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/raid1/www/Hosts/bankrupt/TCR_Public/010621.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, June 21, 2001, Vol. 5, No. 121 Headlines 360NETWORKS: S&P Downgrades Credit Ratings to D AMERICAN ECO: Disclosure Statement Hearing Set For August 3 AMERICA WEST: Standard & Poor's Revises Outlook to Negative ARMSTRONG: Court Fixes August 31 General Claims Bar Date BURKE INDUSTRIES: Senior Notes' Ratings Drop to Ca From Caa1 COLO.COM: Retains Development Specialists To Manage Asset Sale CONSUMERS PACKAGING: Court Extends CCAA Protection To August 15 CRIIMI MAE: Chairman Purchases 100,000 Shares of Common Stock DANKA BUSINESS: Amends Terms Of Pending Exchange Offer DERBY CYCLE: S&P Withdraws All D Ratings Following Default EDISON: SCE Reaches Agreement With Alternative Energy Generators EINSTEIN/NOAH: Completes $190 Million Asset Sale To New World EL COMANDANTE: Moody's Lowers First Mortgage Note Rating to Ca ESSEX CORP.: Shareholders To Convene On July 12 in Baltimore, MD FAMILY GOLF: Creditors Panel Won't Oppose Liquidating Plan FINOVA GROUP: Deadline For Filing Proofs of Claim Is July 13 FRANCHISE MORTGAGE: S&P Lowers Ranking to Below Average FRUIT OF THE LOOM: Seeks More Time To Act On Unexpired Leases GLOBAL TELESYSTEMS: Decides Not to Sell Central European Unit HARVARD INDUSTRIES: Enters Into New Secured Credit Facilities INDEPENDENT INSURANCE: S&P Revises Ratings to R From BB INOTEK TECHNOLOGIES: Board Endorses Davis' Acquisition LUBY'S INC.: Reports 3rd Quarter Losses & Discloses Bank Talks NEWCARE HEALTH: Examiner & Committee File Joint Liquidation Plan NEWCARE: Court Denies Motion To Convert Case To Chapter 7 OWENS CORNING: Moves To Defend & Indemnify Employee Defendants OXFORD AUTOMATED: S&P Cuts Ratings To Low-B's, Outlook Negative PACIFIC GAS: Judge Gives Tentative Okay For Executives' Bonuses PSINET INC.: Court Allows Continuance Of Investment Practices PURINA MILLS: Inks $23 per Share Cash Deal with Land O'Lakes PURINA MILLS: Board Amends Stockholder Rights Plan RELIANCE GROUP: Employs Bankruptcy Services LLC As Claims Agent SENIOR HOUSING: Fitch Rates Preferred Offering At BB- SOURCE MEDIA: Defaults on Payment of 12% Senior Secured Notes THOMASTON MILLS: Files Chapter 11 Petition in M.D. Georgia TOKHEIM CORP: Engages Ernst & Young As New Certifying Accountant TRANS WORLD: Court Says No To Creditor's Demand For Payment W.R. GRACE: Committees Hot on Fresenius & Sealed Air Recoveries WALL STREET DELI: Taps Liuzza To Explore Strategic Alternatives WARNACO GROUP: Engages Alvarez & Marsal As Restructuring Officer WASHINGTON GROUP: Dennis Washington to Participate in DIP Pact WESTPOINT STEVENS: Moody's Cuts Long Term Debt Ratings to Ca WINSTAR COMMUNICATIONS: AT&T Broadband Seeks Relief From Stay ********* 360NETWORKS: S&P Downgrades Credit Ratings to D ----------------------------------------------- Standard & Poor's lowered its corporate credit rating on 360networks Inc. to 'D' from single-'B'-plus and lowered its rating on the company's US$175 million 12.5% senior unsecured notes due 2005 to 'D' from single-'B'. The ratings were removed from CreditWatch, where they were placed May 3, 2001. At the same time, all outstanding ratings on 360networks and its subsidiaries were lowered and remain on CreditWatch with negative implications. (See below for a complete list of ratings actions.) The ratings actions follow 360networks' announcement that it will not make its scheduled US$10.9 million interest payment due today on its US$175 million 12.5% senior unsecured notes. The ratings were originally placed on CreditWatch amid concerns about the company's funding position and near-term liquidity prospects, including its ability to obtain additional funding. The ratings downgrades reflect the increased likelihood that 360networks could defer its next scheduled interest payment on its US$500 million 12.0% senior unsecured notes due 2009. The bank loan ratings on the company were lowered to the same level as the corporate credit ratings on 360USA and GlobeNet Communications Holdings Ltd., reflecting Standard & Poor's view that asset protection is not considered adequate to recover bank obligations under a bankruptcy scenario. At May 17, 2001, 360networks had cash and unused bank facilities of US$596 million, which could fund the company through the second quarter of 2001. It is unclear if 360networks will be able to obtain additional funding in the near term to sustain its operations given the failure of discussions with existing shareholders to resolve the company's funding needs. Standard & Poor's will continue to monitor the situation. Ratings Lowered And Removed From CreditWatch Negative To From 360networks Inc. Corporate credit rating D B+ US$175 mil 12.5% sr unsecd nts due 2005 D B Ratings Lowered And Remaining On CreditWatch Negative To From 360networks Inc. US$600 mil 13.0% sr unsecd nts due 2008 CC B US$500 mil 12.0% sr unsecd nts due 2009 CC B 360USA Corporate credit rating CCC- B+ Senior secured bank loan CCC- BB- GlobeNet Communications Group Ltd. Corporate credit rating CCC- B+ GlobeNet Communications Holdings Ltd. Corporate credit rating CCC- B+ Senior secured bank loan CCC- BB- AMERICAN ECO: Disclosure Statement Hearing Set For August 3 ----------------------------------------------------------- According to documents obtained by BankruptcyData.com, American Eco Corp. filed a Liquidating Plan of Reorganization and related Disclosure Statement with the U.S. Bankruptcy Court. The Court scheduled an August 3, 2001 hearing to consider approving the Disclosure Statement's adequacy. (New Generation Research, June 19, 2001) AMERICA WEST: Standard & Poor's Revises Outlook to Negative ----------------------------------------------------------- Standard & Poor's revised its outlook on America West Holdings Corp. and subsidiary America West Airlines Inc. to negative from stable (see list below). The outlook revision is based on weaker-than-anticipated earnings since mid-2000, expected to continue through 2001. In addition to pressure on earnings from a weaker economy and higher labor and fuel prices, the company will incur a $30 million pretax charge in the second quarter of 2001 related to returns of leased aircraft and work force reductions. Fuel costs continue to remain at high levels and the company has filed for federal mediation with its pilots union, likely to result in higher labor costs (which the rest of the industry is also experiencing). As a result, America West's financial profile, which weakened in 2000, is expected to weaken further in 2001. However, the company has taken steps to improve its profitability, including a cost-reduction program of $75 million a year. America West, traditionally among the lowest cost providers in the industry, should also benefit from improved performance in its operating statistics and customer service from depressed 2000 levels. The company also has the flexibility to reduce its fleet if economic conditions warrant due to the relatively large number of aircraft it leases on a short-term basis. America West Holdings is the parent of America West Airlines, the eighth-largest airline in the U.S.; and The Leisure Company, one of the nation's larger tour packagers. Its ratings reflect the airline's favorable operating costs, among the lowest in the airline industry, offset by strong competition in its major markets and a substantial operating lease burden. America West competes at its two major hubs--Phoenix and Las Vegas--against Southwest Airlines Co., the other major low-cost operator in the industry and financially the strongest. America West also faces considerable competition from large airlines offering discount fares. America West is a partner in the marketing alliance between Continental Airlines Inc. and Northwest Airlines Inc. Outlook: Negative If America West's earnings do not recover, ratings could be lowered, Standard & Poor's said. Outlook Revised To Negative: America West Holdings Corp. Corporate credit rating at B+ America West Airlines Inc. Corporate credit rating at B+ Equipment trust certificates at BB Senior unsecured debt at B ARMSTRONG: Court Fixes August 31 General Claims Bar Date -------------------------------------------------------- Nitram Liquidators, Armstrong World Industries, Inc., and Desseaux Corporation of North America told Judge Farnan that, to confirm a plan of reorganization, they need to possess complete and accurate information regarding the nature, amount and status of all claims against them that will be asserted in these Chapter 11 cases. In particular, the development of a long-term business plan and a plan of reorganization - and the creditors' ability to evaluate meaningfully the Debtors' plan proposals - depend on the Debtors' ability to prepare thorough estimates of the aggregate amounts of claims held against the Debtors' estates. By Motion, the Debtors asked that Judge Farnan: (a) establish the General Claims Bar Date of August 31, 2001, (b) approve a proof of claim form for claims other than "excluded claims", (c) approve the form and manner of notice of the general claims bar date and (d) approve special procedures relating to certain employee and environmental claims. Fixing of the General Claims Bar Date and approval of the procedures described in the Motion will enable the Debtors to begin the analysis of prepetition claims in a timely and efficient manner and will give all creditors ample opportunity to file proofs of claim. Creditors Who Must File Proofs of Claim The Debtors reminded Judge Farnan that Fed R Bankr Pro 3003 provides that the Court will fix the time within which proofs of claim must be filed in a Chapter 11 case. Moreover, this Rule states that a creditor whose claim is not scheduled, or whose claim is scheduled as disputed, contingent or unliquidated must file a proof of claim. By Motion, the Debtors asked that the Court establish August 31, 2001, at 5:00 p.m. Eastern time as the last date and time by which any entity holding a prepetition claim (whether secured, priority or general unsecured) against one or more of the Debtors, other than an "excluded claim". The Debtors suggested that Judge Farnan order that any entity that holds a claim arising from, or as a consequence of, the rejection of an executory contract or unexpired lease must file a proof of claim based upon rejection on or before the later of (a) 30 days after service of an order of he Court approving the rejection, or (30 days after service of notice of the rejection, if the rejection occurs by expiration of time fixed by the Court, or (b) the General Claims Bar Date. In addition, the proposed General Claims Bar Date Order should provide that the trustee or administrative agent for any debt issued by AWI is authorized, but not obligated, to file a master proof of claim on behalf of the debtholders for which it acts, in lieu of, or in addition to, any proof of claim that may be filed by an individual debtholder. The proposed General Claims Bar Date Order should further provide that individual debtholders shall retain the exclusive right to vote on any plan or plans of reorganization of AWI with respect to their respective claims. Under the proposed Order, each entity that asserts a claim against any of the Debtors that arose prior to December 6, 2000 (other than an Excluded Claim) must file an original, written proof of the claim that substantially conforms to the Proof of Claim form proposed to be used by the Debtors, or Official Form No. 10, so as to be received on or before the General Claims Bar Date by Trumbull Services LLC, the official claims agent in these cases, either by mailing or delivering by messenger or overnight courier, the original proof of claim to: AWI Claims Processing Center c/o Trumbull Services LLC, Griffin Center, 4 Griffin Road North, Windsor, Connecticut 06095. The proposed Order further provides that the AWI Claims Processing Center will not accept proofs of claim sent by facsimile or telecopy transmission, and that proofs of claim are deemed timely filed only if such claims are actually received by the AWI Claims Processing Center on or before the General Claims Bar Date. Excluded Claims Entities are not required to file a proof of claim on or before the General Claims Bar Date with respect to: (a) any claim that has already been properly filed with the Clerk of the United States Bankruptcy Court for the District of Delaware on a claim form that substantially conforms to Official Form No. 10; (b) any claim that (i) is listed on the Schedules, (ii) is not described as "disputed", "contingent" or "unliquidated" on the Schedules, and (iii) that is in the same amount and of the same nature as set out in the Schedules; (c) an administrative expense of any Debtor's Chapter 11 case under Sections 503(b) or 507(a) of the Bankruptcy Code; (d) any claim of a Debtor or subsidiary of a Debtor against another Debtor or another subsidiary of a Debtor; (e) a claim that has been allowed by an order of this Court entered on or before the General Claims Bar Date; (f) an asbestos-related personal injury claim (other than a claim for contribution, indemnity, reimbursement, or subrogation); and (g) any claim of a current employee of AWI for prepetition benefits or deferred compensation. Asbestos-Related Personal Injury Claims By this Motion, the Debtors did not seek to establish a bar date for asbestos-related personal injury claims, and such claims are treated as Excluded Claims. Excluded Claims do not include however, claims for property damage or claims for contribution, indemnity, reimbursement or subrogation, even tough such claims may or might arise directly or indirectly as a result of exposure to asbestos or asbestos-containing products. Subject to the approval of this Motion, all claims for property damage or contribution, indemnity, reimbursement or subrogation are subject to, and governed by, the General Claims Bar Date and the procedures set out in the notice. Consequences of Failure to File Proof of Claim The Debtors proposed that any holder of a claim against one or more of the Debtors who is required, but fails, to file a proof of claim in accordance with the General Claims Bar Date Order on or before the General Claims Bar Date shall be forever barred, stopped and enjoined form asserting such claim against the Debtor (or filing a proof of claim with respect thereto), and the Debtor and its property shall be forever discharged from any and all indebtedness or liability with respect to such claim and the holder will not be permitted to vote on any plan or plans of reorganization or participate in any distribution in the Debtor's chapter 11 case on account of the claim or to receive further notices regarding the claim. Form of Proof of Claim Due to the size and complexity of these Chapter 11 cases, the Debtors, with the help of Trumbull, have prepared a "customized" proof of claim form for use in these cases. For each creditor whose claim has been listed in the Schedules, the Debtors propose to include on the proof of claim form sent to the creditor a description in the upper right hand corner of he form of (a) the amount of the creditor's claim against a specific Debtor, as reflected in the Schedules, (b) the type of claim held by the creditor (i.e., non-priority unsecured, priority unsecured, or secured), and (c) whether the claim is disputed, contingent or unliquidated. This will permit the creditor to readily ascertain how its claim is scheduled against a specific Debtor without having to examine the Schedules. If a creditor holds a claim or claims against more than one Debtor, the creditor will receive a separate proof of claim form for each Debtor against which it may have a claim. Each proof of claim form will reflect he claim of the creditor against each Debtor, as listed in the Schedules. The Debtors proposed that each Proof of claim filed must (i) be written in English, (ii) be denominated in lawful currency of the United States, (iii) conform substantially with the proof of claim form provided or Official Form No. 10, and (iv) indicate the Debtor against which the creditor is asserting a claim. The Debtors asked Judge Farnan to review and approve the proposed particularized proof of claim form. Notice of the General Claims Bar Date Order Within 30 days from the date of the entry of the General Claims Bar Date Order, the Debtors propose to mail, in addition to a Proof of Claim form, a notice of the General Claims Bar Date Order to: (a) the Office of the United States Trustee for the District of Delaware; (b) the members of the Committees and their attorneys; (c) all known prepetition debtholders and the abents and trustees for the prepetition debtholders; (d) the postpetition lenders and their attorneys; (e) all known holders of claims listed on the Schedules at the addresses stated therein; (f) all counter-parties to executory contracts and unexpired leases listed on the Schedules at the addresses stated therein; (g) the District Director of Internal Revenue for the District of Delaware; (h) the Securities and Exchange Commission; and (i) all entities that requested notices under Fed R Bankr Pro 2002 as of the entry of the Order approving this Motion. The proposed General Claims Bar Date Order Notice informs the parties of the General Claims Bar Date and contains detailed information regarding who must file a proof of claim, the procedure for filing a proof of claim, and the consequences of failing to timely file a proof of claim. The proposed Notice includes a toll-free telephone number that potential creditors may call to obtain a proof of claim form and information concerning the procedures for filing a proof of claim, as well as the address of the website established by Awi that potential claimants may visit to obtain information and download proof of claim forms. The Debtors further proposed, out of an abundance of caution, to send the Notice and a blank proof of claim form to any entity not listed on the Schedules, but from whom any of the Debtors had purchased goods or service in the several years preceding the Petition Date. The Debtors, in generating this list, told Judge Farnan they have relied exclusively upon their computerized vendor data base and have to reviewed any additional records. Providing this notice will enable any creditor inadvertently excluded from the Schedules to receive notice of the General Claims Bar Date and to file a proof of claim, if necessary. The Debtors requested that Judge Farnan approve the form and use of the Notice. Publication Notice The Debtors have determined that it would be in the best interest of their estates to give notice by publication to potential creditors, including (a) those creditors to whom no other notice was sent and who are unknown or not reasonably ascertainable by the Debtors, and (b) known creditors whose addresses are unknown to the Debtors. The publications in which the Debtors propose to publish the Notice include (i) national publications; (ii) trade publications in the industries I which the Debtors do, or formerly did, business, and (iii) regional or local publications in the areas in which AWI currently has manufacturing facilities, all at least 30 days before the General Claims Bar Date. As with the mailed Notice, the Publication Notice includes a toll-free telephone number that potential creditors may call to obtain a Proof of Claim form and information concerning the procedures for filing a proof of claim, as well as the website address that potential claimants may visit to obtain information and download Proof of Claim forms. Employee Notification As to AWI's current employees and retirees, in lieu of providing notice to these employees via the General Claims Bar Date Notice procedures described in the Motion, the Debtors proposed to use other procedures to notify the employees of the General Claims Bar Date. The Debtors reminded Judge Farnan that by a "first day" order, AWI was authorized to pay, and has paid, its employees' prepetition wages and has continued to honor its employees' prepetition benefits, as well as other employment- related obligations (including deferred compensation), in a manner that is consistent with AWI's prepetition business practices and policies. AWI has not scheduled deferred compensation claims of current employees because AWI is authorized to continue paying such amounts and has every intention of doing so. If AWI hereafter changes its policy with respect to the payment of deferred compensation claims, AWI will file a supplemental schedule listing he amounts owed to current employees for deferred compensation and providing such employees the opportunity to file proofs of claim if they disagree with the scheduled amounts. Although AWI does not believe that its current employees hold claims for prepetition wages, AWI intends to notify such employees of the General Claims Bar Date so that employees who believe they have claims for unpaid prepetition wages or other claims against AWI can obtain information regarding when and how to file a proof of claim and the consequences of failing to timely file a proof of claim. The notice expressly provides that current employees are not required at this time to file a proof of claim with respect to prepetition benefits or deferred compensation; if they believe, however, that they have other claims against AWI, they must file a proof of claim asserting such claims on or before the General Claims Bar Date. Specifically, AWI will distribute a notice to their employees and will conspicuously post a notice in all of AWI's offices, warehouses and facilities within five business days after the Court's entry of an order approving this Motion. As with current employees, AWI is authorized to pay, and has continued to pay, its retirees' post-employment benefits (including any deferred compensation). In contrast with current employees, though, AWI has scheduled the amounts it believes it owes to retirees with respect to post-employment benefits. AWI intends to notify retirees of the General Claims Bar Date so that retirees who disagree with the scheduled amounts or believe they have other claims against AWI can obtain information regarding when and how to file a proof of claim and the consequences of failing to timely file a proof of claim. The Debtors argue that this employee notification procedure is adequate and sufficient in light of the circumstances. Environmental Claims Notification Procedures Since the Petition Date the Debtors told Judge Farnan they have engaged in an extensive examination of their own records as well as public documents in order to locate (a) all facilities presented owned or operated by AWI, (b) all sites where AWI, or a hauler on behalf of AWI, may have disposed of AWI's hazardous wastes, (c) all state or federal Superfund sites at which AWI has been identified as a potentially responsible party for environmental liability, (d) all facilities owned or operated by an affiliate of AWI where AWI may have contractually guaranteed such affiliate's environmental obligations, and (e) all facilities formerly owned or operated by AWI. This examination is intended to enable the Debtors to identify entities that may wish to assert potential environmental claims against the Debtors with respect to such sites, whether for remedial or other costs claimed by governmental agencies or for contribution or indemnification amounts asserted by other potentially responsible parties. The identification and notification of potential creditors of the Debtors with respect to potential environmental claims is complicated by the Debtors' extensive history of operations and the potential for environmental claims to exist as a result of property that the Debtors may have owned or operated at any time in their history. Although the Debtors have identified a substantial number of sites to date, the identification of all possible sites and potential claimants through out the Debtors' operating history is difficult, if not impossible. To the extent the Debtors are able to currently identify potential claimants, the Debtors propose to furnish such parties with notice of the General Claims Bar Date in accord with the common procedures. In addition, the Debtors will provide special notice of the General Claims Bar Date to state and federal governmental agencies, the owners of facilities formerly owned or operated by AWI, and the owners of offsite disposal facilities. If, subsequent to the mailing of notices, the Debtors locate any additional entities to which they would like to provide actual notice of the Debtors' potential environmental liability, the Debtors proposed to use special procedures to notify such additional potential environmental claimants of their right to file a proof of claim in the Debtors' Chapter 11 cases. Specifically, the Debtors proposed that (a) the Debtors will provide written notice to any additional potential environmental claimants with respect to newly located potential environmental liabilities, and (b) these additional potential environmental claimants will be accorded the later of the General Claims Bar Date and 60 days from the date of the notice to file any proof of claim to assert potential environmental claims against any of the Debtors. Since it is extremely expensive, inefficient and burdensome for the Debtors to amend their Schedules each and every time they discover a potential environmental claimant, the Debtors propose that the environmental claims notification procedure supersede any obligation the Debtors would have to amend their Schedules with respect to potential claims and would supersede any other right a potential environmental claimant would have to file a proof of claim to assert any potential environmental claim it may have against the Debtors. The Debtors requested that Judge Farnan approve this procedure of notice and an absence of the requirement of amendment and rights to file proofs of claim otherwise. Reasonable Notice and Bar Date The Debtors believe that the notice procedures described in the Motion are "reasonably calculated under the circumstances to apprise an interested party of the pendency of the bankruptcy case" and the requirement of filing a proof of claim by the General Claims Bar Date. Recognizing that this could be argued to be a short bar date for filing proofs of claim, the Debtors argued that as Trumbull is the authorized claims agent with respect to these cases, it is responsible for mailing the notice of the claims bar date and proof of claim forms. Each creditor who is listed on the Schedule will receive a customized and particularized Proof of Claim form printed with the appropriate Debtors' name checked off and the creditor's name, address, and information regarding the nature, amount and status of its claim as reflected in the Schedules. Each creditor will also receive instructions for filing a proof of claim form. The Debtors have been advised by Trumbull that, based on the number of parties to whom the Debtors propose to provide notice, including those entities having obtained notice under Fed R Bankr Pro 2002 (collectively in excess of 30,000), Trumbull will be able to complete the mailing within thirty days after the Court enters its order. By establishing August 31, 2001, as the general claims bar date, general creditors will have several months' actual notice of the bar date. This period of time appears to the Debtors to be clearly adequate as Fed R Bankr Pro 2002(a)(7) only requires 20 days' notice. Amendment to Schedules and Objections to Claims In the event that the Debtors amend their Schedules to (a) designate a claim as disputed, unliquidated, contingent or undetermined, (b) change the amount of a claim reflected in the Schedules, or (c) add a claim that was not listed in the Schedules, then and in such an event the Debtors propose that the affected claimant be notified of the amendment and be granted 60 days from the date of the notification within which to file a proof of claim or be forever barred from doing so. The Debtors reserve their right to object to any claim, whether filed or scheduled, on any grounds. The Debtors also reserve their right to dispute, or to assert offsets or defense to, any claim reflected on the Schedules or any amendments to the Schedules, as to amount, liability, classification or otherwise, and to subsequently designate any claim as disputed, unliquidated, contingent, or undetermined. Judge Farnan Agrees Judge Farnan agreed with the Debtors that the notice procedures proposed are reasonable and adequate, and that the General Claims Bar Date of August 31, 2001, is reasonable. Claims described in the Motion as having to be filed by that date must be, or the claims holder will be forever barred from asserting the claim against the Debtors, voting on the plan, or receiving any distribution under the plan on account of the claim. (Armstrong Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURKE INDUSTRIES: Senior Notes' Ratings Drop to Ca From Caa1 ------------------------------------------------------------ Moody's Investors Service lowered Burke Industries, Inc.'s ratings due to its deteriorating financial condition with losses in 1999 and 2000, strained liquidity, highly leveraged balance sheet, and the recent delays in filing its 2000 10-K and March 2001 10-Q. Moody's related that the reason for the delay is that there are likely errors in its reported inventory valuation and that operating profit have been pointed out and are being investigated. The rating agency also noted that the company was in covenant violation of its bank facility at the end of the third quarter of fiscal 2000 but obtained a waiver to maintain access for liquidity. The ratings that were downgraded are as follows: * $30 million of floating rate senior notes, due 2007, to Ca, from Caa1, * $110 million senior notes, due 2007, to Ca, from Caa1, * $20 million senior secured revolving credit facility, maturing August 2002, to Caa2, from B2, * senior implied rating to Caa3, from B3, and * issuer rating to C, from Caa2 The rating outlook is negative while approximately $160.0 million of debt securities are affected. Burke Industries, Inc., through its subsidiaries, is a maker of rubber, silicone and vinyl-based products for the commercial construction (flooring), aerospace and defense, and other industrial markets. The company is based in Santa Fe Springs, California. COLO.COM: Retains Development Specialists To Manage Asset Sale -------------------------------------------------------------- COLO.COM(SM) has retained Development Specialists, Inc. (DSI) a prominent national/international workout and turnaround firm, to organize, manage and negotiate the sale of COLO.COM. In light of the strong level of interest in the Company and the Bankruptcy Court's recent entry of an order establishing bidding procedures, Development Specialists, Inc. has been retained (subject to Bankruptcy Court approval) to manage, coordinate and complete the sale process in as efficient and timely manner as possible. The engagement of Development Specialists, Inc. has been supported by both the Debtor and the Counsel for the Official Creditors' Committee. DSI expects to work closely with both groups in order to coordinate the flow of information and to maximize the value of the Company. "We are pleased that we were able to obtain the assistance of an organization with the experience and expertise of DSI. Their participation in the sale process will assure buyers and help us get the best possible result," said David Stanley, chief restructuring officer of COLO.COM. On May 8, 2001 COLO.COM filed Chapter 11 in the United States Bankruptcy Court Northern District of California. COLO.COM has 21 operational co-location sites located across the United States. These sites total approximately 650,000 gross square feet of rented space with an average site size of 25,000 square feet. With over 170 customers, COLO.COM has monthly recurring revenues of approximately $2.2 million. The average number of Carriers per site is 5.5. Development Specialists, Inc. was selected due to its national presence, its experience in the industry and its proven ability to manage rapid and complex sales within the context of distressed situations including bankruptcy. DSI's experience and capabilities become particularly imperative given the technological scope of COLO.COM, the large number of interested parties, and the broad geographic dispersion of the sites. Interested buyers should note that the Due Diligence phase of the process will continue through July 9, 2001 with opening bids, financing proposals and marked-up asset purchase agreements due by 5:00 PM PST. On July 9, 2001. The selection of the lead bidder will be completed on July 11, 2001 and Bankruptcy Court approval of Successful Bid or Bids will be held on August 2, 2001. The closing of any and all transaction(s) is to be completed by August 10, 2001. CONSUMERS PACKAGING: Court Extends CCAA Protection To August 15 --------------------------------------------------------------- Consumers Packaging Inc. announced that it has received an extension until August 15, 2001 pursuant to an Initial Order dated May 23, 2001of the Ontario Superior Court of Justice made under the Companies' Creditors Arrangement Act (CCAA). The extension of the Order continues the stay from legal proceedings against the Company in respect of its Canadian operations, and allows it to continue work to develop a restructuring plan. The Toronto office of KPMG Inc. has been appointed Monitor under the CCAA and is assisting the Company in formulating its restructuring plan. "Consumers Packaging continues to operate on a 'business as usual' basis during this restructuring period," said Brent Ballantyne, Chief Restructuring Officer and Chief Executive Officer. "Our plants continue to operate and we are meeting our customer requirements." Mr. Ballantyne said good progress is being made on developing a restructuring plan. "Our key stakeholders are fully co-operating as we work with a number of third parties to develop a plan that will address the Company's current financial needs." The Court Order establishes June 29 as the deadline for the submission of restructuring or purchase proposals by third parties. Consumers Packaging employs approximately 2400 people in Canada. It manufactures and sells glass containers for the food and beverage industry. It commenced operations in 1917 and supplies approximately 85% of the glass containers used by the Canadian juice, food, beer, wines and liquor industries. In Canada, the company operates six facilities, three in Ontario (Toronto, Brampton and Milton), and one each in Quebec (Montreal), New Brunswick (Scoudouc) and British Columbia (Lavington). In the United States, it operates a plant in Glenshaw, Pennsylvania through its wholly owned subsidiary, GGC LLC (Glenshaw Glass). Consumers Packaging also owns 60% of Anchor Glass Container Corporation, which is the third largest manufacturer of glass containers in the United States. It employs approximately 4,000 persons and operates nine glass manufacturing plants in the United States. CRIIMI MAE: Chairman Purchases 100,000 Shares of Common Stock ------------------------------------------------------------- CRIIMI MAE Inc. (NYSE: CMM) announced that its chairman, William B. Dockser purchased a total of 100,000 shares of the Company's common stock. The purchases occurred on June 14, 2001 at prices ranging from 59 to 61 cents per share. Mr. Dockser said, "In light of the recent developments of the Company's emergence from bankruptcy and reinstatement of the servicing ratings for CRIIMI MAE's servicing affiliate by Standard and Poor's, I believe that the current market value of CRIIMI MAE's common stock makes the shares an attractive investment." DANKA BUSINESS: Amends Terms Of Pending Exchange Offer ------------------------------------------------------ Danka Business Systems PLC (Nasdaq: DANKY) has amended two of the conditions of its pending exchange offer for its outstanding $200 million of 6.75% convertible subordinated notes due 2002 (CUSIP Nos. G2652NAA7, 236277AA7, and 236277AB5) in response to comments made by the Securities and Exchange Commission. Danka said that, in response to comments made by the Securities and Exchange Commission, the following changes have been made: * The exchange offer is now conditioned on the consent of Danka's senior bank lenders. Previously, the exchange offer was conditioned on the refinancing of Danka's senior bank debt. * In addition, the exchange offer is now conditioned on the closing of the purchase of DSI by Pitney Bowes Inc. Previously, the exchange offer was conditioned on closing of the sale of DSI. Danka and Pitney Bowes entered into an agreement for the purchase of DSI by Pitney Bowes on April 9, 2001 and Danka anticipates that the purchase by Pitney Bowes of DSI will close by June 29, 2001. All other terms of the exchange offer remain in effect as previously announced. Banc of America Securities LLC is the exclusive dealer manager for the exchange offer. D.F. King & Co., Inc. is the information agent and HSBC Bank USA is the exchange agent. Additional information concerning the terms and conditions of the offer may be obtained by contacting Banc of America Securities LLC at (888) 292-0070. Danka Business Systems PLC, headquartered in London, England and St. Petersburg, Florida, is one of the world's largest independent suppliers, by revenue, of office imaging equipment and related services, parts and supplies. Danka provides office products and services in approximately 30 countries around the world. Danka Services International, the outsourcing division of Danka Business Systems PLC, provides on- and off-site document management services, including the management of central reprographics departments, the placement and maintenance of photocopiers, print-on-demand operations and document archiving and retrieval services. DERBY CYCLE: S&P Withdraws All D Ratings Following Default ---------------------------------------------------------- Standard & Poor's withdrew its 'D' corporate credit and senior secured debt ratings on U.K.-based bicycle manufacturer Derby Cycle Corp., as well as its 'D' senior unsecured debt rating on guaranteed subsidiary, Lyon Investments B.V. All ratings on Derby and Lyon were revised to 'D' on May 15, 2001, after Derby's announcement that it would not be making the scheduled interest payment on both the $100 million 10% senior notes issue due 2008 and the DM110 million ($53 million) 9.375% senior notes issue due 2008, Standard & Poor's said. EDISON: SCE Reaches Agreement With Alternative Energy Generators ---------------------------------------------------------------- Southern California Edison (SCE) announced it has reached an agreement with most of its renewable Qualifying Facilities (QF) power producers that addresses past payment issues and future pricing considerations, and creates a mechanism for ending numerous lawsuits. "We believe this agreement will help bring stability to an important segment of California's energy market," said SCE Chairman, President & CEO Stephen E. Frank. The plan was negotiated between the utility and key representatives of the QF industry and facilitated by Governor Gray Davis' office. To date, SCE has received signed agreements from QFs representing approximately 95% of its renewable energy capacity and today executed those contracts. The company hopes that the small number of remaining producers will also agree. Certain elements of the agreements are subject to the approval of the California Public Utilities Commission. The plan calls for generators to provide power at a fixed price -- 5.37 cents/kWh -- over the next five years, eliminating some of the price volatility that has plagued California's energy markets during the current crisis. The plan stays all existing legal action, and assures that no new legal action will be initiated unless the terms of the agreement are not met. "The people of Edison are committed to pursuing the benefits of negotiated practical solutions to California's energy crisis," said Frank. "The QF agreement and the MOU, if approved, are critical steps toward resolving the crisis. A bankruptcy, in contrast, would lead to years of delay and uncertainty for our customers and raise serious questions about the business climate in California." An Edison International company, Southern California Edison is one of the nation's largest electric utilities, serving a population of more than 11 million via 4.3 million customer accounts in a 50,000-square-mile service area within central, coastal and Southern California. EINSTEIN/NOAH: Completes $190 Million Asset Sale To New World ------------------------------------------------------------- Einstein/Noah Bagel Corp. completed the sale of substantially all the assets of the Company and its majority owned subsidiary, Einstein/Noah Bagel Partners, L.P. to Einstein Acquisition Corp., an affiliate of New World Coffee - Manhattan Bagel, Inc., for approximately $160 million in cash and the assumption of up to $30 million in liabilities. New World was the successful bidder in an auction that was conducted on June 1, 2001 in the U.S. Bankruptcy Court in Phoenix, Arizona. EL COMANDANTE: Moody's Lowers First Mortgage Note Rating to Ca -------------------------------------------------------------- Moody's Investors Service cut the rating of El Comandante Capital Corporation's 11.75% $68 million first mortgage notes due 2003 to Ca from Caa1. Approximately $68 million of debt securities are affected. Other ratings lowered are as follows: * senior implied rating to Ca from Caa1 * long-term unsecured issuer rating to C from Caa2 Moody's said that the downgrade considers the company's failure to make the June 15, 2001 scheduled interest payment on the first mortgage notes. Reportedly, El Comandante is currently pursuing ways to remedy the interest default during the 30-day default period but so far has not been able to arrange the necessary financing. The rating agency said that it does not anticipate the company to fulfill the required maturity dates of the first mortgage notes without seeking additional financing, thus the downgrade. Moody's also stated that the Ca rating reflects the limited recovery prospects to the first mortgage noteholders. El Comandante Capital Corporation, a wholly-owned subsidiary of Housing Development Associates S.E. (HDA), is headquartered in Puerto Rico. HDA owns and operates Puerto Rico's only thoroughbred racing facility, the El Comandante Racetrack. ESSEX CORP.: Shareholders To Convene On July 12 in Baltimore, MD ---------------------------------------------------------------- The Annual Meeting of Stockholders of Essex Corporation, a Virginia corporation, will be held at 9:30 a.m., Thursday, July 12, 2001, at Oriole Park at Camden Yards, 555 Russell Street, 6th Floor Banquet Room, Baltimore, Maryland, for the following purposes: (1) To elect nine (9) directors to serve until the next Annual Meeting of Stockholders or until their successors are duly elected and qualified; (2) To approve the adoption of the Essex Corporation 2001 Stock Option and Appreciation Rights Plan; (3) To ratify the appointment of independent auditors; and (4) To transact such other business as may properly come before the Annual Meeting. The Board of Directors fixed the close of business on May 21, 2001, as the record date for the determination of Stockholders entitled to notice of, and to vote at, the Annual Meeting. FAMILY GOLF: Creditors Panel Won't Oppose Liquidating Plan ---------------------------------------------------------- Despite no recovery for general unsecured creditors under the liquidating chapter 11 plan that Family Golf Centers Inc. recently filed, the creditors' committee won't challenge the plan. Melville, N.Y.-based Family Golf has already sold most of its assets, and only a few odds and ends remain, according to company counsel. While a portion of the roughly $125 million in sale proceeds has already been distributed to certain secured creditors, counsel said the bulk of the funds will be paid out following court approval of the plan. (ABI World, June 19, 2001) FINOVA GROUP: Deadline For Filing Proofs of Claim Is July 13 ------------------------------------------------------------ To administer their cases efficiently and to protect their interests and those of creditors and other parties in interest, The FINOVA Group, Inc. sought and obtained the Court's approval, pursuant to Rule 3003(c)(3) of the Bankruptcy Rules, fixing July 13, 2001, 4:00 p.m. (Mountain Standard Time) as the Bar Date by which proofs of claim against the Debtors that arose before the petition date are to be received; otherwise the creditors, with the exception of the following entities, will be forever barred from asserting such claim against the Debtors: (a) government units for which the Bar Date is September 3, 2001; (b) any person or entity that has already properly filed a proof of claim against any of the Debtors in the form and manner required by Bankruptcy Rules 3003 and 9009 and substantially conforming to Official Bankruptcy Form No. 10; (c) any person or entity whose claim is listed on the Schedules and the claim is not "disputed," "contingent," or "unliquidated,"; (d) any person having a claim under sections 503(b) or 507(a) of the Bankruptcy Code as an administrative expense of the Debtors' chapter 11 cases; (e) any person or entity whose pre-petition claim has been paid in full post-petition by the Debtors as authorized by the Court; (f) any of the Debtors or their affiliates making an intercompany claim; (g) holders of claims in respect of principal and accrued interest arising under any public debt securities of the Debtors; (h) holders of equity interests in The FINOVA Group Inc. provided, however, that any person or entity who wishes to assert a claim against the Debtors that is not based solely upon ownership of such equity interest, including, without limitation any claims or interest as asserted in, or holders who are or may be members of the putative classes alleged in, the cases listed below (the "Securities Actions") must file a proof of claim on or before the Bar Date: * In re FINOVA Group Inc. Securities Litigation, currently pending in the United States District Court for the District of Arizona, No. CIV 00-619-PHX-SMM; * Cartwright v. Sirrom Capital Corp., et al., No. CIV 01-158-PHX-SMM, currently pending in the United States District Court for the District of Arizona, consolidated for all purposes with In re FINOVA Group, Inc., Securities Litigation; * Sirrom Partners and Sirrom G-l v. The FINOVA Group Inc., et al., No. CIV Ol-l52-PHX-SMM, currently pending in the United States District Court for the District of Arizona, consolidated for all pretrial purposes with In re FINOVA Group Inc. Securities Litigation; * William Kass v. Matthew M. Breyne, et al., currently pending in the Court of Chancery in New Castle County, Delaware, No. 18306-NC; * Cindy Burkholder, et al. v, Samuel L. Eichenfield, et al., currently pending in the United States District Court for the District of Arizona, No. CIV 00-1737-PHX-LOA; and, * Ronald Benkler v. Geosge M. Miller II, et al., currently pending in the Circuit Court for the State of Tennessee, 20th Judicial District, No. 00C22630, or (i) any person or entity that holds a claim that has been allowed by an order of the Court entered on or before the Bar Date. The Bar Date order specifies that: (1) each proof of claim shall (i) be written in the English language, (ii) be denominated in lawful currency of the United States as of the Petition Date, and (iii) conform substantially with the Proof of Claim form as approved by the Court, or in conformity with Official Form No. 10, and the original must be filed so as to be received on or before the Bar Date either (x) by mail to FGI, Claims Administration Center, P.O. Box 8980, Scottsdale, Arizona 85252-8980, or (y) by messenger or overnight courier to FGI, Claims Administration Center, 4800 N. Scottsdale Road, 6th Floor, Scottsdale, Arizona 85251-7623 (tel: (480) 636- 4800) (the "Claims Administration Center"); and (iv) a separate proof of claim must be filed with respect to each Debtor against which a claim is asserted; (2) proofs of claim arising from rejection of executory contract or lease or stock or option authorized after the Bar Date must be filed on or before the later of (i) 30 days after service of the applicable rejection order or (ii) the Bar Date; (3) the Debtors may rely on the proofs of claim filed by the indenture trustee of the Debtors' bond issues, and bondholders are not required to file proofs of claim to evidence claims for the principal and interest due on the bonds; (4) the records of the Debtors' stock transfer agent will provide prima fade evidence of the amount and validity of stock ownership interests in the Debtors, and stockholders are not required to file proofs of interest or proofs of claim to evidence their stock ownership interests in the Debtors; (5) the Bar Date Notice in its approved form will be deemed good, adequate and sufficient notice if it is served by being deposited in the United States mail, first class postage prepaid, on or before May 14, 2001, upon: * the Office of the United States Trustee for the District of Delaware; * each member of the official committee of unsecured creditors and the official committee of equity security holders and the attorneys for such committees; * all known holders of claims listed on the Schedules at the addresses stated; * all counter parties to executory contracts and unexpired leases listed on the Schedules at the addresses listed; * all known bondholders of the Debtors and the agents and/or trustee's as of the Petition Date; * all known stockholders of the Debtors as of the Petition Date; * all current and recent former employees of the Debtors; * all persons or entities with whom the Debtors have done business in the two years preceding the Petition Date; * the District Director of Internal Revenue for the District of Delaware; * the Securities and Exchange Commission; * all persons and entities requesting notice pursuant to Bankruptcy Rule 2002 as of the entry of the order approving this Motion; (6) so long as the initial mailing of the Bar Date Notice occurs on or before May 14, 2001, the Debtors may make supplemental mailings of the Bar Date Notice up to 25 days in advance of the Bar Date, as may be necessary in situations where (a) notices are returned, (b) certain parties acting on behalf of parties in interest decline to pass along notices to such parties, and (c) additional potential claimants become known; (7) with respect to claimants identified within or after 25 days of the Bar Date, the Debtors may establish special bar dates that would each be at least 20 days after the date on which Debtors effect mailing of notice of each special bar date. (8) pursuant to Bankruptcy Rule 2002(l), the Debtors shall publish a bar date notice in The Wall Street Journal (National Edition), The New York Times (National Edition), and USA Today (National Edition) on at least one occasion at least 45 clays prior to the Bar Date or, depending upon the publishing deadline and frequency of publication of a particular newspaper or periodical, as soon as practicable after the entry of the Bar Date Order; (9) Pursuant to Local Rule 1009-2, in the event that the Debtors amend their schedules, the Debtors will within 10 days transmit notice of the amendment to the creditor, and notice of the creditor's right to file a Proof of Claim by the later of the Bar Date or 20 days from the notice date. (10) King & Associates, Inc. is authorized to retain and pay third party service providers, subject to approval from the Debtors, to the extent necessary to insure proper preparation and distribution of the Bar Date Notice and Proof of Claim and is authorized to be reimbursed by the Debtors; (11) the Bar Date Order is without prejudice to the right of the Debtors to seek a further order of the Court fixing the date by which a holder of a claim not subject to the Bar Date must file such claim against the Debtors; (12) the rights of all holders of claims, creditors and parties in interest are reserved to challenge the Debtors' designation of claims scheduled against a particular Debtor as set forth on the Schedules, as well as any designations by creditors on the proof of claim form of a particular Debtor against which their claims are asserted. (Finova Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392- 0900) FRANCHISE MORTGAGE: S&P Lowers Ranking to Below Average ------------------------------------------------------- Standard & Poor's lowered its ranking to Below Average from Average on Franchise Mortgage Acceptance Co. (FMAC) as a Franchise Loan Servicer. Concurrently, the ranking is removed from CreditWatch, where it had been placed with negative implications on Oct. 6, 2000, following a downgrade in the credit rating of the parent, Bay View Bank N.A. Subsequently, on Jan. 8, 2001, FMAC's ranking was lowered to Average from Above Average, kept on CreditWatch with negative implications, and removed from Standard & Poor's Select Servicer List. The ranking action is based on various issues surrounding FMAC's delivery and disclosure of information to Standard & Poor's, concerns regarding the company's operational capabilities to service its portfolios in a sufficiently proactive manner, and Standard & Poor's eroded confidence in the company's ongoing stability. Simultaneously, FMAC has been stressed with the challenge of maintaining staffing levels and resources to address the demands presented from its surge in loan delinquencies that have well exceeded its industry peers. Based on these combined factors, Standard & Poor's finds that the status of FMAC's servicing operation is not consistent with an Average ranking. FRUIT OF THE LOOM: Seeks More Time To Act On Unexpired Leases ------------------------------------------------------------- Fruit of the Loom, Ltd. is party to approximately 30 leases that it has not moved on to assume or reject. The leases relate to Debtor's corporate offices and various manufacturing, distribution and other facilities. Since the petition date, the leases have remained in effect and have not expired or terminated. The Debtors do not want to find themselves in the position of (a) prematurely assuming a lease that is inconsistent with their long-term business plan or (b) prematurely rejecting a lease that could deliver value to their estates and their creditors. Accordingly, the Debtors asked Judge Walsh for a further extension, pursuant to 11 U.S.C. Sec. 365(d)(4), of the time within which they must make lease disposition decisions through December 31, 2001. Fruit of the Loom told the Court that it has been re-evaluating every aspect of its business, including its leases. As a result of this review, Fruit of the Loom has either assumed or assumed and assigned certain leases. This evaluation is substantially, but not fully, complete. It must be completed for the remaining leases so management can intelligently decide what action to take with each lease in the context of Fruit of the Loom's overall business plan. In addition, Fruit of the Loom has been working diligently to steward its submitted plan of reorganization. Give the size and complexity of Fruit of the Loom's operations, the evaluation will not be complete before the June 30, 2001 deadline. Ms. Stickles told the Court that without further extension, Fruit of the Loom risks prematurely and improvidently assuming leases that could later prove burdensome, thus creating large uncapped potential administrative claims against the estates. J. Kate Stickles, Esq., at Saul Ewing, directed Judge Walsh's attention to Nostas Associates v. Costich, et al. (In re Klein Sleep Products, Inc.), 78 F.3d 18, 28 (2d Cir. 1996). Fruit of the Loom also risks rejecting leases that management could later discover to be critical to its reorganization efforts. Ms. Stickles informed the Court that one of the most extensive lists of factors to consider in determining whether cause exists for an extension was formulated in In re Wedtech Corp., 72 B.R. 464 (Bankr. S.D.N.Y. 1987). According to Ms. Stickles, the Wedtech Court held that the following factors, among others, tend to indicate that cause exists to extend the statutory period: * where the leases are an important asset of the estate such that the decision to assume or reject would be central to any plan of reorganization; * where the case is complex and involves large numbers of leases; * where the debtor has had insufficient time to intelligently appraise each lease's value to a plan of reorganization. Ms. Stickles asserted that under the Wedtech criteria, cause clearly exists to extend the period within which Fruit of the Loom must assume or reject the leases. She told Judge Walsh that the above criteria are clearly met and, therefore, the deadline should be extended. The relief sought by Fruit of the Loom is without prejudice to the right of lessors to seek a reduction of the time to assume or reject the leases. A hearing on this fourth request for an extension is set for June 22, 2001, at 2 p.m. in Wilmington. (Fruit of the Loom Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL TELESYSTEMS: Decides Not to Sell Central European Unit ------------------------------------------------------------- Global TeleSystems, Inc. (GTS) (OTC:GTLS; NASDAQ EUROPE:GTSG; Frankfurt:GTS) has terminated discussions to sell its Central European Division because of unfavorable market conditions for the sale of telecommunications businesses. GTS had announced in November 2000 that it would consider selling its Central European unit as a part of its ongoing restructuring effort, but determined to take the unit off the market in light of its recent sale of its majority interest in Golden Telecom, Inc. The investment bank Credit Suisse First Boston (CSFB) had been managing the sale process on GTS's behalf. Robert Amman, GTS chairman and CEO, said: "GTS Central Europe is an extremely well-performing business with EUR 3.6 million in EBITDA last quarter and with EUR 15 -20 million in anticipated EBITDA this year on expected 2001 revenues of about EUR 100-110 million. It has a young, focussed and experienced management team and a strong, early position in each of the key countries in the region. While there have been a number of interesting proposals made for our Central European unit, we thought it best to take the asset off the market in light of relatively unattractive current market conditions and the liquidity provided from our recent sale of our interest in Golden Telecom." In a related development, GTS announced that it had initiated discussions with the holders of public debt and convertible preferred stock issued by it, and holders of public debt issued by its Global TeleSystems Europe BV subsidiary, with a view toward developing a consensual financial restructuring plan involving an exchange of non-cash paying securities for those outstanding securities. The Company also announced that it had met with legal and financial advisors representing informal committees of those bondholders, and that further discussions have been scheduled. HARVARD INDUSTRIES: Enters Into New Secured Credit Facilities ------------------------------------------------------------- Harvard Industries, Inc. entered into a new senior secured credit facility dated May 31, 2001 with The CIT Group/Business Credit, Inc. and Citicorp USA, Inc. of up to $65 Million, secured by substantially all of the assets of the Company and its domestic and foreign subsidiaries. The credit facility provides for up to $45 million of revolving credit borrowings with a $15 million sub-limit letter of credit facility, and two $10 million term loans. The amount that may be borrowed under the credit facility from time to time will be based on the value of the Company's accounts receivable, inventory, and equipment, among other things. The proceeds of the revolving credit borrowings will be used to finance working capital and other general corporate purposes. The proceeds of the term loans and a portion of the revolving credit borrowings were used to satisfy obligations under its former credit facility with General Electric Capital Corporation ("GECC"). The Company also entered into a new $10 million junior secured credit facility dated May 31, 2001 with Hilco Capital LP, secured by substantially all of the assets of the Company and its domestic and foreign subsidiaries. The credit facility provides for a $10 million term loan. The proceeds of the term loan were used to partially satisfy obligations under its credit facility with General Electric Capital Corporation ("GECC"). Hilco also acquired 500,596 shares of Harvard Industries, Inc. common stock representing approximately 5% of the issued and outstanding shares on the closing date and the right to purchase additional shares in the future in order to maintain its interest in the Company's common equity. The Company used of the proceeds of the term loans and borrowings under the revolving credit facility from The CIT Group/Business Credit, Inc., Citicorp USA, Inc. and Hilco Capital LP, to satisfy all obligations under its $45 million senior secured revolving credit facility with General Electric Capital Corporation ("GECC"). "We are very pleased with this outcome," said Roger Pollazzi, Chairman & Chief Executive Officer. "The management team has worked extremely hard to restructure Harvard operationally and financially due to recent trends in the auto industry and the economy in general." "With our financing in place, we are now concentrating on implementing our business strategy of entering new market segments that complement our traditional core businesses and exiting unprofitable businesses," added Pollazzi. Harvard Industries, Inc. designs, develops, and manufactures a broad range of components for OEM manufacturers and the automotive aftermarket, as well as aerospace and industrial and construction equipment applications worldwide. The Company has approximately 2,000 employees at 9 plants in the United States and Canada. INDEPENDENT INSURANCE: S&P Revises Ratings to R From BB ------------------------------------------------------- Standard & Poor's revised its counterparty credit and insurer financial strength ratings on U.K.-based insurer Independent Insurance Co. Ltd. (Independent) to 'R' from double-'B'. The 'R' rating is applied to insurers that have experienced a regulatory or similar action relating to their solvency. This rating action follows the company's placement into provisional liquidation at the request of its directors following their conclusion that there was insufficient certainty that the company's insurance operations could be run off on a solvent basis. Accordingly, the company, and its parent, Independent Insurance Group PLC, are now under the management of the Provisional Liquidators, PricewaterhouseCoopers. The uncertainty surrounding the adequacy of existing claims reserves has been exacerbated recently by press reports of unrecorded claims. Additional uncertainty has been created by the disclosure of the existence of alleged reinsurance irregularities. It is probable that the Provisional Liquidators will put forward a Scheme of Arrangement, which will mean that claim obligations may not be settled in full, and if they are ultimately settled in full, they are unlikely to be settled in a timely manner. This rating action updates Standard & Poor's previous press release when Independent's ratings were lowered to 'BB' and CreditWatch implications on the company were revised to negative from developing, following the failure to complete the capital raising exercise being pursued by its parent company and the subsequent temporary suspension of business pending the ascertainment of the appropriate level of technical provisions and the reinsurance position. The company's ratings were originally placed on CreditWatch Developing on May 24, 2001. Standard & Poor's expects to update this rating action shortly, following further discussions with the liquidators. INOTEK TECHNOLOGIES: Board Endorses Davis' Acquisition ------------------------------------------------------ Inotek Technologies Corporation has sent an information statement to its stockholders (holders of common stock, par value $0.01 per share), in connection with the proposed acquisition of the company by Davis Instruments, LLC. The acquisition will be effected by the merger of a wholly-owned subsidiary of Davis with Inotek under an Agreement and Plan of Merger dated May 15, 2001, between Inotek, Davis and the stockholders named therein. Under the merger agreement, at the effective time of the merger, each outstanding share of Inotek common stock, other than treasury shares and shares as to which appraisal rights have been properly exercised, will be converted into the right to receive $0.65 in cash. The Board of Directors of Inotek unanimously support the merger. In addition, Neal E. Young, David L. White and Dennis W. Stone, stockholders of Inotek holding 72.2% of the outstanding voting stock of Inotek, have consented in writing to the merger and adopted the merger agreement and have executed and delivered irrevocable proxies in favor of Davis to vote their shares of Inotek in favor of the adoption of the merger agreement and approval of the merger. This action by controlling stockholders is sufficient to ensure that a majority of the stockholders of Inotek adopt the merger agreement and approve the merger without the vote of any other stockholder of Inotek. Accordingly, approval is not required and is not being sought from other holders of Inotek's common stock. LUBY'S INC.: Reports 3rd Quarter Losses & Discloses Bank Talks -------------------------------------------------------------- Luby's, Inc. (NYSE: LUB) announced the results of operations for the quarter ended May 31, 2001. Sales were $122 million compared to $126 million in the corresponding quarter last year, a decline of 3.65%. Due to store closings over the past nine months, the Company operated 17 fewer restaurants during this quarter compared to the same quarter of the previous year; after adjusting to a same-store basis, sales declined 0.44%. The net loss for the quarter was $1.1 million, or $(0.05) per share compared to net income of $5.8 million, or $0.26 per share for the same period last year. Sales for the nine months ended May 31, 2001, were $348 million compared with $371 million for the same period last year, a decline of 6.34%. The net loss was $12.5 million, or $(0.56) per share, for the first nine months of fiscal 2001, compared to net income of $17.6 million, or $0.79 per share, for the first nine months of fiscal 2000. The Company has a signed commitment letter with its bank group to amend its existing credit facility. The amendment will cure the default status that occurred in the second quarter. It is expected that the amendment will be formally executed before the issuance of the third quarter 10-Q. Chris Pappas, Luby's new President and CEO, commented, "We are making foundational changes and operational improvements that are driven by a systematic and contagious focus on excellence. We reinforce this every day and at every opportunity. The road to improved financial performance will not be easy, but Harris Pappas, our COO, and I are investing significant effort and resources in Luby's in a concerted effort to reach this objective." The San Antonio-based company operates 215 Luby's restaurants in ten states, and its stock is traded on the New York Stock Exchange (NYSE: LUB). NEWCARE HEALTH: Examiner & Committee File Joint Liquidation Plan ---------------------------------------------------------------- According to documents obtained by BankruptcyData.com, Court- appointed Examiner William Brandt and the official committee of unsecured creditors filed a Joint Liquidating Plan of Reorganization and related Disclosure Statement for the NewCare Health Corp. case with the U.S. Bankruptcy Court. (New Generation Research, June 19, 2001) NEWCARE: Court Denies Motion To Convert Case To Chapter 7 --------------------------------------------------------- The U.S. Bankruptcy Court denied without prejudice Heller Healthcare Finance, Inc.'s motion to convert NewCare Health Corp.'s Chapter 11 reorganization to a Chapter 7 liquidation. (New Generation Research, June 19, 2001) OWENS CORNING: Moves To Defend & Indemnify Employee Defendants -------------------------------------------------------------- Acting for Owens Corning, J. Kate Stickles, joined by Norman L. Pernick and Jeremy W. Ryan of the Wilmington firm of Saul Ewing LLP, tell Judge Fitzgerald that the Debtors are concerned about the effect on the morale of their employees who are being named as defendants in various litigation matters, and want to provide a fund to pay the costs of those employees' defenses and indemnify them. In October 2000 the Debtors filed a Motion seeking judicial approval and authorization to pay prepetition employee wages, salaries, commissions, business expenses, and other accrued compensation, and to continue employee benefit plans and programs postpetition. The Debtors said the primary purpose of this Motion was to protect the Debtors' business operations form the disruption that would result if certain basic protections were not provided to the Debtors' current and former employees. These protections were intended to maintain employee morale and facilitate the Debtors' ability to retain the employees during the Chapter 11 process. Judge Walrath entered an Order granting this Motion on the same day it was filed. As the Debtors' bankruptcy cases have progressed, the Debtors have come to understand that the employee Motion did not address the ability of the Debtors to defend and indemnify present and former employees who are individually named as defendants in lawsuits for acts perform while in the ordinary course and scope of their employment. At this time, the Debtors said they are aware of six lawsuits, all of which relate to underlying events which occurred prior to the Petition Date. Should the Debtors not be allowed to defend and indemnify the employees with respect to these and similar actions, the employees will be forced to bear their own defense costs and potentially have their own personal assets be at risk to satisfy any judgment rendered. More significantly, should the Debtors not be permitted to defend and indemnify employees, the morale of the Debtors' employees is likely to suffer severe damage, and the Debtors' ability to retain quality personnel will be jeopardized. The Debtors simply cannot risk the disruption and failure of employee morale that would result if the Debtors are not authorized to defend and indemnify their employees. Citing the "necessity of payment" rule first enunciated by the Supreme Court in "Miltenberger v. Logansport, C. & S. W. R. Co.", the Debtors asked that Judge Fitzgerald use her equitable powers to authorize the Debtors to assume the costs of defense of their employees and indemnify them against any judgment for acts performed while in the ordinary course and scope of their employment, as the continued service and dedication of all of the Debtors' employees is critical to the Debtors. (Owens Corning Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) OXFORD AUTOMATED: S&P Cuts Ratings To Low-B's, Outlook Negative --------------------------------------------------------------- Standard & Poor's lowered the following ratings of Oxford Automotive Inc.: To From -- ---- * Corporate credit rating B+ BB- * Senior secured debt B+ BB- * Subordinated debt B- B The ratings are removed from CreditWatch, where they were placed on March 30, 2001. The rating actions reflect Standard & Poor's expectation that Oxford's credit protection measures will remain below previously expected levels and that continuing industry pressures and heavy capital spending requirements will prevent the company from significantly reducing debt leverage over the next two years. In addition, the rating actions take into account the company's reduced liquidity. The outlook is now negative. Oxford is a Tier I supplier of engineered metal components, assemblies, and modules for the original equipment automotive industry. Core products include closure systems, suspension systems, and complex structural subsystems. Oxford's operating performance has deteriorated over the past year as a result of the weakening in North American automotive demand and increased costs associated with the launch of new business. As a result, credit protection measures have deteriorated and are well short of expectations. Debt/EBITDA is currently estimated to be in the 6.5 times (x) area (adjusting for restructuring charges and other one-time factors). Previous ratings had incorporated an expectation that debt/EBITDA would fall to the 4x area and remain below 4x (except for temporary spikes immediately following an acquisition). Given Oxford's significant investment requirements this year and the likelihood of continued industry pressures over the near term, the company's debt leverage is likely to remain above previously expected levels over the near to intermediate term. Current ratings assume that ongoing cost-cutting actions will enable the company to improve credit protection measures somewhat over the next year, with debt/EBITDA falling below the 6x area and approaching the 5x area by the end of the current fiscal year. Earnings pressures and tooling requirements for new business have, together, reduced the company's flexibility for dealing with current industry pressures. Oxford recently amended its credit agreement to relax covenants over the next year. However, it did not increase the size of its $175 million bank facility and, given the company's diminished near-term cash flow outlook, availability under the facility is likely to be less than previously expected. As of Dec. 31, 2000, the company had $62 million of availability under its bank line and availability is expected to decline from that level during fiscal year 2002 (FYE is March 31). Outlook: Negative Ratings assume that cost-containment efforts will enable the company to mitigate current industry pressures and generate improved credit protection measures over the next year. Should earnings pressures or investment requirements lead to a weaker- than-expected liquidity position, ratings are likely to be lowered, Standard & Poor's said. PACIFIC GAS: Judge Gives Tentative Okay For Executives' Bonuses --------------------------------------------------------------- A federal bankruptcy judge tentatively approved Pacific Gas & Electric's plan to award $17.5 million in bonuses to top executives, saying he did not want to interfere in the day-to- day business dealings of the shattered utility, according to Reuters. But Judge Dennis Montali said that before giving the final okay to the plan he would need more information, including which executives would receive bonuses, how much they would be paid and why stock options were not considered as ways to keep these employees from jumping ship. The bonuses, dubbed a management-retention program, have been one of the more contentious issues involved in the bankruptcy of Pacific Gas & Electric, which filed for chapter 11 protection in April after racking up some $9 billion in debt during California's energy crisis. The payout proposal, which was first floated last month, earmarks a total of $17.5 million for payments to about 200 top utility executives. Some of the most lavishly rewarded include the top six officers of the utility and 17 other senior managers, who would see their salaries doubled under the plan. Montali told the utility he wanted to know the names of the top six recipients of the bonuses and how much they would receive, as well as the titles and dollar amounts of the 17 executives below them. (ABI World, June 19, 2001) PSINET INC.: Court Allows Continuance Of Investment Practices ------------------------------------------------------------- At PSINet, Inc.'s behest, Judge Gerber authorized the Debtors: (A) to deposit and invest the money of their estates in the manner proposed in its motion, which in essence is a continuance of their existing deposit and investment practices or commercially comparable practices, in lieu of the requirements of Section 345 of the Bankruptcy Code and the U.S. Trustee's Guidelines; (B) to sell certain marketable securities representing minority interests in a number of publicly traded enterprises (the "Public Venture Investments"), in the manner the Debtors were doing prior to the Petition Date, without having to attempt to auction or privately negotiate the sale of these interests. (A) Investment Practices Prior to the commencement of their bankruptcy cases and in the ordinary course of business, the Debtors deposited their money in 31 bank accounts at 17 different financial institutions. Except as described below, these accounts are ordinary depository accounts, maintained for operational and not investment purposes. To the extent they bear interest, it is at nominal rates. At times the individual balances in these accounts will exceed the current limits of governmental insurance. Were it not for the waiver granted by the Court, these deposits would otherwise be subject to the bonding or collateralization requirements of Section 345(b) and the U.S. Trustee's Guidelines unless those requirements are waived. Other than the Venture Investments, the only investments the Debtors presently make are: (a) overnight investments of the funds that are swept from the Debtors' main concentration account with Fleet Bank N.A. to the Fleet overnight investment sweep account at the close of business each day, (b) investments in certificates of deposit held in accounts with Bank of America N.A., JP Morgan Chase Bank and United Bank (the "Collateral Accounts") to secure letters of credit and (c) investments of excess amounts not needed for daily operations through two investment accounts with Donaldson, Lufkin & Jenrette and Merrill Lynch (the "Investment Accounts"). Funds in the Overnight Investment Account are invested in a Fleet money market account that complies with the Debtors' Investment Guidelines. The Overnight Investments mature the next business morning and are returned to the Fleet Concentration Account; earned interest is credited on a monthly basis. Funds in the Collateral Accounts are invested in certificates of deposit ("CDs") that comply with the Debtors' Investment Guidelines. Interest income from the CDs in the Collateral Accounts is transferred to the Fleet Concentration Account, or if not needed for daily operations, transferred to the Investment Accounts for investment therein. Existing CDs in the Collateral Accounts are usually rolled over into new CDs as they mature. The great bulk of the Debtors' aggregate cash reserves are held in the Investment Accounts and invested therein in compliance with the Debtors' Investment Guidelines. The Overnight Investment Account, the Collateral Accounts, the Investments Accounts and the investments therein are largely uncovered by governmental insurance. They will therefore be subject to the bonding and collateralization requirements of Section 345(b) and the U.S. Trustee's Guidelines unless those requirements are waived. The Debtors believe that, with very little risk differential, their existing practices are significantly less burdensome and more appropriately tailored to their business needs than the practices otherwise required under the Bankruptcy Code and by the U.S. Trustee. The Debtors' Investment Guidelines apply to all deposits and investments. The Investment Guidelines call for (i) compliance with the financial covenants of the indentures governing the various senior notes issued by PSINet Inc. and (ii) maximum reasonable net return on investment of the Debtors' funds, consistent with the Debtors' needs for safety and liquidity. Under the Investment Guidelines, the Debtors' deposits and investments are limited to the following: (a) any evidence of Indebtedness, maturing not more than one year after the date of acquisition, (1) issued by the United States of America, or an instrumentality or agency thereof, and guaranteed fully as to principal, premium, if any, and interest by the United States of America or (2) which is denominated in euros and is issued by the Federal Republic of Germany, the Federal Republic of France or the United Kingdom, or any instrumentality or agency thereof, and guaranteed fully as to principal, premium, if any, and interest by the issuing government; (b) any certificate of deposit, maturing not more than one year after the date of acquisition, issued by, or time deposit of, (1) a commercial banking institution that is a member of the Federal Reserve System, or (2) a bank or trust company organized under the laws of any member of the European Union whose long-term debt is rated "A-" or higher according to S&P or "A-3" or higher according to Moody's, and such banking institution, bank or trust company also has (i) combined capital and surplus and undivided profits of not less than $500 million, and (ii) short term debt with a rating, at the time as of which any investment therein is made, of "P-1" or higher according to Moody's Investors Service, Inc. or any successor rating agency or "A-1" or higher according to Standard & Poor's Corporation or any successor rating agency; (c) commercial paper, maturing not more than 270 days after the date of acquisition, issued by a bank or corporation, other than an Affiliate or Subsidiary of PSINet, with a rating, at the time as of which any investment therein is made, of "P- 1" or higher according to Moody's or "A-1" or higher according to S&P and which is organized under the laws of (1) the United States of America or (2) any member of the European Union provided that such member's long-term debt is rated "A-" or higher according to S&P or "A-3" or higher according to Moody's; and (d) any money market accounts or funds at least 95% of the assets of which constitute cash equivalents of the kinds described in (a), (b) or (c) above. As of May 23, 2001, the Investment Account with Donaldson, Lufkin & Jenrette held cash and investments with an approximate value of $268.0 million, virtually all of which was invested in commercial paper of banks and corporations meeting the requirements of the Debtors' Investment Guidelines. As of April 30, 2001, the Investment Account with Merrill Lynch held cash and investments with an approximate value of $34.0 million, virtually all of which was invested in time deposits with banks meeting the requirements of the Debtors' Investments Guidelines. The Debtors estimate that the approximate value and investment of funds in the Investment Accounts as of the Petition Date do not vary substantially from the amounts and types of investments held as of May 23, 2001 and April 30 2001, respectively. The Debtors believe that their investments and deposits in the Accounts, the Overnight Investment Account, the Collateral Accounts and the Investment Accounts are commercially reasonable and appropriate and consistent with the intent of Section 345 of the Bankruptcy Code, and the Investment Practices developed by them are very conservative. The Investment Practices permit investments only in high grade securities. Such investments, the Debtors note, provide the PSINet estates with the benefit of a reasonable rate of return, while at the same time providing safety and liquidity. Although largely not insured by the government, a surety or collateralized, the deposits and investments are among the safest types available and bear practically no risk to principal from market fluctuations, the Debtors represent. The Debtors believe that, as long as cash is available in amounts sufficient to permit adequate diversification of investments and investments are restricted in accordance with the Investment Practices, no corporate surety or collateralization is required to afford protection to creditors comparable to or greater than that afforded by use of a corporate surety or collateralization when a smaller amount of cash is invested in a less diversified portfolio. The yield on deposits and investments under the Investment Practices, the Debtors note, will be greater than if the Debtors are restricted solely to direct investment in government securities. As to investments in securities of private entities, the Debtors believe that any corporate surety that might be obtained to guarantee the safety of the investment would likely not have significantly greater financial strength than the private entities in which they could invest under the Investment Practices. Moreover, a bond secured by the undertaking of a corporate surety would be unduly expensive, even if such a bond were available, and could offset much of the financial gain derived from investing in private as well as government or government guaranteed securities. Therefore, the Debtors believe it would be in the best interest of the creditors of the estate for the Debtors to continue to follow the Investment Practices, notwithstanding the requirements of Section 345(b) and the U.S. Trustee's Guidelines. (B) Public Venture Investments These marketable securities representing minority equity interests in approximately 16 public companies with a market value of approximately $10 million, were acquired prepetition by the Debtors as part of their venture capital and/or services- for-equity program. The Debtors believe that the returns to the estate will be maximized if these securities are disposed of when market conditions are favorable, as the Debtors were doing prior to the Petition Date. Because none of these interests convey control or other management rights, the Debtors do not believe that attempting to auction or privately negotiate the sale of these interests would improve recoveries for the estates. Any proceeds of the disposition of the Public Venture Investments will be deposited in the Fleet Concentration Account, or if not needed for daily operations, invested in the Investment Accounts in compliance with the Debtors' Investment Guidelines. (PSINet Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392- 0900) PURINA MILLS: Inks $23 per Share Cash Deal with Land O'Lakes ------------------------------------------------------------ Land O'Lakes, Inc. and Purina Mills, Inc. (Nasdaq: PMIL) announced jointly that they have signed a definitive merger agreement, under which Land O'Lakes will acquire Purina Mills. Under terms of the agreement, Land O'Lakes will acquire all of Purina Mills' stock at a price of $23 per share in cash. Land O'Lakes President and Chief Executive Officer Jack Gherty said the acquisition makes sense in terms of both feed industry trends and the future of Land O'Lakes feed operations. Purina Mills will become part of Land O'Lakes Farmland Feed LLC following the acquisition. "We are bringing together well-recognized brands in different product categories, as well as complementary geography and product lines," Gherty said. "At the same time, we are building the economies of scale and critical mass necessary to compete nationally in the consolidating feed industry. This transaction clearly has positive implications for the long-term success of our farmer-owned feed system." The Purina Mills product lines, brands, nationwide dealer network and checkerboard trademark logo will be maintained, Gherty said. The Purina Mills organization will continue to be based in St. Louis, Mo., with its own sales and marketing team. Purina Mills Chief Executive Officer Brad Kerbs said the proposed acquisition has positive implications for Purina dealers and customers. "Our focus has consistently been on positioning our organization and our dealers for long-term success. While pursuing that strategic intent, discussions with Land O'Lakes revealed our two organizations have a number of very valuable synergies," Kerbs said. "This transaction will create a more competitive national feed system, well-positioned to contribute to the long- term success of Purina dealers and customers." The acquisition will deliver additional value through increased efficiency in such areas as production, distribution and purchasing, Gherty said, adding that little change is anticipated at the dealer and customer levels. "The key to this acquisition is the fact that it brings together two organizations and two leading brands with a proven record of quality and service and a high level of customer recognition and acceptance," Gherty said. "As we work to preserve and build upon that record, we will focus on making the transition to the new organization as seamless and as smooth as possible." The acquisition of Purina Mills by Land O'Lakes is subject to certain conditions, including approval by the shareholders of Purina Mills, Inc. and receipt by Land O'Lakes of financing for the acquisition. Land O'Lakes was advised by, and has received a commitment for financing, subject to customary conditions, from JPMorgan. In connection with the execution of the definitive merger agreement, GSCP Recovery, Inc., which beneficially owns approximately 28 percent of the outstanding shares of Purina Mills' common stock, has entered into a voting agreement pursuant to which, among other things, such stockholder has agreed (and has granted a proxy) to vote its shares of Purina Mills' common stock in favor of the acquisition. Land O'Lakes ( http://www.landolakesinc.com) is a national, farmer-owned food and agricultural cooperative, with sales approaching $6 billion. Land O'Lakes does business in all fifty states and more than fifty countries. It is a leading marketer of a full line of dairy-based consumer, foodservice and food ingredient products across the U.S.; serves its international customers with a variety of food and animal feed ingredients; and provides farmers and local cooperatives with an extensive line of agricultural supplies (feed, seed, crop nutrients and crop protection products) and services. Purina Mills (http://www.purinamills.com),based in St. Louis, Mo., has 48 plants and approximately 2,300 employees nationwide. Purina Mills is permitted, under a perpetual, royalty-free license agreement from Ralston Purina Company, to use the trademarks "Purina" and the nine-square Checkerboard logo. Purina Mills is not affiliated with Ralston Purina Company, which distributes Purina Dog Chow and Purina Cat Chow brand pet foods. PURINA MILLS: Board Amends Stockholder Rights Plan -------------------------------------------------- Purina Mills, Inc. (Nasdaq: PMIL) announced that its Board of Directors amended Purina Mills' stockholder rights plan to make the provisions of the plan inapplicable to the Land O'Lakes merger agreement. The amendment also provides that a person or entity (other than GSCP Recovery, Inc., Purina Mills' largest stockholder) will become an "acquiring person" under the rights agreement if such person or entity becomes the beneficial owner of 10% or more of the outstanding common stock of Purina Mills. If any person or entity (other than GSCP Recovery) already owns 10% or more of the outstanding Purina Mills common stock, that person or entity will not be considered an "acquiring person" unless and until such time as that person or entity acquires additional shares of Purina Mills' common stock. RELIANCE GROUP: Employs Bankruptcy Services LLC As Claims Agent --------------------------------------------------------------- Reliance Group Holdings, Inc. said that the parties in interest in its chapter 11 cases include customers, employees, taxing authorities, bank lenders, bondholders, trade creditors and stockholders, among others. They number well in excess of 1,000. All such parties must be included in the noticing and claims process. Neither the Clerk nor the Company has the equipment or staff to docket and maintain the large number of proofs of claim that will be filed. Reliance told the Court that the most effective and efficient manner to handle proofs of claim is to engage an independent third party to act as claims processing agent. Bankruptcy Services LLC ("BSI") is a firm specializing in claims management, consulting and computer services. It has been engaged in this business for several years and is one of the pioneers of the bankruptcy claims processing business. BSI has considerable experience as a claims agent and has acted as the official claims agent in numerous large cases. In Reliance's cases, BSI will: (a) Establish the address where all proofs of claims should be filed; (b) Relieve the Clerk's Office of notice responsibility relating to the bar date and claims processing; (c) Assure the Court that it has the ability to notice, docket and maintain proofs of claims; (d) Furnish a bar date notice and proof of claim form to creditors; (e) Serve notices to creditors regarding meetings and deadlines; (f) File with the Clerk's Office a certificate of service which includes a copy of the notice served, a list of recipients and the mailing date; (g) Receive, docket, maintain, photocopy, and transmit all proofs of claim filed; (h) Maintain and protect the original proofs of claim; (i) Provide access to the claims without charge during regular business hours; (j) Make all original documents available to the Clerk's Office on an expedited, immediate basis; (k) Maintain a proof of claim docket in sequential order, which specifies the claim number, date received, name and address of claimant and agent, amount of claim and classification; (l) Transmit to the Clerk's office a copy of the register every month; (m) Maintain a mailing list for all entities that have filed a proof of claim; (n) Record all transfers of claims pursuant to rule 3001(e) and provide notice of the transfer; (o) Comply with applicable state, municipal and local laws and rules, orders, regulations and requirements of federal government departments and bureaus; (p) Comply with further conditions as the Clerk's Office may prescribe; In addition, Reliance wants BSI to assist in fulfilling claims- related obligations including: (1) Assist with schedules of assets and liabilities, statements of financial affairs, schedule of executory contracts and unexpired leases; (2) Provide training and consulting support to manage claims reconciliation; (3) Assist with the objection process; (4) Assist with preparation, mailing and tabulation of ballots to the plan of reorganization; (5) Provide requisite notices throughout the Chapter 11 proceedings; (6) Any other administrative services requested by RGH. Kathy Gerber, director of operations at BSI declared that BSI is a disinterested party. Section 156(c) gives the Court power to utilize outside agents provided that Debtor pays the costs. Debtors proposed to pay BSI a retainer of $5,000 out of their estates. BSI does not consider itself to be a "professional" for purposes of the Bankruptcy Code. Therefore, to reduce expenses, RGH proposed that the fees of BSI be treated as an administrative expense and be paid on a monthly basis. RGH informed the Court that BSI meets the legal definition of a "disinterested party." (Reliance Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) SENIOR HOUSING: Fitch Rates Preferred Offering At BB- ----------------------------------------------------- Fitch has assigned its 'BB-' rating to a recent offering of $25 million trust preferred securities by SNH Capital Trust I, a newly-formed financing subsidiary of Senior Housing Properties Trust (SNH). Proceeds will be used to reduce bank borrowings of SNH. Fitch has also assigned an issuer rating of 'BB+' to SNH and affirmed the company's 'BBB-' rating assigned to its $270 million secured revolving credit agreement expiring Sept. 15, 2002. The Rating Outlook is Stable. SNH is a $440 million (current market capitalization) equity health care REIT with investments in 85 properties in 23 states. By value, the SNH portfolio is weighted toward 14 high-quality senior living properties operated and leased by Marriott Senior Living Services, which provide approximately 65% of SNH's net- lease revenues. The portfolio also includes 71 skilled nursing and assisted living facilities, including a group of 57 properties that SNH has taken back from distressed operators. Because the majority of SNH's portfolio value is concentrated within the Marriott pool, which serves as collateral for the secured bank credit facility, the 'BB-' trust preferred rating assigned by Fitch recognizes the relatively high structural and economic subordination of the preferred to senior secured lenders. Partially mitigating this issue is SNH's current moderate use of debt leverage of 26% on a market basis as of March 31, 2001, and solid fixed charge coverage estimated by Fitch at 3.5 times (x) on a pro forma basis for the current offering. The 14 properties operated by Marriott Senior Living Services ($325 million book value, 55% of total investments) consist of stabilized (92% weighted average occupancy for 2000) congregate care and assisted living facilities with a total of 4,030 units. The majority of the units consist of independent living and assisted living units, resulting in a relatively high 88% percentage of revenues from private pay sources. Skilled nursing beds account for approximately 20% of total units. The portfolio continues to perform well, overall, resulting in a 6.6% increase in percentage rent paid to SNH during 2000. While the pool includes two weaker facilities (each with a high proportion of assisted living units) that do not cover their allocated rent, concerns associated with these properties are mitigated by cross-default of these leases to the other 12 properties, and are further backstopped by a guarantee of lease revenues from Marriott International Inc. The remainder of SNH's portfolio consists primarily of nursing home properties, including 14 facilities that are operated by independent health care operators generating annual rent of approximately $17 million, and 57 properties currently operated by SNH for its own account. The group of 57 nursing home properties represent approximately $145 million of book asset value or 25% of total investments. In order to stabilize facility-level operations (which have suffered from the combined impact of lower Medicare reimbursement rates, lower occupancies and operator bankruptcies), SNH's management company has formed its own nursing home operating company to manage these assets. So far, free cash flow is running at a break-even level after capital expenditures for physical plant and information systems. SNH's strategy is to stabilize and ultimately re-lease or sell these properties to independent operators, although Fitch cautions that high labor rates, increasing insurance costs and competition from the assisted living sector will challenge management to restore historical profitability and value to third-party operators. As of March 31, 2001, SNH's total debt leverage consisted of $105 million of borrowings under the $270 million secured revolving credit facility. During 2000, borrowings were reduced nearly 50% through the sale of four properties back to operator Brookdale Living Communities for $123 million. As a result of SNH's moderate overall leverage, consolidated interest coverage from EBITDA is above average at 4.5x for 1Q'01, and SNH does not currently foresee the need for significant incremental borrowings beyond maintenance capital expenditures at the foreclosure properties. While financing options remain limited for the health care REIT sector generally, Fitch believes that the collateral value of the Marriott properties combined with SNH's other assets should allow it to comfortably refinance outstanding borrowings when the bank facility matures in 2002. SNH was formed in October 1999 when HRPT Properties Trust (senior debt rated 'BBB/Stable' by Fitch) spun-off 51% of its ownership in SNH to shareholders. Both SNH and HRPT are externally managed by REIT Management and Research, a privately held real estate advisory and property management company. SOURCE MEDIA: Defaults on Payment of 12% Senior Secured Notes ------------------------------------------------------------- Source Media, Inc. (OTC Bulletin Board: SRCM), a provider of interactive digital cable TV applications and audio and text applications for all digital media platforms, has announced that the indenture trustee of its 12% Senior Secured Notes due May 1, 2001 declared the entire principal amount of the Notes and all accrued interest due and payable immediately, due to the company's failure to make the current interest payment. As a result, Source Media will record the entire principal amount of the Notes as short-term indebtedness rather than long-term indebtedness. Source Media and its financial advisor, UBS Warburg, continue to analyze Source Media's strategic alternatives and options, and hold discussions with the unofficial committee of holders of the Notes. Source Media is conducting its business as usual. Source Media is a leader in the development, production and distribution of new media content. Source Media's interactive TV business is conducted through SourceSuite LLC, a 50/50 joint venture with Insight Communications, which is managed by Source Media. SourceSuite's products are SourceGuide, an interactive program guide and LocalSource, a local interactive programming service. Source Media's IT Network is the leading creator of private label audio and text content. This content is designed for universal distribution and access across all platforms, including voice portals, wireless and wireline telephone, Internet and digital cable television. For further information, you may visit its website at www.sourcemedia.com THOMASTON MILLS: Files Chapter 11 Petition in M.D. Georgia ---------------------------------------------------------- Thomaston Mills, Inc. (OTC Bulletin Board: TMSAE.OB, TMSBE.OB) filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Middle District of Georgia at Macon. During the bankruptcy proceedings, the Company expects to continue certain operations while seeking a purchaser for all or part of its assets under court protection from creditors. "The decision to file a Chapter 11 petition was an extremely difficult one, but we believe it is the only alternative that may provide the breathing space and relief necessary to find a purchaser for the Company, or, if none can be found, an orderly wind-down of the Company's operations," said A. William Ott, Acting President and Chief Executive Officer of Thomaston Mills. As part of recent efforts to reduce the Company's operating expenses and overhead costs during its search for a purchaser, the Company last week ceased operations at its Peerless manufacturing facility in Thomaston, Georgia, thereby discontinuing the spinning and weaving operations for its home furnishings lines. This shut-down has resulted in the furlough of approximately 540 employees who worked at the Peerless facility. "We deeply regret the hardship that these changes will cause to many of our employees who have been loyal to Thomaston Mills over the years," said Mr. Ott. Thomaston Mills operates three textile plants in the Thomaston, Georgia area with approximately 900 employees. The Company produces sheets, pillowcases and comforters for retail customers, and also produces textiles for the home furnishings and piece dyed markets. TOKHEIM CORP: Engages Ernst & Young As New Certifying Accountant ---------------------------------------------------------------- Tokheim Corporation has indicated a change in its certifying accountant having engaged Ernst & Young LLP as its independent public accountants, effective June 12, 2001. TRANS WORLD: Court Says No To Creditor's Demand For Payment ----------------------------------------------------------- The U.S. Bankruptcy Court in Wilmington, Del., ruled Monday that Trans World Airlines Inc. (TWA) doesn't have to immediately pay off a $507,000 administrative expense claim to a creditor, according to Dow Jones. Swissport Puerto Rico, which provided ground and baggage handling services to TWA at the San Juan Airport, said it would have difficulty operating its business if it had to wait for TWA to get its reorganization plan approved and to finish liquidating before it gets repaid. Judge Peter J. Walsh said he would allow the administrative claim to be entered but couldn't approve an immediate payment unless Swissport submits evidence of its financial straits. Judge Walsh denied Swissport's motion without prejudice, giving the company the opportunity to come back to the court with proof of its situation. Judge Walsh said that if Swissport could prove its case at a later date, he could possibly order TWA to pay a portion of the debt before a plan effective date. TWA filed for chapter 11 bankruptcy protection on Jan. 10, listing assets of $2.1 billion and liabilities of $2.3 billion. (ABI World, June 19, 2001) W.R. GRACE: Committees Hot on Fresenius & Sealed Air Recoveries --------------------------------------------------------------- Justice and equity require that the Official Committee of Asbestos Property Damage Claimants and the Official Committee of Personal Injury Claimants be empowered to prosecute W. R. Grace & Co.'s fraudulent conveyance claims arising out of the Sealed Air Corporation and Fresenius Transactions. Those transactions stripped billions of dollars of value from W.R. Grace & Co., through complex schemes that worked a fraud on Grace's asbestos claimants, Scott L. Baena, Esq., at Bilzin Sumberg Dunn Baena Price & Axelrod LLP, and Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, told Judge Farnan. The Debtors and their legal team at Kirkland & Ellis suffer from debilitating conflicts of interest, the Asbestos Committees assert, making them unable to pursue recovery of the assets spun-out in the Sealed Air and Fresenius Transactions. Moreover, the Debtors are unwilling to pursue those fraudulent conveyance claims and have done everything in their power thus far to safeguard their fraud by seeking injunctive relief to bring pending actions in other courts to a screeching halt. The Unsecured Creditors Committee's "wait and see" approach baffles the Asbestos Committees. Waiting, as the Unsecured Creditors' Committee suggested, to see whether the Debtors are solvent and capable of paying all creditors' claims without the need for prosecuting fraudulent conveyance claims -- determinations that could take years -- runs too high a risk. Evidence will be lost, witnesses' memories will fade, new statute of limitation or repose defenses may arise, and subsequent transfers of the assets could place them further out of reach. The time to assert the claims is now, Messrs. Baena and Inselbuch argue, and the Asbestos Committees are the right parties to prosecute the claims. The Asbestos Committees step the Court through their rendition of the facts underpinning the fraudulent conveyance claims: The 1996 Fresenius Transaction In 1996, the operating assets of the Grace corporate group were owned by W.R. Grace & Company -- Conn ("Grace I") through various divisions and direct and indirect subsidiaries. One of its most profitable subsidiaries was National Medical Care, Inc. ("NMC"), a health care business. In 1996, Grace I divested itself of NMC, thereby purporting to insulate NMC assets from the asbestos liability confronting Grace I. Grace I, however, did not receive adequate consideration for NMC, and the transfer appears tainted by intent to defraud asbestos creditors. The Asbestos Committees understand the transfer happened this way: * Grace I transferred NMC to the ultimate parent of the Grace corporate group, a publicly-owned New York holding company known as W.R. Grace & Company ("Grace II"). The consideration for this transfer was $2,262,000,000 in cash borrowed by NMC, about half of which went to reduce Grace I's debt. The $2,262,000,000 consideration was much less than the $3,175,000,000 to $4,000,000,000 value that the Grace group ascribed to NMC on a stand-alone basis in reports to shareholders. * Grace II created a new Delaware subsidiary also named W.R. Grace & Company ("Grace III"), and then transferred the stock of Grace I to that new corporation. Grace I thus ceased to be a direct subsidiary of Grace II and became a direct subsidiary of Grace III. * The stock of Grace III was spun-off to the public shareholders of Grace II. This step ostensibly ended the formal affiliation between Grace III (with its subsidiary, Grace I) and Grace II ) with its subsidiary, NMC). * Grace II was renamed Fresenius National Medical Care Holding Company ("FMC Holding"). It then merged into a subsidiary of Fresenius A.G. ("Fresenius"), a German company operating a worldwide dialysis business. As part of the same plan, Fresenius contributed its U.S. subsidiary, Fresenius U.S.A., to FMC Holding. In sum, the Asbestos Committees charge, these complex maneuvers stripped NMC out of Grace I and turned Grace II, renames as FMC Holding, into a subsidiary of Fresenius holding two subsidiaries, Fresenius U.S.A. and NMC. As a result, the public shareholders of Grace II received 44.8% of the combined NMC/Fresenius business, plus preferred stock of FMC Holding. In all, the Asbestos Committees calculate, those shareholders received approximately $4,500,000,000 in value, yet the consideration paid to Grace I was only $2,262,000,000. The 1998 Sealed Air Transaction The Fresenius transaction left Grace I as a subsidiary of Grace III operating a flexible packaging business and a specialty chemicals business. In 1998, Grace disposed of the packaging business in a series of maneuvers evidently modeled on the Fresenius transaction. The Asbestos Committees understand the transfer happened this way: * Grace III separated its packaging business and specialty chemicals business into separate subsidiaries, creating "Cryovac" as a new subsidiary to receive the packaging business. As consideration for the packaging business, Grace I received $1,200,000,000. That money was borrowed by the transferred business and was used to pay down Grace I's debt. * Grace III proceeded to sin-off Grace I, which became the subsidiary of a new company known as Grace Specialty Chemicals. Grace Specialty Chemicals was later renamed as yet another iteration of W.R. Grace & Company ("Grace IV"). * Grace III then merged its Cryovac subsidiary with Sealed Air Corporation U.S., a subsidiary of the company then known as Sealed Air Corporation, producers of bubble wrap and other packaging. In connection with this merger, Grace III changed its name to Sealed Air Corporation. In short, the Asbestos Committees charge, Grace I was divested of the packaging business and $1,200,000,000 in debt was removed from Grace I's books and placed on the books of the packaging business as transferred. Public shareholders of Grace III, now known as Sealed Air Corporation, received 63% of the combined packaging/bubble wrap business. * * * These fraudulent conveyance claims, the Asbestos Committees contended, may well constitute the most substantial asset of the Debtors' estates. The claims engender numerous complex issues, including the transfer of venue of litigation pending in San Francisco; Spokane County, Washington; Massachusetts and elsewhere, the assertion of state law fraud claims and causes of action arising under Chapter 5 of the Bankruptcy Code. These matters, the Asbestos Committees said, require prompt attention and decisive action to ensure that W.R. Grace's estates and their creditors realize full value. Accordingly, the Asbestos Committees asked Judge Farnan for permission to step into the Debtors' shoes and prosecute these fraudulent conveyance claims without further delay. Objections to the Asbestos Committees' Joint Motion must be filed with the Court by June 29, 2001. Judge Farnan will convene a hearing on the matter on July 19, 2001. (W.R. Grace Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) WALL STREET DELI: Taps Liuzza To Explore Strategic Alternatives --------------------------------------------------------------- Wall Street Deli, Inc. (OTCBB:WSDI) reported that it has engaged Liuzza Management Consulting, L.L.C. to advise the Company on strategic alternatives for enhancing shareholder value and to coordinate a series of activities on behalf of the Board. In view of increasing losses and adverse trends, the Company is actively pursuing a number of alternatives. In addition to accelerated closings or sale of unprofitable units already being undertaken, the Company is considering seeking additional short- term or long-term capital in the form of either debt or equity, a possible merger or sale of part or all of the company, other forms of reorganization of the Company's capital structure, and the development of other forms of strategic alliances with outside parties. The Company has previously cautioned that unless one or more of these alternatives is successful, it may be unable to continue as a going concern. The Company expects to report a loss for the fourth fiscal quarter ending June 30, 2001, based on continuing declines in sales volume, as well as losses associated with sold and closed units and recently flooded units in Houston, Texas. These losses will result in significant additional impairments of long-term assets including leasehold improvements and the deferred tax asset though the extent of the additional impairments is not yet determinable. The Company has sold seven units and closed seven restaurants during the fourth quarter and may also franchise or close up to five additional ones in the balance of the fourth fiscal quarter. Fourth quarter results will also be affected by the recent flooding in Houston that has disrupted operations at three company-owned restaurants. Two of the Houston units are still under water and the extent of the losses cannot be determined at this time. The Company also reported that its primary lender has extended its line of credit through July 5, 2001, and waived compliance with financial covenants as of the end of the third quarter. It is expected that at the end of the fourth quarter, the Company will continue to be in non-compliance with the financial covenants. The Company is in the process of requesting additional extensions and waivers, but it is not known whether or how long the lender will continue to grant additional extensions and/or waivers of noncompliance with financial covenants. Wall Street Deli currently operates 74 company-owned and 21 franchised restaurants. Two additional restaurants are closed due to flooding. The Company's stock is traded on the OTC Bulletin Board under the symbol WSDI. WARNACO GROUP: Engages Alvarez & Marsal As Restructuring Officer ---------------------------------------------------------------- The Warnaco Group, Inc. sought the Court's authority to enter into an employment agreement with Antonio Alvarez, a founding managing director of Alvarez & Marsal Inc., as their Chief Restructuring Officer. A&M is a consulting firm that specializes in crisis management and the restructuring of troubled companies. Beginning late April through the Petition date, Mr. Alvarez and members of the Debtors' senior management devoted extraordinary amounts of time and effort to: (i) Prepare a detailed analysis of the Debtors' operations and financial condition; (ii) Prepare short-term cash flow forecasts and other detailed financial analyses; (iii) Meet and negotiate with the Debtors' Pre-Petition Lenders, including obtaining an additional 30-day waiver of the outstanding defaults under the Pre-petition Credit Agreements through June 15, 2001; (iv) Prepare for and attend meetings of the Debtors' Board of Directors; (v) Coordinate the Debtors' efforts to prepare for a possible Chapter 11 filing in the event that the Debtors were unable to accomplish an out-of-court restructuring or refinancing, including without limitation, analyzing the Debtors' cash flow requirements in a chapter 11 proceeding and arranging for a $600-million post-petition financing facility for the Debtors. The Debtors believe that Mr. Alvarez's efforts have been extremely valuable to the Debtors and that they will greatly benefit from his full-time involvement going, they believe Mr. Alvarez's experience and services are important to the Debtors' operational and reorganizing efforts. Under the Employment Agreement, Mr. Alvarez services as Chief Restructuring Officer for the Debtors include: (a) Oversee, with the approval of the CEO and the Board, all restructuring and refinancing related efforts of the company, including: (1) The activities of all professionals retained to assist in the marketing and sale of assets, the recapitalization of the Company or otherwise retained as part of the restructuring efforts; (2) The preparation and presentation of reports and other general communications with the Company's creditors and shareholders; and (3) At the Board's request, the development of a restructuring plan for the Company. (b) Assist the CEO and other senior management in the preparation of an operating plan and cash flow forecast; (c) Assist the CEO and other senior management in the identification of cost reduction opportunities and working capital opportunities; (d) Assist the CEO and other senior management with other operational issues as requested; and (e) Engage in such other activities as are approved by the Board or the CEO. Other principal terms of the Employment Agreement are: (a) Term: April 30, 2001 through October 31, 2002, unless sooner terminated pursuant to the provisions of the Employment Agreement. (b) Base Salary: $175,000 per month (c) Severance: In the event that Mr. Alvarez's employment is terminated by the Debtors other than for cause or by Mr. Alvarez for a good reason, Mr. Alvarez will receive a severance payment equal to $175,000 time the lesser of 12 or the number of months remaining until the expiration date. (d) Incentive Compensation: Mr. Alvarez will be entitled to incentive compensation equal to 90% the cash value of the annual bonus, including any incentive based bonus, discretionary bonus and supplemental incentive plan bonus, paid to the highest paid senior officer of the Debtors, payable on the same terms and at the same time, as to such officer, but in any event not less than 120 days after the Debtors' fiscal year end. (e) Restructuring Compensation: Upon the occurrence of the earlier to occur "trigger events": (i) The consummation of a sale, lease, transfer or other disposition of all or substantially all of the assets of the Debtors in one or more transactions, (ii) The merger or consolidation of the Debtors with or into any other entity or any combination, including a joint venture, of all or substantially all of the Debtors' assets in one or more transactions, (iii) A substantial restructuring of the Debtors' debt, either through a restructuring or refinancing of the existing bank debt, new investments, sales of assets combined with a material modification of debt documents, or a combination of any or all of the foregoing in one or more transactions, the effect of which is to provide the Debtors with an amount of liquidity and flexibility which is anticipated to be sufficient to allow them to operate without default under the Debtors' operating plan to be formulated by senior management under Mr. Alvarez's, or (iv) The expiration of Mr. Alvarez's employment upon the conclusion of the Employment Period or its termination by the Debtors without cause or by Mr. Alvarez for a good reason, Mr. Alvarez will be entitled to a restructuring fee equal to 5% of the improvement of value; provided however, that in no even shall the restructuring fee be less than $3,000,000 and, provided further, that any amounts payable as incentive compensation will be credited against the amounts, if any, that become payable as a restructuring fee. (f) Expense Reimbursement: Mr. Alvarez will be reimbursed for all reasonable, ordinary and necessary travel, entertainment and other expenses, as well as for the reasonable fees and expense, as well as for the reasonable fees and expenses of his counsel incurred in connection with the preparation, negotiation and approval of the Employment Agreement. (g) Advance: Mr. Alvarez will be entitled to a payment of $100,000 as an advance against the last sums payable to him under the terms of the Employment Agreement. (h) Indemnification: Mr. Alvarez will be entitled to the benefit of the most favorable indemnities provided by the Debtors to its officers and directors, whether under the Debtors' by-laws, certificates of incorporation, by contract or otherwise. The Debtors also will use commercially reasonable efforts to arrange to add Mr. Alvarez as an additional insured party under the Debtors' existing director and officer liability insurance policy. Prior to Petition Date, A&M held a retainer of $100,000. If this motion is granted, A&M will return the retainer to the Debtors since the Debtors will advance $100,000 to Alvarez. (Warnaco Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) WASHINGTON GROUP: Dennis Washington to Participate in DIP Pact -------------------------------------------------------------- Washington Group International, Inc. (NYSE:WNG) announced that its Chairman, Dennis R. Washington, has reached an agreement with the company's bank group to invest new capital in the company by participating in the debtor-in-possession financing facility being provided by the bank group and to serve as Chairman through the company's financial restructuring and for at least two years thereafter. Under terms of the agreement, which is subject to Court approval, Mr. Washington will provide at least $10 million of the debtor-in-possession credit facility. The agreement also provides Mr. Washington the right to purchase, through stock options, up to 15 percent of the new common stock of the reorganized company over five to seven years following confirmation of the company's Plan of Reorganization. In addition, the agreement allows Mr. Washington to purchase, in open-market or privately negotiated transactions, new common stock of the reorganized company, which taken with any common stock purchased through stock options, would give Mr. Washington up to a 40 percent ownership interest in the reorganized company. Mr. Washington has been Chairman of the Board since the company's acquisition of Morrison Knudsen Corporation in 1996. Through his leadership and strategic vision, the company acquired Westinghouse Government Services in partnership with BNFL in 1999 and forged a leadership position in the power industry through the acquisition of Raytheon Engineers & Constructors last year. Under Mr. Washington's strategic plan, the company is now a national leader in the fastest growing segments of the industry: power, government services, and infrastructure, and a premier provider of industrial / process services. In addition to his duties as Chairman, Mr. Washington will continue to lead the company's strategic development. "This agreement underscores my commitment to the future success of this company," said Mr. Washington. "I've been in this business for 50 years and I built this company from my own company and through acquisitions. Our employees are the best in the engineering and construction industry and we will deliver results to our clients around the world that are second to none." Mr. Washington also announced that the Washington Group Board of Directors has elected company President Stephen G. Hanks to the additional position of Chief Executive Officer, a position previously held by Mr. Washington. Mr. Hanks also has been elected to the company's Board of Directors. Washington Group International, Inc. is a leading international engineering and construction firm with more than 35,000 employees at work in 43 states and more than 35 countries. The company offers a full life-cycle of services as a preferred provider of premier science, engineering, construction, program management, and development in 14 major markets. WESTPOINT STEVENS: Moody's Cuts Long Term Debt Ratings to Ca ------------------------------------------------------------ Moody's Investors Service downgraded the long-term debt ratings of WestPoint Stevens, Inc. Approximately $1.0 billion of debt securities are affected. Given the very weak retail environment, the downgrade reflects Moody's concerns regarding the company's liquidity position, the company's approach in the traditional peak borrowing season and the high inventory days level. Moody's also said that the mandatory quarterly $25 million principal reduction on the senior credit facility commencing August 1st also affected the rating as well as the company's negative cash generation in the first quarter. The affected ratings are as follows: * $525 million issue of 7.875% senior unsecured notes due 2005 to Ca from Caa2 * $475 million issue of 7.875% senior unsecured notes due 2008 to Ca from Caa2 * senior implied rating to Caa3 from Caa1 * senior unsecured issuer rating to Ca from Caa2. The rating agency said that based upon the current retail environment, they expect that sales and operating profits for the second half will be below their previous expectations. WestPoint Stevens Inc. is a manufacturer and marketer of bed linens, towels, blankets, comforters, and accessories that are sold through each major retail distribution channel. The company is based in West Point, Georgia. WINSTAR COMMUNICATIONS: AT&T Broadband Seeks Relief From Stay ------------------------------------------------------------- By motion, AT&T Broadband seeks an order from the Court granting it relief from the bankruptcy stay in order to cancel a purchase order with Winstar Communications, Inc. for sixteen 8x radios at $50,000 each, or a total of $800,000. AT&T Broadband is a provider of broadband services, which include telephony, high-speed data, and video. AT&T Broadband Financial Operations Director Francis Brown relates that in February and March 2001, they had discussions with Winstar Wireless to determine whether Winstar Wireless could provide a wireless "solution" for AT&T Broadband customers at multiple dwelling unit facilities (MDU facilities). During their talks, Winstar Wireless offered to sell to and install radios for AT&T Broadband. However, Mr. Brown told Judge Farnan, AT&T found it difficult to find MDU facilities suitable for the wireless proposal that Winstar Wireless was selling because: (i) The number of individual dwellings at the MDU facilities; (ii) The age of the MDU facilities, the construction materials used at the MDU facilities; (iii) The need for approval by the MDU facility owners for installation of the equipment; and (iv) The relative costs for installing the equipment versus other available technologies. In March, Winstar Wireless investigated a specific MDU facility in Florida, called the Wynmoor, and surveyed that site. Shortly thereafter, Winstar Wireless made a proposal for the Wynmoor facility. Under the proposal, AT&T Broadband would have to purchase a spectrum, engineering, and installation from Winstar Wireless aside from purchasing radio equipment for the site. Spectrum is the radio frequency over which video and data is transmitted. But AT&T Broadband rejected the proposal citing technical and economic reasons. Still, Winstar Wireless insisted that it could provide a wireless solution if more suitable MDU facilities could be identified. Although no facility suitable for the equipment had been located, Winstar Wireless requested AT&T Broadband to send a purchase order for the radio equipment in order to lock in the price for the radio equipment. AT&T Broadband and Winstar still had to find suitable MDU facilities and negotiate the terms of the purchase of the spectrum, engineering, and installation. AT&T Broadband was strained to send Purchase Order #414353 to Winstar Wireless for 16 8x radios at $50,000 each for a total purchase price of $800,000 in the event the parties agreed on the terms of a wireless proposal. But after sending the purchase order, AT&T Broadband determined that they could not use the Winstar Wireless radios because, among other reasons, the radios could not be placed on tiled rooftops. So, Mr. Brown said, they advised Winstar Wireless last April 20, 2001 that they are canceling the purchase order because they could not use the radios Winstar Wireless was selling. This prompted Winstar Wireless to object. Responding by e-mail, Winstar Wireless Vice-President for Commercial Legal Operations Colleen R. Jones advised AT&T Broadband that they had filed for a Chapter 11 bankruptcy protection. Ms. Jones also informed AT&T Broadband that the purchase order they sent was a binding contract, and therefore, it could not be canceled. Winstar Wireless was determined to proceed with the contract despite AT&T's Broadband's refusal that it could not use the radios. But Stephen W. Spence, Esq., at Phillips, Goldman & Spence, P.A., in Wilmington, Delaware, argued that a provision in purchase order gave AT&T Broadband an absolute, unconditional right to cancel since AT&T Broadband cannot use the equipment identified in the purchase order. As of this motion, Mr. Spence notes, AT&T Broadband has not yet received any of the equipment described in the purchase order. AT&T Broadband asked Judge Farnan to annul the bankruptcy stay in order to make the cancellation of the purchase order effective as of April 20, 2001. In the alternative, AT&T Broadband requests a relief from the automatic stay so it can terminate the purchase order effective as of the date of this motion. (Winstar Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) ********* 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. 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