/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/010227.MBX T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, February 27, 2001, Vol. 5, No. 40 Headlines A-1 SPECIALTY: SouthTrust Wins Contempt Ruling against Principals AMES DEPARTMENT: Inking New $800MM Financing Pact with GE Capital ARMSTRONG: Asbestos Committee Balks at Lazard's Employment BK ENTERTAINMENT: Case Summary & 20 Largest Unsecured Creditors BLUELIGHT.COM: Kmart Says Put Up or Shut Down BROCKER TECHNOLOGY: Taps PwC to Review Accounting Irregularities CROUSE HOSPITAL: Files Chapter 11 Petition in New York EDWARDS THEATRES: Reviews Anschutz & Oaktree Capital Proposal eFANSHOP: e-Tailer Closes Doors EQUALNET: CCC GlobalCom To Acquire Selected Assets FIRST ALLIANCE: Court Disallows Borrowers' Class Proofs of Claim FIRST DATA: Plans to Sell $525MM of New Notes to Refinance Debt FRUIT OF THE LOOM: Seeks Court's Nod To Sell Equipment To Gibbs GREAT BASIN: Agrees To Sell Assets To Volvo Truck For $40 Million HARNISCHFEGER: Beloit Seeks To Reject Proctor & Gamble Agreement HEILIG-MEYERS: Fitch Slashes Receivable Securitization Ratings HOMEPLACE: DJM Asset Management to Dispose of 38 Store Leases ICG COMMUNICATIONS: Moves to Hire Arthur Andersen as Consultants IMPERIAL SUGAR: Wells Fargo Asks for Protection of Set-Off Right INTEGRATED HEALTH: Rejects 7 Rotech Real Property Leases INTERNATIONAL MENU: Selling Operating Subsidiaries After Default INVESTAMERICA: Looks for New Funding to Continue as Going Concern LEGEND AIRLINES: FAA Nixes Auction of Operating Certificate LERNOUT & HAUSPIE: AllVoice Pursues Patent Infringement Lawsuit LETSBUYIT.COM: Says It Has Enough Cash to Reach Break-Even LOEWEN GROUP: Selling Macer-Hall Funeral Home For $550,000 LUCENT TECHNOLOGIES: Secures New $6.5 Billion Credit Facilities NORD RESOURCES: Files Chapter 11 Petition in Albuquerque OMEGA HEALTHCARE: S&P Rates Preferred Stock in Default OWENS CORNING: Wants More Time To Decide On New York Lease PEAPOD.COM: Foresees Cash Shortfall By Year's End PETMED EXPRESS: Plans Asset Sales to Obtain More Funds PILLOWTEX: Creditors' Committee Hires Akin Gump as Lead Counsel PLAYDIUM ENTERTAINMENT: Applies for CCAA Protection in Ontario PRECEPT BUSINESS: Files for Chapter 11 Protection in N.D. Texas RITE AID: AdvancePCS Sale Proceeds Approach $300 Million Mark SAFETY-KLEEN: Enters Into Marketing Agreement With SystemOne SMITH CORONA: Court Approves First Amended Disclosure Statement STAMPEDE WORLDWIDE: Specialized Solutions Picks-Up a Piece SUNTERRA CORP.: Fitch Places Receivable-Backed Notes on Watch VISTA EYECARE: Inks Deal to Sell Freestanding Centers & N.Y. Lab WATERLINK INC.: Working to Restructure Senior Credit Facility WHEELING-PITTSBURGH: Makes Bid to Assume MPS Engineering Contract YORK FUNDING: Moody's Downgrades Securitized Notes to Junk ********* A-1 SPECIALTY: SouthTrust Wins Contempt Ruling against Principals ----------------------------------------------------------------- SouthTrust Bank announced that it had successfully argued for the imposition of contempt charges and sanctions against the principals of A-1 Specialty Gasolines, a chapter 11 debtor, for their repeated flagrant violations of both applicable bankruptcy law and orders of the U.S. Bankruptcy Court prohibiting it from using cash on which SouthTrust had a lien. A-1 Specialty Gasolines, a large supplier of fuels in West Palm Beach, Fla., filed for chapter 11 protection last year. The case was later converted to chapter 7. "The principals repeatedly used monies which secured the debtor's obligations to SouthTrust prompting us to take the highly unusual step of seeking to hold the debtor's principals in contempt," said SouthTrust Bank attorney Scott L. Baena. After conducting a two-part trial, Judge Steven Friedman found the debtor's principals to be in contempt of court and entered an order determining that the bank was entitled to recover $590,979 from the principals. As a result, Judge Friedman has jurisdiction to incarcerate the principals until they have paid the award to SouthTrust. (ABI World, February 23, 2001) AMES DEPARTMENT: Inking New $800MM Financing Pact with GE Capital ----------------------------------------------------------------- Ames Department Stores, Inc., has been working to finalize a commitment for a three-year, $800.0 million senior secured financing agreement with GE Capital. In a recent conversation with the Company, Analysts at F&D Reports confirmed that the agreement is expected to be completed this week. This new facility replaces Ames' existing $650.0 million senior credit facility (under which GE Capital is a lender) led by Bank of America. ARMSTRONG: Asbestos Committee Balks at Lazard's Employment ---------------------------------------------------------- The Official Committee of Asbestos Claimants objected to the employment of Lazard Freres & Co., LLC, as investment bankers to these estates. Lazard claims entitlement to a Sales Fee upon the completion of certain contemplated transactions, and a Restructuring Fee of $9.0 million upon completion of other defined transactions, are payments in addition to the $200,000 Monthly Financial Advisory Fee. While Lazard states that the Monthly Financial Fee will be credited in full toward the Restructuring Fee, the Committee believes this monthly fee should be credited against either the Sales Fee or the Restructuring Fee, as applicable, and asked that debtors Armstrong Holdings, Inc. and Lazard affirm that intent. Further, neither the Sales Fee nor the Restructuring Fee should be paid to Lazard without prior application and order, in the same manner as every other professional employed by this estate. Elihu Inselbuch, Esq., and Peter Van N. Lockwood, Esq., at Caplin & Drysdale, Chartered, told Judge Farnan that the Asbestos Committee thinks any Order approving Lazard's employment should contain express language embodying these restrictions and requirements. (Armstrong Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) BK ENTERTAINMENT: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: BK Entertainment Inc. f/k/a Stuart Entertainment Inc. 8200 Normandale Boulevard Suite 400 Minneapolis, MN 55437 Debtor affiliates filing separate chapter 11 petitions: Bingo Systems and Supplies, Inc. Video King Gaming Systems, Inc. Western Bingo Supplies, Inc. Type of Business: Manufactures bingo paper, pulltabs, and related electronic gaming equipment and supplies, with facilities and operations in the U.S., Canada and Mexico. Chapter 11 Petition Date: February 16, 2001 Court: District of Minnesota Bankruptcy Case Nos.: 01-40638 through 01-40641 Judge: Nancy C. Dreher Debtors' Counsel: Clinton E. Cutler, Esq. Fredrikson & Byron, P.A. 1100 International Centre 900 Second Avenue South Minneapolis, MN 55402 612-347-7000 Total Assets: $126,897,472 Total Debts: $82,980,791 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Wasserstein Perella & Co. Goods and/or $1,500,000 K. Devecchis services 31 West 52nd Street New York, NY 10019 Kyle Fields Notes payable $593,262 1042 Upland Drive El Dorado Hills, CA 95762 (916)363-5591 Aurthur Andersen LLP Goods and/or $530,840 Michael Altschaefl services 100 East Wisconsin Avenue Suite 1900 Milwaukee, WI 53202 (414)283-3235 Squire Sanders & Dempsey LLP Goods and/or $466,167 Craig Hanson Two Renaissance Square Phoenix, AZ 85004 (602)528-4000 Melange Computer Services Notes Payable $322,904 Bill Wai 808 Century Boulevard Suite 100 Lansing, MI 48917-9231 (800)572-1497 Grupo Pipsamex Notes Payable $244,002 QAD Inc. Notes Payable $224,364 Milbank Tweed Hadley Goods and/or $195,000 services Banner Fibreboard Notes Payable $182,860 Potlach Corporation Notes Payable $136,490 United Parcel Service Goods and/or $116,467 services US Printing Ink Notes Payable $116,224 Deloitte & Touche LLP Goods and/or $105,260 services Colle & McVoy Incorporated Goods and/or $93,184 services Cunningham Group Notes Payable $90,460 Maria Antonieta Fitzmaurice Notes Payable $78,733 Litho Development & Research Notes Payable $68,870 American Express Goods and/or $44,665 services Welsh Companies LLC $35,727 Deloitte & Touche Goods and/or $35,677 services BLUELIGHT.COM: Kmart Says Put Up or Shut Down --------------------------------------------- Mark H. Goldstein, president & CEO of BlueLight.com, which is 59% owned by Kmart (Troy, MI), recently mandated that if the e-tailer was not "operational break-even" by the fourth quarter ending January 2002, "it's just not going to happen," according to an article appearing in an F&D Reports trade publication last wee. Mr. Goldstein also noted that in a worst-case scenario, the unit would be absorbed by Kmart if it fails to meet its goals, which include generating $100 million in annual sales. BlueLight.com has also abandoned any thoughts of going public during 2001, but may try to do so in 2002. BROCKER TECHNOLOGY: Taps PwC to Review Accounting Irregularities ---------------------------------------------------------------- Brocker Technology Group Ltd. (Nasdaq:BTGL, TSE:BKI, http://www.brockergroup.com),is undertaking a corporate-wide restructuring and has appointed PricewaterhouseCoopers (PwC) to review the accounting irregularities uncovered within the Company's Australian distribution subsidiary formerly known as Sealcorp (Australia) Pty Ltd. Brocker's internal audit activities have determined that there has been improper application of accounting procedures in the Australian operation, resulting in the over-statement of net income (loss), by an amount estimated by management to be approximately CDN$4.5 million. This estimate is subject to change as PricewaterhouseCoopers proceeds through the review process. The improper invoicing resulted in a shortfall of about $1.2 million in the lending facility collateralized by the invoices. Brocker rectified this shortfall earlier in the week, and the lending facility remains in place. After allowing for these adjustments, management estimates that Brocker's shareholders' equity will remain in excess of CDN$21 million. Although Brocker is confident that the irregularities are confined to the Australian subsidiary, PwC will conduct a review of the Group accounts for corporate governance and bank security purposes. This review is expected to be completed within two weeks. "We are taking action immediately, rather than waiting for the investigation to be completed," said CEO, Richard Justice. "The company has taken appropriate disciplinary action, immediately terminating the employment of the manager of the Australian operation. We are also reviewing all aspects of our business and will take all appropriate actions suggested by that review." The focus of Brocker's restructuring is to eliminate non- performing businesses by March 31, 2001 and reduce costs throughout the remaining businesses, with the goal of rapidly reaching positive cash flow. The Australian distribution business will be wound down, while the Professional Services and Datec operations in Australia (which are under separate management in separate companies) will continue. As part of cost cutting, Brocker's staff will be reduced from a high last year of about 250 to about 90 positions. This will reduce Brocker's staffing costs by about CDN$6.8 million per year. Thirty positions have already been eliminated as part of the strategic review and restructuring, begun late last year. The elimination of non-performing businesses may result in the write down of some or all of the goodwill and deferred development costs presently carried on Brocker's balance sheet, and other one-time restructuring costs. After the restructuring is completed, Brocker will comprise four business units: Vendor Services (distribution of wireless products), Online Telecommunications (telco service provision); Professional Services (e-commerce consulting and solutions); and Datec (technology provider). The Australian irregularities were discovered by Brocker's CFO, Grant Hope and CEO, Richard Justice. Brocker voluntarily and immediately brought the irregularities to the attention of Nasdaq and the TSE, and issued a public statement on Thursday, February 15. Trading in the common shares of Brocker has been halted on Nasdaq and the TSE, pending the announcement of further details to be revealed by the investigations of the audit committee and the independent accountants. It has not yet been determined whether previously reported results will be affected by the accounting matters being reviewed. Completion of the investigation by PwC may delay the completion and release of the Corporation's December 31, 2000 financial statements. Shareholders will be kept appraised of information concerning these matters as it becomes known. Brocker will promptly announce the results of the independent accountant's review once it is complete. In other news, Brocker's Board announced the departure of Board member Julie Clarkson. Ms. Clarkson resigned effective February 15, 2001. The Board appreciates her efforts on behalf of Brocker, and her service on the Compensation Committee. About Brocker Technology Group Brocker Technology Group Ltd. (http://www.brockergroup.com)is a communications company focused on improving information flows by delivering innovation and market leadership in telecommunication services, e-commerce strategies and information management technologies. Brocker subsidiary, Datec also provides a broad range of IT and communications solutions to companies across the South Pacific. CROUSE HOSPITAL: Files Chapter 11 Petition in New York ------------------------------------------------------ Syracuse, NY based Crouse Hospital and six entities filed February 21 for Chapter 11 bankruptcy protection from creditors while they reorganize their finances. Crouse owes money to big- time organizations such as Time Magazine, IBM and the Drug Enforcement Administration in Washington, D.C. But the filing also affects many small businesses in Central New York, including florist shops, cleaning companies and hardware stores. The paperwork filed in U.S. Bankruptcy Court in Utica, NY list debts of approximately $110 million, including about $20 million owed to suppliers. Crouse owes Upstate Medical University $1.96 million, BlueCross BlueShield of Central New York $1.23 million and Medtronic USA of Dallas $1.14 million. (New Generation Research, February 23, 2001) EDWARDS THEATRES: Reviews Anschutz & Oaktree Capital Proposal ------------------------------------------------------------- Edwards Theatres Circuit Inc. said that it is analyzing and evaluating an investment proposal from Philip Anschutz and Oaktree Capital that-if approved by the U.S. Bankruptcy Court- would provide for a substantial investment in Edwards Theatres and its affiliates, according to a press release from Irell & Menella LLP. The Newport Beach, Calif.-based Edwards has previously announced that it would accept terms outlined in the letter of intent from Anschutz and Oaktree Capital regarding their proposed movie theater chain investment as part of Edwards' bankruptcy restructuring. (ABI World, February 23, 2001) eFANSHOP: e-Tailer Closes Doors ------------------------------- Online retailer eFanshop has admitted defeat little more than a month after it said it would continue business as usual after laying off 20 workers, according to LocalBusiness.com. Callers to the company received a message saying that the company had closed down. "Unfortunately, we have closed our doors and ceased all operations," the recording said. "All open orders have been cancelled. Thanks for your call." eFanshop's business was to help sports-oriented web sites generate revenue by selling sports- themed merchandise. The sites were designed to blend in with each affiliate site's look and feel, but eFanshop operated the technology and logistics. The sites got a cut of the revenue generated by sales through their sites. The Dallas-based company had only 10 employees after last month's layoffs, but founder and Chief Executive Officer Marc Andres said at the time that the company's existing web stores would not be affected. News of eFanshop's demise caught some of the company's partner sites by surprise. An executive at one of the companies, who requested anonymity, expressed shock at learning that eFanshop had shut down. "I just tried to connect to our [online shop], and I can't get there," she said. "We're still a small startup, and this is not good for us." (ABI World, February 23, 2001) EQUALNET: CCC GlobalCom To Acquire Selected Assets -------------------------------------------------- CCC GlobalCom Corporation (OTCBB:CCGC) said it has executed an Asset Purchase Agreement, to acquire selected assets of Equalnet Communications Corp. (OTCBB:ENET). Equalnet is in a Chapter 11 Bankruptcy proceeding and the completion of CCC GlobalCom's purchase of the Equalnet assets is subject to approval of the bankruptcy court. The assets to be acquired include: a customer base of approximately 30,000 long distance customers, employees and telecommunication hardware switching equipment and networks. The operations of Equalnet will be integrated into CCC GlobalCom's existing organization. According to Mr. Z.A. Hakim, chairman and CEO of CCC GlobalCom Corporation, "This asset purchase is a significant stride in the corporation's merger and acquisition strategic plan. The plan focuses on building an expedient revenue model through the acquisition of domestic and international customers including the deployment of state of the art telecommunication equipment. The plan objective is to implement CCC GlobalCom's own Virtual Private Telecommunications Network first in the Western Hemisphere and globally thereafter. This acquisition, combined with the two previous acquisitions since going public last June, provides a fully integrated facilities-based, competitive local exchange service provider. The acquisition specifically will add approximately 30,000 long distance customers giving CCC GlobalCom a customer base in all 50 States. In addition, the acquisition includes the purchase of two Class four switches and two enhanced (debit card) platforms from d-Tel Networks, L.L.C. to add to the CCC GlobalCom network. The equipment will change the current operations from a "Switchless Reseller" to a facilities-based service provider. Equalnet is currently generating approximately $1,400,000 in monthly revenue. CCC GlobalCom will immediately market to the Equalnet customers a bundle of communication services (local, long distance, etc.) and provide them with one point of contact for all their communication needs. In achieving this objective, operating margins are expected to be increased." CCC GlobalCom Corporation is a telecommunications company headquartered in Houston. The corporation is an integrated communications provider offering a full range of communications services to commercial and residential customers, while providing for a single point of contact through bundled billing services. The corporation provides its' services as a Competitive Local Exchange Carrier (CLEC). The corporation provides local, long distance, high speed data, Internet, paging, cellular and other enhanced communications services in the Southwest Region of the United States and plans to offer similar services to more than thirty (30) U.S. markets over the next 12 months. In addition, the corporation is finalizing certain agreements for telecommunications services in Latin America and Indonesia. The corporation is actively engaged in discussions, negotiations and has executed Letters of Intent to acquire existing telecommunication service providers, customer bases and major telecommunication switching equipment to be deployed worldwide. FIRST ALLIANCE: Court Disallows Borrowers' Class Proofs of Claim ---------------------------------------------------------------- In a ruling regarding multi-million dollar claims against the estate of Irvine, Calif.-based First Alliance Mortgage Company, U.S. Bankruptcy Court Judge Lynne Riddle held that class-action proofs of claim filed on behalf of certain borrowers would be disallowed, according to Irell & Menella LLP. Judge Riddle based her decision on the failure of the class-action claimants to satisfy the standards applicable to class certification as well as the unfairness to those borrowers who had filed timely proofs of claim. The ruling eliminates millions of dollars in claims from First Alliance's bankruptcy estate. (ABI World, February 23, 2001) FIRST DATA: Plans to Sell $525MM of New Notes to Refinance Debt --------------------------------------------------------------- First Data Corp., one of the largest U.S. credit card processors, disclosed its plans to publicly sell $525 million of its seven- year senior convertible notes, mainly to refinance short-term debt, according to CollectionIndustry.com. The Atlanta-based company said that it will use sale proceeds to repay outstanding commercial paper and for general corporate purposes. It said its debt load will not change, and the sale will slightly increase its per-share earnings in 2001. (ABI World, February 23, 2001) FRUIT OF THE LOOM: Seeks Court's Nod To Sell Equipment To Gibbs --------------------------------------------------------------- Winfield Cotton Mill Inc., a subsidiary of Fruit of the Loom, Ltd., is a leading international, vertically integrated, basic apparel manufacturer operating in over sixty countries worldwide. Winfield emphasizes branded products for consumers ranging from children to senior citizens. The subsidiary is owner and former operator of a yarn-manufacturing mill located in Winfield, Alabama. In October of 2000, the Winfield plant ceased operations in order to improve the rationalization of Fruit of the Loom's yarn manufacturing capabilities. Since Winfield no longer requires use of its yarn-manufacturing equipment, a sale would maximize value and benefit the creditors and the estates. Winfield Cotton Mill is currently seeking a purchaser for the plant. Therefore, Winfield must conclude the sale, dismantling and removal of the equipment so as to effectuate a sale of the plant. Due to these time restraints, the current market for used yarn equipment and the large quantity of equipment being liquidated, Winfield solicited bids from equipment brokers that specialize in the sale of used textile manufacturing equipment. By letter, Winfield Cotton Mill solicited offers from four prospective purchasers. Winfield received three legitimate offers and one that was not seriously considered. Gibbs International offered $795,000 for the equipment and committed to an expeditious removal schedule, which ensures that Winfield will not encounter occupancy problems in connection with the sale of the plant. International Textile Machinery offered $900,000 to purchase the specified equipment, plus other items Winfield did not intend to sell. The offer was conditioned on obtaining nine months to remove and liquidate the equipment. Atkins Machinery Inc., offered $708,000 for the equipment. Therefore, Winfield determined that Gibbs' offer was the best. The $795,000 is payable in cash, check or wire transfer. Gibbs will pay Winfield a good faith deposit of $95,000, which will be credited against the purchase price at the closing of the sale. Gibbs will also provide Winfield with a letter of credit to guarantee payment of the balance. Upon Court approval, Gibbs may request a $25,000 breakup fee. Ms. Stickles told the Judge that the equipment sale is a reasonable business decision and is in the best interests of the estate and creditors. She also requested that the sale be free and clear of liens, claims and encumbrances and that it be exempt from tax of any sort. (Fruit of the Loom Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) GREAT BASIN: Agrees To Sell Assets To Volvo Truck For $40 Million ----------------------------------------------------------------- Great Basin Trucks Inc., which filed Chapter 11 in the U.S. Bankruptcy Court in Utah listing liabilities of about $59 million, has now reached an agreement to sell nearly all of its assets to Volvo Trucks North America. The $40 million deal must be approved by the U.S. Bankruptcy Court. (ABI World, February 23, 2001) HARNISCHFEGER: Beloit Seeks To Reject Proctor & Gamble Agreement ---------------------------------------------------------------- The Proctor & Gamble Paper Products Company filed an adversary proceeding (Case No. 00-02065) against Beloit Corporation seeking a declaratory judgment in P&G Pape r's favor, recovery for $4.5 million on various common law theories, and an order that P&G Paper's claim be allowed as an administrative expense priority claim. Defendant Beloit Corporation moved the Court to dismiss P&G's complaint pursuant to Fed.R.Civ.P.12(b)(6). Beloit asserted that, once the claims are dismissed, the administrative claim that P&G Paper has asserted against Beloit should correspondingly be disallowed and expunged for all purposes pursuant to 11 U.S.C. section 502(b)(1). P&G Paper makes 5 counts in its complaint: -- Count I seeks a declaratory ruling that the Agreement is a lease arrangement and not a financing transaction; -- Count II alleges that Beloit was unjustly enriched by its sale of the Non-exclusive Equipment; -- Count III alleges that Beloit converted the Non-exclusive Equipment to its own use by selling it; -- Count IV seeks to hold Beloit liable on a claim of money had and received; -- Count V alleges that Beloit breached the Agreement by selling the Non-exlusive Equipment. Beloit debunks P&G Paper's charges. With respect to Count I, Beloit argued that the Agreement is a financing arrangement that created a security interest in favor of P&G Paper as opposed to a true lease because of the inclusion of the language that Beloit "shall purchase the Non-exclusive Equipment" and the "purchase price shall be the Fair Market Value of the Non-exclusive Equipment as at the expiry of the term of the Agreement." Beloit asserted that Illinois law, the governing law of the Agreement, requires that the Agreement be deemed a financing transaction and not a lease. The Debtors cited Uniform Commercial Code Section 1-207(37), codified in Illinois at 810 ILCA 5/1-201(37), which provides that: "Whether a transaction creates a lease or security interest is determined by the facts of each case; however, a transaction creates a security interest if the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee, and . . . the lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods, . . . In this regard, Beloit contended that the Agreement unambiguously states that Beloit was bound to become the owner of the Non- exclusive Equipment either upon default or after the ten-year term. Count II, Beloit contended, must fail as a matter of law because the Non-exclusive Equipment was Beloit's property subject to P&G Paper's security interest. Because P&G Paper failed to perfect its security interest, Beloit told Judge Walrath, it is now unenforceable puruant to the strong arm provision of 11 U.S.C. section 544 and as such, it would not violate the principles of equity for Beloit to retain the benefits of the sale. To refute Count III, Beloit again asserted that the Equipment was Beloit's property. Thus, the sale of it was not, as a matter of law, a conversion. With respect to Count IV, Beloit again asserted that the Equipment was Beloit's property and the money, in equity and good conscience, belongs to Beloit. Count V, Beloit said, must fail, also because the Non-exclusive Equipment was Beloit's property subject to P&G Paper's security interest. The provisions of the Agreement that P&G Paper asserts Beloit breached are not material, Beloit contended, because the Agreement was not a true lease. Accordingly, Beloit requested that the Court estimate P&G Paper's administrative claim at zero for all purposes in the case, including for establishment of a reserve and distribution. Beloit believes its request is reasonable because P&G Paper's administrative claim are contrary to applicable Illinois law and in any event must be disallowed under 11 U.S.C. section 502(d). (Harnischfeger Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) HEILIG-MEYERS: Fitch Slashes Receivable Securitization Ratings -------------------------------------------------------------- Fitch downgraded ratings on the asset-backed certificates issued by Heilig-Meyers Master Trust as follows: -- Series 1998-1 6.125% class A asset-backed certificates to `BB' from `AAA'; -- Series 1998-1 6.35% class B asset-backed certificates to `CCC' from `A'; -- Series 1998-2 floating-rate class A asset-backed certificates to `BB' from `AAA'; -- Series 1998-2 floating-rate class B asset-backed certificates to `CCC' from `AA-`. All securities remain on Rating Watch Negative. The ratings indicate that full repayment of the senior classes is now speculative in Fitch's view and that the subordinate bonds face a real possibility of default. The downgrade is in response to severe deterioration in collateral performance since Heilig-Meyers' bankruptcy filing in August and the subsequent servicing transfer from Heilig- Meyers to OSI Portfolio Services, Inc. (OSI) in October. In addition, Fitch remains concerned with the quality and timeliness of information available through First Union as trustee and OSI as successor servicer. In particular, Fitch has not received a monthly servicing statement since August. However, delinquency data made available for the first time this month confirmed Fitch's belief that the servicing transfer and closing of a large portion of Heilig-Meyers' store base has had a dramatic effect on portfolio credit quality and trust cash flows. Fitch believes the uniqueness of Heilig-Meyers decentralized servicing platform and the lack of a coherent backup plan prior to Heilig-Meyers' unexpected resignation as servicer exacerbated this deterioration. Fitch will continue to monitor the ratings and take additional actions if warranted. The ratings were originally placed on Rating Watch Negative on Aug. 18, 2000 following Heilig-Meyers Co. filing for Chapter 11 bankruptcy protection. The securities are backed by a pool of finance contracts made through subsidiary MacSaver Finance for purchases at Heilig-Meyers furniture stores. HOMEPLACE: DJM Asset Management to Dispose of 38 Store Leases ------------------------------------------------------------- DJM Asset Management, LLC, has been retained as real estate advisor to HomePlace during its Chapter 11 bankruptcy reorganization. DJM will market 38 retail leases in 17 states. "The locations that we are marketing include properties of between 21,150 s.f. to 133,500 s.f. in established strip-centers, malls and freestanding buildings," said Andy Graiser, Principal of DJM. "The leases available include properties in Arizona, Colorado, Georgia, Illinois, Indian, Maryland, Minnesota, North Carolina, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee and Texas. Bids are due on or before March 30 and we welcome all inquiries." HomePlace is a linens, housewares and home decor retailer with 122 stores in 27 states. It has been operating under bankruptcy protection since January. To obtain information on specific HomePlace locations contact Jim Avallone or Andy Graiser at 631-752-1100. Store photos, demographics, store plans and site can plans can be seen on DJM's web site at www.djmasset.com. Based in Melville, New York, DJM Asset Management, LLC, a Gordon Brothers Group company, assists retailers nationwide with the disposition of unwanted locations. DJM, whose clients have included Roberds, Nobody Beats the Wiz, Hechinger's, Laura Ashley, Charming Shoppes, Loehmann's, Elder Beerman, Jumbo Sports and Pergament, has been involved in the disposition and restructuring of over 45,000,000 s/f of retail space and over 4,500 properties during the past four years. ICG COMMUNICATIONS: Moves to Hire Arthur Andersen as Consultants ---------------------------------------------------------------- A significant restructuring of ICG Communications, Inc.'s operations is necessary to restore its profitability and emerge from these chapter 11 cases as a healthy and viable business. To reach that end, the Debtors are eyeing certain projects and tasks designed to make the Debtors' operations more efficient and cost- effective. The Debtors believe that their ability to develop and implement those improvements will be greatly enhanced through consulting services available from Arthur Andersen LLP. David Kurtz, Esq., at Skadden, Arps, Slate, Meager & Flom, told Judge Walsh that ICG wants to employ Arthur Andersen as an independent consultant. ICG has determined that Arthur Andersen specializes in working with companies to help identify areas where operational improvements can be made and can help ICG implement the operational improvements it needs in three key areas of their business: (1) billing, (2) the monitoring of network performance, and (3) fulfillment of customer services. Specifically, Arthur Andersen will: (i) evaluate the Debtors' billing, customer fulfillment and network monitoring processes; (ii) provide detailed evaluative data and improvement recommendations; (iii) develop and define policies and procedures to implement improvements; and (iv) assist in actually implementing improvements. The objectives for this project are: (a) Evaluation of the "as is" fulfillment, assurance and billing processes for four selected on-net and hybrid products, being (1) PRI, (2) Hybrid PRI, (3) PLRAS, and (4) IRAS using cost, quality and time as performance metrics. Roughly 50% of Andersen's efforts will focus on the fulfillment process, 30% on assurance, and 20% on billing; (b) Documentation of the performance and first-pass yield for each of the four products using data supplied by ICG; (c) Provision to ICG of "directionally correct" process metrics based on Andersen's industry experience. Illustrative examples include order processing times, FTEs required to install an order, number of manual handoffs, and cost per order; (d) Definition of consistent policies and procedures for the implementation of the in-scope process improvements (e.g., standardize procedures, performance measurements, etc.); (e) Utilization of Andersen's proprietary change enablement tools to identify and overcome potential employee barriers to process implementation; (f) Implementation of select process improvements. The agreement with Arthur Andersen also allows the Debtors to utilize certain of Arthur Andersen's proprietary change enablement tools. The individuals assigned to this project are: Ron Bose Engagement partner Raj Narula Quality assurance partner Laddie Suk Subject matter expert Chris Rodriguez Engagement manager Ron Haas Project lead for billing Jennifer Gold Day-to-day project manager Dan Avery Evaluation of fulfillment processes Janette Bell Process area team lead Brian Wilson Lead re-engineering teams Arthur Andersen will be paid an advance of $250,000, and estimated total compensation for the project of $2,000,000. Andersen's professional fees will be based on time actually spent and materials actually provided at an approximate run rate of $125,000 per week. Approximately twelve Andersen personnel will be engaged on the project on a fulltime or close to fulltime basis. The agreement contains a "risk allocation" limiting Andersen's total liability under the agreement to the fees it receives for this engagement. The Debtor is to indemnify Andersen, its affiliates, and their partners, principals and personnel against all costs, fees, expenses, damages and liabilities (including defense costs) associated with any third-party claim relating to or arising from the services under this engagement, the Debtors' use of delivered properties, or the Agreement. This includes any damage or expenses relating to bodily injury or death of any person, or damage to real or personal property, and to the extent caused by the negligent or willful acts or omissions of Andersen's personnel or agents in performing services under this engagement. The Debtors told Judge Walsh that they believe the estates will benefit in the form of increased efficiency and reduced costs through this contract. (ICG Communications Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) IMPERIAL SUGAR: Wells Fargo Asks for Protection of Set-Off Right ---------------------------------------------------------------- Jeffrey C. Wisler, Esq., of Connoly Bove Lodge & Hutz LLP, representing Wells Fargo Bank (Texas), N.A., asked Judge Robinson to require Imperial Sugar Company to provide Wells Fargo Bank with adequate protection of its right of setoff. The Debtors have deposit accounts containing approximately $1,500,000 in funds at Wells Fargo, and have requested the Bank continue honoring checks postpetition for prepetition obligations until the funds in these accounts have been exhausted. Wells Fargo has a right of setoff against the funds contained in these accounts. However, the Bank has agreed to the Debtors' request. Wells Fargo is a party to a certain Interest Swap Agreement with Imperial Holly, dated December 23, 1997, which provides a mechanism for Wells Fargo and Imperial Holly to reduce their exposure to interest rate fluctuations and reduce the cost of actual or expected borrowing though Net Swap Settlement Payments, which are calculated according to a formula provided for in the Swap Agreement. The funds in the deposit accounts at Wells Fargo give rise to a right of setoff to secure the Debtors' obligations to Wells Fargo under the Swap Agreement, and any other obligation existing on the Petition Date. Mr. Wisler believes that Wells Fargo is entitled to adequate protection of this setoff right, but in his Motion only suggested that the Court award such adequate protection as the Court deems appropriate. (Imperial Sugar Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) INTEGRATED HEALTH: Rejects 7 Rotech Real Property Leases -------------------------------------------------------- Integrated Health Services, Inc. sought and obtained the Court's authority for the rejection of seven Rotech leases for nonresidential real property because these leases: (a) are of no value to the Debtors or constitute a burden upon the Debtors' estates; and (b) are unnecessary for the Debtors' continued operations. Two of these relate to currently vacant parcels of Leased Property for which the Debtors would like to reject the appurtenant lease. The other five relate to parcels of Leased Property which are anticipated to be vacated shortly and as to which the Debtors would also like to reject the appurtenant leases. The Debtors presented to the Court a brief description of each of the Unwanted Leases and the reasons for the rejection: (1) Name: Rotech Managed Care Location: Neptune Beach, FL Lease Expires: 9/30/02 Rent: $1302.51 Reason for rejection: No longer needed; will be vacated shortly (2) Name: Select Home Health Care, Inc. d/b/a Kelly's Home Health Location: Young Harris, GA Lease Expires: 11/30/01 Rent: $1,500.00 Reason for rejection: Vacant and not needed (3) Name: Premier Medical, Inc. d/b/a Hometown Oxygen Location: Silver City, NM Lease Expires: 1/31/02 Rent: $1.000.00 Reason for rejection: No longer needed; will be vacated shortly (4) Name: Responsive Home Health Care, Inc. d/b/a Hooks Home Health Care Location: Fairfield, OH Lease Expires: 6/30/02 Rent: $3,103.35 Reason for rejection: Vacant and not needed (5) Name: CP02, Inc. Location: Hanover, PA Lease Expires: 1/1/02 Rent: $1,300.00 Reason for rejection: No longer needed; will be vacated shortly (6) Name: Home Medical Systems, Inc. d/b/a Adaptive Medical Equipment Location: Charleston, SC Lease Expires: 3/31/02 Rent: $1,071.00 Reason for rejection: No longer needed; will be vacated shortly (7) Name: Home Medical Systems, Inc. d/b/a Sunshine Medical Location: Mt. Pleasant Lease Expires: 10/31/02 Rent: $2,300.00 Reason for rejection: No longer needed; will be vacated shortly Mr. James A. McNabb, Jr., Corporate Counsel of Rotech, represent that the Debtors have thoroughly reviewed each of the 10 unwanted leases and have determined that the leases do not provide a benefit but in many cases impose an economic hardship upon IHS. Mr. McNaBB also believe that there is no reasonable likelihood that the Debtors could sublet or assign any of the leaseholds on advantageous terms. (Integrated Health Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) INTERNATIONAL MENU: Selling Operating Subsidiaries After Default ---------------------------------------------------------------- International Menu Solutions Corporation ("MENU") announced that it is initiating a process to sell its operating subsidiaries. As part of this process, MENU is in discussion with one of its major shareholders and lenders with respect to such a sale. In this regard, MENU has retained the services of professional advisors and is working closely with its principal lender. As indicated in its December 20, 2000 disclosure, MENU is and continues to be in default of certain covenants with its lenders. Notwithstanding recent progress in rationalizing and lowering the cost structure of its operations, MENU's future cash requirements exceed the availability of funds to the Company. MENU further announced that it has accepted on February 22, 2001 the resignations of Mr. Reginald Petersen and Ms. Lynda King as directors and officers of MENU effective February 13, 2001 and Mr. Len Shiffman as a director effective February 22, 2001. INVESTAMERICA: Looks for New Funding to Continue as Going Concern ----------------------------------------------------------------- InvestAmerica, Inc., through its subsidiary, Zed Data Systems Corp., provides public and private sector end users with data communication solutions across North America. These services primarily include system design and installation. At December 31, 2000, the company had negative working capital of $7,808,971. For the quarter ended December 31, 2000, the company incurred a net loss of $2,311,209 and is reliant on current and future stockholders' financial support to assist in meeting cash flow needs. Management has evaluated the company's alternatives to enable it to pay its liabilities as they become due and payable in the current year, reduce operating losses and obtain additional or new financing in order to advance its business plan. Alternatives being considered by management include, among others, obtaining financing from new lenders, obtaining vendor financing, and issuance of additional equity. The company believes these measures will provide liquidity for it to continue as a going concern throughout fiscal 2001, however, management can provide no assurance with regard thereto. These factors, among others, raise substantial doubt about the company's ability to continue as a going concern. Total revenues were $194,345 and $Nil for the quarters ended December 31, 2000 and 1999, respectively. Total revenue for the year ended September 30, 2000 was $1,293,690. InvestAmerica has not generated any significant revenues and has incurred significant net losses, including a net loss of $4,840,861 for the year ended September 30, 2000. As of December 31, 2000, its accumulated deficit was $7,156,628. The company expects to have continuing net losses and negative cash flows for the foreseeable future. The size of these net losses will depend, in part, on the commencement of and the rate of growth in its revenues. LEGEND AIRLINES: FAA Nixes Auction of Operating Certificate ----------------------------------------------------------- Executives of Legend Airlines Inc., which is in bankruptcy court proceedings, must surrender its operating certificate or face legal action, federal regulators say. Lawyers for the Dallas- based startup airline had planned to ask U.S. Bankruptcy Judge Robert McGuire Friday for permission to hold an auction for its certificate, according to the Associated Press. But the Federal Aviation Administration (FAA) has notified Legend that it cannot sell its operating certificate. Creditors of the airline had supported the idea, hoping to receive some money. Friday's hearing has since been canceled, T. Allan McArtor, Legend's chief executive and president, told The Dallas Morning News. Toby Gerber, Legend's bankruptcy lawyer, said the carrier is exploring other ways of disposing of the certificate but he declined to elaborate. The airline filed for chapter 11 protection on Dec. 2. (ABI World, February 23, 2001) LERNOUT & HAUSPIE: AllVoice Pursues Patent Infringement Lawsuit --------------------------------------------------------------- On February 12, 1999 AllVoice PLC sued Dragon, now L&H Holdings USA, Inc for infringement a patent for "Automated Proofreading Using Interface Linking Recognized Words To Their Audio Data While Text Is Being Changed", issued to AllVoice on August 25, 1998. AllVoice requested a preliminary injunction against further infringement, and after hearing the District Court issued a memorandum denying the preliminary injunction. AllVoice has appealed this denial. AllVoice again requested a preliminary injunction, alleging continuing infringement based upon Holdings' newly-released version 5 of its "Naturally Speaking" products. In December 2000 AllVoice moved to transfer the litigation before the Massachusetts District Court to the District Court in Delaware for purposes of consolidation with the pending bankruptcy proceedings filed by L&H Holdings' affiliates. This motion upon hearing was denied by the Massachusetts court on December 15, 2000. William D. Sullivan, Esq., of the firm of Elzufon Austin Reardon Tarlov & Mondell, PA, asked Judge Judith H. Wizmur to allow: (1) receipt of a Massachusetts District Court ruling on the fully- briefed and pending motion for a preliminary injunction regarding Holdings' alleged continuing patent infringement; (2) completion of the fully-briefed appeal of the denial of AllVoice's original motion for a preliminary injunction currently pending before the Federal Court; and (3) enforcement of any equitable remedies awarded by the District Court of Massachusetts and the Federal Court arising from the appeal. Mr. Sullivan seeks relief from the automatic stay in order to stop the continuing post-petition infringement of AllVoice's patent. He reasoned that under the law post-petition infringement claims are not stayed as they bear no relation to the bankruptcy case or to the purpose of a stay. (L&H/Dictaphone Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392- 0900) LETSBUYIT.COM: Says It Has Enough Cash to Reach Break-Even ---------------------------------------------------------- Internet retailer LetsBuyIt.com, which until recently was staring bankruptcy in the face, said it did not expect to call on additional funds as it reinvents its battered e-business model, according to Reuters. John Palmer, chief executive officer of the co-buying web site, told Reuters in an interview that a comprehensive revamp would help the company back into the black by the end of 2002 as it slashes costs and pulls out of unprofitable operations. "We're planning to break even in the fourth quarter of 2002," he said. Shareholders have seen the value of their investment fall from $3.18 per share at their July listing on Frankfurt's Neuer Markt to just 74 cents on Thursday afternoon. Even this level represents a welcome improvement from the level of 13 cents reached in late January, when the market had all but given up hope on LetsBuyIt as it battled for survival in an Amsterdam bankruptcy court. But with little time to go before the court deadline for a rescue, Palmer and his team received a fax from German investor Kim Schmitz, pledging the four million euros bailout. A debt moratorium was lifted as recently as Wednesday. (ABI World, February 23, 2001) LOEWEN GROUP: Selling Macer-Hall Funeral Home For $550,000 ---------------------------------------------------------- As part of The Loewen Group, Inc.'s Disposition Program, and in accordance with section 363 and 365 of the Bankruptcy Code, Loewen (Indiana), L.P. sought and obtained the Court's authority: (i) to sell the funeral home business and related assets at Macer-Hall Funeral Home (2664) in New Castle, Indiana 47362-3315 to Samuel W. Hall, Inc. and Samuel W. Hall (collectively, the Initial Bidder) free of all liens, claims and encumberances, at a purchase price of $ 550,000 pursuant to the Asset Purchase Agreement dated December 22, 2000, or to the Purchaser that the Debtors determine has submitted the highest and best offer, free of all liens, claims and encumberances. Any Qualified competing bid must exceed $577,500 i.e. 5% above the Purchase Price of the Initial Bidder. Any entity that desires to submit a competing bid for the Sale Locations may do so in accordance with the Bidding Procedures approved by the Disposition Order. The Selling Debtor does not anticipate assuming and assigning any executory contracts or unexpired leases in connection with the Transaction. The Sale Location is subject to a right of first refusal granted by Loewen Group International to Samuel W. Hall (the ROFR Holder). The ROFR Holder, individually and combined with a corporation of which he is the sole shareholder, is the Initial Bidder and will be entitled to participate in the Auction. The Debtors believe they have performed their obligations to the ROFR Holders and may proceed with the saleof the ROFR Location. Accordingly, the Debtors requested that in approving the motion, the Court's order provide that the Debtors have complied with their obligations under the ROFR and are authorized to sell the Sale Locations to the Purchaser, and the ROFR Holders have no further rights or interests in the ROFR Location or the related business or assets in respect of the ROFR. In accordance with the Net Asset Sale Proceeds Procedures, the Debtors will use the proceeds generated to repay any outstanding balances under the Replacement DIP Facility and deposit the net proceeds into an account maintained by LGII at First Union National Bank for investment, pending ultimate distribution on court order. Neweol would sell and the Initial Bidder would purchase certain accounts receivable related to the Sale Locations, pursuant to a purchase agreement between Neweol and the Initial Bidder. The amount of the Neweol Allocation will be determined immediately prior to closing. The Neweol Allocation will not be utilized or deposited in the manner contemplated by the New Asset Sale Proceeds Procedures. (Loewen Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) LUCENT TECHNOLOGIES: Secures New $6.5 Billion Credit Facilities --------------------------------------------------------------- Lucent Technologies (NYSE: LU) announced that it has closed $6.5 billion in credit facilities. The company successfully obtained $4.5 billion of new 364-day credit facilities which were arranged by J. P. Morgan and Salomon Smith Barney. A portion of these new credit facilities replaces a $2 billion credit facility that expired February 22; the remaining $2.5 billion will be assumed by Agere Systems at its initial public offering. In addition to the new $4.5 billion credit facilities, Lucent amended an existing $2 billion credit facility due in 2003, for a total of $6.5 billion in credit facilities. "A critical element of our seven-point restructuring plan is now in place with these new agreements," said Lucent's Chief Financial Officer Deborah Hopkins. "We are now moving ahead totally focused on executing the turnaround of our business." Lucent Technologies, headquartered in Murray Hill, N.J., USA, designs and delivers the systems, software, silicon and services for next-generation communications networks for service providers and enterprises. Backed by the research and development of Bell Labs, Lucent focuses on high-growth areas such as broadband and mobile Internet infrastructure; communications software; communications semiconductors and optoelectronics; Web-based enterprise solutions that link private and public networks; and professional network design and consulting services. For more information on Lucent Technologies, visit its Web site at http://www.lucent.com. NORD RESOURCES: Files Chapter 11 Petition in Albuquerque -------------------------------------------------------- Nord Resources Corporation (OTC Bulletin Board: NRDS) filed a reorganization case under Chapter 11 of the U.S. Bankruptcy Code for the purpose of enabling it to develop its Johnson Camp Mine near Benson, AZ. The reorganization was filed in the Bankruptcy Court District of New Mexico, Case No. 11-01-11160 MA, in Albuquerque. OMEGA HEALTHCARE: S&P Rates Preferred Stock in Default ------------------------------------------------------ Standard & Poor's lowered its rating on the cumulative preferred stock of Omega Healthcare Investors Inc. (Omega) to single-'D' from single-'C'. At the same time, the company's corporate credit rating was affirmed at single-'B', and the rating on its senior unsecured debt was affirmed at triple-'C'-plus. The outlook remains negative. On Feb. 2, 2001, Standard & Poor's had lowered the corporate credit rating on Omega, as well as its ratings on the existing senior unsecured debt and preferred stock. At that time, Standard & Poor's stated that the rating on the company's two outstanding publicly rated preferred stock issues would be lowered to single- 'D' once the payment date (Feb. 15) had passed, as Standard & Poor's considers a deferred preferred dividend payment as tantamount to a default on the issue. Outlook: Negative While Omega's dividend suspension will result in an increase in retained cash flow, the company's overall financial flexibility remains weak. While the company has no material debt maturities remaining in 2001, the company faces relatively sizable maturities in 2002. In addition, Standard & Poor's expects debt coverage measures to remain very weak, given the vulnerable financial profile of the majority of Omega's health care operators, Standard & Poor's said. OUTSTANDING RATINGS LOWERED Rating Omega Healthcare Investors Inc. To From $57.7 million 9.25% cumulative preferred stock series A D C 50 million 8.625% cumulative preferred stock series B D C OUTSTANDING RATINGS AFFIRMED Omega Healthcare Investors Inc. Rating Corporate Credit Rating B $100 million 6.95% senior unsecured notes due 2007 CCC+ $125 million 6.95% senior unsecured notes due 2002 CCC+ OWENS CORNING: Wants More Time To Decide On New York Lease ---------------------------------------------------------- By earlier Order, Judge Walrath extended Owens Corning's time period during which they must move to assume or reject Integrex's unexpired leases of nonresidential real estate until June 4, 2001, except with respect to the New York lease for which the Debtors' time period was extended until March 5, 2001. The Debtors asked that Judge Walrath enter an order further extending the time during which they may assume or reject the Manley lease of commercial real property at 41 East 11th Street, New York, New York. The Debtors argued that the extension given to the Debtors with respect to the Manley lease was different from the extension given to the Debtors with respect to their other nonresidential real estate leases because of a "last minute objection" by John Manley, the landlord. Manley argued that the reason he objected to an extension was because he was dealing with a single tenant that has 20% of the building. Manley argued in court that, while the current strong market for commercial rentals in New York would let him find a replacement tenant without difficulty, the extension proposed by the Debtors put him in the position of having to seek bankruptcy protection if the market turns down in the next six months, so that the balance of the equities favored putting a short time period on the Debtors' ability to accept or reject this lease. The Court stated in court that a 90-day extension would be granted, and at the end of that time the Court would "consider whether another tenant has been found or whether, in fact, the New York market has gone soft or if there is still some reason to continue the marketing effort." The Debtors argued in support of a further extension that in the time period since this hearing the Debtors, with the assistance of a broker, have made significant efforts to market the Manley lease. Although the Debtors have not yet reached agreement regarding an assignment of the lease, they have received over 80 inquiries about the subject premises. Thirteen prospective tenants have inspected the premises and several have inspected the premises more than once. Given this level of activity, which is ongoing, the Debtors "firmly" believe that they will locate an assignee for the space in issue. Second, the concerns raised at the hearing about the condition of the New York commercial leasing market have been dispelled by events. In fact, the New York commercial leasing market has solidified and continues to improve. When these circumstances are considered, together with the significant value of the New York lease, a further three- month extension of the Debtors' time to assume or reject the Manley lease is, the Debtors say, warranted by the fair market rental value of this lease at $30-35 per square foot. Based on this figure, and taking into account the fact that the Manley lease does not expire until 2008, and using a fair market value of $32.50 per square foot, the mid-way point in he range between $30 and $35 per square foot, the Manley lease has a value of approximately $4.0 million, before discounting for present value. This lease is therefore a valuable asset of the Debtors' estates because it contains favorable terms which are significantly below market rate. The Debtors are current, and will remain current, on all of their postpetition rent obligations under the Manley lease. Therefore, the Debtors argued that a further extension does not prejudice Manley. By contrast, if no extension is had, the Debtors will be compelled prematurely to assume substantial, long-term liabilities under the Manley lease, potentially creating administrative expense claims, or forfeit the significant benefit associated with the Manley lease, to the detriment of creditors and parties in interest in these cases. The Debtors therefore seek a further extension of three months during which they may assume, assume and assign, or reject the Manley lease, without prejudice to their seeking a further extension if circumstances warrant. (Owens Corning Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) PEAPOD.COM: Foresees Cash Shortfall By Year's End ------------------------------------------------- With record sales undermined by staggering losses, Internet grocer Peapod.com has issued a warning that it would run out of cash by the end of the year if it does not secure additional financing, according to EcommerceTimes.com. The e-tailer posted record fourth-quarter sales of $23.7 million in its earnings report but also announced that it was hit with its biggest quarterly loss to date. The Chicago-based company said that its net loss for the quarter was $23.8 million, more than double its net loss of $9.1 million for the same period in 1999. Despite the steep losses, Peapod - which was pulled back from the brink of bankruptcy last year by an infusion of capital from European food giant Royal Ahold - reported that its fourth quarter sales increased 11 percent over the same period the previous year, and said the growth was significant because the company closed four markets in September. As of Dec. 31, Peapod said that it had about $14.7 million and a $20 million credit from Royal Ahold available for funding its operations. Peapod said that it expects it will need about $50 million to keep its business up and running for the remainder of 2001, adding that it is currently in discussions with Royal Ahold to receive additional financing. (ABI World, February 23, 2001) PETMED EXPRESS: Plans Asset Sales to Obtain More Funds ------------------------------------------------------ PetMed Express, Inc. and subsidiary is a direct marketer and wholesaler of household pet medications and other pet products and is located in the Ft. Lauderdale, Florida area. The company takes orders by telephone, internet and mail. Almost all of its sales are to residents of the United States. For the three and nine months ended December 31, 2000, the company has incurred significant operating losses and an operating cash flow deficiency. The company had a net loss of $1,700,748 for the nine months ended December 31, 2000 and negative working capital of $2,278,270 at December 31, 2000. In addition, the company was in violation of certain of its debt covenants at December 31, 2000. As a result, the company is dependent upon additional capital in order to fund future operations. Management is also seeking to raise additional capital through the sale and possible leaseback its land and building. No assurances can be given that the company will be successful in obtaining additional capital, or that such capital will be available on terms acceptable to the company. Further, there can be no assurances that even if such additional capital is obtained, that the company will achieve profitability or positive cash flow. These matters raise substantial doubt about the entity's ability to continue as a going concern. Sales decreased by $1,436,577, or 44.4%, for the three months ended December 31, 2000 from the three months ended December 31, 1999. Net loss was $364,202 for the three months ended December 31, 2000 as compared to net loss of $326,293 for the three months ended December 31, 1999. Sales decreased by $4,497,594 or 38.8%, for the nine months ended December 31, 2000 from the nine months ended December 31, 1999. Net loss was $1,700,748 for the nine months ended December 31, 2000 as compared to a net loss of $472,563 for the nine months ended December 31, 1999. PILLOWTEX: Creditors' Committee Hires Akin Gump as Lead Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Pillowtex, Inc., sought and obtained permission from Judge Robinson in Wilmington to retain Akin, Gump, Strauss, Hauer & Feld of New York as its lead counsel. The Committee requested that the retention be made to apply retroactively to the commencement of the Chapter 11 case. The Committee told Judge Robinson it is necessary to retain the services of Akin Gump to give the Committee: (a) Advice with respect to the Committee's rights, duties, and powers; (b) Assistance and advice in its consultations with the Debtors; (c) Assistance in analysing the claims of Debtors' creditors and the Debtors' capital structure, and in negotiating with the holders of claims and equity interests; (d) Assistance in the investigation of conduct, financial condition, and operation of the Debtors; (e) Assistance in analysing and negotiating with the Debtors or any third party regarding the assumption and rejection of certain leases and executory contracts, asset dispositions, financing, and the terms of the Debtors' plan of reorganization; (f) Assistance and advice as to its communications to the general creditor body; (g) Representation at all hearings and other proceedings; (h) Assistance in the Committee's review and analysis of all applications, orders, statements of operations, and schedules filed in Court, and advice to the Committee as to their propriety; (i) Assistance in the preparation of pleadings and applications; and (j) Other legal services as may be necessary. Akin Gump will request compensation based on its customary hourly rates, subject to periodic adjustments to reflect economic and other conditions. The names, positions and standard hourly rates for Akin Gump professionals retained by the Committee are: Fred S. Hodara Partner $550 Charles R. Gibbs Partner $500 Kirk Kennedy Associate $295 Philip C. Dublin Associate $275 In his affidavit, Fred S. Hodara, a member of the firm, assured the Court that Akin Gump is a "disinterested person" and does not hold nor represent any interest adverse to the Committee with respect to matters on which the firm is to be engaged. Akin Gump has represented Pillowtex Corporation in connection with two corporate matters. These matters were handled by Akin Gump's Brussels office and were closed in 1996. The representation was in connection with the defense of a preference action in the Best Products bankruptcy proceeding and was concluded in July 1998. The firm also represented Apollo Investment Fund in the purchase of preferred stock of Pillowtex Corporation. Apollo has since released Akin Gump from any role in connection with its interest in the Debtors. Although Akin Gump may have represented, currently represents, and may in the future represent other entities who may be creditors of the Debtors in matters wholly unrelated to these Chapter 11 cases, Mr. Hodara assured the Court that if the firm discovers any such information, Akin Gump will promptly disclose such information to the Court. The Committee also requested that the retention of Akin Gump be made to apply retroactively to November 29, 2000 because since that date, the firm has been undertaking extensive work on behalf of the Committee. The firm assisted the Committee in its review and analysis of the Debtors' first day motions, DIP financing documents, and motions for other relief. Additionally, the firm participated in meetings and discussions with the Debtors regarding post-petition financing. (Pillowtex Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) PLAYDIUM ENTERTAINMENT: Applies for CCAA Protection in Ontario -------------------------------------------------------------- Playdium Entertainment Corporation (PEC) filed an application under the Companies' Creditors Arrangement Act (CCAA) to restructure its debt obligations. PEC will continue to operate normally at its four major locations in Toronto, Mississauga, Edmonton and Burnaby, and at its 50 game centres across Canada. PEC is currently in direct discussions with its lenders. An independent committee of the Board of Directors is working with PEC senior management on the restructuring process. "The proposal aims to restructure debt largely incurred by PEC during the development phase of the company. Ongoing operations continue to generate significant cash flow," said Jon Hussman, President and CEO of PEC. Consistent with initial CCAA applications, the Ontario Superior Court of Justice has granted PEC protection from creditors during this restructuring period. PricewaterhouseCoopers Inc. is the court-appointed monitor in the CCAA proceedings. Playdium Entertainment Corporation is the leader in the introduction of location-based entertainment centres in Canada andis dedicated to developing and operating entertainment centres worldwide. Playdium operates Playdium Mississauga, Playdium Burnaby, Playdium Toronto and Playdium Edmonton. In addition, PEC has equipped and operates 50 game centres across Canada. PRECEPT BUSINESS: Files for Chapter 11 Protection in N.D. Texas --------------------------------------------------------------- Precept Business Services, Inc. (OTC Bulletin Board: PBSI) and all of its wholly owned subsidiaries filed voluntary petitions with the United States Bankruptcy Court for the Northern District of Texas to reorganize their capital structure under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq. The filing was made after a creditor of one of the Company's wholly owned subsidiaries, Precept Business Products, Inc., filed an involuntary petition on January 26, 2001 against PBP in the Bankruptcy Court under Chapter 7 of the Bankruptcy Code. The Company intends to begin the preparation of a plan of reorganization immediately and to file the plan as soon as practicable. During the reorganization, the Company will conduct business as usual. It plans to pay all obligations incurred during the Chapter 11 period out of current operations. The Company does not plan any changes to employee benefit programs outside the normal course of business. The Company has retained Kane, Russell, Coleman & Logan, P.C. as its Chapter 11 counsel. Precept Business Services, Inc. (www.preceptinc.com) is an independent distributor offering single-source solutions for automated document management services, inventory control and order processing via the internet, as well as many other E- commerce services, and provides custom and stock business products to companies throughout the United States. The Company also operates various corporate transportation services companies, focusing on chauffeured town car and limousine services. The Company is organized in two divisions: Business Products and Transportation Services. The Company was founded in 1988 as a regional products distributor in Dallas, Texas. This release includes forward-looking statements. These RITE AID: AdvancePCS Sale Proceeds Approach $300 Million Mark ------------------------------------------------------------- Rite Aid (Camp Hill, PA) plans to sell nearly all of its 23.3% stake in AdvancePCS, the pharmacy benefits management company formed when Advance Paradigm purchased PCS Health Systems from Rite Aid in October 2000. Merrill Lynch & Co. and Banc of America Securities LLC will serve as lead managers for the secondary public offering. If all 6.3 million shares covered in the registration are sold, Analysts at F&D Reports relate, Rite Aid will receive proceeds of more than $300 million, based on the near-$50 stock price, and its stake in the PBM will be reduced to 2.1%. So far, F&D says, it seems like Rite Aid picked a good time to sell, as AdvancePCS' share price set a 52-week high on Friday. SAFETY-KLEEN: Enters Into Marketing Agreement With SystemOne ------------------------------------------------------------ As part of their overall plan to restructure their operations, Safety-Kleen Corp. have focused on, among other things, identifying new business opportunities with the potential for high rates of return. Toward that end, the Debtors asked that Judge Walsh approve a marketing and distribution agreement between Safety-Kleen Systems, Inc., and SystemOne Technologies, Inc., under which Systems will purchase, market, and distribute to Systems' current and potential customers parts washing equipment manufactured by SystemOne. The Debtors told Judge Walsh that the marketing agreement presents Systems with a unique opportunity to bolster what Systems describes as its position as a leader in the parts cleaning market. With the marketing agreement in place, Systems will have access to significant numbers of new customer opportunities. Further, entry into the marketing agreement will improve Systems' ability to retain its substantial existing share of the parts cleaning market. Finally, performance under the marketing agreement will afford Systems the opportunity to realize significant returns on its capital investments. In short, the Debtors' analysis shows that the marketing agreement will be extremely beneficial to the Debtors, their creditors, and their bankruptcy estates. The significant terms of the marketing agreement are: (a) Marketing, Distribution and Service Systems will be the exclusive marketer and distributor of, and service provider for, SystemOne's parts cleaning equipment within the United States, Canada, Mexico, and Puerto Rico. SystemOne will retain the right to sell, lease, rent and service the equipment directly, and through other agents and distributors, in its sole discretion, outside the territory. (b) Term The Marketing Agreement provides for an initial term of five years following the Effective Date, which is the date all conditions precedent to entry into the marketing agreement have been met. The Marketing Agreement will be automatically extended for two additional five-year terms unless: (i) not less than one hundred eighty days prior to the end of the Initial Term or during the then current Renewal Term, as the case may be either party gives written notice to the other of its intent to terminate the Marketing Agreement; (ii) the Marketing Agreement is otherwise terminated in accordance with its terms, or (iii) the parties fail to reach an agreement in writing as to Systems' minimum purchase commitments for each contract year during a Renewal Term, prior to 185 days before the date such Renewal Term would otherwise commence. (c) Early Termination In addition to the ability to terminate for "cause" under certain circumstances, Systems can terminate the marketing agreement for convenience, without cause, effective on the second anniversary of the Effective Date, by providing irrevocable written notice to SystemOne of such termination at any time prior to the 180th day before the second anniversary of the Effective Date, and SystemOne may terminate the marketing agreement at any time if it has been approved by the Bankruptcy Court. (d) Minimum Purchase Commitment During each Contract Year, Systems will purchase as a minimum commitment from SystemOne not less than the following number of Series 500 Equivalent Units: Contract Year Minimum Purchase Commitment ------------- --------------------------- 1 10,000 Series 500 Equivalent Units 2 10,000 Series 500 Equivalent Units 3 12,500 Series 500 Equivalent Units 4 15,000 Series 500 Equivalent Units 5 18,000 Series 500 Equivalent Units The Minimum Purchase Commitment for Contract Year 1 includes SystemOne's inventory of equipment, including Demo Units, as of the Effective Date. In addition, at SystemOne's option, exercisable within 30 days after the Effective Date, Systems may be required to purchase up to all the units of Equipment currently rented by SystemOne, in which case SystemOne will assign and delegate, and Systems will receive and assume, all benefits and obligations arising under the rental agreements related to such units. The purchase price would be at the book balance, less $500 per Series 500 Equivalent Unit. (e) Purchase Pricing The standard price payable for each unit of Equipment during Contract Year 1 is set forth in Schedule 1 to the Marketing Agreement. Beginning in Contract Year 2, the standard price for each unit will be adjusted annually, based upon the pricing adjustments set forth in Schedule 2 to the Marketing Agreement. (f) Royalty Payments Under the Marketing Agreement, Systems is required to make quarterly royalty payments in respect of each unit of equipment sold (other than rental units), in the amount of $7.00 per month per Series 500 Equivalent Unit, for the 36 months following the sale of such unit. (g) Assignments The Marketing Agreement may not be assigned, nor can the performance of any duties be delegated, by any party without the prior written consent of the other party, except: (i) to a direct or indirect parent or a direct or indirect wholly-owned subsidiary of a party or such parent, upon prior written notice to the other party, or (ii) to a successor to Systems' parts washer business as part of such successor's acquisition of all or substantially all of the assets of such business, whether by merger or other business combination, provided that (x) the assignee's or successor's financial strength is equal to or greater than that of the assignor and (y) the other party approves of the assignment, such approval not to be unreasonably withheld. (h) Warrants Under the marketing agreement, Systems will receive a five-year warrant to purchase 1,134,615 shares of SystemOne's common stock at an exercise price of $3.50 per share. The Debtors advised Judge Walsh that they believe entry into this agreement is in the ordinary course of business for Systems and no judicial review or approval is required; however, from an abundance of caution and because the market agreement by its terms is not effective until and unless the Court enters an Order approving it, and Systems' opportunity to expand its lines of business in the future is clearly important to the creditors of these estates, the Debtor brought this Motion. The Debtors cite four reasons why entry into this agreement should be approved as an exercise of the Debtors' sound business judgment: (1) Entry into the agreement will allow Systems to better preserve its existing share of the parts washer equipment market; (2) The agreement will afford Systems an opportunity to increase its market penetration by (i) converting current SystemsOne customers into Systems customers; and (ii) attracting new customers with SystemOne's state-of-the-art technology; (3) Approval of the agreement will permit Systems to provide new and improved bundled services to its existing non-parts washers customers; and (4) Implementation of the agreement will offer Systems the chance to participate in any increase in SystemOne's enterprise value through exercise of the warrant. By Order, Judge Walsh authorized the Debtors to enter into this agreement upon the terms and conditions stated above. (Safety- Kleen Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) SMITH CORONA: Court Approves First Amended Disclosure Statement --------------------------------------------------------------- Smith Corona Corp. received bankruptcy court approval of the disclosure statement for its first amended joint reorganization plan, as well as for the ballots and procedures for soliciting creditor votes to accept or reject the plan. Judge Mary F. Walrath of the U.S. Bankruptcy Court in Wilmington, Del., concluded that the disclosure statement contained "adequate information" as defined by the Bankruptcy Code and scheduled a plan confirmation hearing for March 16. Objections are due March 9. (ABI World, February 23, 2001) STAMPEDE WORLDWIDE: Specialized Solutions Picks-Up a Piece ---------------------------------------------------------- Stampede Worldwide, Inc. has incurred substantial operating losses since inception. Current liabilities exceed current assets by $2,255,629 at December 31, 2000. These factors, combined with the fact that the company has not generated positive cash flows from operating activities since inception, raise substantial doubt about its ability to continue as a going concern. On February 12, 2001, the company entered into a non-binding memorandum of understanding under which Specialized Solutions, Inc., a Florida corporation, will acquire controlling interest in i-Academy, Inc., a Florida corporation and a wholly-owned subsidiary of Stampede Worldwide, Inc., by means of a reverse merger and thereafter become a publicly traded company. The Company showed a slight increase in revenues for the three months ended December 31, 2000 in the amount of $3,801 or an increase of 0.6% over the same period for 1999. The net loss for the period was $716,494. SUNTERRA CORP.: Fitch Places Receivable-Backed Notes on Watch ------------------------------------------------------------- Fitch places the ratings of Signature Resorts Vacation Ownership's receivables-backed notes 1998-A, class A-2 (rated `A') and class A-3 (rated `BBB'); TerraSun LLC Vacation Ownership's receivables-backed notes 1999-A, class B (rated `A'), class C (rated `BBB') and class D (rated `BB'); and DutchElm LLC Vacation Ownership's receivables-backed notes 1999-B, class B (rated `A') and class C (rated `BBB') on Rating Watch Negative. This rating action is a result of unusually high loan defaults experienced by the three collateral portfolios. Fitch will continue to monitor the performance of the trust collateral for any signs of increasing delinquency or defaults. It should be noted that the portfolio is serviced by Sunterra Financial Services Inc., a subsidiary of Sunterra Corp., which filed for bankruptcy in May 2000. VISTA EYECARE: Inks Deal to Sell Freestanding Centers & N.Y. Lab ---------------------------------------------------------------- Vista Eyecare, Inc. (OTC Bulletin Board: VSTAQ) entered into a purchase agreement to sell substantially all of the assets of its freestanding Vision Centers and its Fullerton, California Laboratory/Distribution Center to Vista Acquisition LLC, Ronkonkoma, New York. Subject to Bankruptcy Court approval, the transaction is expected to close in late March 2001 or early April 2001. Vista Acquisition LLC has an executive management team with an aggregate of Optical Industry experience exceeding 100 years. The retailing, managed vision care, and operations experience of the team will direct the focus of the freestanding stores to accomplish the initiatives of the company's long- term strategic goals. Following completion of the transaction, Vista will have 498 Vision Centers in host environments, including Wal-Mart, Wal-Mart de Mexico, Fred Meyers, and selected Military locations. Vista will retain two lab/distribution facilities to serve the host vision centers. Jim Krause, Chairman, President & CEO of Vista, commented "The principals of Vista Acquisition have a very strong background in the freestanding optical industry and we believe that this will be a very positive event for our freestanding store associates and customers. This transaction allows us to return to our roots as a strong operator in the host environment. We can now finish our plan of reorganization and file with the court in the next few weeks. With court approval, we will emerge from bankruptcy during the second quarter as a strong and focused company meeting the needs of our customers". Vista Eyecare, Inc. is an operator of Vision Centers in freestanding and host department environments. The company filed for protection under Chapter 11 of the Bankruptcy Code in April 2000. WATERLINK INC.: Working to Restructure Senior Credit Facility ------------------------------------------------------------- Waterlink Inc. is in violation of certain of its covenants under its Senior Credit Facility. These covenant violations have created an Event of Default under the Senior Credit Facility. At December 31, 2000 the company had a working capital deficiency of $24,714,000, which raises substantial doubt about its ability to continue as a going concern for a reasonable period of time. The company is in the process of discussing amendments to its Senior Credit Facility with the objective of allowing the company to operate while it continues with its previously announced strategic alternative process. At this time, the company can give no level of assurance that it will be able to negotiate amendments to its Senior Credit Facility or what terms and conditions will be required from its lenders. Net sales for the three months ended December 31, 2000 were $23,773,000, a decrease of $11,339,000, or 32.3%, from the $35,112,000 in net sales reported in the comparable prior period. WHEELING-PITTSBURGH: Makes Bid to Assume MPS Engineering Contract ----------------------------------------------------------------- Wheeling-Pittsburgh Steel Corporation asked that Judge Bodoh permit WPSC to assume and perform a contract with MPS Engineering & Construction, Inc., to replace fume exhaust scrubbers at WPSC's Allenport, Pennsylvania, facility. WPSC owns and operates a rolling mill in Allenport that receives output form WPSC's hot strip ill and processes it into a variety of "cold-rolled" steel sheets of various widths and thickness. The Allenport facility includes an acid cleaning or "pickling" facility, an annealing facility to improve painting and coating capability, and a temper mill that covers steel sheets with a coating of oil as a protection against corrosion. As part of the ordinary course of operations, the Allenport facility must comply with environmental regulations. One such requirement is that WPSC replace the existing pickle line fume exhaust scrubber equipment at the Allenport facility and achieve compliance with the new environmental standards by June 22, 2001, or WPSC will face penalties and possible restrictions on the use of the facility. Prior to commencement of these cases, WPSC solicited competing proposals to replace the fume exhaust scrubbers and MPS was the winning bidder, having submitted the lowest bid and having been determined by WPSC to have the capability of providing the required services and equipment. Subsequently WPSC submitted applications for environmental permits to allow the MPS equipment to be installed at Allenport. Although purchase orders were executed prior to the Petition Date, and although MPS sent pre-petition invoices to WPSC in the amount of $304,973, which have not been paid, MPS has retained title to all of the relevant equipment, so that replacing MPS with another contractor would mean that WPSC would still need to bear the full cost of the project. Since MPS was the low prepetition bidder, it is unlikely that WPSC could locate a lower-priced contractor at this time. In addition, the project must be completed by June 22, 2001, to avoid penalties and a potential restriction in operation at the Allenport plant. The MPS system is presently the only system that WPSC will have permits to install at Allenport. WPSC is dubious that it could solicit new proposals, choose a new contractor, obtain a new permit and still complete installation of the required fume exhaust scrubbers by the June 22 deadline. The total price of the current MPS contract is $819m670. MPS and WPSC have agreed that MPS will finish the project and submit invoices to WPSC that would be payable on net 30 day terms from the date of invoice, and that will be subject to a 10% retainage: Invoice Date Invoice Amount Retainage Amount Due ------------ -------------- --------- ---------- 01/17/01 $ 50,000 $ 5,000 $ 45,000 02/15/01 $200,000 $20,000 $180,000 3/15/01 $200,000 $20,000 $180,000 4/15/01 $200,000 $20,000 $180,000 5/15/01 $100,000 $10,000 $ 90,000 6/15/01 $ 69,670 $ 6,967 $ 62,603 7/15/01 $ 81,967 (retainage) Total $819,670 Notwithstanding this schedules, no payments have or will be made until and unless Judge Bodoh first orders and approves the assumption of this agreement. WPSC also advised Judge Bodoh that it is not unusual, in contracts of this type, for various change orders to be require during the process of construction and installation. In order to provide flexibility for such change orders, WPSC also sought permission to implement change orders at an additional cost not to exceed $60,000, without seeking further approval from the Judge. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) YORK FUNDING: Moody's Downgrades Securitized Notes to Junk ---------------------------------------------------------- Moody's Investors Service said that it downgraded three classes of notes issued by York Funding Ltd. Series 1998-1. The affected tranches are: * $51,000,000 Series 1998-1 Class III Notes from Baa3 to Ba1 * $45,000,000 Series 1998-1 Class IV Notes from B1 to Caa2 * $15,000,000 Series 1998-1 Class V Notes from B3 to Caa3 Moody's relates that the ratings downgrade result from (i) significant defaults in the underlying reference pool and (ii) significant deterioration in the credit quality of the reference pool. Moody's notes that since the transaction closed on June 18, 1998, there have been several defaults within the reference pool and that, since May of 1999, when the Class II, Class III, Class IV and Class V were downgraded, there have been further defaults and deterioration in pool quality. Accordingly, defaults within the reference pool have been higher than anticipated at the time of the rating agency's initial action of the transaction, while recovery rates have been lower than anticipated. The reduction in credit enhancement and the migration of the credit quality of the reference assets has increased the expected losses associated with the three classes of notes, Moody's says. ********* Bond pricing, appearing in each Monday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. 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. 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., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L. Metzler, Aileen Quijano and Peter A. Chapman, Editors. Copyright 2001. 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 $575 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 301/951-6400. *** End of Transmission ***