock) at July 2, 2005, was about $696 million. ELECTROPURE: Hein & Associates Raises Going Concern Doubt --------------------------------------------------------- Hein & Associates LLP expressed substantial doubt about Electropure, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Oct. 31, 2004. The auditing firm points to Electropure's recurring losses from operations and a $29 million accumulated deficit at Oct. 31, 2004. At Oct. 31, 2004 Electropure reports $2.5 million in assets and liabilities totaling $5.2 million. Financial Crisis In its Form 10KSB for the fiscal year ended Oct. 31, 2004 submitted with the Securities and Exchange Commission on Sept. 26, 2005, Electropure's management states that the Company is suffering a financial crisis and does not have the financial wherewithal to continue the research and development activities of Micro Imaging Technology, its subsidiary. Neither can it expand marketing and sales efforts in order to make the Electropure EDI, Inc., operation more profitable, or even continue to operate EDI as a going concern for any length of time. As a consequence of its financial situation, Electropure has taken steps to divest itself of MIT and thus generate some working capital and eliminate some debt. Such an action would also eliminate the expense of Electropure EDI operations. The Company believes the MIT technology may ultimately provide greater value to the stockholders than will the continued operation of EDI. On April 19, 2005, the Company entered into a Purchase and Sale Agreement to sell substantially all of the assets of the EDI subsidiary to SnowPure, LLC, a Nevada limited liability company, formed by EDI's General Manager, Michael Snow, for the purpose of this transaction. As a second measure, in June 2005, the Company entered into an agreement to sell the building currently owned by Electropure Holdings, LLC, its wholly-owned California limited liability company, to the George A. Boukather Trust, an unaffiliated third party, for a total cash purchase price of $3,925,000. The building constitutes the Company's single largest asset. Payment Default Electropure is currently in default of its obligations to pay a total of $720,000 in principal loans made by Anthony Frank , the majority shareholder, which have come due through August 2005. Of this amount, $300,000 in principal loans, plus accrued interest, are to be repaid with proceeds from the sale of the Company's building. The Company anticipates that Mr. Frank will agree to extensions on the remaining outstanding loans. About Electropure Electropure, Inc. -- http://www.electropure-inc.com/-- conducts its business through two wholly-owned subsidiaries, Electropure EDI, Inc. and Micro Imaging Technology, both of which are Nevada corporations organized in February 2000. Electropure is also the parent of Electropure Holdings, LLC, which is a wholly-owned subsidiary formed specifically to purchase the building that Electropure, Inc., currently occupies. EDI manufactures and sells a line of patented ion permeable membranes and proprietary water purification products that are incorporated into water treatment systems for ultra-pure water applications. The Company's MIT subsidiary is a research and development operation conducting research on the Company's patented laser-based rapid microbe detection system. ENERGY & ENGINE: Losses & Deficits Fuel Going Concern Doubts ------------------------------------------------------------ Energy & Engine Technology Corporation delivered its quarterly report on Form 10-QSB for the period ended June 30, 2005, to the Securities and Exchange Commission on Sept. 27, 2005. For the six months ended June 30, 2005, the Company incurred a net loss of $2,193,976, resulting in an accumulated deficit of $15,024,648. At June 30, 2005, the Company also had a working capital deficit of $186,435. On April 27, 2005 and on May 10 and 12, 2005, the Company closed on the initial $1,366,667 of $2,000,000 of financing with several investors, and on June 20 and 22, 2005, closed on the balance of the funding. Proceeds of the financing were used to purchase Anchor Manufacturing, Inc. and for working capital purposes. The $950,000 purchase price for Anchor Manufacturing's business was paid as follows: a) $200,000 in Common Stock (2,702,703 shares); b) $587,500 in cash; c) $25,000 in price reduction for assumption of warranty claims; and d) $137,500 in a purchase money note. Going Concern Doubt Marcum & Kliegman LLP expressed substantial doubt about the Company's ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2004 and 2003. The auditing firm cited the Company's net loss for 2004 of $5,849,366 and a working capital deficit of $247,533. Material Weakness Marcum & Kliegman also reported to the Company's Board of Directors certain matters involving internal controls that the independent auditors considered to be a reportable conditions and a material weakness, under standards established by the American Institute of Certified Public Accountants. The reportable conditions and material weaknesses relates to the December 31, 2004 financial close process and absence of appropriate reviews and approvals of transactions and accounting entries. Certain adjustments were identified in the annual audit process, related to the recording of stock-based compensation, exercise of warrants, asset acquisition, inventory, deferred debt and beneficial conversion feature on convertible debentures, amortization of deferred debt and beneficial conversion features, conversion of convertible debentures and discontinued operations. The adjustments related to these matters were made by the Company in connection with the preparation of the audited financial statements for the year ended December 31, 2004. It was subsequently determined that these reported conditions and material weaknesses also existed as of June 30, 2005. The Company is taking steps to correct these deficiencies. About Energy & Engine headquartered in Plano, Texas, Energy & Engine Technology Corporation (OTC:EENT) -- http://www.eent.net/-- develops and markets auxiliary power generators for the long haul trucking industry. The Company's flagship product, the AXP 1000, is an idle-reduction technology device, designed for new and retrofit installation on semi truck tractors, that provides power generation without requiring the operation of the truck's engine. Powered by an EPA- approved and CARB-certified engine, the AXP 1000 maintains the truck's battery power while delivering electricity for air conditioning, heating, and the operation of televisions, appliances and other devices, to the sleeper cab, thereby reducing fuel consumption, air/noise pollution and long- term truck maintenance costs. ENTERGY GULF: Moody's Reviews Ba3 Preferred Stock Rating -------------------------------------------------------- Moody's Investors Service placed the debt ratings of Entergy Gulf States, Inc. under review for possible downgrade. Ratings under review include: Entergy Gulf States, Inc.: * Baa3 senior secured, * Ba1 senior unsecured, and * Ba3 preferred stock. The ratings of parent Entergy Corporation are unaffected. The review of the ratings of Entergy Gulf States reflects the extensive damage that Hurricane Rita caused to the: * utility transmission system, * distribution system, and * power plants. The extent of damage appears to be among the worst experienced by any investor owned utility as a result of a hurricane in recent times. While hurricanes are an annual event in the Gulf Coast region and most do not have a lasting credit impact or result in a downgrade of the affected utilities, Moody's believes that Entergy Gulf States differs from these previous cases because of the following factors: 1) The magnitude of the damage, with approximately 248,000 customers (nearly half) still without power, and 288 transmission lines and 283 substations out of service; 2) Of 14 generating units in the hurricane affected area, only two are currently operating, and six remain out of service due to wind damage; 3) The likelihood for substantial anticipated lost revenues due to protracted electric outages as a result of substantial transmission system damage that is not covered by insurance; 4) Entergy Gulf States has indicated that it expects a long and difficult restoration process; 5) Unlike other hurricane affected utilities in the region, Entergy Gulf States operates under a rate freeze in Texas and has had a difficult relationship with the Public ilities Commission of Texas, which dismissed its last te case; 6) Entergy Gulf States is expected to need to significantly increase its funded debt to finance at least part of its restoration costs, increasing leverage and lowering cash flow coverage metrics. The review will focus on: * the severity of the damage to the utility's infrastructure; * the speed of the restoration process; * the ultimate cost of recovery; * the availability of insurance proceeds; and * the ability of the utility to recover its costs in a timely manner through rate filings or other regulatory mechanisms in Texas and Louisiana. Unlike Entergy New Orleans, which filed for bankruptcy last week, Entergy Gulf States is expected to retain most if not all of its customer base, providing a stronger opportunity to recover a substantial portion of its hurricane expenses over time. The review will also focus on the utility's financial flexibility and debt financing plans as it undergoes the restoration and rebuilding process, particularly considering it has: * a $340 million limitation on borrowings from the Entergy System money pool; * a $200 million existing authorization for the issuance of additional public debt; and * no bank credit facilities of its own. Entergy Gulf States, Inc. is a public utility headquartered in Beaumont, Texas and a subsidiary of Entergy Corporation, an integrated energy company that is headquartered in New Orleans, Louisiana. ENTERGY NEW ORLEANS: Gets Interim OK for $100 Mil. DIP Borrowing ---------------------------------------------------------------- Without access to fresh financing, Entergy New Orleans, Inc., won't have enough cash to meet its obligations to fuel and gas suppliers. The Company needs new financing to continue operating its business as a going concern and to rebuild the electric and gas infrastructure of the City of New Orleans. Entergy Corporation, the Debtor's parent, has agreed on an interim basis to advance up to $150 million in financing, on a discretionary basis, to meet the Debtor's immediate liquidity needs. R. Patrick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., in Baton Rouge, Louisiana, tells the the U.S. Bankruptcy Court for the Eastern District of Louisiana that the Debtor and Entergy are still discussing the extent to which Entergy would be willing to provide additional financing. "It is contemplated, however, that any such additional financing would only be made on a first priority lien basis pursuant to a priming facility approved under [Section 364(d) of the Bankruptcy Code], and the interim financing will be immediately repayable if a final order approving the proposed credit facility, in form and substance satisfactory to Entergy, is not entered." After good faith negotiations, the Debtor and Entergy have reached an agreement on the principal terms of the DIP Facility. The salient terms of the DIP Financing Agreement are: Borrower: Entergy New Orleans, Inc. Lender: Entergy Corporation Facility Amount: Up to $150 million on an interim basis pending final approval of the DIP Facility. Upon final approval of the DIP Facility, the Facility Amount will increase to $200 million; Purpose: The Debtor will use borrowings under the DIP Facility to fund its working capital and general corporate requirements, including electric and gas system restoration costs. Term: Borrowings will be repaid in full, and the DIP Agreement will terminate, at the earliest of: (i) August 23, 2006, (ii) November 10, 2005, if a Final Order satisfactory to Entergy will not have been entered on or prior to that date, (iii) the acceleration of the loans and the termination of the DIP Agreement in accordance with its terms, (iv) the date of the closing of a sale of all or substantially all of the Debtor's assets pursuant to section 363 of the Bankruptcy Code or a confirmed plan of reorganization, and (v) the effective date of a plan of reorganization in the Debtor's chapter 11 case. Security: All borrowings by the Debtor under the DIP Facility will at all times, subject to the Carve-Out: (i) pursuant to section 364(c)(1) of the Bankruptcy Code, be entitled to superpriority administrative claim status; (ii) pursuant to section 364(c)(2) of the Bankruptcy Code, be secured by a perfected first priority lien on all Unencumbered Collateral; (iii) pursuant to section 364(c)(3) of the Bankruptcy Code, be secured by a perfected junior lien on all property of the Debtor subject to perfected and non- avoidable liens as of the Petition Date; and (iv) pursuant to section 364(d)(1) of the Bankruptcy Code, be secured by a perfected first priority, senior priming lien on all property of the Debtor that is subject to valid, perfected and non- avoidable liens in existence on the Petition Date; provided, however, that the superpriority liens granted to Entergy pursuant to section 364(d)(1) of the Bankruptcy Code will not be effective unless and until the Final Order is entered, in which case those priming liens will be deemed to have been effective nunc pro tunc to the Petition Date; Carve-Out for Fees & Expenses of Retained Professionals: The superpriority claims and postpetition liens in favor of Entergy, including the DIP Liens, will be subject to: (i) in the event of the occurrence and during the continuance of an Event of Default, the payment of allowed and unpaid professional fees and disbursements incurred by the Debtor and any statutory committee appointed in the Debtor's chapter 11 case in an aggregate amount not to exceed $500,000, and (ii) the payment of all statutory fees incurred pursuant to Section 1930 of the Judiciary Code. Interest Rate: Cost of Funds Rate, which currently is approximately 4.6% per annum; provided, however, that no interest shall accrue under the DIP Facility prior to receipt of necessary approvals from the Securities and Exchange Commission, at which time each outstanding loan will be deemed to have accrued interest at the rate nunc pro tunc to the date the loan was made. Events of Default: * Failure to make payment of any installment of principal or interest when due and payable; * The occurrence of any Change of Control; * Failure of Entergy to receive, on or prior to November 30, 2005, approval from the Securities and Exchange Commission regarding the charging of interest under the DIP Facility or, in connection with entry of the Final Order, the full amount of the proposed DIP Facility and the priming lien; * Failure by either the Debtor or Entergy to receive other necessary governmental approvals and consents; * The occurrence of an event having a materially adverse effect on the Debtor or its prospects; and * Customary bankruptcy-related defaults, including, without limitation, appointment of a trustee, "responsible person," or examiner with expanded powers, conversion of the Debtor's chapter 11 case to a case under chapter 7 of the Bankruptcy Code, and the Interim Order or the Final Order being stayed or modified or ceasing to be in full force and effect. Expenses: The Debtor agrees to pay all out-of-pocket expenses (including the reasonable fees and expenses of counsel) incurred by Entergy in connection with the preparation of the DIP Agreement and all related documents, and the enforcement of any provision of the DIP Agreement. Moreover, he adds, the Debtor does not believe that any commercial lender would extend credit on an unsecured basis, or even on a basis that is pari passu with the Mortgage Liens or with the Hibernian Lien, to a borrower in the Debtor's situation. Given the impact of Hurricane Katrina on the Debtor's existing plant and property, the Debtor believes that the interests of its current first mortgage bondholders and other prepetition secured creditors are adequately protected, because the proposed expenditures will preserve and enhance the value of the Debtor's assets, which otherwise could have little value, Mr. Vance says. "That being said, however, the Debtor is not seeking at this time to impose a priming lien with respect to the $150 million loan." A full-text copy of the Debtor's DIP Agreement is available for free at http://ResearchArchives.com/t/s?205 The Lender is represented by: * J. Ronald Trost, Esq., at Cronin & Vris, LLP, in New York * Shalom L. Kohn, Esq., at Sidley Austin Brown & Wood LLP, in Chicago, Illinois; and * David S. Rubin, Esq., at Kantrow Spaht Weaver and Blitzer (APLC), Baton Rouge, Louisiana * * * The Honorable Jerry A. Brown, at a hearing on Sept. 28, 2005, in Baton Rouge, authorized the Debtor on an interim basis to borrow up to $100,000,000. Judge Brown emphasized that his interim approval does not constitute a priming or pari passu lien on any property otherwise subject to a valid, enforceable prepetition security interest or a determination of what constitutes Unencumbered Property or property of the estate. A full-text copy of the Interim DIP Financing Order is available for free at http://ResearchArchives.com/t/s?204 Judge Brown will convene a Final DIP Financing Hearing on Dec. 7, 2005, at 2:00 p.m. Objections, if any, must be filed and served on: (a) Attorneys for the Debtor Jones Walker Four United Plaza 8555 United Plaza Boulevard Baton Rouge, Louisiana 70809 Attn: R. Patrick Vance, Esq. (b) Attorneys for Entergy Corporation Cronin & Vris LLP 380 Madison Avenue New York, New York 10017 Attn: J. Ronald Trost, Esq. Sidley Austin Brown & Wood 10 South Dearborn Chicago, Illinois 60603 Attn: Shalom L. Kohn, Esq., and Kantrow Spaht Weaver and Blitzer (APLC) P.O. Box 2997 Baton Rouge, Louisiana 70821-2997 Attn: David S. Rubin, Esq. (c) The Office of the United States Trustee for the Eastern District of Louisiana so they are Received no later than Nov. 29, 2005. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENTERGY NEW ORLEANS: Gets Interim Order to Use Cash Collateral -------------------------------------------------------------- Before filing for bankruptcy protection, Entergy New Orleans, Inc., issued six series of first priority mortgage bonds in the aggregate principal amount of $230 million, ranging in maturity dates from August 2008 to September 2029. The Mortgage Bonds are secured by first priority liens on certain property of the Debtor pursuant to a Mortgage and Deed of Trust dated as of May 1, 1987 by and among the Debtor, The Bank of New York (successor to Harris Trust Company of New York and Bank of Montreal Trust Company) as Trustee and Stephen J. Giurlando (successor to Mark F. McLaughlin and Z. George Klodnicki) as Co- Trustee. The Mortgage Collateral largely consists of utility plant and equipment, but it does not include the Debtor's cash, accounts receivable, personal property, mineral rights, general intangibles, and all products or materials generated by the Debtor in the ordinary course of business, including electric power and gas. In addition to the Mortgage Bonds, the Debtor has traditionally had two other sources of financing to meet its short-term liquidity needs: (i) a fully-drawn $15 million, 364-day secured credit facility with Hibernia National Bank dated June 6, 2005, and (ii) borrowings from Entergy's intercompany money pool, pursuant to which the Debtor had authority to borrow certain amounts from Entergy and certain affiliates. According to Daniel F. Packer, ENOI President and Chief Executive Officer, unless authorized to use their prepetition lenders' cash collateral, the Debtor will not have enough cash to: -- repair and rebuild its business and operations in the wake of Hurricane Katrina, -- continue operating its business, -- maintain business relationships with vendors, suppliers and customers, -- make payroll, and -- satisfy other working capital and operational needs. Mr. Packer informs the U.S. Bankruptcy Court for the Eastern District of Louisiana that the Debtor and Entergy Corporation have reached an agreement for fresh financing to further address ENOI's liquidity problems. At present, the Debtor does not anticipate requiring the use of any cash collateral subject to the Mortgage Lien, but it does expect to utilize cash collateral subject to the Hibernia Lien, in the form of collections on prepetition receivables which were pledged to Hibernia. The Debtor proposes that Hibernia be granted a replacement lien on the Debtor's postpetition receivables to the extent of the cash collateral so used, which replacement lien will have the same validity and priority as the Hibernia Lien as of the Petition Date. With respect to cash collateral that may be covered by the Mortgage Lien, the Debtor believes that that cash collateral would represent insurance proceeds related to assets that were destroyed or damaged by the hurricane, and would appropriately be used to either finance rebuilding efforts or to reimburse Entergy, in connection with the grant of priming lien, for advances Entergy made for purposes of rebuilding. * * * At the hearing on Sept. 28, 2005, in Baton Rouge, the Court authorized the Debtor to use all Cash Collateral, if any, of Hibernia; provided that Hibernia is granted adequate protection. Specifically, Hibernia is granted a replacement lien in postpetition receivables to secure an amount equal to the amount of Cash Collateral used. The Court directs Hibernia to make a series of book entries that will result in the transfer of funds so that the Hibernia Payment Processing Account will have an immediate balance of $15,057,050. The Hibernia Payment Processing Account will remain frozen and subject to all parties' rights pending the submission and determination of a motion establishing cash management procedures. The Court will convene a Final Hearing on December 7, 2005, at 2:00 p.m. Objections must be filed and served by November 29, 2005, at 5:00 p.m. prevailing Eastern time. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 215/945-7000) EXIDE TECH: Closes Senior Secured & Convertible Debt Offerings -------------------------------------------------------------- As previously reported, Exide Technologies issued $60 million of Floating Rate Convertible Senior Subordinated Notes due 2013 to initial purchasers in a private placement on March 18, 2005. Exide Technologies' initial purchasers resold the notes in transactions exempt from the registration requirements of the Securities Act to qualified institutional buyers within the meaning of Rule 144A of the Securities Act. According to Gordon A. Ulsh, Exide's President and Chief Executive Officer, selling securityholders, including their transferees, pledges or donees or their successors, may from time to time offer and sell any or all of the notes and common stock into which the notes are convertible. Mr. Ulsh relates that as of Sept. 12, 2005, the Company had $24,522,760 shares of common stock outstanding. The selling securityholders are: Common Principal Stock Amount of Common Owned after Selling Notes Percentage Stock Completion Security Beneficially of Notes Owned Prior of the -holder Owned Outstanding to Conversion Offering -------- ------------ ----------- ------------- ----------- Acuity Master Fund, Ltd. 500,000 Less 1% - 28,785 Axis RDO Limited 436,000 Less 1% 69,627 94,727 BNP Paribas Equity Strategies, SNC 1,402,000 2.33% 1,105 81,818 CooperNeff Convertible Strategies (Cayman) Master Fund, LP 501,000 Less 1% - 28,842 CRT Capital Group LLC 3,250,000 5.4% - 187,104 DBAG London 3,750,000 6.25% - 215,889 Deutsche Bank Securities Inc. 4,000,000 6.66% - 230,282 Distressed Recovery Fund Ltd. 255,000 Less 1% 74,160 88,840 Fidelity Puritan Trust: Fidelity Balanced Fund 990,000 1.65% - 56,994 Fidelity Management Trust Company on behalf of accounts managed by it 10,000 Less 1% - 575 Grace Convertible Arbitrage Fund, Ltd. 2,500,000 4.16% - 143,926 HFR DS Master Trust Performance 689,000 1.14% 112,753 152,419 Lyxor/ Convertible Arbitrage Fund Limited 200,000 Less 1% - 11,514 Lyxor/ Mellon Rediscovered Opportunities Fund 507,000 Less 1% 84,791 113,979 Mellon HBV Capital Partners LP 154,000 Less 1% 61,708 70,573 Mellon HBV Master Global Event Driven Fund LP 3,097,000 5.16% 754,267 932,562 Mellon HBV Master Rediscovered Opp. Fund LP 2,218,000 3.69% 469,941 597,632 Mellon HBV Master US Event Driven Fund LP 894,000 1.49% 253,224 304,692 PIMCO Convertible Fund 250,000 Less 1% - 14,392 Singlehedge US Convertible Arbitrage Fund 158,000 Less 1% - 9,096 SOCS Ltd. 2,750,000 4.58% - 158,318 Stanfield Offshore Leveraged Assets Ltd. 22,750,000 37.91% 645,118 1,954,846 Sturgeon Limited 239,000 Less 1% - 13,759 Tribeca Global Convertible Investments, Ltd. 4,250,000 7.1% - 244,674 Vicis Capital Master Fund 2,000,000 3.33% - 115,141 Waterstone Market Neutral MAG51, Ltd. 68,000 Less 1% - 3,914 Waterstone Market Neutral Master Fund, Ltd. 932,000 1.55% - 53,655 Others 1,250 2.08% - 71,963 Headquartered in Princeton, New Jersey, Exide Technologies -- http://www.exide.com/-- is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. * * * As reported in the Troubled Company Reporter on July 8, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'CCC+' from 'B-', and removed the rating from CreditWatch with negative implications, where it was placed on May 17, 2005. "The rating action reflects Exide's weak earnings and cash flow, which have resulted in very high debt leverage, thin liquidity, and poor credit statistics," said Standard & Poor's credit analyst Martin King. Lawrenceville, New Jersey-based Exide, a manufacturer of automotive and industrial batteries, has total debt of about $740 million, and underfunded post-employment benefit liabilities of $380 million. EXIDE TECH: Names Kevin McMahon as Audit Vice President ------------------------------------------------------- Exide Technologies (NASDAQ: XIDE) disclosed the appointment of Kevin McMahon as Vice President-Audit, effective immediately. Mr. McMahon succeeds Steve Ellis, who elected not to relocate from Lawrenceville, New Jersey. "I am pleased to welcome Kevin to Exide," said J. Timothy Gargaro, Executive Vice President and Chief Financial Officer. "Kevin brings a wealth of both financial and operational auditing in his background to our Company, and has hands-on experience developing internal accounting compliance procedures, including Sarbanes- Oxley 404 testing, for a multinational company." Prior to joining Exide, Mr. McMahon most recently was Chief Internal Auditor at Novelis Inc., an aluminum rolling and recycling company that was formed as a spin-off from Alcan. Earlier, he served as Vice President Internal Audit Services at HCA Inc. and a Manager of Assurance and Advisory Services at Ernst & Young LLP. Mr. McMahon is a Certified Internal Auditor and holds a bachelor's degree in accounting from the State University of New York and an MBA from Palm Beach Atlantic University. Headquartered in Princeton, New Jersey, Exide Technologies -- http://www.exide.com/-- is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. * * * As reported in the Troubled Company Reporter on July 8, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'CCC+' from 'B-', and removed the rating from CreditWatch with negative implications, where it was placed on May 17, 2005. "The rating action reflects Exide's weak earnings and cash flow, which have resulted in very high debt leverage, thin liquidity, and poor credit statistics," said Standard & Poor's credit analyst Martin King. Lawrenceville, New Jersey-based Exide, a manufacturer of automotive and industrial batteries, has total debt of about $740 million, and underfunded post-employment benefit liabilities of $380 million. FOAMEX INT'L: Court Enters Order to Say Automatic Stay is Real -------------------------------------------------------------- By operation of Section 362 of the U.S. Bankruptcy Code, the commencement of Foamex International Inc., and its debtor- affiliates' bankruptcy cases gave rise to an automatic stay enjoining all persons and all governmental units from, among other things: (a) commencing any proceeding against the Debtors that could have been commenced before the cases were commenced, or recovering upon a claim against any of the Debtors that arose before the commencement of the Debtors' chapter 11 case; and (b) taking any action to collect, assess or recover a claim against any of the Debtors that arose before the commencement of the Debtors' chapter 11 cases. In addition, Section 525 prohibits and enjoins all governmental units from, denying, revoking, suspending or refusing to renew any license, permit, charter, franchise or other similar grant to, or discriminate with respect to a grant against the Debtors, solely because the Debtors: (a) are debtors under the Bankruptcy Code; (b) may have been insolvent before the commencement of the Chapter 11 cases; or (c) may be insolvent during the pendency of the Chapter 11 cases. Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, asserts that the injunctions contained in Sections 362 and 525 are self-executing. They constitute fundamental debtor protections, which, in combination with other provisions of the Bankruptcy Code, provide the Debtors with the "breathing spell" that is essential to the Debtors' ability to make a smooth and orderly transition into Chapter 11, Mr. Barry explains. However, Mr. Barry notes, not all affected parties of the Debtors' Chapter 11 cases are aware of the Bankruptcy Code's provisions. Nor are all parties cognizant of their significance and impact, he says. Thus, the Debtors believe it is necessary to advise third parties of the existence and effect of the provisions. Accordingly, the Debtors ask Judge Walsh for a declaratory order enforcing Sections 362 and 525. "Such an order is necessary to apprise parties affected sections 362 and 525 of the existence of these provisions and, in particular, the protections that such provisions provide the Debtors," Mr. Barry contends. Mr. Barry also asserts that an order is appropriate in the Debtors' chapter 11 cases, primarily, because the Debtors conduct business with parties in jurisdictions around the world. Some of the affected parties are likely not aware of the significant and necessary protections these sections provide to the Debtors. In addition, the Debtors and their property are subject to the rules and regulations of numerous governmental authorities, including those in foreign jurisdictions that may not be familiar with U.S. bankruptcy law and that, absent an order, may take precipitous action against the Debtors or their property. "The [Debtors' request] will facilitate a smooth and orderly transition of the Debtors into Chapter 11 and minimize the disruption to their business, without violating either the policies of Chapter 11 or the rules of the Court," Mr. Barry continues. The Debtors believe the order is necessary for a successful reorganization because it will help to prevent parties from attempting to seize and to liquidate their assets before the Court has reviewed the matter fully, or from discriminating unlawfully against the Debtors due to the Chapter 11 cases. * * * The U.S. Bankruptcy Court for the District of Delaware grants the Debtors' request. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) FORD CREDIT: Fitch Places BB+ Rating on $40.2 Mil Class D Certs. ---------------------------------------------------------------- Fitch Ratings assigns ratings to the Ford Credit Auto Owner Trust 2005-C asset-backed notes: -- $363,000,000 class A-1 3.95063% 'F1+'; -- $657,000,000 class A-2 4.24% 'AAA'; -- $618,000,000 class A-3 4.30% 'AAA'; -- $273,121,000 class A-4 4.36% 'AAA'; -- $60,351,000 class B 4.52% 'A'; -- $40,234,000 class C 4.72% 'BBB+'; -- $40,234,000 class D 6.76% 'BB+'. The ratings on the notes are based upon their respective levels of subordination, the specified credit enhancement amount (funds in the reserve account and overcollateralization, and the yield supplement OC amount. All ratings reflect the transaction's sound legal structure, the high quality of the retail auto receivables originated by Ford Motor Credit Company, and the strength of Ford Credit as servicer. Class D notes will be initially retained by the seller. The weighted average APR in 2005-C is 5.92%, up from 5.54% and 5.27% in 2005-B and 2005-A, respectively. The APR increase is representative of a higher interest rate environment, and a recent shift in marketing strategy away from 0% financing and toward employee discounts offered to all customers. The percentage of loans with APRs below 0.50% is 11.90%, noticeably lower than 2005- B (16.02%) and 2005-A (20.22%). As with previous deals, the 2005-C transaction incorporates a YSOC feature to compensate for receivables with interest rates below 8.75%. The YSOC is subtracted from the pool balance to calculate bond balances and the first priority, second priority, and regular principal distribution amounts, resulting in the creation of 'synthetic' excess spread. These amounts enhance the receivables' yield and are available to cover losses and turbo the class of securities then entitled to receive principal payments. As before, initial enhancement for the class A notes as a percentage of the adjusted collateral balance (collateral balance less YSOC) is 5.5% and consists of 5.0% subordination from the class B notes (3.0%) and the class C notes (2.0%), and the 0.5% initial deposit to the reserve account. After the closing date, the specified CE amount for all classes of notes (reserve account and OC) is 1.0%, thereby bringing the total target class A CE to 6.0%. Initial enhancement for the class B notes is 2.5% and consists of the 2.0% subordination of the class C notes and the 0.5% reserve account. The target enhancement is 3.0% and is made up of the subordination of the class C notes and the specified CE, as described above. Initial enhancement for the class C notes is 0.5% provided by the reserve account. The target enhancement for Class D notes is 1.0%. In addition to enhancement levels for each class of notes discussed above, under the expected base case scenario excess spread provides an additional 2% enhancement in the form of class D (privately placed) subordination. On the closing date, the aggregate principal balance of the notes will be 102% of the initial pool balance less the YSOC. The class D notes represent the undercollateralized 2%. During amortization, both excess spread and principal collections are available to reduce the bond balance. Hence, if excess spread is positive, the bonds will amortize more quickly than the collateral. It is this mechanism that ensures that the class D notes are collateralized and the specified CE level is achieved. Furthermore, the 2005-C transaction provides significant structural protection through a shifting payment priority mechanism. In each distribution period, a test will be performed to calculate the amount of desired collateralization for the notes versus the actual collateralization. If the actual level of collateralization is less than the desired, then payments of interest to subordinate classes may be suspended and made available as principal to higher rated classes. Based on the loss statistics of Ford Credit's prior securitizations, and Ford's U.S. retail portfolio performance, Fitch expects consistent performance from the pool of receivables in the 2005-C pool. For the six months ending June 2005, average net portfolio outstanding totaled approximately $68 billion, and had total delinquencies of 1.92% and net losses of 1.44% of the average net portfolio outstanding. FOSS MANUFACTURING: Gets 2nd Interim Order on Cash Collateral Use ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Hampshire entered a second interim order permitting Foss Manufacturing Company, Inc., to continue using Cash Collateral securing repayment of pre-petition obligations to CapitalSource Finance LLC and grant adequate protection to CapitalSource and the Pension Benefit Guaranty Corporation. On July 28, 2005, the PBGC filed a lien against the Debtor. The Debtor believes that only Capital Source and the PBGC have security interests in the Cash Collateral. Pre-Petition Debt & Cash Collateral Use The Debtor owes Capital Source approximately $30 million under a Revolving Credit and Security Agreement dated April 14, 2004, comprising of a Revolving A Facility, which is subject to a $25 million cap and a Revolving B Facility, which is subject to a $5 million cap. The Debtor will use the proceeds of the Cash Collateral in order to preserve the operations, value, and integrity of its business and to pay employee wages and benefits, purchase materials from vendors, and to pay expenses in the ordinary course of its business. Capital Source has consented to the continued use of Cash Collateral pursuant to the terms of the cash collateral Budget and of the Court's second interim order. The Court authorizes the Debtor to use the Cash Collateral on an interim basis in compliance with the projections of a 13-week Budget, covering the period from Sept. 23, 2055, to Dec. 16, 2005. A full-text copy of the Budget is available for free at: http://ResearchArchives.com/t/s?1ff Subject to and without waiver of any of its estate's rights, the Debtor has agreed to make payments in the aggregate amount of $251,000 to CapitalSource during the term of the Court's second Interim Order, without consenting to make any further payments to CapitalSource during the pendency of its chapter case, including in connection with any further use of Cash Collateral. Adequate Protection As adequate protection for their interests, CapitalSource and PBGC are granted Replacement Liens in all post-petition property of the Debtor's estate of the same types against which CapitalSource and PBGC held validly perfected and not avoidable liens and security interests, if any, as of the Petition Date. As further adequate protection to Capital Source, the Debtor may make two payments of the $251,000 payment to CapitalSource, each in the amount of $125,500, to be made on or before Oct. 1, 2005 and Oct. 15, 2005. The Court will convene a hearing at 1:00 p.m., on Oct. 31, 2005, to consider the Debtor's motion to use the Cash Collateral on a final basis. Headquartered in Hampton, New Hampshire, Foss Manufacturing Company, Inc., -- http://www.fossmfg.com/-- is a producer of engineered, non-woven fabrics and specialty synthetic fibers, for a variety of applications and markets. The Company filed for chapter 11 protection on Sept. 16, 2005 (Bankr. D.N.H. Case No. 05-13724). Andrew Z. Schwartz, Esq., at Foley Hoag LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million. FOSS MANUFACTURING: U.S. Trustee Appoints 7-Member Creditors Panel ------------------------------------------------------------------ The United States Trustee for Region 1 appointed seven creditors to serve on the Official Committee of Unsecured Creditors in Foss Manufacturing Company, Inc.'s chapter 11 case: 1. Polly Quest, Inc. Attn: John Marinelli 2 North Front Street, Suite 300 Wilmington, North Carolina 28402 Phone: 910-342-9554, Fax: 910-342-9558 2. W.P. Carey Attn: Chad F. Edmonson 50 Rockefeller Plaza New York, New York 10020 Phone: 212-492-8903, Fax: 212-492-8922 3. A. Schulman, Inc. Attn: Jim Warholic 3550 West Market Street Akron, Ohio 44333 Phone: 330-668-7350, Fax: 330-668-7384 4. Irving Oil Corporation Attn: Mary Masson Hummel PO Box 1421 St. John, New Brunswick Canada E2L4K1 Phone: 506-202-6620, Fax: 506-202-2687 5. Techmer PM, LLC Attn: Don Higdon #1 Quality Circle Clinton, Tennessee 37716 Phone: 865-805-0728, Fax: 865-457-9125 6. Eastman Chemical Co. Attn: Lawrence E. Rifken McGuireWoods LLP 1750 Tysons Boulevard, Suite 1800 McLean, Virginia 22012 Phone: 703-712-5337, Fax: 703-712-5250 7. Sprauge Energy Corp. Attn: Joe Vogelsang Two International Drive, Suite 200 Portsmouth, New Hampshire 03801-6801 Blacks Harbour, New Brunswick, Canada NB E5H 1E6 Phone: 603-430-7215, Fax: 603-430-5326 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Hampton, New Hampshire, Foss Manufacturing Company, Inc., -- http://www.fossmfg.com/-- is a producer of engineered, non-woven fabrics and specialty synthetic fibers, for a variety of applications and markets. The Company filed for chapter 11 protection on Sept. 16, 2005 (Bankr. D.N.H. Case No. 05-13724). Andrew Z. Schwartz, Esq., at Foley Hoag LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million. GB HOLDINGS: Files for Chapter 11 Protection in New Jersey ---------------------------------------------------------- GB Holdings, Inc., a minority stockholder of Atlantic Coast Entertainment Holdings, Inc., filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of New Jersey. GB Holdings has stated that it does not currently have the capital necessary to pay its 11% Notes that came due yesterday, Sept. 29, 2005. GB Holdings holds a 28% fully diluted common stock interest in Atlantic Coast Entertainment Holdings. The bankruptcy of GB Holdings, while significant to the stockholders and noteholders of GB Holdings, is irrelevant to Atlantic Coast Entertainment Holdings, which owns and operates The Sands Hotel and Casino in Atlantic City, New Jersey. As a minority stockholder in Atlantic, GB Holdings' bankruptcy will in no way affect the operation or business decisions of The Sands. As a result of an exchange offer conducted last year and prior conversions of debt to common stock, The Sands is fiscally sound with very little debt and a positive net worth of $143 million, as of June 30, 2005. The Sands can, and will, move forward with its current operations and its anticipated plans for an even greater presence in Atlantic City and is planning an expansion program to add up to 1,000 rooms to its facilities. Headquartered in Atlantic City, New Jersey, GB Holdings, Inc., primarily generates revenues from gaming operations in its Atlantic City facility. Although the Company's other business activities including rooms, entertainment, retail store and food and beverage operations also generate revenues, which are nominal in comparison to the casino operations. The Company filed for chapter 11 protection on Sept. 29, 2005 (Bankr. D. N.J. Case No. 05-42736). Mark A. Fink, Esq., at Sonnenschein Nath & Rosenthal, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated between $10 million to $50 million in assets and debts. GB HOLDINGS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: GB Holdings, Inc. c/o Sands Hotel and Casino Indiana Avenue and Brighton Park, 9th Floor Atlantic City, New Jersey 08401 Bankruptcy Case No.: 05-42736 Type of Business: The Debtor primarily generates revenues from gaming operations in Atlantic Coast Entertainment Holdings, which owns and operates The Sands Hotel and Casino in Atlantic City, New Jersey. The Debtor also provides rooms, entertainment, retail store and food and beverage operations. These operations generate nominal revenues in comparison to the casino operations. Chapter 11 Petition Date: September 29, 2005 Court: District of New Jersey (Camden) Debtor's Counsel: Mark A. Fink, Esq. Sonnenschein Nath & Rosenthal 1221 Avenue of the Americas New York, New York 10020 Tel: (212) 768-6700 Fax: (212) 768-6800 Debtor's Special Corporate Counsel: Katten Muchin Rosenman LLP 575 Madison Avenue New York, New York 10022 Debtor's Financial Advisor: Libra Securities, LLC Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Indenture Trustee $43,741,030 Corporate Trust Operations MAC N9303-121 6th Street & Marquette Avenue Minneapolis, MN 55479 Attn: Corporate Trust Administration Tel: (800) 932-2224 Harbert Distressed Bondholder $13,108,000 Investment 0247, Master Fund Ltd. For Arranged Financing Only 555 Madison Avenue, 16th Floor New York, NY 10022 Attn: Matt Fesko Tel: (212) 521-6974 Triage Capital Management Bondholder $5,932,000 B LP 0307 401 City Avenue, Suite 526 Bala Cynwyd, PA 19004 Attn: Leonid Frenkel Tel: (610) 688-0404 Triage Capital Bondholder $3,989,000 Management LP 0307 (USD Account) 401 City Avenue, Suite 526 Bala Cynwyd, PA 19004 Attn: Leonid Frenkel Tel: (610) 688-0404 Royal Bank of Canada Bondholder $2,000,000 Rbct_Dat_Equities 1 Liberty Plaza New York, NY 10006 Tel: (212) 428-6200 Tel: (212) 406-8422 Cragswood Ltd. Bondholder $1,045,000 c/o RH Capital Associates LLC 139 West Saddle River Road Saddle River, NJ 07458 Attn: Robert Horwitz Frenkel, Leonid Bondholder $446,000 1600 Flat Rock Road Narberth, PA 19072-1230 Tel: (610) 688-0404 Fmt Co Cust IRA Rollover Bondholder $200,000 Fbo Andrew D Kaufman 210 West 101st Street Apartment 7l New York, NY 10025 Andy Kaufman IRA Bondholder $145,000 The Braka Bondholder $81,000 Philanthropic Foundation c/o Ivor Braka US Realty Company David Braka Living Trust Bondholder $59,000 c/o Midland Credit Bonanno, Salvatore A. Bondholder $47,000 Watson, John Bondholder $47,000 Thomas H. Arnold IRA, Bondholder $35,000 Raymond James & Associates Inc. CSDN DCGT FBO Mona P May IRA Bondholder $34,000 Brookfield Capital Inc Bondholder $30,000 c/o Standard Private Trust Ltd. IRA FBO Carla Fels Bondholder $30,000 Pershing LLC, As Custodian Weinstein & Burton Bondholder $29,000 Esther M. Weinstein JT Ten Smith, Senter R. Bondholder $26,000 Chaut, Michael S. Bondholder $25,000 HAO QUANG: Wants Smith Lease as Special Counsel ----------------------------------------------- Hao Quang Vu asks the U.S. Bankruptcy Court for the District of Maryland for permission to retain Smith, Lease & Goldstein, LLC, as his special counsel. The Debtor selects Smith Lease to represent him in the lawsuit against Hewitt Avenue Associates, LLC in the Circuit Court for Montgomery County, Maryland. Smith Lease will move to vacate a default judgment entered in the civil case. Jeffrey D. Goldstein, Esq., a Smith Lease partner, discloses that his current hourly rate is $275. The Firm will have an initial $7,500 retainer. The Debtor believe that Smith Lease is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Bethesda, Maryland, Hao Quang Vu filed for chapter 11 protection on July 26, 2005 (Bankr. D. Md. Case Nos. 05-26765). Richard H. Gins, Esq., at The Law Office of Richard H. Gins, LLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated $500,000 to $1 million in assets and $1 million to $10 million in debts. HEATING OIL: Wants Access to Cash Collateral & DIP Loan ------------------------------------------------------- Heating Oil Partners, L.P., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Connecticut, Bridgeport Division, for authority: a) to obtain $115,000,000 DIP financing facility from the Bank of America, N.A., as administrative agent for a consortium of lenders; and b) to use the prepetition lenders' cash collateral. The Debtors tell the Court that the increase in the price of oil necessitates an increase in their operational needs. At the start of the heating season, the Debtors explain that it is critical for their continued operations that the financing be available. Without it, the Debtors won't be able to preserve and maintain their market position and their going concern value. Prepetition Credit The Debtors obtained prepetition loans from a group of lenders with Bank of America, N.A., as successor to Fleet National Bank as administrative agent. As of bankruptcy filing, the Debtors obligation under the credit pact is approximately $63,062,461 in revolving loans, term loans and advances. In a separate transaction, the Debtors issued 6.18% Senior Secured Notes due May 1, 2010 for $50,000,000. Furthermore, the Debtors borrowed $4,000,000 under a Priming Facility Agreement with certain lenders. Prepetition Collateral Trust and Security Agreement The prepetition lenders, the Debtors and U.S. Bank National Association, as Trustee, were party to a Third Amended and Restated Collateral Trust Agreement dated May 9, 2003. Under the agreement, a trust estate was established to secure the prepetition obligations. Also, the Debtors and the Trustee entered into a Third Amended and Restated Security Agreement which granted liens and interests to the Collateral Trustee to secure the obligations. DIP Collateral To protect the lenders interests, the Debtors proposes to grant them: a) liens on all of the Debtors' assets; and b) super-priority administrative expense claims. Cash Collateral Use The Debtors propose to use the encumbered funds in accordance with a Four-Week Budget projecting: Week Ending ----------- 9-30 10-7 10-14 10-21 ---- ---- ----- ----- Total Disbursements $34,462,000 $14,537,000 $12,398,000 $12,730,000 Letters of Credit $7,300,000 $7,300,000 $7,300,000 $7,300,000 To provide the lenders with adequate protection required under 11 U.S.C. Sec. 363 for any diminution in the value of their collateral, the Debtors will grant them replacement liens having the same extent, validity and priority as the prepetition liens. Headquartered in Darien, Connecticut, Heating Oil Partners, L.P. -- http://www.hopheat.com/-- is one of the largest residential heating oil distributors in the United States, serving approximately 150,000 customers in the Northeastern United States. The Company's primary business is the distribution of heating oil and other refined liquid petroleum products to residential and commercial customers. The Company and its subsidiaries filed for chapter 11 protection on Sept. 26, 2005 (Bankr. D. Conn. Case No. 05-51271). Craig I. Lifland, Esq., and James Berman, Esq., at Zeisler and Zeisler, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $127,278,000 in total assets and $155,033,000 in total debts. HEATING OIL: Wants Zeisler & Zeisler as Bankruptcy Counsel --------------------------------------------------------- Heating Oil Partners, L.P., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Connecticut, Bridgeport Division, for permission to employ Zeisler & Zeisler, P.C., as their bankruptcy counsel. Z&Z is expected to: a) advise the Debtors of their rights, powers and duties as debtors-in-possession continuing to operate and manage their business and property; b) advise and assist the Debtors concerning the negotiation and documentation of financing agreements, debt restructuring, cash collateral and related transactions; c) review the nature and validity of liens asserted against the Debtors' estates; d) advise the Debtors concerning the actions that they might take to collect and recover property of the estates; e) prepare on behalf of the Debtors, necessary and appropriate applications, motions, pleadings, draft orders, notices, schedules and other documents; f) advise and prepare applications, motions, pleadings, notices and other papers; g) counsel the Debtors with the formulation, negotiation and promulgation of a plan of reorganization and related documents; and h) perform all other legal services necessary and appropriate in the administration of these chapter 11 cases. The Debtors disclose they paid Zeisler a $200,000 retainer. However, Court records don't show the Firm's professionals' hourly billing rates. To the best of the Debtors' knowledge, Zeisler & Zeisler is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Darien, Connecticut, Heating Oil Partners, L.P. -- http://www.hopheat.com/-- is one of the largest residential heating oil distributors in the United States, serving approximately 150,000 customers in the Northeastern United States. The Company's primary business is the distribution of heating oil and other refined liquid petroleum products to residential and commercial customers. The Company and its subsidiaries filed for chapter 11 protection on Sept. 26, 2005 (Bankr. D. Conn. Case No. 05-51271). When the Debtors filed for protection from their creditors, they listed $127,278,000 in total assets and $155,033,000 in total debts. HONEY CREEK: Files Schedules of Assets and Liabilities in Texas --------------------------------------------------------------- Honey Creek Kiwi LLC, delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Northern District of Texas, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $10,000,000 B. Personal Property $450,483 C. Property Claimed As Exempt D. Creditors Holding $20,582,519 Secured Claims E. Creditors Holding Unsecured $72,198 Priority Claims F. Creditors Holding Unsecured $1,354,591 Nonpriority Claims G. Executory Contracts and Unexpired Leases H. Codebtors I. Current Income of Individual Debtor(s) J. Current Expenditures of Individual Debtor(s) ----------- ----------- Total $10,450,483 $22,009,308 Headquartered in Mesquite, Texas, Honey Creek Kiwi LLC, filed for chapter 11 protection on August 24, 2005 (Bankr. N.D. Tex. Case No. 05-39524). Richard G. Grant, Esq., at Roberts & Grant, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $10,450,483 in assets and $22,009,308 in debts. HONEY CREEK: Section 341(a) Meeting Slated for Oct. 18 ------------------------------------------------------ The U.S. Trustee for Region 6 will convene a meeting of Honey Creek Kiwi LLC's creditors at 10:00 a.m., on Oct. 18, 2005, at the Office of the U.S. Trustee, 1100 Commerce Street, Room 976, Dallas, Texas. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Mesquite, Texas, Honey Creek Kiwi LLC, filed for chapter 11 protection on August 24, 2005 (Bankr. N.D. Tex. Case No. 05-39524). Richard G. Grant, Esq., at Roberts & Grant, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $10,450,483 in assets and $22,009,308 in debts. HORNBECK OFFSHORE: Moody's Rates Planned $75 Million Notes at Ba3 ----------------------------------------------------------------- Moody's affirmed the Ba3 Corporate Family Rating and the Ba3 rating on the existing $225 million senior unsecured notes for Hornbeck Offshore Services, Inc. (HOS) while also assigning a Ba3 to the company's proposed $75 million senior unsecured notes add- on offering. The outlook remains stable. Proceeds from the proposed notes offering will be used to repay outstanding under the revolving credit facility (about $21 million as of Sept. 21, 2005). The remaining proceeds, along with the companion equity offering (at least $150 million) will be used to help fund: * the company's proposed newbuild program of about $275 million; * the completion of existing newbuilds in progress (about $37 million); and * conversion of the two coastwise sulfur tankers into 370' class multi-purpose supply vessels (about $65 million). The Ba3 ratings are restrained by: * HOS' concentration of the OSV business in the very commodity price sensitive and increasingly competitive deepwater GOM; * the general cyclicality of the OSV business as it relies on the exploration and production sector's spending patterns which are primarily driven by commodity prices; * the company's aggressive growth strategy; * the full amount of pro forma debt; * the intensely competitive nature of its Northeast focused tug and barge business; and * HOS' still small scale relative to its peers. The rating are supported by: * HOS' position as the second largest new generation OSV operator in the very active GOM; * the increasing asset mix/value which is comprised of the youngest and highest specification supply vessel fleets within the sector and will be enhanced by the newbuild program as well as the conversion of the 370' sulfur vessels into multi-purpose supply vessels; * the company's ability to effectively compete in the deep shelf GOM when the deepwater market experiences softness; * the scale and durability of the tug and barge business which has provides sufficient to cover the consolidated debt service of HOS; * the company's increasing diversification into some international markets; and * management's willingness and ability to issue ample equity to fund fleet expansions and acquisitions. The stable outlook reflects the continued strength in the underlying fundamentals of the offshore supply vessel (OSV) market, particularly the deepwater Gulf of Mexico (GOM) where HOS is a leading OSV operator, which is likely to continue well into 2006 and drive further credit accretion. The outlook also considers the optionality of the new equity offering (at least $150 million) which reduces the risk to bondholders as the company pursues its growth strategy through organic fleet expansions as well as to pursue consolidation opportunities within the sector. A positive outlook would require the company to clearly demonstrate that it can and will operate with leverage (debt/adjusted EBITDA) below 3.0x as it completes its newbuild program and embarks on other growth initiatives. A positive outlook and/or upgrade will also be considered if the company completes an acquisition completed with no additional debt and is viewed by Moody's to provide sufficient additional earnings and cash flows that can help fund the newbuild program and other initiatives. However, the outlook would face negative pressure if the company does not meet its earnings and cash flow projections over the next 12 to 18 months; or if capital spending exceeds the current plans and is not sufficiently funded with either internal cash flow or equity in order to maintain leverage (Debt/adjusted EBITDA) within below the 3.5x. The outlook could also face pressure if market conditions deteriorate and the company utilizes significant debt to complete the newbuild program. The ratings for Hornbeck are: 1) Affirmed at Ba3 -- the Corporate Family Rating 2) Affirmed at Ba3 -- the existing 6.125% $225 million senior unsecured notes 3) Assigned a Ba3 - $75 million add-on senior unsecured notes The note rating is not currently notched from the senior implied rating due to the inclusion of guarantees from all significant domestic subsidiaries as well as the expectation that there will be no borrowings under the company's revolver over the next 12 to 18 months. At present, the company has a $60 million borrowing base with the ability to grow to the $100 million commitment. Currently, only 11 of the company's total fleet (7 OSV and 4 tugs) are currently pledged to the revolver lenders, leaving significant collateral value for the bonds. However, Moody's would revisit notching the notes down from the Corporate Family Rating if the revolver is expanded and becomes significantly drawn; or if the company utilizes all of the restricted payments baskets (which Moody's estimates could add up to about $80 million to $85 million) without adding visible commensurate cash flows. HOS' operations are regionally concentrated with the OSV business focused in the GOM and the tug and barge operations located in the Northeast. Moody's notes that the company has begun to diversify its OSV business by deploying eight OSV's to Trinidad and one to Mexico. However, HOS is still highly dependent on activity in the GOM which is increasingly competitive and still vulnerable to cyclicality with approximately 50% to 60% of its earnings and cash flows derived from this region. The deepwater GOM continues to experience increased exploration and production activity against the backdrop of strong commodity prices and HOS is likely to benefit from the repair work needed to restore production impacted by hurricanes Katrina and Rita. However, due to its costly nature, the deepwater remains highly sensitive to commodity price strength and thus could face a rather quick pullback if oil and natural gas prices don't remain supportive. In addition, deepwater GOM is relatively small and highly competitive, with private companies having nearly an estimated 70% market share. Hornbeck believes it has the largest market share by a public company (about 15% to 16% before the newbuilds) but faces rising competition. Approximately 8 scheduled newbuilds are expected to enter the market by 2007 in addition to more U.S. flagged vessels currently operating in foreign markets that could be mobilized back to the GOM. Given that most offshore markets have greatly improved, it's unlikely that all or even many of these vessels would return to the GOM next year. However, the market's ability to absorb even some of those vessels could pressure dayrates, especially if re-entry is not staggered. HOS has built a fleet that of 23 young and sophisticated fleet OSV's that are all 200 class and above. The fleet, which has the youngest average age (5 years) within the sector, is designed to handle the significant requirements of the harsher environment in the deepwater GOM with its proprietary dynamic positioning and larger supply capacity, thus generating higher dayrates. The conversion of the two 370' sulfur tankers into multi-purpose supply vessels also offers an opportunity to add diversification and sophistication. The company's fleet composition provides some sustained earnings power through what has been a relatively stable tug and tank barge business as well as the ability of HOS's OSV's to effectively compete in the deep shelf. Over the past three years, the tug and barge EBITDA has grown from $13.7 million to an estimated $23 million for 2005, which is sufficient to estimated interest expense. As the activity in the deepwater GOM continues to show positive momentum, OSV demand has increased, causing dayrates to significantly strengthen. Currently, Hornbeck's OSV utilization is about 96% and average dayrates that have climbed to over $14,000/day. With cash operating expenses averaging around $3,800/day, Hornbeck's earnings and cash flows are likely to continue to expand into 2006. The company's liquidity, pro forma for the notes offering will be strong, with over $200 million of cash on the balance sheet, $60 million undrawn on its revolver and expected EBITDA in Q4'05 of about $23 to $28 million. In 2006, Moody's estimates Hornbeck's: * EBITDA to range between $95 million and $110 million versus interest expense of about $18 million; * working capital of about $6 million to $7 million; and * capex of about $160 million to $170 million (including about $140 million for newbuilds). Hornbeck Offshore Services, Inc. is headquartered in Covington, Louisiana. HYDROCHEM INDUSTRIAL: S&P Junks $150 Million Sr. Sub. Notes ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Deer Park, Texas-based HydroChem Industrial Services Inc. to 'B' from 'B+'. At the same time, Standard & Poor's lowered its rating on HydroChem's $150 million senior subordinated notes due 2013 to 'CCC+' from 'B-'. All ratings were placed on CreditWatch with negative implications. Total debt outstanding was about $175 million as of June 30, 2005. "The rating actions reflect the company's substantially weaker-than-anticipated operating performance in 2005, compounded by the expected effects of hurricanes in the Gulf Coast region on near-term results," said Standard & Poor's credit analyst Robyn Shapiro. As a provider of equipment cleaning services primarily to the petrochemical and oil refining industries, HydroChem could experience lower than anticipated revenues during the next several months as its clients defer maintenance. Some of HydroChem's labor force in the areas affected by the hurricanes has been temporarily displaced because of evacuations in these regions. Although the company may benefit in the longer term from additional repairs necessitated by the storms, this is outweighed by the near-term risk that capacity constraints due to storm damage will cause clients to defer previously scheduled maintenance on equipment that is undamaged. In addition, rising fuel costs may further squeeze HydroChem's declining operating margins. All of these factors could strain HydroChem's already limited liquidity. The ratings on HydroChem reflect a modest scope of operations, with: * revenues of about $200 million; * high debt leverage; and * minimal free cash generation. These factors are only somewhat offset by the company's position as a leading participant in the $2 billion market for domestic industrial cleaning services. HydroChem offers: * high-pressure water cleaning (hydroblasting); * chemical cleaning; * industrial vacuuming; * tank cleaning; and * related services to the: -- petrochemical (about 50% of revenues), -- oil refining (25%-30%), -- power (15%), and -- other process industries. Services offered are typically part of customers' recurring maintenance programs that improve operating efficiency and extend the useful lives of equipment and facilities. The CreditWatch listing will be resolved as soon as the recent hurricanes' impact on operating performance can be assessed. Ratings could be lowered again in the near term if customers' maintenance delays, elevated fuel costs, or the unexpected loss of a key customer causes HydroChem's financial performance to weaken further or if liquidity deteriorates. If performance remains weak, but is not significantly affected by any of these factors, the ratings could be removed from CreditWatch and affirmed with a negative outlook. However, if revenue, earnings, and cash flow increase due to storm-related activity or performance improves for other reasons and credit measures strengthen, the ratings could be removed from CreditWatch and affirmed with a stable or positive outlook. INSIGHT COMMS: Soliciting Consent from 12-1/4% Noteholders ---------------------------------------------------------- Insight Communications Company, Inc. (NASDAQ: ICCI) reported the commencement of a consent solicitation of holders of its outstanding 12-1/4% senior discount notes due 2011 for a proposed waiver of an indenture provision relating to its merger agreement with Insight Acquisition Corp. and related transactions. Concurrently with the solicitation, Insight Midwest, L.P., and Insight Capital, Inc., 50% owned subsidiaries of Insight Communications, are soliciting consents in respect of their 9-3/4% senior notes due 2009 and 10-1/2% senior notes due 2010 with respect to the waiver of a substantially similar provision in each indenture governing those notes. Insight Communications will pay consenting holders 0.125% of the accreted value of their 12-1/4% notes as of the consent payment date and 0.125% of the principal amount of their Insight Midwest notes as of the consent payment date, subject to the terms and conditions of the solicitations, which conditions include receipt of majority noteholder consent and consummation of the merger with Insight Acquisition Corp. The solicitations of consents will expire at 5 p.m., New York City time, on Oct. 12, 2005, unless extended in accordance with their respective terms. J.P. Morgan Securities Inc. and Banc of America Securities LLC have been retained as the consent solicitation agents. Insight Communications (NASDAQ: ICCI) is the 9th largest cable operator in the United States, serving approximately 1.3 million customers in the four contiguous states of Illinois, Indiana, Ohio, and Kentucky. Insight specializes in offering bundled, state-of-the-art services in mid-sized communities, delivering analog and digital video, high-speed Internet, and voice telephony in selected markets to its customers. * * * As reported in the Troubled Company Reporter on July 12, 2005, Standard & Poor's Ratings Services revised its outlook on New York City, New York-based cable TV operator Insight Midwest L.P. to stable from negative. At the same time, Standard & Poor's affirmed its ratings on Insight Midwest, including the 'BB-' corporate credit rating. Standard & Poor's also assigned its 'BB-' rating to intermediate holding company Insight Midwest Holdings LLC's new $1.108 billion term loan C due December 2009. Proceeds from the new bank loan will be used to repay the previous term loan B facility. "The outlook was revised to stable to reflect the company's receipt of looser financial covenants under accompanying bank loan amendments," said Standard & Poor's credit analyst Catherine Cosentino. "We had been concerned that the company could be out of compliance with the borrower total debt to EBITDA limitation in the latter half of 2006, when the maximum allowed leverage reduced to 3.25x," she continued. Under bank amendments, this threshold has been reset to 4.5x through mid-2006, and drops to only 4.25x through June 2007. This provides the company some near-term cushion to weather potential downturns in the business. INSIGHT HEALTH: S&P Affirms B Corporate Credit & Sr. Debt Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its recovery rating on InSight Health Services Corp.'s $300 million secured floating-rate notes due 2011 to '3' (indicating the expectation for meaningful {50%-80%} recovery of principal in the event of a payment default) from '2' (indicating the expectation for substantial {80%-100%} recovery). This action reflects an increased transaction size from the $250 million originally anticipated and the attendant dilution of collateral protection. Other existing ratings on InSight, including the 'B' corporate credit and senior secured debt ratings, were affirmed. The rating outlook is stable. Proceeds of the offering were used to repay the company's existing $250 million term loan B (and existing delayed-draw term loan), of which about $238 million is outstanding, and to repurchase $55.5 million of senior subordinated notes at a cost of $50 million. The remainder of the proceeds from the offering were used to cover transaction expenses and for general corporate purposes. "The ratings on InSight reflect the highly fragmented and competitive nature of the medical imaging industry, the limited barriers to competitor entry, and reimbursement risk," said Standard & Poor's credit analyst Cheryl Richer. "Moreover, the company's debt-financed acquisitions over the past few years have weakened its balance sheet. These risks overshadow the favorable effect on the industry as the population ages, the ability of imaging to limit overall health costs, and the expanded approval of imaging for additional disease states." INTEGRATED HEALTH: Wants Until January 4 to Object to Claims ------------------------------------------------------------ IHS Liquidating, LLC, as successor to Integrated Health Services, Inc., and certain of its direct and indirect subsidiaries, asks the U.S. Bankruptcy Court for the District of Delaware to further extend its deadline to file objections to all administrative and other claims in the IHS Debtors' Chapter 11 cases to January 4, 2006, without prejudice to its right to seek additional extensions. Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that as of the Plan Effective Date, the IHS Debtors have reviewed substantially more than 14,000 claims filed in their cases. However, a number of claims have not yet been fully analyzed and nearly 2,000 claims are still being disputed pursuant to pending claims objection. Mr. Barry notes that since the Effective Date, IHS Liquidating has: (a) worked diligently to: -- review pending claims objection; -- perform required diligence to determine which of the pending objections should be prosecuted; -- prosecute or consensually resolve the pending claims objection; and -- ensure that all disputed claims are made the subject of a proper objection prior to the expiration of the Claims Objection Deadline; (b) diligently pursued resolution of every claim that is subject of an omnibus claims objection, resulting in the settlement, ordered stipulation or other resolution of approximately 1,200 disputed claims; (c) reviewed and analyzed all claims that were designated by the IHS Debtors as "unresolved" but had not been made subject to an objection as of the Effective Date; and (d) filed an omnibus objection to: -- abandoned tort claims; -- claims that were the subject of a litigation before another court which dismissed the suit with prejudice, thereby liquidating the claim at zero; -- claims which represent liabilities that should have been withdrawn as part of a settlement with the claimant or by operation of events that occurred after the claim was filed, but that the claimant had not agreed to withdraw; and -- claims which otherwise failed to state a valid claim against the IHS Debtors' estates. Mr. Barry asserts that the extension of the Claims Objection Deadline will provide IHS Liquidating with much-needed time to effectively evaluate all claims, prepare and file additional objections to claims and, where possible, attempt, to consensually resolve disputed claims. The Court will hold a hearing to consider IHS Liquidating's request on October 13, 2005, at 11:30 a.m., prevailing Eastern Time. By application of Del.Bankr.L.R. 9006-2, IHS Liquidating's Claims Objection Deadline is automatically extended until the Court rules on the request. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 96; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTRAWEST CORP: Earns $32.6MM of Net Income in FY Ending June 30 ---------------------------------------------------------------- Intrawest Corporation reported its results for the fiscal year ended June 30, 2005. "The strong performance of Abercrombie & Kent, the newest member of Intrawest's portfolio, was very gratifying and it speaks to the power of its brand," said Joe Houssian, chairman, president and chief executive officer. "We are also pleased at the acceleration and expansion of our partnering strategy in all phases of real estate development. The joint ventures that we entered into in the fourth quarter are great examples of how this strategy is paying off for our shareholders." Fiscal 2005 Year End Highlights Record total revenue of $1.68 billion compared with $1.55 billion in 2004. Total Company EBITDA of $243.1 million, versus $268.3 million the previous year. Strong contribution from Abercrombie & Kent and record results at most of our non-British Columbia resorts offset the impact of the worst weather in 40 years at our British Columbia resort operations. Net income of $32.6 million after reflecting a non-recurring expense of $30.2 million to refinance high interest rate senior notes. Going forward, this refinancing is expected to save us approximately $15 million per annum. Net income also reflects a non-recurring write-down of $17.6 million on our non-resort golf properties, resulting from a strategic decision to focus our golf business on resort-based and branded operations. This compares with net income of $59.9 million in 2004 after reflecting a non- recurring call premium of $12.1 million to refinance senior notes Earnings per share on a diluted basis were $0.68 ($1.68 before non-recurring items) versus $1.25 ($1.48 before non-recurring items) in 2004. Real estate joint venture and sale transactions in the fourth quarter contributed to full year positive free cash flow of $62 million. Strong balance sheet with year-end Net Debt to EBITDA ratio of 3.6 times, well within target leverage range. "We have made a commitment to our shareholders to maintain our strong balance sheet and to grow with financial discipline," said John Currie, chief financial officer. "Our 2005 results reflect the successful execution of our financial strategies to deliver on this promise." Intrawest Corporation (IDR:NYSE; ITW:TSX) -- http://www.intrawest.com/-- is one of the world's leading destination resort and adventure-travel companies. Intrawest has interests in 10 mountain resorts in North America's most popular mountain destinations, including Whistler Blackcomb, a host venue for the 2010 Winter Olympic and Paralympic Games. The company owns Canadian Mountain Holidays, the largest heli-skiing operation in the world, and a 67% interest in Abercrombie & Kent, the world leader in luxury adventure travel. The Intrawest network also includes Sandestin Golf and Beach Resort in Florida and Club Intrawest -- a private resort club with nine locations throughout North America. Intrawest is developing five additional resort village developments at locations in North America and Europe. Intrawest is headquartered in Vancouver, British Columbia. * * * As reported in the Troubled Company Reporter on May 12, 2005, Standard & Poor's Ratings Services revised its outlook to stable from positive on Vancouver, British Columbia-based ski resort operator Intrawest Corp. At the same time Standard & Poor's affirmed its 'BB-' corporate credit and 'B+' senior unsecured debt ratings on the company. As reported in the Troubled Company Reporter on Sept. 24, 2004, Moody's Investors Service assigned a B1 rating to Intrawest Corporation's U.S. dollar-denominated 7.5% senior unsecured note offering, due 2013 and Canadian dollar-denominated 7.5% senior unsecured note offering, due 2009, for an aggregate amount of approximately US$325 million. In addition, these rating actions were taken by Moody's: * Ratings assigned: -- U.S. dollar-denominated 7.5% senior notes, due 2013 rated B1 -- Canadian dollar-denominated 7.5% senior notes, due 2009 rated B1 * Ratings affirmed: -- Senior implied rating at Ba3 -- Senior unsecured issuer rating at B1 -- US$350 million 7.5% senior notes due 2013 rated B1 -- US$125 million 10.5% senior notes due 2010 rated B1 -- US$135 million 10.5% senior notes due 2010 rated B1 -- US$125 million 10.5% senior notes due 2010 rated B1 The ratings outlook is stable. INTRAWEST CORP: Sells Beachfront Property in Maui for $25 Million ----------------------------------------------------------------- Intrawest Corporation together with its joint venture partner reported the sale of Lot Three Ka'anapali, a 26-acre parcel of beachfront property in Maui. The parcel of land was sold to a third party for a net profit before tax to Intrawest of approximately $25 million. "This parcel of land was not scheduled to be developed for some time and we had the opportunity to realize its value this year," said Gary Raymond, president and chief executive officer of Intrawest Placemaking. "We will now turn our attention to the adjacent site and our Honua Kai condo-hotel project, the first whole-ownership condominium project on Ka'anapali Beach in more than 20 years." The joint venture partnership is developing Honua Kai, a 700-unit luxury condominium-hotel project, on Lot Four Ka'anapali. Honua Kai is a whole-ownership condominium resort that will include two luxury condo-hotel towers and three townhome clusters with ocean and mountain views, lush gardens and resort-style amenities and services. Reservations for condominium units in the first phase of development, the Hokulani tower, will be accepted in mid-October. For more information, visit http://www.honuakai.com/ Intrawest Corporation (IDR:NYSE; ITW:TSX) -- http://www.intrawest.com/-- is one of the world's leading destination resort and adventure-travel companies. Intrawest has interests in 10 mountain resorts in North America's most popular mountain destinations, including Whistler Blackcomb, a host venue for the 2010 Winter Olympic and Paralympic Games. The company owns Canadian Mountain Holidays, the largest heli-skiing operation in the world, and a 67% interest in Abercrombie & Kent, the world leader in luxury adventure travel. The Intrawest network also includes Sandestin Golf and Beach Resort in Florida and Club Intrawest -- a private resort club with nine locations throughout North America. Intrawest is developing five additional resort village developments at locations in North America and Europe. Intrawest is headquartered in Vancouver, British Columbia. * * * As reported in the Troubled Company Reporter on May 12, 2005, Standard & Poor's Ratings Services revised its outlook to stable from positive on Vancouver, British Columbia-based ski resort operator Intrawest Corp. At the same time Standard & Poor's affirmed its 'BB-' corporate credit and 'B+' senior unsecured debt ratings on the company. As reported in the Troubled Company Reporter on Sept. 24, 2004, Moody's Investors Service assigned a B1 rating to Intrawest Corporation's U.S. dollar-denominated 7.5% senior unsecured note offering, due 2013 and Canadian dollar-denominated 7.5% senior unsecured note offering, due 2009, for an aggregate amount of approximately US$325 million. In addition, these rating actions were taken by Moody's: * Ratings assigned: -- U.S. dollar-denominated 7.5% senior notes, due 2013 rated B1 -- Canadian dollar-denominated 7.5% senior notes, due 2009 rated B1 * Ratings affirmed: -- Senior implied rating at Ba3 -- Senior unsecured issuer rating at B1 -- US$350 million 7.5% senior notes due 2013 rated B1 -- US$125 million 10.5% senior notes due 2010 rated B1 -- US$135 million 10.5% senior notes due 2010 rated B1 -- US$125 million 10.5% senior notes due 2010 rated B1 The ratings outlook is stable. KAISER ALUMINUM: Wants Modified USWA Settlement Agreement Approved ------------------------------------------------------------------ As previously reported in the Troubled Company Reporter on February 8, 2005, Judge Fitzgerald approved the amended and restated agreement and three letter agreements between Kaiser Aluminum & Chemical Corporation and the United Steelworkers of America, AFL-CIO-CLC, which resolves the Pension Benefit Guaranty Corporation's concerns regarding certain replacement pension plans for the terminated salaried and hourly pension and retiree benefit plans for applicable retirees and dependents. KACC & USW Modify 1113/1114 Agreement In Spring of 2005, Kaiser Aluminum & Chemical Corporation and the United Steelworkers commenced discussions regarding certain aspects of their amended agreement to modify retiree benefits and collective bargaining agreements that needed modification. Kimberly D. Newmarch, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, relates that USW raised concerns that, pursuant to the existing terms of the First Amended 1113/1114 Agreement, the Voluntary Employee Beneficiary Association might have insufficient liquidity on the Debtors' emergence from bankruptcy to pay then-existing benefits to its beneficiaries. The parties also discussed: (a) clarifying certain potential ambiguities regarding the effective date of certain provisions under the First Amended 1113/1114 Agreement; and (b) inserting the new name of the union that resulted from the merger between the USW's predecessor, the United Steelworkers of America, AFL-CIO, CLC, and the Paper, Allied-Industrial, Chemical and Energy Workers Union on April 12, 2005. At the same time that negotiations with the USW were underway, KACC was also negotiating the terms of KACC's participation in the Steelworkers Pension Trust with the SPT Trustees. While certain terms of the participation were reflected in the Original 1113/1114 Agreement and the First Amended 1113/1114 Agreement, it was always contemplated that KACC would need to enter into an incorporation agreement with the SPT Trustees that would provide final terms governing KACC's participation. The SPT Trustees, KACC and the USW have separately negotiated and agreed to the final form of the SPT Agreement. The terms of the SPT Agreement have been incorporated into the Second Amended 1113/1114 Agreement. The principal modifications to the 1113/1114 Agreement are: A. For up to two years after KACC's emergence from bankruptcy, Reorganized KAC will make available to the VEBA, if applicable law permits and the VEBA's liquidity falls below a certain threshold, cash advances aggregating to $8.5 million, in lieu of any Variable Cash Contribution. Reorganized KAC will be entitled to reimbursement for those cash advances, with interest, if amounts remain outstanding for certain periods of time; B. References to the USWA are replaced with the USW. If the PBGC does not prevail in the PBGC Appeal, four of KACC's smaller pension plans -- the Kaiser Aluminum Tulsa Pension Plan, the Kaiser Aluminum Bellwood Pension Plan, the Kaiser Aluminum Los Angeles Extrusion Pension Plan and the Kaiser Aluminum Sherman Pension Plan -- will be terminated and assumed by the PBGC; C. KACC's participation in the SPT will commence upon the Court's approval of the Second Amended 1113/1114 Agreement, which should not be later than December 10, 2005. KACC's participation will require it to start making contributions to the SPT on behalf of covered USW employees enrolled in the SPT. Extending back to June 2004 and looking forward, KACC will start making monthly contributions to the SPT equivalent to $1 for each "Hour Worked" in a wage month by a covered USW employee. In addition to the Hourly Contributions, for purposes of allowing covered USW employees to be eligible for certain benefits based on past services, KACC will also make a $1,500 one-time contribution for each: (a) covered USW employee enrolled in the SPT on or after June 2004; and (b) former USW employee who has been reinstated prior to February 2006 in accordance with certain Inter-Plant Job Opportunity rights under applicable USW collective bargaining agreements. Under the Second Amended 1113/1114 Agreement, the exact rates for Hourly Contributions and Additional Contributions had not yet been established, even though KACC and USW had contemplated that the rate for Hourly Contributions would be capped at $1 for every hour worked and the rate for Additional Contributions would be capped at $2,500 for every employee; D. To permit the exercise of KACC's right to withdraw from the SPT during the "free look" period provided by the SPT under authority granted in Section 4210(a) of the Employment Retirement Income Security Act of 1974, the SPT Trustees are required to give KACC notice of any potential modifications to the SPT that would interfere with KACC's ability to withdraw from the SPT during its "free look" period; E. KACC and the USW reserve the right to renegotiate the rate of Hourly Contributions made to the SPT if KACC's Hourly Contributions in a quarter exceed 2% of all similar contributions made by all participants to the SPT in that quarter. Any reduction in the Hourly Contribution rate -- causing the rate to fall below $1 -- as a result of these renegotiations would be offset by additional contributions required to be made to the replacement defined contribution plan established by KACC for USW employees; and F. Unused budgeted amounts for administrative expenses of the VEBA for which KACC is required to reimburse the VEBA during the first calendar year of its existence will carry forward for use in the second and third years of the VEBA's existence. The Debtors ask the Court to approve the modifications to the First Amended 1113/1114 Agreement. The modifications will have minimal economic effect on the Debtors or on Reorganized KAC, Ms. Newmarch assures Judge Fitzgerald. Reorganized KAC will only be required to make advances if the VEBA experiences liquidity problems and will be entitled to reimbursement for the full amount of any advances, with interest, Ms. Newmarch explains. A full-text copy of the Second Amended 1113/1114 Agreement is available at no extra cost at http://ResearchArchives.com/t/s?201 Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) KAISER ALUMINUM: Claims Reps Want Insurers' Objection Overruled --------------------------------------------------------------- Republic Indemnity Company and Transport Insurance Company, formerly known as Transport Indemnity Company, support the objections to Kaiser Aluminum Corporation, its debtor-affiliates and the London Underwriters' Settlement Agreement filed by: a. AIU Insurance Company, Granite State Insurance Company, Insurance Company of the State of Pennsylvania, Landmark Insurance Company, Lexington Insurance Company, National Union Fire Insurance Company of Pittsburgh, Pennsylvania, and New Hampshire Insurance Company, among others; and b. First State Insurance Company, Hartford Accident and Indemnity Company, New England Reinsurance Corporation and Nutmeg Insurance Company. The Future Silica Claimant's Representative, the Official Committee of Asbestos Claimants, and Martin J. Murphy, as Legal Representative for Future Asbestos Claimants, ask the U.S. Bankruptcy Court for the District of Delaware to overrule the objection filed by First State Insurance Company, Hartford Accident and Indemnity Company, New England Reinsurance Corporation, and Nutmeg Insurance Company. Daniel K. Hogan, Esq., at The Hogan Firm, in Wilmington, Delaware tells Judge Fitzgerald that the Underwriters Settlement Agreement expressly provides that it does not affect any other PI Insurance Company's rights and obligations under its insurance policies. Therefore, any claim that the Agreement might negatively affect Hartford's contract rights is "unfounded." Mr. Hogan explains that the Settlement Agreement plainly contemplates that Hartford's rights and obligations under its policies remain intact, and the Agreement does not and cannot be argued to compromise or otherwise negatively affect Hartford's contractual rights in any way. Hartford clearly retains "all rights and obligations under the Hartford Policies," as well as "all of its rights and defenses against Kaiser Aluminum Corp., the Reorganized KAC, and the Funding Vehicle Trust." To the extent Hartford seeks relief in relation to some possible right to seek "contribution" from the settling insurers as a matter of equity or law, Hartford is seeking relief to which it is not entitled and is asking the Court to rule on issues that are neither ripe for decision nor properly before the Court, Mr. Hogan contends. Mr. Hogan points out that there has been no settlement or judicial determination of Hartford's liability to the Debtors or the Funding Vehicle Trust, a necessary predicate to any claim that some other insurer is as matter of "equity" obliged to "contribute" to the tort losses paid by Hartford. Even more important, Mr. Hogan says, there has been no determination that even if and when Hartford is held liable to pay tort claims, it would have any equitable right to seek contribution from settling insurers. In as much as Hartford continues to deny its coverage obligations altogether and not make any payments toward the tort claims, whatever "equitable" right to contribution Hartford might possibly have at the end of the day depends on the total history and overall circumstances of Hartford's claims conduct in comparison with other insurers' conduct as of the time Hartford actually is called on to pay claims, Mr. Hogan notes. It would be impossible for the Court to prejudge the prospective existence and extent of any right to contribution on the basis of conjecture, Mr. Hogan says. Any ruling on those matters by the Court, on the basis of the current and undeveloped record, would be "premature, purely advisory and improperly preemptive" of the California Superior Court, which is currently addressing issues of equitable contribution rights as among the several insurers responsible to pay the Debtors' tort claims. The impact of the London Underwriters' decision to settle their coverage disputes and to make payments toward the Debtors' tort liabilities on Hartford's ability to invoke equity and press "contribution" or similar claims against the London Underwriters should be left to the California court, Mr. Hogan asserts. "At bottom, Hartford is trying to get a free ride on contractual relief that was bargained and paid for by the London Underwriters," Mr. Hogan tells Judge Fitzgerald. However, Mr. Hogan notes that Hartford has made no bargain with the Debtors. Hartford has not even conceded that it has any liability for PI Claims and disputes its coverage in the pending insurance coverage litigation in California, entitled Kaiser Aluminum & Chemical Corporation v. Certain Underwriters at Lloyd's London, et al., Case No. 312415, in the Superior Court of California, County of San Francisco. Furthermore, Hartford is asking to benefit from an inapposite provision in a proposed plan of reorganization that is not yet effective and that may or may not be confirmed, Mr. Hogan maintains. That provision under the Debtors' Plan applies to contribution claims solely against the Debtors or an entity owned by the Debtors so it is not analogous to the third-party contribution claims that Hartford may have against non-debtor entities. The other insurers, Mr. Hogan notes, are also seeking relief similar to that sought by Hartford. Their objections should also be overruled. Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) KANSAS CITY: S&P Assigns BB+ Rating to $125 Million Facilities -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' rating to Kansas City Southern's revolving credit facility maturing in 2007, which is being increased from $100 million to $125 million. At the same time, Standard & Poor's affirmed its ratings on Kansas City Southern, including the 'BB+' rating on the term loan facility maturing in 2008 and 'BB-' corporate credit rating, and revised the outlook to stable from negative. The Kansas City, Missouri-based freight railroad has about $1.8 billion of lease- adjusted debt. "The ratings reflect Kansas City Southern's leveraged capital structure and challenges associated with the integration of Mexican railroad TFM S.A. de C.V., offset by the favorable characteristics of the U.S. freight railroad industry and the company's strategically located rail network, said Standard & Poor's credit analyst Lisa Jenkins. "The outlook revision reflects the resolution of two outstanding issues between TFM and the Mexican government and our expectation that favorable industry conditions will enable Kansas City Southern to generate improved financial results over the near to intermediate term." Kansas City Southern is a Class 1 (large) U.S. freight railroad. It is significantly smaller and less diversified than its peers but operates a very strategically located rail network in the central U.S. With its acquisition of TFM in April 2005, Kansas City Southern should be better able to take advantage of its north-south route orientation and NAFTA trade opportunities. TFM serves the three largest cities in Mexico, representing a majority of the Mexican population and GDP. Its rail lines connect with the principal border gateway and largest freight exchange point between the U.S. and Mexico at Nuevo Laredo/Laredo and serves three of the four principal seaports in Mexico. Kansas City Southern had previously maintained a 49% voting interest in Grupo TFM (TFM's parent company). Now that it owns 100% of TFM, Kansas City Southern should be able to more fully integrate its operations with those of TFM, thereby achieving marketing and cost synergies over time. Although Kansas City Southern now influences the management of day-to-day operations at TFM, the two companies have retained separate legal identities and are continuing to finance their operations separately. Two TFM-related issues were recently resolved: the long-running value-added-tax dispute with the Mexican government and the put option that the Mexican government could exercise to sell its remaining ownership interest in Grupo TFM. The matters were resolved in a VAT for put swap agreement in September 2005. No cash payments were made by any party under the agreement. Ratings are based on the expectation that credit protection measures will improve at Kansas City Southern over the next two years as a result of benefits from the integration of TFM and from continuing healthy market fundamentals. If the improvement exceeds the levels factored into current ratings, the outlook could be revised to positive. KCMC CHILD: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: KCMC Child Development Corporation 2104 East 18th Street Kansas City, Missouri 64108 Bankruptcy Case No.: 05-47403 Type of Business: The Debtor is a 34-year-old nonprofit organization that provides early childhood education and nutrition services to children from low- and moderate-income families. See http://www.kcmccdc.org/ Chapter 11 Petition Date: September 29, 2005 Court: Western District of Missouri Debtor's Counsel: Bruce E. Strauss, Esq. Merrick Baker Strauss 1044 Main Street, 7th Floor Kansas City, Missouri 64105 Tel: (816) 221-8855 Fax: (816) 221-7886 Total Assets: $4,392,008 Total Debts: $5,828,542 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Kansas City MO School HS Servs May $798,633 District 1211 McGee Kansas City, MO Independent School District Business debt: $623,456 218 North Pleasant Avenue HS Servs/May 2004 Independence, MO 64050 and HS Servs/ June 2004 SBC Smart Yellow Pages Business debt $24,999 De Lange Landen Financial Business debt $10,567 Services Sysco of Kansas City Food services $10,182 Internal Revenue Service 0243736517 (/16/05) $9,116 LTR 2645 43-0957914 American Express Credit card $8,713 purchases/Kenneth Spaulding Blankinship Distributors, Business debt $6,335 Inc. SBC Telephone service $3,719 Stinson Morrison & Hecker Legal services $3,573 LLP Overland Park Convention Reservation $3,500 Center cancellation fee United Way Pledge $3,291 Dell Financial Business debt $3,265 Citicorp Vendor Finance Personal property $2,945 Inc. (Fax machine) and business debt Ikon Office Soultions $2,865 Sheraton Overland Park Hotel Cancellation fee $2,500 Canon Business debt $2,236 d/b/a GE Capital Corporation Ameritech Credit Corp. Telephone service $2,177 Missouri Department of Labor $1,698 Industrial Scholastic Inc. $1,200 KEY ENERGY: Default Spurs Noteholders' Valid Acceleration Notices ----------------------------------------------------------------- Key Energy Services, Inc. (OTC Pink Sheets: KEGS) received valid acceleration notices from Cede & Co., acting at the request of holders of $51.6 million in principal amount of the Company's $150 million 6.375% Senior Notes due 2013. As previously disclosed, holders of 25% or more of the outstanding principal balance of the Notes have the right to accelerate the Notes as a result of the Company's failure to file its Annual Report on Form 10-K for the year ended Dec. 31, 2003, within the periods permitted under the indenture, as amended. The Company previously received notices from Noteholders that were defective in certain respects; the most recent notices cure these defects. The Company expects to receive a formal demand for repayment of the Notes from the indenture trustee, following which the Company will repay the Notes. Credit Facility Also as previously disclosed, in July 2005 the Company obtained a $547.25 million Senior Credit Facility, which includes a $400 million seven-year Delayed Draw Term Loan B Facility. The Delayed Draw Term Loan B Facility is available to repay the 6.375% Notes. The Company anticipates that it will borrow $150 million under this Facility to repay the outstanding principal of the Notes promptly after demand is received from the trustee. The Company will also pay accrued interest on the Notes and the indenture trustee's fees and expenses, which it will fund from cash on hand. At Sept. 26, 2005, cash and short term investments totaled approximately $102 million. As a result of the failure to file the 2003 Form 10-K report, the holders of the Company's 8.375% Senior Notes due 2008 also have the right to accelerate the notes and demand repayment in full. To date, the Company has not received any notice of acceleration with respect to these notes. The balance of the Delayed Draw Term Loan B Facility is available to repay these notes, if necessary. Key Energy Services, Inc., is the world's largest rig-based well service company. The Company provides oilfield services including well servicing, contract drilling, pressure pumping, fishing and rental tools and other oilfield services. The Company has operations in essentially all major onshore oil and gas producing regions of the continental United States and internationally in Argentina. * * * As reported in the Troubled Company Reporter on July 11, 2005, Standard & Poor's Ratings Services revised the CreditWatch implications on its 'B-' corporate credit rating on Key Energy Services Inc. to developing from negative. As reported in the Troubled Company Reporter on June 17, 2005, Moody's Investors Service continues to leave Key Energy Services' ratings on review for downgrade pending the filing of its 2003, 2004 and 2005 financial statements. Though receiving a notice of default on June 7, 2005, from the trustees on behalf of both the 6.375% and the 8.375% noteholders, Moody's is currently not taking any ratings action as the company has procured a commitment for a new financing package from Lehman Brothers which, combined with the company's cash balances, appears sufficient to refinance essentially all of Key's existing debt. The notice of default stems from the company not meeting its recent waiver from the bondholders and bank lenders to file its 2003 Form 10-K by May 31, 2005. Under the terms of the indenture, the company now has 60 days to cure the default (by Aug. 5, 2005, at which time the trustee or 25% of each class of noteholders will have the right to accelerate each series of notes). KMART CORP: Objects to Dutch Farms' $2,311,710 Claim ---------------------------------------------------- Dutch Farms, Inc., a food service vendor of Kmart Corporation, asserted, among others, Claim No. 13992 for $2,311,710 in Kmart's Chapter 11 case. Pursuant to an omnibus objection filed by Kmart, Claim No. 13992 is Dutch Farms' sole remaining claim. The Dutch Farms Claim The Claim can be broken down into these categories: (a) Cheese Program Dutch Farms and Kmart entered into a Private Label Cheese Program. Dutch Farms paid Kmart $500,000 up front for "slotting charges" or "rollout allowance" for the private label cheese business to continue for 18 months. However, Kmart prematurely cancelled the Cheese Program after nine months. Prior to the Petition Date, Kmart employee Al Abbood agreed to return $250,000 to Dutch Farms as a result of the cancellation. The sum, however, was never paid to Dutch Farms. (b) Cheese Program and Private Label Packaging Agreement In addition to the slotting charges and pursuant to the Cheese Program and a separate Private Label Packaging Agreement, Kmart agreed to reimburse Dutch Farms for costs related to unused labels and artworks. Kmart failed to reimburse $60,312 in aggregate costs. (c) F.A. Davis Unpaid Charges Kmart directed Dutch Farms to sell products to F.A. Davis and guaranteed collection. F.A. Davis filed for bankruptcy and Dutch Farms is owed $48,251. (d) CPS and Coremark Charges CPS and Coremark charged Dutch Farms $49,196 in aggregate slotting charges for Big K Stores that Dutch Farms never agreed to pay. Kmart agreed to reimburse Dutch Farms for the charges but failed to do so. (e) Unapproved Grocery Allowances Dutch Farms asserted a $365,478 claim on account of unauthorized grocery allowances charged to it. (f) Short Pays and Mispricing Kmart's Dairy Department was in charge of keying in Dutch Farms' price changes into the electronic ordering and payments system. The changes could not be keyed in on Dutch Farms' side. Consequently, Kmart owes Dutch Farms $356,387 on account of short pays and mispricing under the parties' ordering and payment system. (g) Accounts Receivable The transactions between the parties itemize goods sold and delivered to Kmart on account with a balance due. The accounts receivable total $1,314,709. Dutch Farms' claim for unpaid accounts receivable, short pays, and mispricing are claims under Class 5 pursuant to Kmart's Plan of Reorganization. Kmart's Omnibus Objection On March 15, 2004, Kmart filed an Objection to Dutch Farms' Claim. Kmart asked the Court to expunge the Claim because "the Critical Vendor Claims have been paid by Kmart." In its response, Dutch Farms clarified that it has not been paid and explained that the $100,000 Critical Vendor Payment it received immediately after the Petition Date represents only a partial payment of the Claim and a set-off against the distribution to which Dutch Farms is entitled under the Plan. Dutch Farms has not received any distributions under the Plan. Kmart's Adversary Complaint On January 26, 2004, Kmart filed an adversary proceeding seeking to recover the Critical Vendor Payment. Dutch Farms tendered a return of the $100,000 sought in the adversary proceeding. Dutch Farms contends that it has made several attempts to resolve its Claim with Kmart. However, Kmart said it will not proceed with the reconciliation because of the pending Adversary Proceeding. The $100,000 Critical Vendor Payment has already been deducted from the Claim. Dutch Farms Seek Allowance Dutch Farms has asked the Court to allow its Claim. In the alternative, Dutch Farms asked the Court to send Kmart's objection to ADR. Dutch Farms also wants Kmart's objection consolidated with the Adversary Proceeding. In response, Kmart argued that the Court should continue Dutch Farms' request for allowance to the next omnibus hearing at which time Kmart will report on the status of critical vendor litigation against Dutch farms. Parties File Joint Pretrial Statement Kmart and Dutch Farms submitted with the Court their joint pretrial statement in connection with the hearing on Dutch Farms' Claim. Kmart says it does not object to the $300,000 portion of the Claim related to the termination of the Private Label Cheese Program. That portion includes a return of $250,000 or half of the slotting charges and about $49,000 for unused labels and outwork. Kmart believes that the Claim should be classified as a Class 6 claim. William J. Barrett, Esq., at Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP, in Chicago, Illinois, tells the Court that Dutch Farms did not pay Kmart for the $365,478 claimed for "Grocery Allowances." Kmart issued the allowances for promotions in 2000. Fleming Companies, Inc., offset the allowances against a payment it made to Dutch Farms for non-Kmart business. If Dutch Farms has a claim relating to the Grocery Allowances, the claim should be asserted against Fleming and not Kmart. Kmart objects to the other remaining portions of the Claim on the grounds that they lack supporting documentation. Kmart demands that Dutch Farms prove up those portions of the Claim. The parties identified the contested issues of fact and law, which the Court needs to address: * Whether Dutch Farms' Claim should be allowed in whole or in part; * In what amount should Dutch Farms' Claim be allowed; * Whether Dutch Farms' claims relating to the cancellation of the Cheese Program, Private Label Packaging Agreement, F.A. Davis, and slotting payments made to distributors are Class 5 or Class 6 claims under Kmart's Plan; * Whether Kmart has any liability for losses Dutch Farms incurred in doing business with F.A. Davis; * Whether Kmart has any liability for slotting fees and similar charges paid by Dutch Farms to distributors; * Whether Kmart has any liability for Grocery Allowances that relate to Kmart businesses but that were charged by Fleming against Dutch Farms; * Whether Dutch Farms can prove up its claim for short pays; and * Whether Dutch Farms can prove up its claim for open invoices. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 102; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: SEC Settles Charges Against Four Former Execs --------------------------------------------------------- The U.S. Securities and Exchange Commission filed civil charges against four former officers of Kmart Corporation and Kmart major vendor, Newell Rubbermaid, Inc. with the United States District Court for the Eastern District of Michigan: (1) David P. Levine, vice president of Kmart's Do-It-Yourself division from April 1997 to July 2002; (2) Michael W. Spake, buyer in Kmart's Home Storage division from April 1997 to July 2002; (3) Barry S. Berlin, director of sales at Rubbermaid Home Products, a division of Newell Rubbermaid, for the Kmart account from June 1999 through March 2002; and (4) Douglas J. Ely, former national account manager at Newell Rubbermaid for the Kmart account. In its complaint, the SEC alleged that Mr. Spake and Mr. Levin caused Kmart to issue materially overstated financial statements by improperly accounting for millions of dollars worth of vendor allowances, which Kmart obtained from various vendors for promotional and marketing activities. Messrs. Berlin and Ely participated in the violations by co-signing false and misleading accounting documents. William H. Kuehnle, Esq., in Washington D.C., notes that Kmart's net income for the fourth quarter and fiscal year ended Jan. 31, 2001, was overstated by approximately $4.8 million in the originally reported financial statements. Kmart restated its financial statements after filing for bankruptcy to correct the accounting errors. The Defendants made offers of settlement to the SEC. On the basis of its acceptance of the Offers, the SEC instituted administrative proceedings against the Defendants. Consequently, the SEC found that the Defendants have violated Rule 13b2-1 of the Securities Exchange Act and caused Kmart's violation of Sections 13(a) of the Exchange Act. Accordingly, the SEC orders the Defendants to cease and desist from committing or causing any violations and any future violations of the anti-fraud and reporting provisions of the Exchange Act. The SEC imposes civil penalties of $35,000 for Mr. Levine, $30,000 for Mr. Berlin, and $25,000 for Mr. Ely. Mr. Spake, however, was not fined. Without denying or admitting the findings, the Defendants consent to the Administrative Orders and agree to pay the civil penalties in connection with the SEC Civil Action. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 102; Bankruptcy Creditors' Service, Inc., 215/945-7000) MASTR ASSET: Fitch Puts BB Rating on $5.5 Mil. Class M10 Certs. --------------------------------------------------------------- Fitch has rated the MASTR Asset Backed Securities Trust, mortgage pass-through certificates, series 2005-WF1, mortgage pass-through certificates: -- $795.5 million classes A-1A, A-2A, A-2B, A-2C, and A-2D 'AAA'; -- $23.9 million class M1 'AA+'; -- $21.1 million class M2 'AA'; -- $14.2 million class M3 'AA-'; -- $10.6 million class M4 'A+'; -- $10.6 million class M5 'A'; -- $9.6 million class M6 'A-'; -- $7.8 million class M7 'BBB+'; -- $6.4 million class M8 'BBB'; -- $9.1 million class M9 'BBB-' -- $5.5 million class M10 'BB'. The 'AAA' rating on the senior certificates reflects the 13.45% total credit enhancement provided by the 2.60% class M1, the 2.30% class M2, the 1.55% class M3, the 1.15% class M4, the 1.15% class M5, the 1.05% class M6, the 0.85% class M7, the 0.70% class M8, the 1.00% class M9, the 0.60% class M10, and the 0.50% initial overcollateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans, and the integrity of the transaction's legal structure as well as the capabilities of Wells Fargo Bank, N.A., as servicer, rated 'RPS1' by Fitch. U.S. Bank National Association is the trustee. The certificates are supported by two collateral groups. The mortgage loans consist of 6,097 first and second lien (2.12%) adjustable-rate and fixed-rate, fully amortizing and balloon, mortgage loans. The mortgage balance as of the cut-off date (Sept. 1, 2005) was $919,147,645. Approximately 28.26% of the mortgage loans are fixed-rate mortgage loans and 71.74% are adjustable-rate mortgage loans. The weighted average loan rate is approximately 6.811%. The weighted average remaining term to maturity is 346 months. The average principal balance of the loans is approximately $150,754. The weighted average original loan-to-value ratio is 79.85%. The properties are primarily located in California (15.78%), Florida (9.52%), and Maryland (8.18 %). None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press releases 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, and 'Fitch Revises RMBS Guidelines for Antipredatory Lending Laws,' dated Feb. 23, 2005, available on the Fitch Ratings web site at http://www.fitchratings.com/ The depositor, Mortgage Asset Securities Transactions, Inc., assigned to the trust fund loan-level primary mortgage insurance policies provided by Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance Co., Republic Mortgage Insurance Corp., Radian Guaranty Inc., Triad Guaranty, AMIC, and United Guaranty Residential Insurance Company. Approximately 96% of the mortgage loans with OLTVs greater than 80% are covered. All of the mortgage loans were purchased by the depositor from UBS Real Estate Securities Inc. The trust fund will make elections to treat some of its assets as one or more real estate mortgage investment conduits for federal income tax purposes. MERIDIAN AUTOMOTIVE: Panel Wants Sanchez-DeVanny as Mexico Counsel ------------------------------------------------------------------ Christopher S. Sontchi, Esq., at Ashby & Geddes, P.A., in Wilmington, Delaware, relates that on Aug. 26, 2005, the Official Committee of Unsecured Creditors of Meridian Automotive Systems-Composites, Inc., filed a complaint for the avoidance of liens and claims and related declaratory relief against Credit Suisse First Boston, as agent, and certain additional lenders that were party to the First Lien Credit Agreement and the Second Lien Credit Agreement, both dated April 28, 2004. The Complaint seeks a declaratory judgment that the First Lien Lenders and the Second Lien Lenders do not have valid, perfected and enforceable security interests in the capital stock of MASI's Mexican subsidiaries as well as certain of the MASI's assets in Mexico. By this application, the Committee seeks authority from the U.S. Bankruptcy Court for the District of Delaware to retain Sanchez- DeVanny Eseverri, S.C., as special Mexico counsel, effective as of Aug. 30, 2005, to assist the Committee's counsel with prosecuting the Adversary Proceeding with respect to the Mexican Assets. The Committee believes that SDE is well qualified to represent it in the Adversary Proceeding because the firm has substantial experience in civil and commercial litigations in Mexico. SDE will be paid in accordance with its ordinary and customary hourly rates: Senior Partner $300 Partner $215 Associate $150 Paralegal/Clerk $60 The Debtors will also reimburse SDE for all costs and expenses reasonably incurred in connection with its services. Ana Laura Mendez, Esq., a partner at SDE, assures the Court that the firm: -- is disinterested within the meaning of Section 101(14) of the Bankruptcy Code; -- does not represent or hold an interest that is adverse to the Debtors with respect to the matters on which the firm is employed; and -- does not have any material connections with the Debtors, their officers, affiliates, creditors or any other parties-in-interest. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Has Until Jan. 25 to Decide on Leases ---------------------------------------------------------- As previously reported in the Troubled Company Reporter on Sept. 9, 2005, Meridian Automotive Systems, Inc., and its debtor- affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend the deadline within which they must assume, assume and assign or reject unexpired non-residential real property leases, through and including Jan. 25, 2006, without prejudice to their right to seek further extensions for cause. Ford Land Objects Christina M. Thompson, Esq., at Connolly Bove Lodge & Hutz LLP, in Wilmington, Delaware, argues that the Debtors' request would give rise to substantial economic loss to Form Motor Land Development Corporation and with no corresponding benefit to the Debtors. Ford Land is the landlord of an office space occupied by Meridian Automotive Systems-Composites Operations, Inc., in Dearborn, Michigan, under a lease that expired on April 1, 2005, Ms. Thompson relates. The Property is not utilized for manufacturing purposes. Pursuant to two amendments to the Ford Land Lease, Meridian Automotive has been permitted to stay in the Property premises on a month-to-month basis. Meridian Automotive continues to occupy the Property. However, Ford Land has advised Meridian Automotive that it must cease occupancy of the Property on or before March 1, 2006, to permit leasing of the Property to a long-term tenant, Ms. Thompson tells the Court. According to Ms. Thompson, Ford Land will not extend a long-term lease to Meridian Automotive for the Property. Instead, Ford Land proposes to relocate Meridian Automotive's offices to another Ford Land property, which has been deemed consistent with Meridian Automotive space needs and cost-savings efforts. The move would not require Meridian Automotive to incur any up front costs since transfer or moving costs would be incorporated into the lease rate, Ms. Thompson explains. "Extension of what is, at most, a month-to-month right to occupancy, especially in light of the offer by Ford Land to relocate the Debtor to [a] less expensive space, when contrasted with the economic detriment to Ford Land and the substantial benefit to the Debtor, is not in the best interest of the Debtor or its estate," Ms. Thompson asserts. "Permitting extension of the time to assume or reject (without conceding that a Lease exists to assume or reject) under these facts would be an abuse of discretion and not an exercise of prudent business judgment," Ms. Thompson maintains. Court Order Judge Walrath extends the deadline within which the Debtors must assume or reject the unexpired non-residential real property leases to Jan. 25, 2005. Judge Walrath will hold a hearing on Oct. 17, 2005, to consider the Debtors' request solely with respect to that certain lease dated Dec. 22, 1999, as amended, between Meridian Automotive Systems, Inc., and Ford Motor Land Development Corporation. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Proofs of Claims Must be Filed by Dec. 1 ------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Sept. 9, 2005, Meridian Automotive Systems, Inc., and its debtor- affiliates ask the U.S. Bankruptcy Court for the District of Delaware to establish Dec. 1, 2005, as the last day for filing written proofs of claim on account of prepetition claims. Court Order Judge Walrath approves the Debtors' request. The Court authorizes International Union, UAW and its Local Unions 36, 174, 3034 and 1766, to file omnibus proofs of claim on behalf of UAW and all UAW-represented persons. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). MICROISLET INC: Files Tardy SEC Reports & AMEX Compliance Restored ------------------------------------------------------------------ MicroIslet, Inc. (Amex: MII) filed with the Securities and Exchange Commission its amended annual report on Form 10-KSB for the 2004 fiscal year, its amended quarterly report on Form 10-QSB for the first quarter of fiscal 2005, and its quarterly report on Form 10-QSB for the period ended June 30, 2005. MicroIslet believes that Wednesday's filing of the Form 10-QSB for the period ended June 30, 2005, constitutes full compliance with the American Stock Exchange continuing listing standards and completion of the plan of compliance submitted to the Amex on Sept. 6, 2005. MicroIslet had been out of compliance with the Amex requirements of Sections 134, 1003(d) and 1101 of the Amex Company Guide for the company's failure to file its Form 10-QSB for the period ended June 30, 2005, with the Securities and Exchange Commission. MicroIslet anticipates notification of regained compliance from Amex shortly. Second Quarter Financials For the quarter ended June 30, 2005, the company reported a net loss of $1,934,061 or $0.05 per share compared with a net loss of $1,721,776, for the same period in 2004. Net loss was $3,934,304 for the six months ended June 30, 2005, compared with a net loss of $3,372,905 for the same period in 2004. Weighted-average common shares outstanding for the quarters ended June 30, 2005 and 2004 were 39.9 million and 39 million, respectively. The results for the 2004 period were restated to correct errors in the accounting treatment for certain non-cash expenses relating to warrants issued to service providers in 2004. General and administrative expenses decreased to $645,766 for the three months ended June 30, 2005, compared to $1,283,016 for the same period in 2004, and decreased to $1,278,373 for the six months ended June 30, 2005 compared to $2,293,576 for the same period in 2004. The decrease was primarily due to lower investor relations expenses offset by an increase in legal expenses. Research and development expenses increased to $1,326,902 for the three months ended June 30, 2005, from $464,553 in the same period in 2004, and increased to $2,730,699 for the six months ended June 30, 2005 from $1,111,650 in the same period in 2004. These increases were due mainly to an increase in headcount for lab personnel, the company's partnership with the Mayo Foundation, and materials and services relating to testing of the company's technology in animals. Going Concern Doubt Deloitte & Touche LLP expressed substantial doubt about the Company's ability to continue as a going concern after it audited its amended financial statements for the fiscal year ended Dec. 31, 2004. The going concern qualification resulted from the Company's need to raise additional capital to continue operations at present levels beyond March 2006. MicroIslet said it is taking appropriate measures to secure additional working capital for sustaining operations beyond March 2006. MicroIslet Inc. -- http://www.microislet.com/-- is a biotechnology company engaged in the research, development, and commercialization of patented technologies in the field of transplantation therapy for people with insulin-dependent diabetes. MicroIslet's patented islet transplantation technology includes methods for isolating, culturing, cryopreservation, and immuno-protection (microencapsulation) of islet cells. MicroIslet is working to develop and commercialize a first product, called MicroIslet-P(TM), a microencapsulated porcine islet cell suspension that will be used for transplantation in patients with insulin-dependent diabetes. MIRANT CORP: U.S. Bank Wants to Propose Ch. 11 Plan for MirMA ------------------------------------------------------------- U.S. Bank, National Association, as lease indenture and pass- through trustee, and 24 Owner Lessors believe that Mirant Corporation and its debtor-affiliates are no longer pursuing its original Plan of Reorganization, and the exclusive period has terminated. The 24 Owner Lessors are: * Morgantown OL1 LLC, Morgantown OL2 LLC, Morgantown OL3 LLC, Morgantown OL4 LLC, Morgantown OL5 LLC, Morgantown OL6 LLC, Morgantown OL7 LLC, * Dickerson OL1 LLC, Dickerson OL2 LLC, Dickerson OL3 LLC, Dickerson OL4 LLC, * SEMA OP1 LLC, SEMA OP2 LLC, SEMA OP3 LLC, SEMA OP4 LLC, SEMA OP5 LLC, SEMA OP6 LLC, SEMA OP7 LLC, SEMA OP8 LLC, SEMA OP9 LLC, * Steamed Crab Partners, L.P. * Steam Heat LLC, * First Chicago Leasing Corporation, and * Bankers Commercial Corporation. Kristian W. Gluck, Esq., at Fulbright & Jaworksi, L.L.P., in Dallas, Texas, notes that by a March 20, 2005 Court Order, the exclusive period was extended so long as the Debtors were pursuing the proposed plan of reorganization that was originally filed in 2004. The Debtors filed a new joint plan of reorganization on Sept. 22, 2005. The Debtors' New Plan appears to ensure that Debtor Mirant Mid-Atlantic, LLC, will continue to remain in chapter 11 for an extended period, Mr. Gluck observes. Mr. Gluck points out that the New Plan: (a) leaves creditors impaired, and so it cannot be confirmed absent voting. Voting cannot occur absent approval of a disclosure statement and solicitation. In MirMA's case, all of that will lead to unnecessary delay and expense; (b) proposes that MirMA's leasehold interests be treated in a manner wholly contrary to Section 365 of the Bankruptcy Code. Its provisions contemplate, inter alia: * a sham assignment of the leases, apparently without consideration; and * elimination of substantive lease terms, none of which is in default or even projected to be, and each of which is designed for the sole purpose of providing assurances that the lessee has adequate funds to make the lease payments; (c) contemplates that holders of allowed unsecured claims would not receive full payment in cash of their claims. This is expected to lead to substantial issues at confirmation. "The New Plan proposes a set of arrangements, particularly in MirMA's case, that will consume many months and many hundreds of thousands, if not, millions of dollars in cost," Mr. Gluck says. U.S. Bank, et al., believe that there is a much better and simpler alternative available in MirMA's case. Accordingly, U.S. Bank, et al., have prepared a simple plan of reorganization that can be confirmed much more efficiently and economically than would the New Plan. A full-text copy of U.S. Bank, et al.'s proposed MirMA plan is available for free at http://ResearchArchives.com/t/s?1fe Mr. Gluck asserts that U.S. Bank, et al.'s proposed Plan for MirMA: (a) can be confirmed more expeditiously and economically. It requires no disclosure statement and involves no disputes over voting, cramdown, best interests, legality, permissibility, valuation, or the like; (b) is the best possible plan because it leaves every creditor and interest holder unimpaired; (c) ensures that MirMA, as lessee, retains the valuable Morgantown and Dickerson leases, which is a critical component to the future success of the Mirant enterprise; and (d) will complement the confirmation of a consensual plan of reorganization for all of the other Mirant cases, and will greatly reduce the combined expense of that process. Thus, U.S. Bank, et al., ask the Court to deem their proposed MirMA Plan as filed as exclusivity has terminated, and promptly schedule a confirmation hearing for that plan. In the alternative, if the Court finds that the Exclusive Period has not yet terminated, U.S. Bank, et al., ask the Court to terminate exclusivity as to MirMA and proceed to confirmation of U.S. Bank's proposed plan. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 78; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Court Okays Bid Procedures for Washington Unit Sale ---------------------------------------------------------------- Mirant Corporation and Mint Farm Generation, LLC, and their affiliated debtors sought and obtained an order from U.S. Bankruptcy Court for the Northern District of Texas establishing the bidding procedures for the proposed sale of the Debtors' electric generating power facility in Longview, Washington. Bid Procedures Only qualified bidders may submit bids for the Facility and related assets or otherwise participate in the Auction. Qualified Bidders are those entities that have delivered: (a) an executed confidentiality agreement in form and substance satisfactory to the Debtors, in their sole discretion; (b) financial disclosure acceptable to, and as requested by, the Debtors, in their sole discretion, which information will demonstrate the financial capability of the potential bidder to consummate the purchase of the Purchased Assets, and to provide "adequate assurance of future performance," within the meaning of Section 365(f)(2)(B) of the Bankruptcy Code, of contracts to be assumed, should the potential bidder be the Successful Bidder, including, but not limited to, immediately available cash, or a binding commitment for financing, adequate to pay no less than $20,000,000 at a Closing; (c) evidence that the potential bidder has the necessary internal authorizations and approvals necessary to engage in the transaction without the consent of any entity that has not already been obtained; and (d) a cashier's check made payable to White & Case LLP, or cash, in the amount of the Deposit -- $1,720,000. Any Qualified Bidder who desires to make a competing offer for the Purchased Assets must submit a written copy of its bid to the Debtors. To constitute a qualified competing bid, the bid must satisfy each of these requirements, which must be received on or before Oct. 13, 2005, at 4:00 p.m.: (a) The bid must include an executed definitive asset purchase agreement made on terms and conditions substantially similar to those contained in the Agreement, including the scope of the Purchased Assets and Assumed Liabilities, which will be no less economically favorable to the Seller and must be accompanied by a form of the Agreement that specifically provides for those amendments and modifications to the Agreement, including price, terms, agreements to be assumed, and liabilities not to be assumed, which the bidder would propose if it were selected as the Successful Bidder. All modifications or amendments to the Agreement that are contained in the Marked Agreement must be "red lined" to be enforceable against the Seller; (b) The Marked Agreement for the initial overbids must provide for total net consideration to the Seller's estate of not less than an amount equal to the sum of $18,216,000, which will include the Purchase Price, the Buyer Break-up Fee, the Buyer Expense Reimbursement, and $250,000 exclusive of any post-closing adjustments that do not guarantee additional consideration to the Seller's estate; (c) The Marked Agreement must not be conditioned on the ability of the bidder to obtain financing or the outcome of unperformed due diligence by the bidder; provided, however, that a bid may be subject to the confirmation of the accuracy and completeness of the specified representations and warranties in all material respects at the closing of the Asset Sale or the satisfaction of specified conditions in all material respects at the closing of the Asset Sale. None of those conditions will be materially more burdensome or unfavorable to the Seller than those provided in the Agreement; and (d) The Marked Agreement must be accompanied by a letter that: (1) provides for the identity of the bidder, the contact information for the bidder, and full disclosure of any affiliates or insiders of the Debtors involved in the bid; (2) states that the bidder offers to purchase the Purchased Assets on the terms and conditions of the Marked Agreement; (3) summarizes the proposed consideration that the bidder proposes to pay under the Marked Agreement; (4) states the aggregate value of the consideration the bidder proposes to pay under the Marked Agreement; and (5) states the form of the Deposit made by the bidder. Auction If the Debtors receive a Qualified Bid, the Debtors will conduct an Auction at 10:30 a.m., Prevailing Central Time, on Oct. 17, 2005, at the Fort Worth offices of Haynes and Boone, LLP, at 201 Main St., Suite 2200, in Fort Worth, Texas, or any other place as the Debtors may designate. Bidding at the Auction will commence with the highest or otherwise best bid for the Purchased Assets and continue in increments of not less than $250,000, until all parties have made their final offers. At the Auction, the Debtors will: (a) review each Qualified Bid or Increased bid on the basis of financial and contractual terms and the factors relevant to the sale process, including those factors affecting the speed and certainty of consummating the Asset Sale and any obligations of the Debtors with respect to the Bid Protections; and (b) identify, in their reasonable discretion, which Qualified Bid or Increased Bid constitutes the highest or otherwise best bid for the Purchased Assets at the Auction. A Qualified Bidder making the bid that is selected as the highest or otherwise best by the Debtors will be considered the "Successful Bidder." At the conclusion of the Auction and after review and consideration, the Debtors will inform each of the Qualified Bidders of the decision regarding who is a Successful Bidder. If for any reason a Successful Bidder fails to consummate the Asset Sale, the Debtors reserve the right to consummate the Asset Sale with the offeror of the second highest or otherwise best bid. Notice of Sale The Debtors have served the Sale Motion, including all exhibits, to several parties-in-interests. The Debtors will also publish a notice of the proposed Asset Sale, Auction, and Sale Hearing, once, in The New York Times National Edition and in The Daily News of Longview, Washington. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) MOUNTAIN TERRACE: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Mountain Terrace Baptist Church 2424 St. Elmo Avenue Memphis, Tennessee 38127 Bankruptcy Case No.: 05-35555 Chapter 11 Petition Date: September 28, 2005 Court: Western District of Tennessee (Memphis) Judge: William Houston Brown Debtor's Counsel: William Anthony Helm, Esq. Law Office of William Anthony Helm 100 North Main Street, Suite 3201 Memphis, Tennessee 38103 Tel: (901) 526-1676 Fax: (901) 526-4855 Estimated Assets: $1 Million to $10 Million Estimated Debts: $100,000 to $500,000 The Debtor does not have Unsecured Creditors who are not insiders. NEIMAN MARCUS: Newton Acquisition Issues $1.2 Bil. of Merger Bonds ------------------------------------------------------------------ Newton Acquisition Merger Sub, Inc., entered into an agreement to sell $700 million principal amount of 9% senior notes due 2015 and $500 million principal amount of 10.375% senior subordinated notes due 2015, in connection with the definitive merger agreement with The Neiman Marcus Group, Inc. Newton Acquisition was formed by investment funds associated with Texas Pacific Group and Warburg Pincus LLC, for the purpose of merging with and into Neiman Marcus, with Neiman Marcus continuing as the surviving corporation. As a result of the Merger, investment funds associated with or designated by the Sponsors, certain co-investors and certain members of Neiman Marcus' management will own Neiman Marcus. Newton Acquisition will use the net proceeds from the offering of the Notes, together with the expected proceeds from a new $1.975 billion senior secured term loan facility, certain drawings under a new $600 million asset-based revolving credit facility, equity financing and cash on hand of Neiman Marcus, to consummate the Merger. The offering of the Notes and the Merger are expected to close on or about Oct. 6, 2005, subject to the satisfaction or waiver of closing conditions. The Notes will be sold only to qualified institutional buyers in reliance on Rule 144A and outside the United States to non-U.S. persons in reliance on Regulation S. The Notes have not and will not be registered under the Securities Act of 1933, as amended, and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Neiman Marcus Group, Inc. -- http://www.neimanmarcusgroup.com/ -- operations include the Specialty Retail Stores segment and the Direct Marketing segment. The Specialty Retail Stores segment consists primarily of Neiman Marcus and Bergdorf Goodman stores. The Direct Marketing segment conducts both print catalog and online operations under the Neiman Marcus, Horchow and Bergdorf Goodman brand names. * * * As reported in the Troubled Company Reporter on Sept. 28, 2005, Fitch Ratings has assigned prospective ratings to the bank facilities and notes being issued by The Neiman Marcus Group, Inc.: -- Issuer default rating (IDR) 'B-'; -- $600 million secured revolving credit facility 'BB-/R1'; -- $1 billion secured term loan facility 'B/R3'; -- $850 million secured notes 'B/R3'; -- $750 million senior unsecured notes 'CCC+/R5'; -- $575 million senior subordinated notes 'CCC/R6'. Fitch has also assigned a rating of 'B/R3' to NMG's $125 million of 7.125% debentures due 2028. Fitch said the rating outlook is stable. NEWPAGE CORP: Moody's Affirms Junks Sr. Sub. Notes' Junk Rating --------------------------------------------------------------- Moody's Investors Service affirmed NewPage Corporation's Speculative Grade Liquidity rating as SGL-2, indicating good liquidity. At the same time, Moody's affirmed NewPage's B2 corporate family, B1 senior secured, B3 senior unsecured, and Caa2 subordinated debt ratings. While the rating action affirmed all ratings at their existing level, Moody's notes that pricing for the company's core product, coated paper, has recently exhibited significant softness. After gradually increasing through 2004 and 2005, benchmark No. 3 60-lb coated woodfree paper prices declined by $20/ton in September. Similar unexpected pricing declines were observed for No. 5 35-lb coated mechanical paper. It is not however, clear that this softness is more than temporal, and Moody's has not changed its view of normalized commodity pricing, nor has it revised its view of NewPage's average long term performance. Accordingly, the outlook continues to be stable. However, in the event market conditions persist or deteriorate further, and especially if near term debt repayment is affected, the ratings and outlook may need to be revisited. Ratings Affirmed: * Speculative Grade Liquidity Rating: SGL-2 * Corporate Family Rating: B2 * Senior secured term loan due 2011: B1 * Second lien senior secured notes due 2012: B3 * Senior subordinated notes due 2013: Caa2 Outlook: Stable NewPage's SGL-2 rating continues to result from: * a combination of good third-party liquidity available under its credit facility; * expectations of positive free cash flow over the rolling forward four quarter SGL time horizon; and * expectations that financial covenants will not limit access to the credit facility. While Moody's is expecting positive free cash flow, recent commodity pricing may pressure free cash flow generation. This may constrain liquidity and, as well, cause earlier estimates of debt reduction to be revised downwards. This may cause pressure on both the outlook and ratings. At June 30, NewPage had some $145 million of unused availability under its 5-year committed $350 million credit facility. The company's revolving credit facility is structured with the following conditional financial covenants that are effective when unused capacity plus excess cash is below $40 million for 10 consecutive business days: a) minimum interest coverage of 2.0 (steps up after fourth quarter of 2006); b) fixed charge coverage of greater than 1.0; c) maximum senior leverage of 3.0 (steps down after the first quarter of 2006); and d) total leverage of 6.0 (steps down after the first quarter of 2006). Despite concerns that NewPage's free cash flow may be reduced from earlier estimated levels, covenant compliance is not expected to be problematic owing to relatively minimal drawings. While there are standard cash sweep provisions in the company's term loan, these are predicated on free cash flow availability and will not constrain liquidity. Similarly, with a surplus pension funding position and no near term debt maturities, non-operating uses of cash are limited. NewPage's B2 corporate family rating results primarily from its very high financial leverage. With over 80% of production capacity in the coated paper segment, NewPage's product line diversification is quite low. This line of business has been, and is expected to continue to be, characterized by relatively volatile pricing and cash flow. As advertising patterns continue to evolve and become increasingly segmented, future demand and pricing are uncertain. Longer term, the company is vulnerable to increased competition from other North American paper manufacturers converting existing uncoated paper-making capacity. In the event of a strengthening US dollar, the company is potentially vulnerable to offshore competition. The company's pulp and its uncoated woodfree paper operations are small and not likely to be very profitable. Similarly, the company's carbonless paper business is in decline and will require repositioning over time. In addition, profit margin suppression from elevated costs for fiber, energy, chemicals and labor is anticipated to remain for the foreseeable future. Coated paper pricing has recovered from a prolonged trough and even though the current pricing environment is soft, pricing is expected to remain above trough levels for the next several quarters. This is supported by the weakened US dollar, which effectively shelters the North American coated paper market from most offshore competitors and has allowed pricing to increase. At current rates of exchange, the delivered cost profile appears to be reasonably competitive on an aggregate basis. Lastly, the company has good liquidity arrangements. While the recently observed softness in coated paper will reduce near term free cash flow, it is not yet clear that this is more than a temporal influence. Moody's has not changed its view of normalized commodity pricing, nor has it revised its view of NewPage's average long term or "normalized" performance. Accordingly, the outlook continues to be stable. As noted above however, this may change should current pricing conditions persist or deteriorate further such that near term debt repayment is adversely affected. The B2 corporate family rating is predicated on near term debt reduction. Until that occurs, a ratings upgrade is not likely, but may be considered in the event expectations for normalized Retained Cash Flow-to-Total Adjusted Debt exceed 10%, with the commensurate (RCF-CapEx)/TD measure exceeding 5%. Conversely, in the event it is confirmed that market conditions preclude meaningful near term debt reduction, a downgrade becomes more likely. A downgrade would also result from debt-financed acquisition activity or a significant deterioration of liquidity. Key credit metrics for a downgrade are normalized Retained Cash Flow-to-Total Adjusted Debt declining towards 5%, with the commensurate (RCF-CapEx)/TD measure declining towards 1%. Headquartered in Dayton, Ohio, NewPage is an integrated producer of coated publication papers, and also produces: * carbonless papers, * uncoated woodfree papers, and * market pulp. NORTHWEST AIRLINES: Wants Existing Business Forms Unchanged ----------------------------------------------------------- In the ordinary course of their businesses, Northwest Airlines Corporation and its debtor-affiliates use a variety of checks and other business forms, including purchase orders and invoices. By virtue of the nature and scope of the businesses in which the Debtors are engaged, and the numerous suppliers of goods and services and numerous other parties with whom the Debtors deal, Neal S. Cohen, executive vice president and chief financial officer of Northwest Airlines Corporation, says the Debtors need to continue using existing business forms without alteration or change. Mr. Cohen explains that parties doing business with the Debtors undoubtedly will be aware, as a result of the size of these cases, of the Debtors' status as chapter 11 debtors in possession. Changing correspondence and business forms would be unnecessary and burdensome to the estates, as well as expensive and disruptive to the Debtors' business operations. However, to avoid breaching a requirement of the United States Trustee that the Debtors' postpetition checks and business forms contain the legend "debtor in possession" or a so-called "debtor in possession number," the Debtors sought and obtained the Court's authority to maintain and continue using existing business forms, without reference to their status as debtors-in- possession. However, Judge Gropper directs the Debtors to label their checks with "debtor in possession", "DIP", or another similar legend as soon as practicable. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05- 17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTHWEST AIRLINES: Paying Maintenance & Service Providers ---------------------------------------------------------- Northwest Airlines Corporation and its debtor-affiliates want authority to promptly pay prepetition debts to maintenance and service providers, suppliers, contractors, subcontractors, shippers and mechanics in satisfaction of perfected or potential mechanics', materialmen's or similar liens or interests. A. Outside Maintenance & Service Providers The Debtors are required to perform significant maintenance and overhaul work to maintain their fleet of aircraft properly and safely and in accordance with the regulations of the Federal Aviation Administration. Although the Debtors perform a large part of their aircraft maintenance and repair work with their own personnel, the Debtors also rely on outside mechanics and repairmen to perform a material part of their aircraft, engine and other equipment maintenance and repair work. The Debtors also have relationships with other non-aircraft related service providers. Certain of the Debtors' Outside Maintenance and Service Providers perform maintenance and repair work (a) pursuant to ongoing maintenance and service contracts or (b) on a credit basis with the subsequent delivery of invoices to the Debtors. Some of the Outside Maintenance and Service Providers provide "on-call" maintenance and repair services at various destinations enabling the Debtors to avoid maintaining complete repair facilities and employing mechanics at every destination city. As part of their maintenance and repair work, the Outside Maintenance and Service Providers also supply or sell certain aircraft component parts, most of which are replacement parts, to the Debtors. B. Shippers The Debtors use domestic and foreign commercial common carriers, road feeder services, movers, shippers, freight forwarders/ consolidators, delivery services, customs brokers and certain other third-party service providers to ship, transport, store, move through customs and deliver goods through established national and international distribution networks. Payments to Shippers, include, but are not limited to, any related taxes and custom duties. The Debtors rely extensively on the Shippers to transport parts, goods and packages to and from third parties. The services provided by the Shippers, therefore, are critical to the day-to- day operations of the Debtors. C. Contractors The Debtors rely on contractors, subcontractors and professional service firms to perform construction, maintenance and repairs at their various facilities. In some instances the Debtors oversee certain construction projects on behalf of other parties like airports. In these instances, the Debtors manage and monitor the construction process and either act as a conduit for the remittance of payments to Contractors or otherwise arrange for payments to be made to Contractors, in each instance out of third party funds like bond facilities. As part of their management responsibilities on Pass Through Projects, the Debtors review and verify whether or not invoiced work has been performed or goods and services have been provided. Furthermore, the Debtors communicate the verification and submit the invoices to the bond trustee who is responsible for processing the invoices and remitting payments to the Contractors and other parties who perform work or provide goods and services on these Pass Through Projects. Due to the nature of their billing cycle with Contractors, the Debtors estimate their outstanding prepetition obligations owed to the Contractors to range from $1.2 million to $3 million. Debtors Need to Pay Prepetition Claims The Debtors must be permitted to pay the prepetition claims of the Outside Maintenance and Service Providers, Bruce R. Zirinsky, Esq., at Cadwalader, Wickersham & Taft, LLP, in New York, asserts, to ensure that: -- the Outside Maintenance and Service Providers and Shippers will provide the required maintenance and overhauls for the Debtors' fleet of aircraft and aircraft components and provide other services; and -- the Debtors' fleet is maintained and serviced in a timely fashion. The Contractors may refuse to continue or to complete work on the various projects absent payment. Any disruption could impair the Debtors' operations as well as their ability to comply with the FAA maintenance regulations. Interim Approval At the Debtors' request, Judge Gropper authorizes them to: 1. pay any undisputed prepetition claims that have given or could give rise to Liens or Interests against the Debtors' property, regardless of whether the Outside Maintenance and Service Providers, Shippers, or Contractors already have perfected the Liens or Interests; and 2. honor Maintenance Contracts and Pass Through Projects in the ordinary course of their business. The Court directs the Debtors use reasonable best efforts to minimize payments to Outside Maintenance and Service Providers, Shippers and Contractors. With respect to each Claim, Judge Gropper rules that: (a) the Debtors will not pay a Claim unless the Outside Maintenance and Service Provider, Shipper, or Contractor has perfected or, in the Debtors' judgment, is presently capable of perfection or will be capable of perfecting in the future one or more Liens or Interests giving rise to the Claim; (b) the payment of the Claim will be made with a full reservation of rights regarding the extent, validity, perfection or possible avoidance of any Liens or Interests, if any; and (c) the Outside Maintenance and Service Provider, Shipper, or Contractor agrees to promptly release any Liens or Interests, if any, upon payment of the Claim. Should the Outside Maintenance and Service Provider, Shipper and Contractor fail to promptly release the Lien or Interest upon payment by the Debtors, any Lien or Interest will be deemed released and expunged, without necessity of further action. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05- 17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) OFFICEMAX INC: S&P Lowers Corporate Credit Rating to B+ from BB --------------------------------------------------------------- Standard & Poor's Ratings Services lowered the corporate credit and senior unsecured ratings on OfficeMax Inc. to 'B+' from 'BB' and removed all the ratings on the company from CreditWatch, where they were placed with negative implications on February 14, 2005. The rating on the 7% senior notes due 2013 was lowered to 'BB' from 'BBB-'. T he outlook is negative. Total book debt outstanding at June 25, 2005, was $517 million. "The rating action reflects the company's continued disappointing operating results, weak credit metrics, and expectations that operations and credit metrics will not significantly improve in the intermediate term," said Standard & Poor's credit analyst Stella Kapur. The 7% senior notes continue to be rated two notches above the corporate credit rating, reflecting collateral which has been pledged solely to these noteholders. Credit metrics for OfficeMax are considerably weaker than expected because of higher debt levels and weaker operating results. Given the highly competitive office supply market and that the company is competing against larger, more robust competitors -- Staples Inc. and Office Depot Inc. -- it faces considerable challenges in improving operations. OfficeMax instituted a re-merchandising initiative to attract business customers. The company is also in the process of implementing a cost reduction program, but success of the initiative is not assured, and it may take some time for OfficeMax to realize benefits from these efforts. While margins may begin to show modest improvement, credit metrics are not anticipated to significantly recover in the intermediate term. Itasca, Illinois-based OfficeMax, with around 943 stores, has a large North American retail store base and a contract stationer and catalog business. However, the company's profitability measures are still well behind Office Depot's and Staples', despite improved performance in 2002 and 2003. OfficeMax also has a weaker geographic profile than these two larger competitors. Although the company has leading market positions in the Midwest, it lacks scale in the Northeast and faces off against significant market share from Office Depot and Staples in key markets such as: * California, * Florida, and * Texas. Furthermore, OfficeMax has a smaller international presence than Office Depot and Staples, which have made significant acquisitions in Europe as the North American retail market has begun to mature. ONESOURCE TECH: Merger Talks Failed; Comerica Appoints Receiver --------------------------------------------------------------- OneSource Technologies Inc. (Pink Sheets: OSRC) disclosed that the merger discussions with First Technology Capital Inc. have been terminated and abandoned. This transaction, if it had been completed, would have provided bridge financing to the company, precedent to the sourcing of additional capital, and would have resulted in the merger of certain divisions of FTC with the existing operations of the company. Also, as part of the transaction, certain OneSource insider debt obligations would have been converted to equity. Concurrent with the termination of the merger discussions, Comerica Bank, which had issued a notice of default to the company on Sept. 12, 2005, has called its loans and pursuant to a complaint filed with the Superior Court of the state of Arizona has had the court appoint a receiver to take possession of the assets of the company that represent Comerica's collateral. Financial Restatements As reported in the Troubled Company Reporter on Sept. 19, 2005, the Company said it intends to restate its financial statements as of March 31, 2005, and for the three months then ended, to correct processing and recording errors related to sales contract billings and sales tax accruals. The result of that correction is to reduce the revenue recorded for the three months ended March 31, 2005, by $90,493. The restated Form 10-QSB for the quarter ended March 31, 2005, will also reflect an increase in other expenses of $62,500. These two adjustments result in a reduction of previously reported net income for the first quarter by $152,993. The resulting adjusted net loss for the period will be restated as $91,702. In addition, it has been determined that in the March 31, 2005 Form 10-QSB, as filed, inventory and deferred revenue accounts were erroneously understated equally by approximately $682,500. This misstatement, by itself, had no effect on the amount previously reported as net income for the quarter, since the cost of goods sold is calculated independently from the inventory and deferred revenue account balances. As a result of these corrections the Form 10-QSB for the period ended March 31, 2005, will be amended and filed as soon as possible. OneSource Technologies, Inc. serves as a technology infrastructure maintenance and supplies distribution company. It offers related and complementary lines of technology industry services and products. The company provides equipment sales, integration, and maintenance services; and value added equipment supply sales. Its products include ribbons, toner, and original equipment manufactured and remanufactured toner cartridges for copiers, faxes, and laser printers. OneSource develops Flat-Rate Blanket Maintenance System, which provides customers with a single source for all general office, computer and peripheral, and industry- specific equipment technology maintenance, installation, and supply products. The company's customers include large regional enterprises and divisions of national companies in the banking and retail industries. OneSource Technologies is headquartered in Scottsdale, Arizona. PARKWAY HOSPITAL: Thelen Reid Approved as Committee Counsel ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave the Official Committee of Unsecured Creditors appointed in The Parkway Hospital, Inc.'s chapter 11 case permission to employ Thelen Reid & Priest LLP as its counsel. Thelen Reid will: (a) administer the case and exercise oversight in issues arising from or impacting the Debtor or the Committee; (b) prepare on behalf of the Committee all necessary applications, motions, orders, reports and other legal papers; (c) appear in Court to represent the Committee's interests; (d) negotiate, formulate, draft, and confirm any plan of reorganization or liquidation; (e) exercise oversight with respect to any transfer, pledge, conveyance, sale or other liquidation of the Debtor's assets; (f) investigate, as the Committee may desire, the Debtor's assets, liabilities, financial condition and operating issues that may be relevant to the case; (g) communicate with the Committee's constituents; and (h) perform all of the Committee's duties and powers under the Bankruptcy Code. Martin G. Bunin, Esq., disclosed that his Firm's professionals bill: Designation Hourly Rate ----------- ----------- Partner $330 - $685 Counsel $320 - $600 Associates $210 - $460 Legal Assistants $95 - $230 Thelen Reid assures the Court that it does not represent any interest materially adverse to the Committee, the Debtor or its estate. The Parkway Hospital, Inc., operates a 251-bed proprietary, acute care community hospital located in Forest Hills, New York. The Company filed for chapter 11 protection on July 1, 2005 (Bankr. S.D.N.Y. Case No. 05-14876). Timothy W. Walsh, Esq., at DLA Piper Rudnick Gray Cary US LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $28,859,000 in total assets and $47,566,000 in total debts. PARMALAT USA: Asks Court to Determine Tax Liability & Refund ------------------------------------------------------------ James M. Sullivan, Esq., at McDermott, Will & Emery, LLP, in New York, tells Judge Drain of the U.S. Bankruptcy Court for the Southern District of New York that one of the means Parmalat SpA and its Italian affiliates defraud creditors was to systematically force Parmalat USA Corporation and its U.S. debtor-affiliates to record in their books false "reimbursement credits," which were fictitious receivables from Parmalat to purportedly reimburse the U.S. Debtors for marketing and advertising costs that allegedly benefited Parmalat and its affiliates worldwide. According to Mr. Sullivan, the booking of the Reimbursement Credits on the U.S. Debtors' books and records concealed tens of millions of dollars in losses. The Reimbursement Credits were represented on the U.S. Debtors' financial statements to be Parmalat's bona fide obligations, but in reality, no reimbursement was ever paid or was intended to be paid to the U.S. Debtors by Parmalat or its affiliates. From 2000 to 2002, Parmalat instructed the Debtors to book Reimbursement Credits for $69,415,250 as reimbursement for the U.S. Debtors' marketing and administrative costs that they incurred on Parmalat's behalf. The Debtors, however, never incurred marketing and advertising costs. Mr. Sullivan further notes that none of the Reimbursement Credits were ever paid to the Debtors. "[B]ecause the Debtors did not actually incur marketing and administrative costs on behalf of Parmalat and its affiliates, there was never an accrual of income to the Debtors," Mr. Sullivan says. Over the eight-year period ranging from 1995 to 2002, the Debtors' income totaled approximately $193,915,250, composed of: Year Credit Amount Owed to Owed by ---- ------------- ------- ------- 1995 $20,000,500 Parmalat USA Parmalat 1996 43,000,000 Parmalat USA Parmalat 1997 22,000,000 Parmalat USA Parmalat 1998 20,000,000 Parmalat USA Parmalat 1999 19,000,000 Farmland Parmalat 2000 4,000,000 Parmalat USA Parmalat 13,400,000 Farmland Parmalat Finance Corp. 2001 37,000,000 Farmland Bonlat Financing Corp. 2002 56,315,250 Parmalat USA Bonlat Financing Corp. 58,700,000 Farmland Bonlat Financing Corp. Filing of Original Tax Returns During 2000 to 2002, the Debtors filed certain U.S. Corporation Income Tax Returns, which taxable income amount was offset by carry-forward net operating losses in the same amounts: Tax Year Filing Date Taxable Income Amount -------- ----------- --------------------- 2000 10/15/01 $15,889,715 2001 09/16/02 1,026,785 2002 09/15/03 9,369,254 However, in the original tax return for 2000, the Debtors paid a $302,666 alternative minimum tax. In March 2004, AlixPartners started investigating the numerous claims among the Debtors and between affiliated and non- affiliated third parties and spent several months analyzing the Debtors' overall financial institution, including the recording of the Reimbursement Credits. Based on the results of that investigation -- which was completed by AP Services following its appointment -- the Debtors' new management decided to amend the Original Tax Returns to correct the Debtors' taxable income for 2000, 2001 and 2002. The Amended Returns Mr. Sullivan explains that the errors reflected in the Original Tax Returns are the result of alleged overstatement of the U.S. Debtors' income relating to the fraudulent recording of the Reimbursement Credits: In the Original Tax Return: * for 2000, Parmalat U.S.A. Corp. reported an additional $4,000,000 income while Farmland Dairies LLC reported an additional $13,400,000 income; * for 2001, Farmland Dairies reported an additional $37,000,000 income; and * for 2002, Parmalat USA reported an additional $6,315,250 income while and Farmland Dairies reported an additional $8,700,000 income. Based on their corrected tax returns, the U.S. Debtors asked the United States Internal Revenue Service to rectify the erroneous recording of the Reimbursement Credits by: -- issuing a refund for 2000 for the overpayment of taxes in the amount of $302,666 in Alternative Minimum Tax; and -- increasing the Debtors' NOLs for 2000, 2001 and 2002 to $1,510,285, $35,973,215, and $5,645,996. Dispute With IRS On Feb. 10, 2005, the IRS sent a letter and an accompanying Revenue Agent Report to the U.S. Debtors, disallowing in full the deductions of $17,400,000, $37,000,000, and $15,015,250 for 2000, 2001, and 2002. The IRS asserted that the U.S. Debtors characterized the recording of the Reimbursement Credits as a mere "clerical mistake." The IRS rejected that argument because the Reimbursement Credits were supported by correspondence, journal entries, and confirmations that purport to establish the legitimacy of the Reimbursement Credits. Specifically, the IRS said the transactions relating to the Reimbursement Credits were coordinated and directed by Parmalat and were supported by: -- Intercompany Debt Agreements signed by all parties; -- internal confidential memoranda; and -- global journal entries posted to the company ledger, which were all reviewed and sanctioned by Deloitte & Touche, Ltd., the Debtors' accountants and auditors. The IRS maintained that the U.S. Debtors have filed a claim in Parmalat's joint insolvency proceedings in Parma, Italy, to collect on "open inter-company receivables." The IRS asserted that the U.S. Debtors may collect on the Reimbursement Credits in the Italian Proceedings and, thus, cannot be entitled to the refund and adjustment of NOLs. Furthermore, the IRS stated that the U.S. Debtors' fraud allegations against Parmalat are unproven. Until there is a positive judicial disposition by a court in their favor, the U.S. Debtors have no basis for claiming that the Reimbursement Credits were improper income accruals. The U.S. Debtors deny the IRS' assertions on these grounds: (a) The presence of a "paper trail" purporting to establish the Reimbursement Credits' legitimacy could in no way overcome the fundamental fraud involved; (b) The U.S. Debtors will never collect any of the Reimbursement Credits owed to them except for a single Reimbursement Credit inexplicably allowed by one of Parmalat's affiliates in the Italian Proceedings and for which the U.S. Debtors expect to receive only a 5% distribution; (c) The Reimbursement Credits fraudulently booked were not proper accruals of income because they were baseless and devoid of any connection to economic reality; and (d) The fact that Deloitte & Touche reviewed and sanctioned the documents allegedly supporting the Reimbursement Credits should not be taken into consideration because evidence exists that the firm may not have adequately performed its role as the U.S. Debtors' accountants and auditors. The U.S. Debtors, together with Farmland Dairies LLC Litigation Trust, ask the Court to declare that they are entitled to a $301,666 federal income tax refund and deductions to increase their NOLs for 2000, 2001, and 2002. Mr. Sullivan clarifies that the U.S. Debtors will not be able to use the requested NOLs since their existing NOLs will be sufficient to offset future taxable income to be generated by the liquidation of Parmalat U.S.A.'s assets. Although the Plan provides for Farmland's reorganization as a going concern, it will not use the NOLs because it has reorganized as an entity treated as a partnership for tax purposes. If the IRS ultimately pays the refund, the U.S. Debtors expect other state and local courts to follow the precedent and allow the Debtors to obtain refunds of state and local taxes, and to avoid payment of the taxes. The U.S. Debtors estimate that amount of state and local taxes at issue total $1,200,000. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) PATCH INTERNATIONAL: Losses Trigger Going Concern Doubt ------------------------------------------------------- Morgan & Company expressed substantial doubt about Patch International Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended May 31, 2005. The auditing firm says that the Company needs to have future profitable operations or obtain additional financing in order to continue as a going concern. For the 2005 fiscal year, the Company generated $97,415 in oil and gas revenues, a decrease of $18,048, or 15.6%, from fiscal 2004. This decrease was due to decreased production from all of the Company's properties. As a result of significantly increased expenses in 2005, the Company's net loss for fiscal 2005 was $1,022,463, an increase of $487,591, or 91.1%, compared with a loss of $534,872 for 2004. Its assets of $ 6,359,214 mainly consist of developed acreage in the Saskatchewan area of Canada. For the year ended May 31, 2005, the Company incurred losses from operations of $1,022,463 compared with incurred losses of $534,872 for the year ended May 31, 2004. At May 31, 2005 the Company had a working capital deficiency of $441,549 compared with a $288,736 deficit at 2004. The Company also had insufficient revenues to offset operating and administrative expenses. Patch International Inc.'s principal business has been the exploration, development and production of oil and natural gas reserves through participation in farmout arrangements where third parties act as the operator of the project. The Company's main focus had been on its assets located in the Kerrobert area in the Province of Saskatchewan, Canada. PCA LLC: S&P Lowers Senior Unsecured Debt Rating to C from CC ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on PCA LLC, an operator of portrait photography studios, to 'CCC-' from 'CCC'. At the same time, the ratings on the company's senior secured second-lien notes and its senior unsecured debt were lowered to 'C' from 'CC.' The outlook is negative. The company had about $286 million of funded debt, including preferred stock, as of July 31, 2005. The downgrade reflects the company's recent announcement that both its CEO and its CFO have resigned. "Although the CEO intends to remain with the company until a successor is found, the resignations take place at a critical juncture for PCA, the company having experienced deteriorating operating performance, reduced profitability, and strained liquidity," said Standard & Poor's credit analyst Kristi Broderick. "The company's recent results raise doubt about the company's ability to continue as a going concern." The ratings on PCA reflect: * profitability pressures, * high leverage, * the significant seasonality of the company's business, and * its small cash flow base. Operating under the trade name Wal-Mart Portrait Studios, PCA is the sole portrait photography provider for Wal-Mart Stores Inc. PCA operates about 2,400 permanent studios, and modular traveling portrait studios reaching an additional 1,000 locations. The company also operates more than 200 studios in Wal-Mart Canada and about 90 in Wal-Mart Mexico. Performance in 2005 has continued to deteriorate from 2004 levels, which were already very weak. As a result of its weakened financial position, PCA arranged for extended payment terms from its main supplier, AgfaPhoto USA. This amounts to an interest- bearing obligation of about $21 million that comes due on June 15, 2006. The company is not able to meet this obligation with its current financing structure, and it is unlikely that even improved operating performance will generate the cash flow to meet this payment. Consequently, PCA will need to amend or extend this contract in order to satisfy it. The covenants in its current debt arrangements limit its ability to incur more debt. The $1.3 billion domestic preschool portrait industry is highly competitive and fragmented. The market is composed of several major competitors that operate within large host retailers, including: * CPI (Sears), * Olan Mills (Kmart), * Lifetouch (Target and J.C. Penney), and * numerous smaller entities. PCA depends on its contractual license agreement with Wal-Mart Stores Inc. for more than 95% of its revenues. Any change in this agreement could have a significant negative impact on the company's business. This business is also highly seasonal, with more than half of annual EBITDA generated in the fourth quarter. PIKNIK PRODUCTS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Piknik Products Company, Inc. 3806 Day Street Montgomery, Alabama 36108 Bankruptcy Case No.: 05-33035 Type of Business: The Debtor sells pickled fruits, vegetables, sauces and dressings. Chapter 11 Petition Date: September 29, 2005 Court: Middle District of Alabama (Montgomery) Debtor's Counsel: Von G. Memory, Esq. Memory & Day P.O. Box 4054 469 South McDonough Street Montgomery, Alabama 36101 Tel: (334) 834-8000 Fax: (334) 834-8001 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. POLYMER GROUP: S&P Affirms Corporate Credit Rating at B+ -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating and other ratings for Polymer Group Inc. and removed all ratings from CreditWatch with developing implications. The ratings were placed on CreditWatch May 17, 2005, following the announcement that the company had retained J.P. Morgan Securities Inc. as its financial advisor to explore strategic alternatives to maximize shareholder value, including the potential sale of the company. The outlook is developing. The resolution of the CreditWatch follows the public announcement that the company is no longer for sale. Credit quality has improved over the last year due to strong operating results and the recent conversion of payment-in-kind preferred shares to common equity. However, management continues to evaluate strategic alternatives to support growth and provide value to shareholders. "The developing outlook reflects uncertainty regarding management's plan to achieve its stated objectives," said Standard & Poor's credit analyst George Williams. The outlook could be revised after Standard & Poor's obtains additional information regarding management's longer-term business and financial objectives. The ratings on Polymer Group reflect the company's weak business position as a producer of nonwoven and oriented polyolefin products and its aggressive financial profile. These factors are partially offset by: * the company's solid positions in niche markets, * good geographic sales and manufacturing diversity, and * favorable long-term growth prospects in certain end markets. With annual revenues of about $910 million, North Charleston, South Carolina-based Polymer manufactures products that are used in a wide range of disposable consumer applications, including: * baby diapers; * feminine hygiene products; * household and consumer wipes; * disposable medical products; and * various industrial applications including: -- automotive, -- filtration, and -- protective apparel. The company's nonwovens are used by leading global manufacturers of: * consumer, * medical, and * industrial products. Long-term industry growth rates are favorable and are driven by new applications for nonwovens in developed countries and volume increases in existing products as income levels increase in developing countries. PROTOCOL SERVICES: FTI Consulting & RJM Approved as Fin'l Advisors ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of California gave Protocol Services, Inc., and its debtor-affiliates permission to retain and employ FTI Consulting, Inc., and RJM, LLC, as their financial advisors. The Court approved the Debtors' request to employ FTI Consulting and RJM on Sept. 9, 2005. The Debtors explain that they have employed FTI Consulting since December 2004, while they have employed RJM since February 2005. FTI Consulting and RJM will: 1) assist and evaluate the Debtors in executing financial strategies in connection with their restructuring efforts and in their debt capacity in light of its projected cash flows; 2) analyze and review the Debtors' businesses, operations and financial projections, assist them to determine an appropriate capital structure and determine a range of value for the Debtors; 3) advise the Debtors in connection with their negotiations with their creditors, stockholders or other appropriate constituents in connection with the Debtors' restructuring efforts; 4) attend meetings of the Debtors' Board of Directors and the Board's committees and advise the Debtors in connection with negotiations related to their restructuring efforts; and 5) perform all other appropriate financial advisory and general restructuring advisory services to the Debtors that are necessary in their chapter 11 cases. The Debtors tell the Court that the financial advisory services provided by FTI Consulting and RJM will not be duplicative but are complimentary to each other's services. The compensation of FTI Consulting and RJM will consist of: 1) a $55,000 Monthly Advisory Fee to FTI and a $70,000 Monthly Advisory Fee to RJM; and 2) a Transaction Fee in the aggregate amount of $250,000 if the Debtors complete a financial restructuring during the term of the engagement for FTI and RJM or within nine months following the termination of a financial restructuring agreement. FTI Consulting assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. RJM assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Deerfield, Illinois, Protocol Services, Inc., and its subsidiaries offers agency services, database development and management, data analysis, direct mail printing and lettershops, e-marketing, media replication, and inbound and outbound teleservices. Protocol has offices and operations in California, Colorado, Illinois, Louisiana, Florida, Michigan, North Carolina, New York, Massachusetts, Connecticut and Canada and employs over 4,000 individuals. The Company and its affiliates -- Protocol Communications, Inc., Canicom, Inc., Media Express, Inc., and 3588238 Canada, Inc. -- filed for chapter 11 protection on July 26, 2005 (Bankr. S.D. Calif. Case Nos. 05-06782 through 05-06786). Bernard D. Bollinger, Jr., Esq., and Jeffrey K. Garfinkle, Esq., at Buchalter, Nemer, Fields & Younger, represent 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. PROTOCOL SERVICES: Wants to Walk Away from 10 Contracts & Leases ---------------------------------------------------------------- Protocol Services, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of California for permission to reject 10 executory contracts and unexpired leases. The Debtors tell the Court that they have evaluated each of the contracts and have determined that the contracts are no longer beneficial to their ongoing operations. The Debtors also note that the deadline by which the counter- parties to the executory contracts must file proofs of claim relating to the damages, if any, arising from the rejection of the executory contract be 30 days after service of notice that the contracts have been rejected pursuant to the Court's final order. A list of the Debtor's executory contracts and unexpired leases is available for a fee at: http://bankrupt.com/misc/ProtocolServicescontractleases.pdf Headquartered in Deerfield, Illinois, Protocol Services, Inc., and its subsidiaries offers agency services, database development and management, data analysis, direct mail printing and lettershops, e-marketing, media replication, and inbound and outbound teleservices. Protocol has offices and operations in California, Colorado, Illinois, Louisiana, Florida, Michigan, North Carolina, New York, Massachusetts, Connecticut and Canada and employs over 4,000 individuals. The Company and its affiliates -- Protocol Communications, Inc., Canicom, Inc., Media Express, Inc., and 3588238 Canada, Inc. -- filed for chapter 11 protection on July 26, 2005 (Bankr. S.D. Calif. Case Nos. 05-06782 through 05-06786). Bernard D. Bollinger, Jr., Esq., and Jeffrey K. Garfinkle, Esq., at Buchalter, Nemer, Fields & Younger, represent 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. PROTOCOL SERVICES: Court Okays Buchalter Nemer as Local Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of California gave Protocol Services, Inc., and its debtor-affiliates permission to employ Buchalter Nemer Fields & Younger as their local counsel. The Debtors hired Buchalter Nemer as their local counsel for the purpose of supplementing the services provided by their lead counsel, Jenner & Block. Buchalter Nemer will: 1) advise the Debtor of their powers and duties as debtors-in- possession, in matters of bankruptcy law and represent the Debtors in proceedings and hearings; 2) prepare on the behalf of the Debtors any necessary motions, applications, order and other legal papers and assist and advise the Debtors concerning the confirmation of any proposed plans or plan of reorganization; 3) assist, advise and represent the Debtors concerning any possible sale of their assets, any further investigations of their assets, liabilities and their financial condition that may be required under local, state or federal law; 4) prosecute and defend litigation matters and other matters that may arise in the Debtors' chapter 11 cases; 5) counsel and represent the Debtor with respect to assumption or rejection of executory contracts and leases, sales of assets and other bankruptcy-related matters; 6) advise the Debtor with respect to general labor, corporate and litigation issues related to their chapter 11 cases, including securities, corporate finance, tax and commercial matters; and 7) perform all other necessary legal services for the efficient and economical administration of the Debtors' chapter 11 cases. Jeffrey K. Garfinkle, Esq., a shareholder of Buchalter Nemer, disclosed that his Firm received a $60,000 retainer. Mr. Garfinkle charges $405 per hour for his services. Mr. Garfinkle reports Buchalter Nemer's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Bernard D. Bollinger Shareholder $450 Lauren M. Tang Associate $215 Designation Hourly Rate ----------- ----------- Counsel & Sr. Counsel $350 - $550 Associates $215 - $425 Paralegals $90 - $200 Case Clerks $50 - $90 Buchalter Nemer assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Deerfield, Illinois, Protocol Services, Inc., and its subsidiaries offers agency services, database development and management, data analysis, direct mail printing and lettershops, e-marketing, media replication, and inbound and outbound teleservices. Protocol has offices and operations in California, Colorado, Illinois, Louisiana, Florida, Michigan, North Carolina, New York, Massachusetts, Connecticut and Canada and employs over 4,000 individuals. The Company and its affiliates -- Protocol Communications, Inc., Canicom, Inc., Media Express, Inc., and 3588238 Canada, Inc. -- filed for chapter 11 protection on July 26, 2005 (Bankr. S.D. Calif. Case Nos. 05-06782 through 05-06786). Bernard D. Bollinger, Jr., Esq., and Jeffrey K. Garfinkle, Esq., at Buchalter, Nemer, Fields & Younger, represent 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. RADIANT COMMS: Gets $7.92 Million in Private Equity Placement ------------------------------------------------------------- Radiant Communications Corp. (TSX VENTURE:RCX) has completed a private placement of 30,463,455 units at a price of $0.26 per unit for aggregate gross proceeds of $7,920,498. Each unit consists of one common share and one-half of one common share purchase warrant, and each full warrant is exercisable to acquire one common share for a period of 36 months at an exercise price of $0.32 per share for the first 24 months and $0.40 for the final 12 months. The securities are subject to a four-month hold period expiring Jan. 28, 2006. "This is a significant and exciting step forward for Radiant, our shareholders and our customers," said Jim Grey, President and CEO of Radiant. "As a company, we have demonstrated our ability to successfully compete with the large, incumbent providers in the highly valued business connectivity market. Completing this financing provides Radiant with a strong balance sheet and a stable foundation for continued growth and success. I am pleased to see so many of our stakeholders join together to invest in the company's future." "I view this as another very important step in Radiant's growth and success," said Chris Worthy, Chairman of Radiant and President and CEO of Worthy Capital Ltd. "Over the past 12 months, Radiant has won many new, national, multi-location customers, rolled out new, industry-leading IP products and services, added senior management and Board level expertise, and now re-structured the balance sheet to provide a sound base for continued growth. The demand for high-performance IP connectivity is rapidly increasing in the Canadian business market, and Radiant is firmly positioned to capitalize on its competitive strengths." As previously announced, the private placement involved both the issuance of units for cash and the conversion of outstanding debentures of the Company. In particular, certain holders of Radiant's $3,000,000 principal amount of senior secured debentures converted $1,914,000 principal amount of the debentures (together with bonus payment amount payable on maturity) at the issue price into 7,361,538 units. In addition, the holders of Radiant's $2,750,000 principal amount of unsecured convertible debentures converted the full $2,750,000 principal amount of the debentures at the issue price into 10,576,923 units. The purchase price for the balance of 12,524,994 units issued was satisfied in cash for aggregate cash proceeds to the Company of $3,256,498. The holders of the senior debentures also surrendered for cancellation 4,350,000 common share purchase warrants of the Company issued to them in connection with the purchase of their debentures. After completion of the private placement, $1,386,000 principal amount of the Company's senior debentures (and related bonus payment amount) remain outstanding. $1,386,000 of the cash proceeds from the private placement will be used for redemption of the remaining senior debentures, which is scheduled to occur on Sept. 30, 2005, while the balance of $1,870,498 will be used for working capital. Radiant is also issuing 230,770 common shares in satisfaction of certain payments required to be made to the holders of the senior debentures on early redemption of the debentures. As previously announced, the private placement and debenture conversion constituted a related party transaction. Working Opportunity Fund (EVCC) Ltd., and Pender Growth Fund (VCC) Inc., are insiders of the Company, held a significant majority of the senior debentures and convertible debentures and participated in the private placement, both through the conversion of their debentures and the purchase of additional units for cash. The Company has relied on the exemption from the valuation and majority of minority approval requirements for related party transactions under the policies of the TSX Venture Exchange and applicable securities laws available in cases of financial hardship. In this regard, since Radiant was unable to pay the senior debentures at maturity on December 23, 2005, which would have constituted a default under the terms of the senior debentures, the Company's board of directors, and its independent directors, acting in good faith, determined that Radiant faced serious financial difficulty and the transaction was designed to improve the financial position of the Company. The private placement and debenture conversion remain subject to the final approval of the TSX Venture Exchange. About Worthy Capital Ltd. Worthy Capital Ltd. is a private investment firm based in Vancouver, Canada. About Growthworks GrowthWorks(i) -- http://www.growthworks.ca/-- is a recognized leader in venture capital fund management with proven experience in the raising and managing of capital. GrowthWorksTM managed funds have $800 million in combined assets and include the Working Opportunity Fund, GrowthWorks Canadian Fund, GrowthWorks Commercialization Fund and GrowthWorks Atlantic Venture Fund. GrowthWorks has a team of skilled and knowledgeable investment professionals with a combined 200 years of experience. The Investment team has a proven track record of identifying, analyzing, and structuring investments in emerging sectors. GrowthWorks is a registered trademark of GrowthWorks Capital Ltd. GrowthWorks(i) means the affiliates of GrowthWorks Ltd. and includes: * GrowthWorks Capital Ltd., manager of the Working Opportunity Fund (EVCC) Ltd.; * GrowthWorks WV Management Ltd., the manager of GrowthWorks Canadian Fund Ltd. and GrowthWorks Commercialization Fund Ltd.; * GrowthWorks Atlantic Ltd., manager of GrowthWorks Atlantic Venture Fund Ltd.; and * GrowthWorks General Partner Ltd, manager of the Pacific Venture Fund Limited Partnership. About Pender Growth Fund (VCC) Pender Growth Fund (VCC) Inc. is an established, diversified venture capital fund that invests in technology companies within the province of British Columbia with the objective of long-term capital appreciation. Pender Growth Fund is the first fund of its kind in British Columbia to focus specifically on expansion and restructuring opportunities within the technology sector that offer investors the potential for liquidity through either existing public listings or near term liquidity events. Pender Growth Fund has approximately $16 million of assets under management. About Radiant Communications Radiant Communications Corp. -- http://www.radiant.net/-- provides a total, integrated solution for businesses requiring national IP data communications services including, broadband and managed network services, Internet access, web hosting, web development and marketing services. The Company offers a complete range of coast-to-coast broadband services including DSL, T1, Fibre, and Cable. Radiant also provides specialized IP services for the Canadian retail industry, namely, RetailCONNECTTM IP network services and TurboSwitch IP payment gateway services. Radiant has offices in Toronto, Montreal, Calgary, Edmonton and Vancouver. As of June 30, 2005, Radiant Communications' equity deficit widened to $3,241,028 from a $2,186,001 deficit at Dec. 31, 2004. REGAL GREETINGS: Deloitte Appoints Century Services as Liquidator ----------------------------------------------------------------- Deloitte & Touche Inc., in its capacity as Interim Receiver of Regal Greetings & Gifts Corporation's assets, appointed Century Services Inc., to liquidate more than $60 million in Company inventory. The sale will begin immediately from all 41 Regal store locations across Canada. The new owners, Northern Group Retail Ltd. -- who also own the "Northern Reflections" and "Northern Get Away" chain of stores -- are preparing to relaunch Regal with new products and new ideas in early 2006. On July 29, 2005, The Bank of Nova Scotia issued demand notices to Regal Greetings and its wholly owned subsidiary, Primes de Luxe Inc., pursuant to security it holds over the Companies' assets. BNS is the Companies' senior secured lender with outstanding debt of approximately $6.5 million. Roynat Capital Inc. and Bank of Montreal Capital Corporation are the Companies' second secured creditors with over $6.4 million in debt. As a result of the Companies' deteriorating financial position and in order to protect its security interests, BNS applied for an order placing the Companies in receivership pursuant to Sec. 47(1) of the Bankruptcy and Insolvency Act and Sec. 101 of the Courts of Justice Act. Following BNS' application, the Honorable Justice James M. Farley of the Ontario Superior Court of Justice appointed Deloitte as interim receiver, paving way to the Companies' assignment into bankruptcy on Aug. 3, 2005. REGIONAL DIAGNOSTICS: Files Liquidation Plan in Ohio ---------------------------------------------------- Regional Diagnostics, L.L.C., and its debtor-affiliates delivered their Joint Plan of Liquidation to the U.S. Bankruptcy Court for the Northern District of Ohio, Eastern Division. Terms of the Plan The Plan provides for the establishment of Newco, an entity formed or funded by the Existing Lenders as the successful purchaser of the Debtors' operating assets. On the Effective Date, a Creditor Trust will be established to: a) administer the Trust's assets; b) resolve all disputed unsecured and seller note claims; and c) make distributions pursuant to the terms of the Plan. On the Effective Date, the Existing Lenders will receive 50% preferred stock and 65% common stock from Newco. A Creditor Trust will also be established and the Existing Lenders' 50% preferred shares in Newco will be contributed to the Trust. General unsecured creditors will receive their pro rata share of the available Creditors Trust assets in accordance with the terms of the Creditors Trust Agreement. The Debtors dispute that Seller Note holders are entitled to any distribution. Until such time that the Court decides to allow or disallow the Seller Note holders claims, the Creditor Trustee will escrow a portion of the Trust's assets sufficient to provide treatment as if the claims are general unsecured claims. Non-compensatory damages claims will be discharged on the Effective Date. Equity interests will be cancelled. Headquartered in Warrensville Heights, Ohio, Regional Diagnostics, L.L.C. -- http://www.regionaldiagnostic.com/-- owns and operates 27 medical clinics located in Florida, Illinois, Indiana, Ohio and Pennsylvania. The Company and its debtor-affiliates filed for chapter 11 protection on April 20, 2005 (Bankr. N.D. Ohio Case No. 05-15262). Jeffrey Baddeley, Esq., at Baker & Hostetler LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets of $10 million to $50 million and debts of $50 million to $100 million. RODNEY WILLIAMS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtors: Rodney W. & Adrianne D. Williams 1308 South Ravenna Court Antioch, Tennessee 37013 Bankruptcy Case No.: 05-12077 Type of Business: The Debtors are affiliated with Windsor Enterprises, a real estate rental company. Chapter 11 Petition Date: September 28, 2005 Court: Middle District of Tennessee (Nashville) Debtors' Counsel: Joseph P. Rusnak, Esq. Tune, Entrekin & White, P.C. Amsouth Center, Suite 1700 315 Deaderick Street Nashville, Tennessee 37238-1700 Tel: (615) 244-2770 Fax: (615) 244-2778 Total Assets: $1,477,632 Total Debts: $1,370,114 Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Litton Loan 348 Clermont $506,000 4828 Loop Central Drive Brooklyn, NY 11238 Houston, TX 77081 Value of security: $450,000 Regions Bank Living Expenses $24,119 P.O. Box 15137 Wilmington, DE 19886 American Express Living Expenses $12,963 P.O. Box 360002 Ft. Lauderdale, FL 33336-0002 The Home Depot HIL Living Expenses $11,767 Citicards Living Expenses $9,185 Discover Card Living Expenses $9,174 AT&T Living Expenses $8,618 Jerry Lewis Personal Loan $8,200 Chase Living Expenses $7,542 Citifinancial Personal Loan $7,500 Advanta Bank Corporation Living Expenses $7,068 Cardmember Service Living Expenses $6,057 American Express Living Expenses $5,364 Citicards Living Expenses $5,206 Sears Gold MasterCard Living Expenses $5,057 Home Depot Credit Services Living Expenses $4,372 Next Card Payment Services Living Expenses $4,268 Bank of America Living Expenses $3,392 Bank of America Living Expenses $3,360 Chase Living Expenses $3,157 ROGERS TELECOM: Receives $200.9MM of Senior Notes in Tender Offer ----------------------------------------------------------------- The tender cash offer of Rogers Telecom Holdings Inc., a wholly owned subsidiary of Rogers Communications Inc. and formerly known as Call-Net Enterprises Inc., for any and all of its US$222.9 million aggregate principal amount of 10.625% Senior Secured Notes due 2008 (CUSIP No. 130910AJ1) expired at 11:59 p.m., New York City time, on Sept. 27, 2005. At the Expiration Time, Notes representing approximately US$200.9 million in aggregate principal amount had been tendered pursuant to the Tender Offer. The Tender Offer was subject to the terms and conditions set forth in Rogers Telecom's Offer to Purchase and Consent Solicitation Statement dated August 30, 2005. Holders of Notes who validly tendered Notes after 5:00 p.m., New York City time, on Sept. 13, 2005, but on or prior to the Expiration Time will receive total consideration of US$1,041.11 per US$1,000 principal amount of Notes tendered, and also will receive any accrued and unpaid interest from the most recent interest payment date for the Notes to, but not including, the final settlement date. Citigroup Global Markets Inc. acted as the dealer manager and solicitation agent for the Tender Offer. Questions regarding the Tender Offer may be directed to Citigroup Global Markets Inc., Liability Management Group, at (800) 558-3745 (U.S. toll free) and (212) 723-6106 (collect). Rogers Communications Inc. (TSX: RCI; NYSE: RG) -- http://www.rogers.com/-- is a diversified Canadian communications and media company engaged in three primary lines of business. Rogers Wireless Inc. is Canada's largest wireless voice and data communications services provider and the country's only carrier operating on the world standard GSM/GPRS technology platform; Rogers Cable Inc. is Canada's largest cable television provider offering cable television, high-speed Internet access, voice-over- cable telephony services and video retailing; and Rogers Media Inc. is Canada's premier collection of category leading media assets with businesses in radio and television broadcasting, televised shopping, publishing and sports entertainment. On July 1, 2005, Rogers completed the acquisition of Call-Net Enterprises Inc. (now Rogers Telecom Holdings Inc.), a national provider of voice and data communications services. Rogers Telecom Holdings Inc. (formerly Call-Net Enterprises Inc.) -- http://www.sprint.ca/-- was acquired by Rogers Communications Inc. on July 1, 2005, and through its wholly owned subsidiary Rogers Telecom Inc. (formerly Sprint Canada Inc.) is a leading Canadian integrated communications solutions provider of home phone, wireless, long distance and IP services to households, and local, long distance, toll free, enhanced voice, data and IP services to businesses across Canada. Rogers Telecom owns and operates an extensive national fiber network, has over 150 co- locations in major urban areas across Canada including 33 municipalities and maintains network facilities in the U.S. and the U.K. * * * As reported in the Troubled Company Reporter on June 14, 2005, Fitch Ratings has initiated coverage of Rogers Telecom Holdings Inc. (formerly Call-Net Enterprises Inc.) and assigned a 'B-' rating to its senior secured notes. Fitch also places the ratings of Call-Net on Rating Watch Positive due to the CDN$330 million all-stock acquisition of Call-Net by Rogers Communications Inc. (rated 'BB-' by Fitch). Approximately $223 million of debt securities are affected by these actions. As reported in the Troubled Company Reporter on May 31, 2005, Standard & Poor's Rating Services affirmed its 'BB' long-term corporate credit ratings and 'B-2' short-term credit ratings on Rogers Communications Inc., Rogers Wireless Inc., and Rogers Cable Inc. S&P said the outlook is stable. ROUNDY'S SUPERMARKETS: S&P Puts Corporate Credit Rating on Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed the ratings on Roundy's Supermarkets Inc., including the 'BB-' corporate credit rating, on CreditWatch with negative implications. Total debt at July 2, 2005, was $473 million. "The CreditWatch placement follows the company's announcement that it is undertaking a refinancing of substantially all of its existing debt," said Standard & Poor's credit analyst Stella Kapur. As part of the transaction, the company intends to enter into a new secured bank facility and to issue new debt. Proceeds will be used to pay a substantial dividend to its existing shareholders, to redeem all of its 8.75% senior subordinated notes due 2012, and to repay borrowings under its current credit facility. Standard & Poor's will resolve the CreditWatch listing once additional information is available regarding the company's new capital structure, dividend amount, and impact on credit metrics. RURAL/METRO: Appoints Conrad A. Conrad to Board of Directors ------------------------------------------------------------ Rural/Metro Corporation (Nasdaq/SC: RURL) reported the appointment of Conrad A. Conrad to its Board of Directors, effective Oct. 12, 2005. Mr. Conrad is former Executive Vice President and Chief Financial Officer of the Scottsdale-based Dial Corporation, a $1.5 billion consumer products company. Cor Clement, Chairman of the Board, said, "Conrad brings a long career and wealth of valuable experience in corporate finance and financial reporting to our organization. We look forward to his contributions as a member of the Board of Directors and believe he will serve the company and its stockholders well as we continue to implement our growth and deleveraging strategies." Mr. Conrad joined the Dial Corporation in 2000 as Senior Vice President and Chief Financial Officer. In January 2001, he was appointed to the position of Executive Vice President and Chief Financial Officer. Prior to his service at Dial, Mr. Conrad held senior positions at Quaker State Corporation, a leading manufacturer of branded automotive consumer products and services. From 1990 to 1994, he served as Quaker State's President and Chief Operating Officer, and from 1994 to 1998, he served as Vice Chairman and Chief Financial Officer. He also was a member of Quaker State's Board of Directors from 1988 through 1998. Mr. Conrad also serves on the Board of Directors for Universal Technical Institute, Inc., where he is Chairman of the Audit Committee; and Fender Musical Instruments Corporation, where he also is Chairman of the Audit Committee. Rural/Metro Corporation -- http://www.ruralmetro.com/-- provides emergency and non-emergency medical transportation, fire protection, and other safety services in 23 states and approximately 365 communities throughout the United States. As of June 30, 2005, Rural/Metro's equity deficit narrowed to $111,165,000 from a $192,226,000 deficit at June 30, 2004. SEPRACOR INC: Registers $75M Convertible Sr. Sub. Notes for Resale ------------------------------------------------------------------ Sepracor Inc. filed a Registration Statement with the Securities and Exchange Commission to allow the resale of $75 million Series A Convertible Senior Subordinated Notes Due 2008 and Series B Convertible Senior Subordinated Notes Due 2010. The Company originally sold the notes on Dec. 12, 2003, to: * Morgan Stanley & Co. Incorporated, * Credit Suisse First Boston LLC, and * U.S. Bancorp Piper Jaffray Inc., as initial purchasers. The initial purchasers of the notes have advised us that the notes were resold in transactions exempt from the registration requirements of the Securities Act to "qualified institutional buyers," as defined in Rule 144A of the Securities Act. These subsequent purchasers, or their transferees, pledgees, donees or successors, may from time to time offer and sell any or all of the notes or shares of the common stock issuable upon conversion of the notes pursuant to this prospectus. The Selling Security Holders include: Selling Security Holders Series A Notes Series B Notes ------------------------ -------------- ----------- --- AM Master Fund Ltd. $24,995,000 $3,850,000 Deutsche Bank Securities Inc. 24,150,000 8,500,000 JMG Capital Partners, LP 22,500,000 0 Credit Suisse First Boston Europe Limited 20,000,000 400,000 Lakeshore International, Ltd. 20,000,000 0 Wachovia Securities International Ltd. 20,000,000 20,000,000 Forest Global Convertible Fund Ltd., Class A-5 17,010,000 0 MSD, TCB, L.P. 11,000,000 18,500,000 Highbridge International LLC 10,500,000 30,000,000 J.P. Morgan Securities Inc. 7,500,000 7,500,000 A full list of the Selling Shareholders are available for free at http://ResearchArchives.com/t/s?1f5 The Notes The notes do not bear interest, and the principal amount does not accrete. The Series A notes will mature on December 15, 2008, and the Series B notes will mature on December 15, 2010. Noteholders may convert: * the Series A notes into shares of our common stock at a conversion rate of 31.3550 shares per $1,000 principal amount of Series A notes (representing a conversion price of approximately $31.8928), subject to adjustment; * the Series B notes into shares of our common stock at a conversion rate of 33.5175 shares per $1,000 principal amount of Series B notes (representing a conversion price of approximately $29.8352), subject to adjustment. The Notes are: * subordinated to all of our existing and future senior indebtedness; * effectively subordinated to all debt and other liabilities of our subsidiaries; and * senior to our $440 million of outstanding 5% convertible subordinated debentures due 2007. The Company cannot redeem the notes prior to maturity. The Notes are convertible to 24,597,500 shares of common stock, with $0.10 par value per share. The Company's shares of common stock trades at NASDAQ National Market under the symbol "SEPR." The Company's shares trade between $49.56 and $58.88 this month. A full-text copy of the Registration Statement is available for free at http://ResearchArchives.com/t/s?1f6 A full-text copy of the Prospectus is available for free at http://ResearchArchives.com/t/s?1f7 Sepracor Inc. is a research-based pharmaceutical company dedicated to treating and preventing human disease through the discovery, development and commercialization of innovative pharmaceutical products that are directed toward serving unmet medical needs. Sepracor's drug development program has yielded an extensive portfolio of pharmaceutical compound candidates with a focus on respiratory and central nervous system disorders. Sepracor's corporate headquarters are located in Marlborough, Massachusetts. As of June 30, 2005, Sepracor's equity deficit narrowed to $201,288,000 from a $331,115,000 deficit at Dec.31, 2004. SMARTVIDEO TECH: June 30 Balance Sheet Upside-Down by $694,966 -------------------------------------------------------------- SmartVideo Technologies, Inc., delivered its quarterly report on Form 10-QSB for the quarter ending June 30, 2005, to the Securities and Exchange Commission on Sept. 14, 2005. For the quarter ended June 30, 2005, the company had a $4,440,183 net loss compared with a net loss of $965,889 for the same period last year. The Company reported assets of $7,495,587 for the quarter ended June 30, 2005. At the end of the six month period ended June 30, 2005 the Company had realized only slightly over $1,000 more in revenue, at $63,492, from $$62,534 for the same period in 2004. To date, Smart Video has generated only minimal revenues. As a result, its operations are not an adequate source of cash to fund future operations. Advisory Services Agreement On July 18, 2005, the Company entered into an Advisory Services Agreement with Ascendiant Capital Group LLC, under which Ascendiant will provide advice with respect to business strategy, strategic alliances, mergers and acquisitions, stock option plans, corporate governance and analysis regarding qualification for national stock exchanges. The term of the Advisory Agreement is for six months from the date of the Advisory Agreement, with additional extensions at the mutual agreement of the parties. Smart Video has agreed to pay Ascendiant for its services: (i) an up front fee of 750,000 shares of its common stock, par value $0.001 per share, in consideration of entering into the Advisory Agreement; and (ii) if such services were requested by Smart Video, a fee for services rendered in connection with a merger, consolidation, asset purchase, technology license or substantially similar transaction equal to 10% of the value of the transaction (or 5% if the party to the transaction is discovered by Smart Video). In the Advisory Agreement, the Company has granted to Ascendiant standard "piggy-back" registration rights that would permit Ascendiant to include its shares on a registration statement filed by the Company in the future relating to the offer or sale of its common stock. Needs Additional Funding The Company anticipates that it will need to raise at least $4,200,000 over the course of the next twelve months to fund its current level of operations. If unable to obtain the financing necessary to support its operations, it may be unable to continue as a viable concern. Loan from Director On Aug. 12, 2005, the Company borrowed $225,000 from Justin A. Stanley, Jr., one of its directors. According to the promissory note issued in connection with the loan, the Company is obligated to pay all principal and interest due under the note by no later than Sept. 12, 2006. Interest on the unpaid principal balance of the note accrues at a rate equal to the fluctuating prime lending rate of LaSalle Bank, N.A., Chicago, Illinois, as such rate is in effect less one hundred basis points Going Concern Doubt Sherb & Co., LLP expressed substantial doubt about Company's ability to continue as a going concern after it audited the Company's financial statement for the year ended Dec. 31, 2004. The auditing firm points to the Company's recurring losses from operations and working capital deficiency. The Company's management repeats those doubts in its latest quarterly filing citing: * an accumulated deficit of $18,872,000, and * a $6,468,000 loss from operations. The Company also said that it does not expect to generate cash flows from operating activities during 2005 sufficient to offset its operating expenditures and it has no firm commitments for any additional capital. At June 30, 2005, the Company's balance sheet showed a $694,966 stockholders' deficit, compared to a $1,120,832 positive equity at Mar. 31, 2004. Based in Norcross, Georgia, SmartVideo Technologies, Inc. -- http://www.smartvideo.com/-- is a provider of turnkey digital media solutions that allows for the management and distribution of live, on-demand, or the downloaded and play of high quality video to mobile devices. SmartVideo offers the world's first cross platform/cross carrier service for aggregating live content and download and play programming for consumers around the globe. SmartVideo's robust library of content includes national networks and local affiliates, news, weather, sports, children's programming, movies, music videos and many other content genres. SmartVideo's mobile video solutions provide exceptional image quality on all existing 2.5g and Edge cellular networks, as well as future 3g networks. STELCO INC: Wants Ontario Court to Approve Tricap Agreement ----------------------------------------------------------- Stelco Inc. (TSX:STE) filed its restructuring agreement with Tricap Management Limited in the Ontario Superior Court of Justice on Sept. 28, 2005. Under the agreement, Tricap will provide Stelco with a $350 million secured revolving term loan and a standby commitment to support a rights offering for Secured Convertible Notes to be issued by Stelco that will generate $75 million in proceeds. The rights offering may generate an additional $25 million proceeds if Tricap exercises its option to purchase additional Secured Convertible Notes. The agreement filed with the Court contains the provisions, conditions and schedules surrounding Tricap's funding commitment. The Court will convene a hearing on Oct. 3, 2005, to consider approval on the Tricap agreement. Stelco, Inc. -- http://www.stelco.ca/-- is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. In early 2004, after a thorough financial and strategic review, Stelco concluded that it faced a serious viability issue. The Corporation incurred significant operating and cash losses in 2003 and believed that it would have exhausted available sources of liquidity before the end of 2004 if it did not obtain legal protection and other benefits provided by a Court-supervised restructuring process. Accordingly, on Jan. 29, 2004, Stelco and certain related entities filed for protection under the Companies' Creditors Arrangement Act. The Court has extended Stelco's CCAA stay period until Oct. 4, 2005. SURGE GLOBAL: Defaults on Farmout Agreement with Deep Well ---------------------------------------------------------- Deep Well Oil & Gas, Inc. (PINK SHEETS:DWOG) has informed Surge Global Energy, Inc. and Surge Global Energy (Canada), Ltd. that they are in default of the terms of the Farmout agreement on Deep Well's lands. On Feb. 25, 2005, Deep Well Oil & Gas, Inc. and its subsidiary, Northern Alberta Oil Ltd., signed a farmout agreement with Surge Global Energy, Inc. and Surge Global Energy (Canada), Ltd. This agreement allowed Surge to earn up to a 40% working interest in the farmout lands. Deep Well and Surge amended the agreement on July 14, 2005, to allow Surge an extension to the Feb. 25, 2005, agreement until Sept. 25, 2005. Surge did not "spud" the first well by Sept. 25, 2005, so the farmout agreement has been noted in default for this and other reasons. The financial impact, if any, of the default under the Farmout Agreement is unclear. About Deep Well Oil Deep Well Oil & Gas, Inc. is a Nevada corporation based in Alberta Canada. Deep Well and its subsidiary Northern Alberta Oil have an 80% working interest in 63 contiguous sections of oil sands leases in the Sawn Lake oil sands in North Central Alberta, Canada. Deep Well Oil & Gas, Inc. filed a chapter 11 petition under its former Allied Devices Corporation name (Bankr. E.D.N.Y. Case No. 03-80962-511) on February 19, 2003. The Company emerged from bankruptcy pursuant to a Bankruptcy Court Order entered on September 10, 2003, with no assets, no liabilities, and a simplified equity structure. About Surge Global Surge Global Energy, Inc. engages in the exploration, acquisition, and development of heavy oil and gas properties in the United States, Canada, and Argentina. The company primarily operates in the Sawn Lake Area of Alberta, Canada. It also holds a 40% working interests in prospects in the Santa Rosa Dome project in Mendoza province in Argentina and leasehold rights for a natural gas prospects in the Permian Basin in west Texas, the United States. The company was incorporated in 1997 and was formerly known as The Havana Group, Inc. It changed its name to Surge Global Energy, Inc. in 2004. Surge Global Energy is headquartered in San Diego, California. THERMAL ENERGY: Incurs $1.42 Million Net Loss in FY Ending May 31 ----------------------------------------------------------------- Thermal Energy International Inc. (TSX VENTURE:TMG) reported its financial results for the fiscal year ended May 31, 2005. Sales for the year were $668,204, a decrease of 27.5% over sales of $922,510 a year earlier. The Company recorded a net loss of $1,421,589 compared to a net loss of $1,117,276 for fiscal 2004. "These results were disappointing," said John R. Parker, Chairman of Thermal Energy's Board of Directors. "As the year progressed it became evident that significant changes were required both on the Board and in the executive ranks of the Company and we have aggressively undertaken those changes." The changes include the appointments of: * Tim Angus as President and CEO, a seasoned executive from a Fortune 100 Company (Johnson Controls LP) with significant industrial sales and marketing experience; * Several new experienced, outside directors to the Board; * New qualified, experienced members of the executive management team. "We are very pleased with the direction of the Company, the efforts of the new management team, and the significant progress and new opportunities which have resulted from these and other changes in the four months since fiscal 2005 ended," said Mr. Parker. "Our visibility into the first and second quarters of fiscal 2006 indicates good revenue growth on the road to restoring Thermal Energy to profitability and becoming the Company shareholders expect and deserve. We look forward to reporting those results to our shareholders in the coming months." This progress includes signing of two contracts for FLU-ACEr waste heat recovery systems worth more than $3 million, one for a major appliance manufacturers and the other, Thermal Energy's largest contract in the Company's history, is also a major breakthrough into the pulp and paper sector. Thermal Energy (TSX VENTURE:TMG) -- http://www.thermalenergy.com/ -- is an environmental and energy technology company established in 1986. Headquartered in Ottawa, Canada, TMG is a designer, developer, fabricator, and supplier of proprietary and patented environmental compliance (air) and energy conservation, renewable energy products and technology solutions. Thermal Energy is a fully accredited professional engineering firm, and offers advanced process and applications engineering services. FLU- ACE(R) and THERMALONOxTM are trademarks of Thermal Energy. As of May 31, 2005, the Company has assets amounting to $1,314,129 and debts totaling $1,504,723. THERMOVIEW: Wants Until Oct. 26 to File Schedules & Statements -------------------------------------------------------------- Thermoview Industries, Inc., and its debtor-affiliates, ask the U.S. Bankruptcy Court for the Western District of Kentucky, Louisville Division, for an extension of their time to file their list of equity security holders, schedules of assets and liabilities, schedules of current income and expenditures, schedules of executory contracts and unexpired leases, and statements of financial affairs. The Debtors want until October 26 to file those documents. The Debtors tell the Court that there are 10 of them in bankruptcy, operating their businesses from several locations each having a large number of vendors, employees and customers. To prepare the required lists, schedules and statements, the Debtors say they need more time to gather all the necessary information to accurately prepare all those documents. Headquartered in Louisville, Kentucky, ThermoView Industries, Inc. -- http://www.thv.com/-- is a national company that designs, manufactures, markets and installs high-quality replacement windows and doors as part of a full-service array of home improvements for residential homeowners. The Company and its subsidiaries filed for chapter 11 protection on Sept. 26, 2005 (Bankr. W.D. Ky. Case Nos. 05-37123 through 05-37132). When the Debtors filed for protection from their creditors, they listed $3,043,764 in total assets and $34,104,713 in total debts. TRUDY DEVELOPMENT: Sellers Want Case Dismissed or Stay Lifted ------------------------------------------------------------- Voyager Boulevard Investments, LLC and South Boulevard Investments, Inc., the Sellers of a real property under two expiring Purchase Agreements with Trudy Development LLC, ask the U.S. Bankruptcy Court for the Southern District of New York to enter an order to: a) dismiss the Debtor's chapter 11 case pursuant to Sections 1112(b) and 101 of the Bankruptcy Code; or if not b) grant relief from the automatic stay under Section 362 of the Bankruptcy Code to permit the Sellers to terminate the two expiring Purchase Agreements and to otherwise exercise their rights and remedies under applicable law, or if not c) shorten the period in which the Debtor is to assume or reject the Purchase Agreements pursuant to Section 365(d)(2) of the Bankruptcy Code. The Sellers and the Debtor entered into two identical Purchase Agreements on Nov. 23, 2004, that contain time of the essence provisions, in which the Sellers agreed to sell to the Debtor one contiguous and undeveloped fifty-five acre parcel of property in Clark County, Nevada, for a purchase price of approximately $83 million. The two Purchase Agreements originally provided for a closing date of May 15, 2005, which by later amendments, the absolute outside closing date was to occur no later than Sept. 16, 2005, which is also the date the Debtor filed for bankruptcy. Cause for Dismissing the Chapter 11 Case The Debtor's chapter 11 case is a classic case of a bad faith filing because its Petition and the accompanying Schedules are incorrect when they erroneously list total assets of over $83,000,000. The Debtor listed the value of the Purchase Agreements to be the contract price, which it has failed to pay until now. Additionally, the Debtor purports to have a personal property interest in $2 million of so-called deposits. In reality, those funds were irrevocably paid to the Sellers when the Debtor exercised its rights under the Amended Agreements to extend the new outside closing date. Simply put, the Debtor has no remaining interest in those funds. The Sellers state that the Debtor has failed to meet its contractual burden on a time of the essence real estate transaction as required in the Purchase Agreements. Moreover, the Debtor's bankruptcy filing is nothing more than a delaying tactic and an attempt to inappropriately use the Bankruptcy Code to expand nonexistent contract rights. The Sellers also allege that the Debtor has no more operations, no cash flow, no assets or personal property, no employees and no books and records. Cause for Relief from the Automatic Stay The Sellers ask the Court that they be granted relief from the automatic stay pursuant to Sections 362(d)(1) and (d)(2) of the Bankruptcy Code if the Court declines to dismiss the Debtor's chapter 11 case. The Debtor's failure to perform and close the Purchase Agreements, which under both Nevada and New York law is a material breach when there is a time of the essence provision and use of bankruptcy as a delaying tactic, constitutes cause allowing for relief from the automatic stay. Additionally, cause exists to lift the stay in favor of the Sellers to terminate the Purchase Agreements because they are not adequately protected from the harms associated with further delays and they are covering the costs for the Nevada real estate property. The Debtor failed to act within the prescribed period and the burden of holding and preserving the real estate should not be placed on the Sellers, if the benefits are to inure to the Debtor. The Sellers also entered into the Purchase Agreements with the Debtor to conduct a multi-parcel transaction to gain the tax benefits of a like kind exchange under Section 1031 of the United States Internal Revenue Code. The Sellers' ability to consummate a 1031 Exchange is being totally impaired because of the uncertainty associated with the closing of the sale of the Nevada real estate property. Cause to Shorten the Period For the Debtor to Assume or Reject the Purchase Agreements If the Court declines to dismiss the Debtor's Petition or grant the Sellers relief from the automatic stay, the Court should at a minimum shorten the period the Debtor has to assume or reject the Purchase Agreements pursuant to Section 365(d)(2) of the Bankruptcy Code, to one business day after the Motion is heard. The Court will convene a hearing at 2:30 p.m., on Oct. 11, 2005, to consider the request Voyager Boulevard and South Boulevard. Headquartered in New York City, New York, Trudy Development LLC, aka Roxanne Development LLC, filed for chapter 11 protection on Sept. 16, 2005 (Bankr. S.D.N.Y Case No. 05-18135). Robert R. Leinwand, Esq., at Robinson Brog Leinwand Greene Genovese represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $83,402,206 and total debts of $3,175,000. TRUDY DEVELOPMENT: Section 341(a) Meeting Slated for October 25 --------------------------------------------------------------- The U.S. Trustee for Region 2 will convene a meeting of Trudy Development LLC's creditors at 3:00 p.m., on Oct. 25, 2005, at the Office of the U.S. Trustee, 80 Broad Street, Second Floor, New York, New York 10004-1408. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in New York City, New York, Trudy Development LLC, aka Roxanne Development LLC, filed for chapter 11 protection on Sept. 16, 2005 (Bankr. S.D.N.Y Case No. 05-18135). Robert R. Leinwand, Esq., at Robinson Brog Leinwand Greene Genovese represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $83,402,206 and total debts of $3,175,000. TURBOSONIC TECHNOLOGIES: Auditor Expresses Going Concern Doubt -------------------------------------------------------------- Mintz & Partners LLP expressed substantial doubt about TurboSonic Technologies, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended June 30, 2005. The auditing firm based its negative going concern opinion on the Company's significant losses during the current fiscal year and the past three most recently completed fiscal years, which have reduced the Company's cash reserves and reduced stockholders' equity. The Company has experienced losses in each of its last four fiscal years, and as a consequence its cash reserves and stockholders' equity have been reduced. The loss before tax in fiscal 2005 decreased $571,825 to a loss before taxes of $245,898, from a loss before taxes of $817,723 for the same period in fiscal 2004. At June 30, 2005, the Company had positive working capital of $370,644 as compared to positive working capital of $460,577 at June 30, 2004, a decrease of $89,933. The Company's current ratio (current assets divided by current liabilities) was 1.13 and 1.37 at June 30, 2005 and June 30, 2004, respectively. The Company believes that projected cash generated from operations will be sufficient to meet its cash needs through the end of the fiscal year ended June 30, 2006 based on its: a) current cash and cash equivalents position of over a million dollars; b) accounts receivable balance of over a million dollars, c) expected revenue for fiscal 2006 of at least $8.2 million based upon orders in-house at June 30, 2005; d) anticipated new OEM orders and a steady stream of aftermarket orders; and e) initiatives to lower operating expenses. Headquartered in Ontario, Canada, TurboSonic Technologies, Inc. -- http://www.turbosonic.com/--directly and through subsidiaries, designs and markets integrated air pollution control and industrial gas cooling/conditioning systems including liquid atomization technology and dust suppression systems to ameliorate or abate industrial environmental problems. UNIFIED HOUSING: Judge Lynn Dismisses Chapter 11 Case ----------------------------------------------------- The Honorable D. Michael Lynn of the U.S. Bankruptcy Court for the Northern District of Texas dismissed the chapter 11 proceeding of Unified Housing of Kensington, LLC. Judge Lynn entered on Sept. 12, 2005, the order dismissing the case with prejudice to re-filing of a new bankruptcy case. Judge Lynn said that on Sept. 1, 2005, he approved a Judgment and Order Approving Settlement and Loan Assumption. Judge Lynn said that the conditions set forth for the Closing Consummation in the Order has been completed and consummated to General Electric Capital Corporation's satisfaction. As reported in the Troubled Company Reporter on July 28, 2005, Judge Lynn approved the Amended Disclosure Statement explaining the Plan of Liquidation filed by General Electric Capital Corporation, a secured creditor of the Debtor. Headquartered in Dallas, Texas, Unified Housing of Kensington, LLC, filed for chapter 11 protection on July 29, 2004 (Bankr. N.D. Tex. Case No. 04-47183). John P. Lewis Jr., Esq., at Cholette, Perkins & Buchanan, represents the Debtor. When the Debtor filed for protection from its creditors, it listed above $10 million in estimated assets and debts. US AIRWAYS: Air Canada Expresses Interest to Merge with US Air -------------------------------------------------------------- Air Canada, a unit of ACE Aviation Holdings Inc., said it would consider merging with US Airways Group Inc. if laws were changed to allow combinations between U.S. and Canadian carriers, Frederic Tomesco of Bloomberg News reports. In May 2005, ACE entered into an agreement to invest $75 million in the merged US Airways/America West carrier. The investment represents approximately 7% of the merged entity at closing. In addition, the agreement provides for five-year commercial agreements between ACE's Air Canada Technical Services unit and the newly merged entity regarding maintenance services, ground handling, regional jet flying, network, training and other areas of cooperation. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 107; Bankruptcy Creditors' Service, Inc., 215/945-7000) VERILINK CORP: Ehrhardt Keefe Raises Going Concern Doubt -------------------------------------------------------- Ehrhardt Keefe Steiner & Hottman PC of Denver, Colorado, expressed substantial doubt about Verilink Corporation's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended July 1, 2005. The auditing firm cites the Company's working capital deficiency, operating loss and negative cash flow from operations. The Company has incurred losses from operations over the last two fiscal years, and as of July 1, 2005, its current liabilities exceeded its current assets by $887,000. Net loss for fiscal 2005 was $37,452,000 compared to the net loss of $26,000 for fiscal 2004. Net loss was 70.3% of sales for fiscal 2005. The Company had net income of $1,520,000, 5.4% of sales, for fiscal 2003. The Company's balance sheet shows $42,328,000 of assets at July 1, 2005, and liabilities totaling $26,556,000. Verilink Corporation is a leading provider of next-generation broadband access products and services. Its products support the delivery of voice, video and data services over converged access networks and enable the smooth migration from present TDM-based networks to IP-based networking. Verilink developes, manufactures, and markets integrated access devices, Optical Ethernet access products, wireless access devices and bandwidth aggregation solutions. VINTAGE PETROLEUM: S&P Affirms BB- Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Vintage Petroleum Inc. and revised its outlook on the company to stable from negative. Tulsa, Oklahoma-based Vintage had about $550 million of debt as of June 30, 2005. The stable outlook indicates Vintage's improved financial profile, and in particular, lower debt leverage and stronger cash flows as result of increased realized commodity prices. The company's balance sheet is better positioned to absorb acquisitions, which the company is likely to pursue to address poor historical reserve replacement performance. The company will be challenged to increase production materially on its current asset base, and management expects to be acquisitive. As evidenced by Vintage's recent Alabama purchase, the company intends to expand its U.S. presence significantly, which would provide needed geographic and commodity rebalancing. "The stable outlook reflects Standard & Poor's view that Vintage's improved financial profile can absorb a modest amount of additional leverage in the pursuit of incremental asset purchases," said Standard & Poor's credit analyst Ben Tsocanos. Acquisitions are likely necessary to offset the significant production declines it has suffered due to constrained capital spending and asset sales. "Future ratings improvement is predicated largely on addressing production declines in a credit- neutral manner, but deterioration in operating performance or substantial worsening of the financial profile through outsized debt-funded acquisitions could result in a negative outlook or lower ratings," he continued. WCI STEEL: Panel Calls Noteholders' Disclosure Statement Deficient ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of WCI Steel, Inc., and its debtor-affiliates tells the U.S. Bankruptcy Court for the Northern District of Ohio, Eastern Division, that the Secured Noteholders' Disclosure Statement filed in support of their Second Plan of Reorganization does not contain adequate information as required by Section 1125 of the Bankruptcy Code. Noteholders' Second Competing Plan On Aug. 19, 2005, Wilmington Trust Company as indenture trustee for the senior secured notes, filed the noteholders' Second Plan of Reorganization. The Bankruptcy Court had refused to confirm the noteholders' first Plan because: a) it did not incorporate a labor contract with the United Steelworkers Association; and b) the plan was structured to force The Renco Group, Inc., WCI's ultimate parent, to shoulder pension payments, which left retirees uncertain about their pension benefits. The Second Plan addresses the Bankruptcy Court's concerns and provides for the assumption and continuance of the current collective bargaining agreement with USW. The Second Plan also assumes and continues all of the Debtors' pension and retiree medical benefit plans. The plan proponents tell the Bankruptcy Court that the Second Plan contemplates pre-funding up to $50 million into the pension plan so that the reorganized WCI will have a fully funded pension plan. Under the revised Plan, only two creditor classes are impaired and are required to vote -- the secured noteholders in Class 2 and the trade creditors and secured noteholders holding unsecured claims in Class 7. All other creditor classes are unimpaired and will be paid 100% of their claims. Equity interest holders get nothing under the Second Plan. On the effective date of the Second Plan, Wilmington Trust will receive on behalf of secured noteholders under Class 2: a) Cash in an amount sufficient to pay the fees and expenses of the Indenture Trustee; and b) $100 million principal amount of New Notes; and $4 million shares of New Common Stock. Each secured noteholder will also have the right to buy its Pro Rata Share of $50 million par value of New Preferred Stock. Any excess of the proposed distributions to Class 2 against the allowed amount of their claims will be eliminated through the reallocation of a portion of the New Common Stock to Class 7. Class 7 claimants, composed of the secured noteholders' deficiency claims and all allowed claims held by vendors and other prepetition unsecured creditors, will have the choice to receive a pro rata share of either: a) cash equal to $10 million plus the pension funding amount if the Pension Benefit Guaranty Corporation decides to terminate the Pension Plans; or b) the reallocated shares plus the proceeds of any actions Renco. The noteholders claim that their Second Plan is better than the Debtor's own revised Plan because: 1) It pays trade creditors more. The noteholders say that trade creditors under Class 7 will likely receive more than 50% of their claims since most of the noteholders under Class 7 are expected to opt for the reallocated shares rather than cash. 2) It accommodates existing union agreements as well as the Debtors' pension and medical benefit plans. 3) It provides better recoveries for the Secured Noteholders. 4) The secured noteholders are more reliable owners of reorganized WCI than Ira Rennert, the majority owner of Renco. The noteholders claim that several of Mr. Rennert's companies are either insolvent or have filed for bankruptcy. The Second Plan will be funded through a $50 million cash investment from the noteholders plus a $150 million exit facility. A copy of the noteholders' Second Disclosure Statement explaining their Second Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=050929024854 Committee Objections The Committee says that it is unclear, based on the noteholders' Disclosure Statement, if the Second Plan provides for a better pro-rata distribution to Class 7 creditors than the noteholders' original Plan. The Committee adds that the noteholders' claims that Class 7 trade creditors will get more under their plan are only true under a very limited set of circumstances. After reviewing the variables of enterprise values, collateral values, and percentages of deficiency noteholder claimants that might not elect to take a cash distribution under Class 7, the Committee concludes that there is little likelihood that the noteholders' claims will ever be true. Further, the Committee believes that the Disclosure Statement does not provide enough information on the sources and uses of cash on the effective date and after the payment of all payments due under the Second Plan. The Committee points out that the neither the Disclosure Statement nor the Second Plan includes the term sheet for the supposed $150 million exit facility. The Committee also wants the noteholders to amend the Disclosure Statement to clarify that the $50 million infusion is in the form of the purchase of $50 million of Preferred Stock and that the $50 million funding for the pension plan will come not from the noteholders but form the assets of Reorganized WCI. WCI Steel, Inc., is an integrated steelmaker producing more than 185 grades of custom and commodity flat-rolled steel at its Warren, Ohio facility. WCI products are used by steel service centers, convertors and the automotive and construction markets. WCI and its debtor-affiliates filed for chapter 11 protection on Sept. 16, 2003 (Bankr. N.D. Ohio Case No. 03-44662). Christine M Pierpont, Esq., and G. Christopher Meyer, Esq., at Squire, Sanders & Dempsey, L.L.P., represent the Debtors. When the Debtors filed for chapter 11 protection, it reported $356,286,000 in total assets and liabilities totaling $620,610,000. WELLS FARGO: Fitch Rates $276,000 Class B-5 Certificates at B ------------------------------------------------------------- Fitch Ratings-NY-September 28, 2005: Wells Fargo mortgage pass- through certificates, series 2005-10, are rated by Fitch Ratings: -- $269,343,406 classes A-1, A-2, A-PO, A-R, and A-PO, 'AAA' ('senior certificates'); -- $4,408,000 class B-1, 'AA'; -- $551,000 class B-2, 'A'; -- $414,000 class B-3, 'BBB'; -- $275,000 class B-4, 'BB'; -- $276,000 class B-5, 'B'. The 'AAA' ratings on the senior certificates reflect the 2.25% subordination provided by the 1.60% class B-1, the 0.20% class B- 2, the 0.15% class B-3, the 0.10% privately offered class B-4, the 0.10% privately offered class B-5, and the 0.10% privately offered class B-6. The ratings on the class B-1, B-2, B-3, B-4, and B-5 certificates are based on their respective subordination. Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral, the integrity of the legal and financial structures and the primary servicing capabilities of Wells Fargo Bank, N.A., (rated 'RPS1' by Fitch Ratings). The transaction consists of one group of 533 fully amortizing, fixed interest rate, first lien mortgage loans, with an original weighted average term to maturity of approximately 30 years. The aggregate unpaid principal balance of the pool is $275,543,189 as of Sept. 1, 2005, (the cut-off date) and the average principal balance is $516,967. The weighted average original loan-to-value ratio of the loan pool is approximately 74.50%; 6.36% of the loans have an OLTV greater than 80%. The weighted average coupon of the mortgage loans is 5.620% and the weighted average FICO score is 756. There are no cash-out or rate/term refinance loans in the loan pool. The states that represent the largest geographic concentration are California (16.22%), New Jersey (7.09%), Washington (5.97%), Pennsylvania (5.60%), Connecticut (5.50%), Virginia (5.31%), Illinois (5.28%) and Texas (5.09%). All other states represent less than 5% of the outstanding balance of the pool. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available on the Fitch Ratings web site at http://www.fitchratings.com All of the mortgage loans were generally originated in conformity with underwriting standards of WFB. WFB sold the loans to Wells Fargo Asset Securities Corporation, a special purpose corporation, who deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. WFB will act as servicer and custodian, and Wachovia Bank, N.A., will act as trustee. Elections will be made to treat the trust as a real estate mortgage investment conduit for federal income tax purposes. WELLS FARGO: Fitch Assigns Low-B Rating to Two Class B Certs. ------------------------------------------------------------- Wells Fargo mortgage pass-through certificates, series 2005-9, are rated by Fitch Ratings: -- $871,118,271 classes I-A-1 through I-A-16, I-A-PO, I-A-R , II-A-1 through II-A-12, and II-A-PO, 'AAA' ('senior certificates'); -- $17,107,000 class B-1, 'AA'; -- $4,952,000 class B-2, 'A'; -- $2,701,000 class B-3, 'BBB'; -- $1,801,000 class B-4, 'BB'; -- $1,350,000 class B-5, 'B'. The 'AAA' ratings on the senior certificates reflect the 3.25% subordination provided by the 1.90% class B-1, the 0.55% class B- 2, the 0.30% class B-3, the 0.20% privately offered class B-4, the 0.15% privately offered class B-5, and the 0.15% privately offered class B-6. The ratings on the class B-1, B-2, B-3, B-4, and B-5 certificates are based on their respective subordination. Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral, the integrity of the legal and financial structures and the primary servicing capabilities of Wells Fargo Bank, N.A., ( rated 'RPS1' by Fitch Ratings). The transaction consists of two groups of 1,753 fully amortizing, fixed interest rate, first lien mortgage loans, with an original weighted average term to maturity of approximately 30 years. The aggregate unpaid principal balance of the pool is $900,380,808 as of Sept. 1, 2005, (the cut-off date) and the average principal balance is $513,623. The weighted average original loan-to-value ratio of the loan pool is approximately 67.94%; 0.97% of the loans have an OLTV greater than 80%. The weighted average coupon of the mortgage loans is 5.810% and the weighted average FICO score is 745. Cash-out and rate/term refinance loans represent 32.27% and 22.53 of the loan pool, respectively. The states that represent the largest geographic concentration are California (37.40%), Virginia (8.16%), New York (5.99%), Maryland (6.10%), and Massachusetts (5.01%). All other states represent less than 5% of the outstanding balance of the pool. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available on the Fitch Ratings web site at http://www.fitchratings.com All of the mortgage loans were generally originated in conformity with underwriting standards of WFB. WFB sold the loans to Wells Fargo Asset Securities Corporation, a special purpose corporation, who deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. WFB will act as servicer and custodian, and Wachovia Bank, N.A. will act as trustee. Elections will be made to treat the trust as three real estate mortgage investment conduits for federal income tax purposes. WERNER HOLDING: Moody's Junks Corporate Family & All Debt Ratings ----------------------------------------------------------------- Moody's Investors Service downgraded all of the debt of Werner Holding Company, Inc. The change in the ratings reflects Moody's concerns related to the company's ability to raise prices sufficiently to offset higher manufacturing and shipping costs. Moody's has also changed the company's outlook to negative. These ratings were downgraded: * $50 million senior secured revolving credit facility, due 2008, lowered to Caa1 from B3; * $90 million senior secured term loan, due 2009, lowered to Caa1 from B3; * $100 million senior secured second lien term loan, due 2009, lowered to Caa2 from Caa1; * $134 million of 10% senior subordinated notes, due 2007, lowered to Caa3 from Caa2; and * Corporate Family Rating, lowered to Caa1 from B3. The ratings outlook was changed to negative from stable. The downgrade in the ratings reflects: * the company's high leverage; * weak cash flow generation; * challenging competitive environment; and * difficulty in passing through higher raw material prices. For six months ended June 30, 2005 the company's reported a negative $38 million cash flow from operations and experienced a negative $42 million in free cash flow. Sales for the second quarter of 2005 rose by approximately 12% year over year; however, despite the increase in sales the company's gross margin decreased by approximately 300 basis points. The company's adjusted total debt to EBITDA for the LTM period ended June 30, 2005 rose to approximately 22 times from approximately 11 times FYE 2004. Moody's notes that it adjusts the company's financial statements for certain off balance sheet items, including but not limited to pensions, leases, and account receivable securitizations. The company's adjusted free cash flow to adjusted debt declined to 2% for the LTM period ended June 30, 2005 from 12.9% FYE 2004. Although Werner is the largest manufacturer and distributor of ladders in the United States, the market has been very competitive due to imports. The competitive market has pressured the company's distribution capability with the largest impact being the loss of the Home Depot account in 2003. Moody's is concerned that the ladder market will remain highly competitive and that the company will therefore be unable to pass through its higher manufacturing costs and the impact of raw material price swings. Although Werner has operations in Mexico, its manufacturing plants in the U.S. are unlikely to allow it to close the competitive gap with its China based competitors. Although Moody's believes Werner is likely to increase its foreign manufacturing levels, the pace and the level of improvement from such a change has been slow in coming relative to the changes in market dynamics and is unlikely to result in a competitive advantage. The company's ratings consider Werner's: * market share, * strong brand recognition, and * diversified customer base. Furthermore, the company seems to have a renewed focus on improving its cost structure and financial performance. The ratings and or outlook could improve if the company's cash flow generation strengthens on a sustainable basis and/or if the company was able to meaningfully reduce its cost structure. An improvement in the company's cushion under its covenants would be supportive of an improvement in the company's ratings outlook. The ratings could be further downgraded: * if the company's debt levels increase significantly; * if its margins weaken; or * if its free cash flow further deteriorates. Headquartered in Greenville, Pennsylvania, Werner Holding Co., Inc. is the nation's largest manufacturer and marketer of ladders and other climbing equipment. In addition, Werner manufactures and sells aluminum extruded products. Total debt as of June 30, 2005 was approximately $345 million. WHITING PETROLEUM: Prices 5 Million-Plus Shares of Common Stock --------------------------------------------------------------- Whiting Petroleum Corporation (NYSE: WLL) reported that its public offering of 5,750,000 shares of common stock was priced at $43.60 per share to the public. Whiting expects the delivery of the shares to occur on October 4, 2005. Whiting has granted to the underwriters a 30-day option to purchase up to 862,500 additional shares of common stock at the same price per share solely to cover over-allotments, if any. Assuming no exercise of the over-allotment option, Whiting will receive net proceeds from this offering of approximately $240.8 million after deducting underwriting discounts and commissions and estimated expenses of the offering. Whiting intends to use all of the net proceeds that it will receive from the offering to pay the cash portion of the purchase price for the previously announced acquisition of the North Ward Estes properties and to repay a portion of the debt currently outstanding under the credit agreement of its wholly-owned subsidiary, Whiting Oil and Gas Corporation, that was incurred in connection with the acquisition of the Postle properties. Merrill Lynch & Co., J.P. Morgan Securities Inc. and Wachovia Securities acted as joint book-running managers for the offering. The offering is being made only by means of a prospectus and related prospectus supplement, copies of which may be obtained from Merrill Lynch & Co., 4 World Financial Center, New York, New York 10080. An electronic copy of the prospectus will be made available from the Securities and Exchange Commission's Web site at http://www.sec.gov/ Headquartered in Denver, Colorado, Whiting Petroleum Corporation -- http://www.whiting.com/-- is a holding company engaged in oil and natural gas acquisition, exploitation, exploration and production activities primarily in the Rocky Mountains, Permian Basin, Gulf Coast, Michigan and Mid-Continent regions of the United States. The Company trades publicly under the symbol WLL on the New York Stock Exchange. * * * As reported in the Troubled Company Reporter on Sept. 27, 2005, Standard & Poor's Ratings Services affirmed its 'B+' long-term corporate credit rating on oil and gas exploration and production company Whiting Petroleum Corp. and removed the rating from CreditWatch with negative implications. The outlook is now stable. The rating was originally placed on CreditWatch on July 28, 2005. At the same time, Standard & Poor's assigned its 'B-' rating to Whiting's proposed $250 million senior subordinated notes due 2014. Pro forma for the expected capital raises, Denver, Colorado-based Whiting will have about $930 million in debt. WHITING PETROLEUM: Prices $250 Million of Senior Sub. Notes ----------------------------------------------------------- Whiting Petroleum Corporation (NYSE: WLL) priced $250 million of Senior Subordinated Notes due 2014 in a private placement under Rule 144A under the Securities Act of 1933. The securities were priced at par with a coupon of 7.0%. The private placement is expected to close on October 4, 2005. Whiting expects to use the net proceeds from the sale of the notes to pay the cash portion of the purchase price for the previously announced acquisition of the North Ward Estes properties and to repay a portion of the debt currently outstanding under the credit agreement of its wholly-owned subsidiary, Whiting Oil and Gas Corporation, that was incurred in connection with the acquisition of the Postle properties. The securities sold have not been registered under the Securities Act of 1933 or any state securities laws and, unless so registered, the securities may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933 and applicable state securities laws. Headquartered in Denver, Colorado, Whiting Petroleum Corporation -- http://www.whiting.com/-- is a holding company engaged in oil and natural gas acquisition, exploitation, exploration and production activities primarily in the Rocky Mountains, Permian Basin, Gulf Coast, Michigan and Mid-Continent regions of the United States. The Company trades publicly under the symbol WLL on the New York Stock Exchange. * * * As reported in the Troubled Company Reporter on Sept. 27, 2005, Standard & Poor's Ratings Services affirmed its 'B+' long-term corporate credit rating on oil and gas exploration and production company Whiting Petroleum Corp. and removed the rating from CreditWatch with negative implications. The outlook is now stable. The rating was originally placed on CreditWatch on July 28, 2005. At the same time, Standard & Poor's assigned its 'B-' rating to Whiting's proposed $250 million senior subordinated notes due 2014. Pro forma for the expected capital raises, Denver, Colorado-based Whiting will have about $930 million in debt. WHITING PETROLEUM: Moody's Rates Proposed $250 Million Notes at B2 ------------------------------------------------------------------ Moody's assigned a B2 rating to Whiting Petroleum's pending $250 million senior subordinated note offering. Together with a pending common equity offering that could net up to more than $275 million if the underwriters' over-allotment option is exercised, note and equity proceeds would either directly fund, or repay the majority of secured bank debt that was incurred to fund, Whiting's $802 million acquisition of oil and gas reserves from private Celero Energy. Moody's also confirmed Whiting Petroleum's Ba3 Corporate Family rating, B2 senior subordinated ratings, and SGL-2 liquidity rating. The rating outlook is stable. Whiting is an oil and gas exploration and production company operating in the: * Permian Basin (46% of pro-forma reserves); * Rocky Mountains (23%); * MidContinent (17%); * Gulf Coast (7%); * Michigan (6%); and * 1% in other regions. To retain the outlook if not the ratings, Whiting will need to: * exhibit sound unit full-cycle economics; * sequential quarter production trends; and * reduction in pro-forma leverage on proven developed reserves. Normal review of year-end 2005 results, including FAS 69 disclosures, will provide an important update on the components of Whiting's organic and all-sources reserve replacement costs. It does not appear that Whiting has so far generated organic production growth in spite of healthy capital spending. Whiting has made major rapid changes in its reserve and prospect portfolio composition. It faces the substantial task of realizing the operational and cost assumptions made to assess the risk and economics of remediation, secondary recovery, and tertiary recovery activity needed to reasonably meet its desired post- acquisition results. Moody's estimates pro-forma leveraged unit full-cycle costs to be escalating towards $28/BOE (unit production, G&A, interest, and reserve replacement costs). Moody's estimates that leverage, pro-forma for the note and equity offerings, is in the range of $5.50/PD BOE of reserves. While its announced acquisition prices per unit of acquired reserves have been roughly in the mainstream for acquisitions during this long up-cycle, prices paid per unit of daily production have been high, PD reserve components have been low and, given the nature and oilfield services intensive needs of the Celero properties in particular, unit production costs for the acquired properties have been high. Moody's envisions that unit production and production tax costs will proceed past $11/BOE of daily production. Thus, the confirmation is largely driven by: 1) Whiting's pattern of supportive common equity funding for acquisitions; 2) rising scale and increased diversification of reserves, production, and prospect locations by region, basin, field, play type, and exploitation activity; and 3) an expected price environment supportive of adequate cash flow before capital spending. Whiting is also the operator for roughly 95% of the acquired Celero properties, providing it with control over timing, cost, and the nature of remediation and exploitation activity that is absolutely vital to justifying their acquisition. Whiting may also benefit from the influx of technical talent and regional knowledge expected to come with the Celero employees that have worked the properties over the years. Whiting's pro-forma PD reserve life is somewhat over a durable 11 years, though long lived reserves typically incur higher unit production costs too. The rating confirmation comes in spite of: 1) a lack of visible evidence so far of strong underlying organic operational performance since Whiting's initial ratings; and 2) acquisition event risk should Whiting find it no longer practicable to issue adequate common equity to fund future acquisitions. It appears that Whiting's organic production trend has been modestly negative. The ratings had been placed on review for downgrade in July 2005 upon Whiting's announced highly leveraged, operationally intensive, and at least initially very expensive acquisition of two old and very mature producing fields from Celero. The North Ward Estes properties yield well below 10 boe per day of production per producing well. While the Celero properties may prove to be favorable additions to Whiting, a high level of sustained general remediation, drilling, completion, re-fracturing and re-completion success, recommencement and remediation of secondary recovery activity, and tertiary recovery success is required to deliver targeted results. Until Whiting's assumptions for the Celero properties are validated by performance, escalated execution risk has been inserted into Whiting's credit profile. Due to the relative acquisition scale, its future capital needs, very large proven undeveloped reserves, and significant commercial and execution risk to bring the PUD's to production, a substantial common equity offering was needed to adequately spread acquisition valuation and performance risk across the capital structure and generally contain leverage on PD reserves. By Whiting's estimate, it acquired 122.3 million barrels-of-oil- equivalent (mmboe) of proven reserves, of which a low 43% was PD reserves and a low roughly 30% was proven developed producing (PDP) reserves (PDP reserves are the producing subset of PD reserves). The properties generated a proportionately low 7,977 BOE per day of production at announcement. The acquisition price paid thus equated to a very high $100,543 paid per BOE of current daily production, though this may have moderated a bit with reportedly higher second quarter production while still being operated by Celero. Whiting is paying roughly $11/boe all-in for total proven reserves, including $534 million of reported future capital needed to bring the large 57% component of proven undeveloped (PUD) reserves and 15% component of proven developed non-producing reserves to production. Moody's notes that roughly 30 mmboe of the acquired reserves require subsequent commercially successful tertiary recovery (CO2 flooding) before those reserves can be confirmed as PUD reserves and proceed to PD reserves and then commercial producing PDP reserves. Excluding the tertiary recovery reserves, the acquisition would be more expensive still. In light of the composition and up-cycle timing of the Celero acquisition, Moody's anticipates significantly higher unit production costs, and a clear break from its prior comparatively lower reserve replacement costs to much higher costs attendant with rapid up-cycle growth, especially given intense sector competition for properties. Though Whiting has issued adequate common equity funding for acquisitions to date, its pattern has been to announce the companion equity offerings several months after its acquisition announcements. This is a substantial time lag that exposes Whiting's willingness to launch equity, and therefore exposes the ratings, to general shifts in market sentiment and Whiting- specific exposure to intervening quarterly results or an unfavorable post-acquisition market view of an acquisition. The confirmed SGL-2 Speculative Grade Liquidity rating indicates: * over the next four quarters, sound combined cash flow cover of interest expense and sustaining capital spending; * ample back-up liquidity; and * adequate covenant coverage relative to currently budgeted outlays and a planned reasonable level of acquisition activity. Whiting paid $343 million in cash to Celero on August 4, 2005 for the first property package (Postle Field), spread across five property units in Texas County, Oklahoma. It will pay $442 million in cash and issue 441,500 Whiting common shares to Celero on October 4, 2005 for the second package (North Ward Estes Field), located in the West Texas region of the Permian Basin. Assuming at least roughly $275 million of common equity is finally raised, Moody's projects that pro-forma Debt/PD Reserves would be reduced from a very high $7.55/PD BOE to roughly $5.50/PD BOE of reserves. With the common equity, debt plus total future development capital spending would be reduced from roughly $6.80/BOE of total proven reserves to $5.90/BOE of proven reserves. Whiting now operates on a much larger scale and diversification after its 2004 and 2005 acquisitions. Whiting's second quarter 2005 average daily production was 30,000 mmboe/day and pro-forma production would approach 38,000 mmboe/day. Pro forma for all 2005 acquisitions, total reserves approximate 274 mmboe, of which approximately 162 mmboe are PD reserves. Year-end 2004 proven reserves totaled 144.2 mmboe and PD reserves totaled 101 mmboe. At year-end 2003, reserves totaled a far smaller 73.1 mmboe, of which 54.8 mmboe was PD reserves. Whiting Petroleum Corporation is headquartered in Denver, Colorado. WINN-DIXIE: Has Until Dec. 19 to File Plan of Reorganization ------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida extended Winn-Dixie Stores, Inc., and its debtor-affiliates' exclusive periods to: -- file a plan of reorganization to Dec. 19, 2005; and -- solicit acceptances of that plan to Feb. 20, 2006. As previously reported in the Troubled Company Reporter on Aug. 22, 2005, the Debtors have focused substantial attention on the formulation and implementation of a market area reduction program that is expected to result in the sale or closure of 326 stores. This Footprint Process is now well underway. However, because of the size and complexity of their Chapter 11 cases, the Debtors believe that, even if they continue to make substantial progress in their proceedings, it is likely that they will need to request a further extension of their Exclusive Periods. D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, asserts that terminating the Exclusive Periods at this time would encourage the development of competing multiple plans that could lead to unwarranted confrontations, litigation and increased administrative costs. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Has Until Dec. 19 to Decide on Leases ------------------------------------------------- As previously reported in the Troubled Company Reporter on Aug. 23, 2005, Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Florida to further extend to Dec. 19, 2005, the period within which they must assume, assume and assign or reject unexpired real property leases. As reported in the Troubled Company Reporter on Sept. 13, 2005, Victory Real Estate Investments, LLC, and Victory Investments, Inc., asks the Court to deny the Debtors' request. In the alternative, the Landlords ask Judge Funk to shorten the Debtors' time for assumption or rejection of leases as it specifically relates to them. Court Order Judge Funk extends the period within which the Debtors must move to assume or reject their unexpired leases through Dec. 19, 2005. However, with respect to the lease governing Store No. 734, the Debtors must decide what to do with that lease by Sept. 30, 2005. Victory Real Estate Investments, LLC, withdrew its objection to the requested extension. The Court will continue the hearing on the objections filed by PMG Ocean Associates, LP, at a later date. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Two Commercial Net Leases Rejected Effective Today -------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida authorized Winn-Dixie Stores, Inc., and its debtor-affiliates to reject two unexpired leases with Commercial Net Lease Realty, Inc.: Store No. Location -------- -------- 2719 1707 Villa Rica Highway Dallas, Georgia 2721 9105 Hickory Flat Highway Woodstock, Georgia The Leases are deemed rejected effective as of Sept. 30, 2005, Judge Funk declares. As reported in the Troubled Company Reporter on Sept. 12, 2005, rejecting the Leases will save the Debtors' estates costs incurred with respect to administrative expenses, including rent, taxes, insurance premiums, and other charges, Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, asserted. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000). * Corporate Revitalization Partners Absorbs RKG Osnos in Merger --------------------------------------------------------------- Corporate Revitalization Partners LLC and RKG Osnos Partners LLC announced the merger of their organizations. The merger, effective immediately, consolidates their three main strengths: their pool of experienced turnaround professionals, focus on interim-management and debtor-only services, and strong industry history and cultures. Financial details were not available. "The timing for the merger was right, it enhances our national footprint and expands the bench strength of interim-managers for the two companies," said William Snyder, managing partner, CRP. "This is a great opportunity for two great organizations to leverage our respective strengths for the benefit and success of our clients. The new organization will have added capacity and a stronger presence in the Northeast. We will continue to be a partner-based and run organization, we will be hands-on and a roll-up-your-sleeves company that puts the client first and foremost." The new company will continue to operate as CRP and will add approximately eight turnaround professionals for an estimated total of 50 professionals nationwide. The new coast-to-coast organization will continue to have key offices in New York City, Dallas and Los Angeles, and will keep its administrative offices in Dallas. Gil Osnos and Greg Rorke, president and chairman, respectively, of RKG Osnos, will become managing partners of CRP. "We are very excited about this new organization," said Gil Osnos. "We think that the combined strength of the two firms and with the same business approach creates a truly national and leading interim-management firm for middle-market companies." Snyder noted that CRP has remained busy during the recent slow- down in the turnaround industry and that "this merger is a testament that the CRP model works. Our debtor-only approach is not only shared by both organizations, but it's an approach that leverages our strengths in interim management and advisory services." Corporate Revitalization Partners LLC -- http://www.crpllc.net-- is a national turnaround management firm. CRP provides Interim Management, Operational and Financial Advisory Services, Bankruptcy Support, Merger, Acquisition and Due Diligence Support and Financial Restructuring. CRP professionals have experience in a broad range of industries, including: Aerospace and Defense, Business Services, Chemicals and Plastics, Computers and Electronics, Consumer Products, Fabric/Apparel, Food and Beverage, Retail, Telecommunications and Transportation, among others. * Paul Miltonberger Joins Epstein Becker's Litigation Practice -------------------------------------------------------------- Epstein Becker & Green, P.C., welcomed Paul C. Miltonberger in its National Litigation practice in the firm's Chicago office. Mr. Miltonberger came from a five year stint as in-house counsel at Sears, Roebuck and Co., where, most recently, he was Associate General Counsel and head of corporate and securities litigation. He will primarily focus on complex commercial litigation, consumer fraud, and electronic discovery and document retention. "Paul Miltonberger is a tremendous asset to EBG, not simply because of his skill as a lawyer, but because of his great personal integrity and commitment to quality," said Diane Romza-Kutz, the managing partner of EBG's Chicago office. In the past, Mr. Miltonberger has made his mark in commercial litigation, trying several multi-million dollar claims to jury verdict. His broad and diverse experience includes numerous class-action lawsuits, such as those alleging securities violations, improper information sharing and invasion of privacy, misrepresentation, consumer fraud and deceptive business practices -- including those involved with California's Section 17200 and similar statutes in other states. His experience includes Truth in Lending Act violations, such as 250 consolidated bankruptcy actions alleging improper credit- statement disclosures, and has handled numerous invasion of privacy claims, such as a California class of four million credit- card holders and three Illinois cases seeking a national class of 40 million cardholders. Mr. Miltonberger has also handled several high profile decisions. He was responsible for the successful defense of a national franchisor against claims by a franchisee for tortious interference with contract and business expectancy. The plaintiffs sought $10 million in compensatory damages and $20 million in punitive damages. The jury trial lasted two weeks in the United States District Court, Northern District of Illinois. In a matter filed in state court in DuPage County, Illinois, the jury awarded his clients $7,985,400. The award is one of the largest jury verdicts awarded in Illinois in favor of a landowner in an eminent domain case. Mr. Miltonberger has engaged in inquiries and investigations conducted by the SEC and various states' attorneys' general, and has significant experience and expertise regarding corporate document retention policies, practices, and electronic discovery issues. He has handled business torts, chancery actions, product and professional liability, surety and construction claims, and employment termination issues. Mr. Miltonberger graduated cum laude from the University of Illinois College of Law in 1983. Founded in 1973, Epstein Becker & Green, P.C. -- http://www.ebglaw.com/-- is a law firm with more than 375 attorneys practicing in 11 offices throughout the U.S. -- Atlanta, Chicago, Dallas, Houston, Los Angeles, Miami, New York, Newark, San Francisco, Stamford, and Washington, D.C. -- and affiliations worldwide. The firm's size, diversity, and global affiliations allow its attorneys to address the needs of both small entrepreneurial ventures and large multinational corporations on a worldwide basis, including domestic, Fortune 100, middle market, and international affiliates. * BOOK REVIEW: The Turnaround Manager's Handbook ------------------------------------------------ Author: Richard S. Sloma Publisher: Beard Books Paperback: 244 pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1893122409/internetbankrupt In the introduction to this book, the author suggests that an accurate subtitle could be "How to Become a Successful Company Doctor." Using everyday medical analogies throughout, he targets "corporate general practitioners" charged with the fiscal health of their companies. As with many human diseases, early detection of turnaround situations is critical. The author describes turnaround situations as a continuum differentiated by length of time to disaster: "Cash Crunch," "Cash Shortfall," "Quantity of Profit," and "Quality of Profit." The book centers on 13 steps to a successful turnaround. The steps are presented in a flowchart form that relates one to another. Extensive data collection and analysis are required, including the quantification of 28 symptoms, the use of 48 diagnostic and analytical tools, and up to 31 remedial actions. (In case the reader balks at the effort called for, the author points out that companies that collect and analyze such data on a regular basis generally don't find themselves in a turnaround situation to begin with!) The first step is to determine which of 28 symptoms are plaguing the company. The symptoms generally pertain to manufacturing firms, but can be applied to service or retail companies as well. Most of the symptoms should be familiar to the reader, but the author lays them out systematically, and relates them to the analytical tools and remedial actions found in subsequent chapters. The first seven involve the inability to make various payments, from debt service to purchase commitments. Others include excessive debt/equity ratio; eroding gross margin; increasing unit overhead expenses; decreasing product line profitability; decreasing unit sales; and decreasing customer profitability. Step 2 employs 48 diagnostic and analytical tools to derive inferences from the symptom data and to judge the effectiveness of any proposed remedy. The author begins by saying "...if the only tool you have is a hammer, you will view every problem only as a nail!" He then proceeds to lay out all 48 tools in his medical bag, which he sorts into two kinds, macro- and micro-tools. Macro-tools require data from several symptoms or assess and evaluate more than a single symptom, whereas micro-tools more general-purpose in function. The 12 macro-tools run from "The Art of Approximation" to "Forward-Aged Margin Dollar Content in Order Backlog." The 36 micro-tools include "Product Line Gross Margin Percent Profitability," "Finance/Administration People-Related Expenses As Percent Of Sales," and "Cumulative Gross $ by Region." Next, managers are directed to 31 possible remedial actions, categorized by the four-stage turnaround continuum described above. The first six actions are to be considered at the Cash Crunch stage, and range from a fire sale of inventory to factoring accounts receivable. The next six deal with reducing people- related expenses, followed by 13 actions aimed at reducing product- and plant-related expenses. The subsequent five actions include eliminating unprofitable products, customers, channels, regions, and reps. Finally, managers are advised on increasing sales and improving gross margin by cost reduction in various ways. The remaining steps involve devising the actual turnaround plan, ensuring management and employee ownership of the plan, and implementing and monitoring the plan. The advice is comprehensive, sensible and encouraging, but doesn't stoop to clich, or empty motivational babble. The author has clearly operated on patients before and his therapeutics have no doubt restored many a firm's financial health. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***