TCR_Public/010628.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 28, 2001, Vol. 5, No. 126


@COMM CORP.: Nasdaq Delists Shares Due To Non-Payment Of Fees
ACME METALS: AK Steel to Acquire Alpha Tube Subsidiary
AMCAST INDUSTRIAL: Posts $19.2 Million Net Loss For Q3 2001
AMRESCO CAPITAL: Reports On Liquidation Activity
BANYAN STRATEGIC: Relocates Offices to Oak Brook, Illinois

BRIDGE INFORMATION: Launches BridgeInform With Microsoft
CONSUMERS PACKAGING: Issues Update On Restructuring Plans
CTI HOLDINGS: S&P Drops Senior Note Rating To CCC+ from B-
BURKE INDUSTRIES: Ratings Drop to D In Wake Of Bankruptcy Filing
EXODUS COMM.: Moody's Cuts Senior Unsecured Debt Rating to Caa1

FINANCIAL CORP.: Final Payment on Convertible Debt Is On July 10
GREEN ISLE: Files Chapter 11 Petition in S.D. Florida
GREEN ISLE: Chapter 11 Case Summary
ICG COMMUNICATIONS: Rejecting 123 Contracts And Leases
ITEMUS INC.: Stung By Shooting Gallery's Deteriorating Finances

ITEMUS: Don Tapscott Resigns As Chairman & Member of the Board
ITEMUS INC.: Sells Personus To Cognicase Inc. for CDN$1 Million
JAZZTEL PLC: S&P Affirms B- Corporate Credit Rating
KASPER A.S.L.: Banks Agree To Waive Debt Covenant Defaults
LUCENT TECHNOLOGIES: Fitch Downgrades Debt Ratings To Low-B's

MAII HOLDINGS: Receives Nasdaq's Delisting Notice
MOLDOVA: Fitch Cuts Long-Term Foreign Currency Rating to CC
NABI: S&P Puts CCC- and CCC+ Ratings On Credit Watch
NEXTMEDIA OPERATING: S&P Assigns B+ Corporate Credit Rating
OWENS CORNING: Moves To Transfer Visionaire Assets To Non-Debtor

PACIFIC GAS: Paying Pre-Petition Property Taxes
PAXSON COMMUNICATIONS: S&P Rates New Senior Sub Notes At B-
PHARMACEUTICAL FORMULATIONS: Discloses Recapitalization Plan
PENN NATIONAL: S&P Rates $300MM Mixed Shelf At B/B-/CCC+
PILLOWTEX CORP.: Court Grants Kenwood Silver Relief From Stay

PSINET INC.: Honoring Prepetition Employee Benefits
RAYTHEON: Sees Higher Costs to Complete 2 Construction Projects
RELIANCE GROUP: Trustee Appoints Unsecured Creditors' Committee
VACATION VILLAGE: Creditor Moves For Sale to Recover Loan
VIATEL INC.: Court Approves Proposed Bidding Procedures

WARNACO GROUP: Paying Prepetition Employee Obligations
WASHINGTON GROUP: Court Approves Issuance of Bonds
WASHINGTON GROUP: Promotes Williams & Therrien to Key Positions
WEINER'S STORES: Intends To Wind-Down Operations & Sell Assets
WINSTAR COMM.: Lucent Technologies Asks For Relief From Stay

ZEPHION NETWORKS: Files Chapter 11 Petition in Wilmington
ZEPHION NETWORKS: Chapter 11 Case Summary
ZYMETX INC.: Shares Kicked Off Nasdaq, Now Trading On OTCBB


@COMM CORP.: Nasdaq Delists Shares Due To Non-Payment Of Fees
@Comm Corporation (Nasdaq:ATCM) reported that as of the opening
of business on June 27, 2001, the Company's stock was delisted
from quotation on The Nasdaq Stock Market due to non-payment of
required Nasdaq fees. Its shares will be eligible to be traded
on the OTC Bulletin Board(R).

                     About @Comm

@Comm (Nasdaq:ATCM) develops and distributes telemanagement
systems, formerly known as Xiox Corporation, providing cost-
saving tools for telephone expense control, billback,
utilization and fraud control. For more information: @Comm
Corporation, 577 Airport Blvd., Suite 700, Burlingame, CA 94010,

ACME METALS: AK Steel to Acquire Alpha Tube Subsidiary
AK Steel (NYSE: AKS) said it had entered into a contract to
acquire Alpha Tube Corporation, a leading manufacturer of welded
steel tubing located in Walbridge, Ohio. The company is a wholly
owned subsidiary of Acme Metals Incorporated, Riverdale,

Acme and its principal subsidiaries, including Alpha Tube, filed
for Chapter 11 bankruptcy protection on September 28, 1998,
however Alpha Tube has continued to manufacture and market its
products since the filing. AK Steel was the successful bidder
for Alpha Tube through an auction conducted in federal
bankruptcy court in Wilmington, Delaware. AK Steel said the
purchase price was $30 million in cash in addition to the
assumption of a building lease. AK Steel expects to close the
acquisition in the third quarter of 2001.

Alpha Tube produces value-added large diameter, thin wall
mechanical tubing for automotive, construction, heating and
cooling, furniture and other markets. The company operates tube
mills, slitters and a variety of finishing equipment and
produces a wide range of specialty and coated steel tubing
products. The company employs about 250 in its facility near

"The acquisition of Alpha Tube further solidifies AK Steel's
strategy of increasing its offering of value-added steel
products to the marketplace," said Richard M. Wardrop, Jr.,
chairman and chief executive officer of AK Steel.

With headquarters in Middletown, Ohio, AK Steel produces flat-
rolled carbon, stainless and electrical steel products for
automotive, appliance, construction and manufacturing markets,
as well as standard pipe and tubular steel products. The company
has about 11,200 employees in steel plants and offices in
Middletown, Coshocton, Mansfield, Warren and Zanesville, Ohio;
Ashland, Ky.; Rockport, Ind.; and Butler, Sharon and Wheatland,

AMCAST INDUSTRIAL: Posts $19.2 Million Net Loss For Q3 2001
Amcast Industrial Corporation, (NYSE:AIZ) reports sales declined
by nearly 17% in its third fiscal quarter ended June 3, 2001
from the prior year.

A net loss of $19.2 million, including unusual items of $13.6
million, was reported for the quarter.

Sales for the quarter were $136.2 million, compared to $163.2
million in the third quarter of fiscal 2000. Weak sales were
attributed primarily to low vehicle build in the company's major
North American market. The vehicle build in North America was
down 9% year over year during the last three months. This
compares to vehicle sales that were down 5% during this same
period. North American vehicle sales have now been below the
prior year for eight consecutive months.

In Flow Control, sales volume was up slightly, but the market
pricing for its products eroded somewhat.

The net loss for the quarter was $19.2 million or ($2.25) per
share versus a prior year net profit of $1.5 million or $ 0.17
per share. Excluding the unusual items, the net loss for the
quarter was $5.6 million or ($ 0.66) per share.

For the FY 2001 nine-month period, sales were $397.1 million,
down nearly 14% from the prior year's $459.3 million. The net
loss for the nine-month period was $25.9 million or ($3.06) per
share. Net income for the same period last year was $4.0 million
or $0.45 per share. Excluding the unusual items, the net loss
for the nine-month period was $10.4 million or ($1.23) per

The Company's inventories had increased to a high of $93.8
million in January 2001. This increase in inventory consumed a
significant amount of cash. As reported earlier, Amcast's
violation of certain financial covenants with its bank group
restricted its ability to borrow. The Company remained in this
restricted position until June 5, 2001 when a new agreement was

Byron O. Pond, President and Chief Executive Officer, said "The
Company has been managed for cash since the new management team
was appointed in mid-February." Mr. Pond also said, "It was
clear soon after new management joined Amcast that the Company
was going to be in violation of certain financial loan
covenants. Taking actions to reduce working capital, spending
and new investments, therefore, became a very high management
priority. At the same time an initiative was launched to develop
a new, committed business plan for the last six months of the
fiscal year to help the Company get back on track."

Mr. Pond went on to say, "The new management team immediately
started a strategic review of the Company in light of its weak
markets and relatively poor operating performance. As a result,
management has decided to dispose of certain under-utilized
machinery, tooling and equipment, to scrap certain slow moving
inventories, and to increase the allowance for doubtful and
disputed receivables." In addition, the Company established a
valuation allowance for foreign net operating loss carryforwards
in compliance with Statement of Financial Accounting Standards
No. 109. These unusual items also included recent expenses
associated with the Company's new financing. Finally, Mr. Pond
said, "We expect to conclude our management review during our
fiscal fourth quarter. Our present estimate is that we will have
additional unusual items in the fourth quarter that are less
than half of the charge taken during the third quarter."

Leo W. Ladehoff, Chairman of the Board, said, "We are very
pleased to have entered into a new agreement with our lenders,
which we completed at the beginning of our fiscal fourth
quarter. The members of the bank lending group, as well as the
insurance company holders of the Company's senior notes, have
waived the financial covenants, which caused the Company to be
out of compliance with the existing loan agreements, until April
15, 2002. This will give us additional borrowing capacity, if
needed, and it allows us to proceed with addressing the
operating needs of the Company. The Company is currently
establishing new covenants with its lenders, and, in the
process, the Company will propose an agreement that will allow
it to be in compliance with its financial covenants through at
least September 2002. The Company believes that an agreement
will be reached on this matter. The Company, however, will
continue with a substantial interest burden, which will affect
earnings until lower cost financing can be put in place."

Mr. Pond stated that Amcast is beginning to show signs of
improvement. Excluding the unusual items, Amcast's third quarter
showed an operating loss of $2.7 million versus an operating
loss of $2.9 million in the second quarter. "In addition", Mr.
Pond said, "inventories have declined almost $26 million since
last quarter. This lost production has cost us about $5 million
in overhead absorption.

In the second quarter inventory increased by $5.7 million, which
increased overhead absorption. Importantly, we have not had to
borrow any additional funds since our covenant violation on
March 4. In fact, we have increased our cash position by $3.6
million and reduced our accounts payable by over $18 million. We
are on the way to rebuilding Amcast's balance sheet."

In conclusion, Mr. Pond said, "While we are pleased with the
progress we have made during the past four months, it is clear
that much remains to be done. Our markets are not expected to
show any significant recovery until the fourth quarter of this
calendar year. However, we have won new contracts in the wheel
and suspension segments of our business, and we are continuing
to quote new business opportunities. In the meantime, we are
committed to focusing on better management of Amcast's balance
sheet, improving profitability and creating a stronger
competitive edge."

Amcast Industrial Corporation is a leading manufacturer of
technology-intensive metal products. Its two business segments
are brand name Flow Control Products marketed through national
distribution channels, and Engineered Components for original
equipment manufacturers. The company serves the automotive,
construction, and industrial sectors of the economy.

AMRESCO CAPITAL: Reports On Liquidation Activity
AMRESCO Capital Trust (Nasdaq: AMCT) announced that two of its
remaining loans have been liquidated. On June 22, 2001, the
company's $15.3 million Irvine (California) office loan was
fully repaid. On June 26, 2001, the company received $42.4
million in complete satisfaction of its Wayland (Massachusetts)
office loan. At the time of the settlement, amounts outstanding
under the Wayland loan totaled $42.9 million.

The company's investment portfolio is now comprised of a $14.7
million mortgage loan and a $0.2 million residual interest in
its unconsolidated taxable subsidiary.

As previously communicated, the company is liquidating its
assets under a plan of liquidation and dissolution. Shareholders
approved the liquidation and dissolution of the company on
September 26, 2000.

For more information about AMRESCO Capital Trust, visit the web
site at

BANYAN STRATEGIC: Relocates Offices to Oak Brook, Illinois
Banyan Strategic Realty Trust (Nasdaq: BSRTS) has relocated its
corporate offices to Oak Brook, Illinois. The new office address
and phone numbers are:

              2625 Butterfield Road, Suite 101 N
                  Oak Brook, Illinois 60523
                      630-218-7251 (fax)
              312-683-3671 (Investor Relations)

Interim President and CEO L. G. Schafran commented: "In keeping
with our strategy of liquidating the Company's portfolio and
winding up its affairs, we have relocated to smaller, less
expensive space in suburban Chicago. We believe we can better
serve the interests of our shareholders from our new location,
while maintaining the level of responsiveness and commitment
that our industry has come to expect from us."

Banyan Strategic Realty Trust is an equity Real Estate
Investment Trust (REIT) which, on January 5, 2001, adopted a
Plan of Termination and Liquidation. On May 17, 2001, Banyan
sold approximately 85% of its portfolio in a single transaction
and now owns three (3) real estate properties located in
Atlanta, Georgia; Huntsville, Alabama; and Louisville, Kentucky.
As of this date Banyan has 15,488,137 shares of beneficial
interest outstanding.

BRIDGE INFORMATION: Launches BridgeInform With Microsoft
Bridge Information Systems (BRIDGE) and Microsoft announced the
launch of BridgeInform, a unique pre and post trade financial
analysis tool, and its availability to Microsoft SharePoint
Portal Server users through Web Parts, an enterprise system
integration tool now included in Microsoft's Digital Dashboard
Resource (DDRK) Kit 3.0.

BridgeInform leverages BRIDGE's expertise in delivering
critical, real time financial transaction and analytic tools to
the corporate portal marketplace. In today's rapidly evolving
financial markets it is crucial to have data and analysis tools
at your fingertips. BridgeInform will offer Web Parts, designed
to solve many of the client issues with distribution, security,
and compatibility of information, providing a fully functional
financial data analysis tool.

"BridgeInform's modular design meets the many diverse needs
of our clients while delivering flexibility across multiple form
factors," said Jeffrey H. Woodruff, senior vice president,
Bridge Internet Services. "We are uniquely positioned to address
the growing demands of corporate clients and financial
institutions looking for company-wide solutions."

The Digital Dashboard is a customizable portal framework that
enables knowledge workers to view and collaborate on personal,
team, corporate, and external information. Web-based content can
be integrated into the portal via Web Parts, which offer
companies the most effective way to integrate any existing
enterprise systems, such as analytical and collaborative tools
in Microsoft Office, Microsoft Exchange Server and Microsoft SQL
Server, into their corporate portal. A new Web Part Development
Kit CD containing an extensive catalog of Microsoft and 3rd
party Web Parts will ship with Microsoft's Digital Dashboard
Resource Kit 3.0. Web Parts contained in the kit can be used
with SQL Server 2000-based digital dashboards, or with
SharePoint Portal Server, the flexible portal solution from
Microsoft that allows companies to easily find, share and
publish information, and the first Microsoft product to be based
on the digital dashboard framework.

The BridgeInform Web Parts include access to BridgeNews
LiveWire, the popular equity newswire from BridgeNews, and top-
down equity market analysis, cross-market screens and security
specific activity sheets. BRIDGE will continue to extend
BridgeInform to include all of the components needed for pre and
post trade equity analysis, with over twenty Web Parts expected
by mid-summer 2001. "Using the DDRK 3.0 we were able to quickly
release a new solution set for our corporate and institutional
client base," said Mr. Woodruff.

"BRIDGE's Web Parts provide a natural extension to Microsoft's
SharePoint Portal Server and Digital Dashboard solutions,
benefiting our mutual customers," said Jeff Teper, general
manager of the SharePoint Portal Server Business Unit at
Microsoft. (Bridge Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

CONSUMERS PACKAGING: Issues Update On Restructuring Plans
Consumers Packaging Inc. (TSE: CGC) provided an update on its
restructuring plans.

On June 20, 2001, the Ontario Securities Commission (OSC) issued
a cease trade order (CTO) for management and insiders of
Consumers Packaging. Among other things, the CTO states that all
trading by the individuals mentioned therein will cease until
two business days after Consumers Packaging submits, to the OSC,
all filings required under Ontario securities laws.

As previously announced, Consumers Packaging's interim financial
statements for the quarter ended March 31, 2001, which were due
to be filed with regulatory authorities by May 30, are expected
to be filed by June 30, 2001. The Company's first quarter
financial report has been delayed by the restructuring.

Consumers Packaging previously reported it has received an
extension of the stay of proceeding until August 15, 2001 under
the Companies' Creditors Arrangement Act (CCAA).

The extension continues the stay from legal proceedings against
the Company in respect of its Canadian operations, and allows it
to focus on developing 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.

The June 18, 2001 Court Order establishes June 29 as the
deadline for the submission of restructuring or purchase
proposals by third parties.

Consumers Packaging manufactures and sells glass containers for
the food and beverage industry. It supplies approximately 85% of
the glass containers used by the Canadian juice, food, beer,
wines and liquor industries.

CTI HOLDINGS: S&P Drops Senior Note Rating To CCC+ from B-
Standard & Poor's affirmed its single-'B' foreign and local
currency corporate credit ratings on CTI Holdings S.A. (CTI). At
the same time, Standard & Poor's lowered the rating on the
company's $263 million 11.5% senior deferred notes due April 15,
2008 to triple-'C'-plus from single-'B'-minus. The outlook is

The downgrade of the notes does not reflect higher default
probability but lower secondary recovery prospects and Standard
& Poor's notching criteria for holding company debt. CTI has no
operations of its own but acts through three subsidiaries: CTI
Compa¤ˇa de Tel‚fonos del Interior S.A., CTI Norte Compa¤ˇa de
Tel‚fonos del Interior S.A., and CTI PCS. As a result, all
indebtedness at the holding company level is structurally
subordinated to all subsidiary liabilities. Based on the current
debt and collateral structure, the notes are now rated two
notches below the corporate credit rating of CTI according to
the above-mentioned criteria.

The ratings on CTI reflect its still-weak financial position,
the demand sensitivity to economic activity in the company's
primary service area, and the sector's increased competition.
These factors are somewhat offset by CTI's adequate market
position, and the financial and operating support offered by its
majority parent, Verizon International Holdings Ltd., a
subsidiary of Verizon Communications.

CTI provides mobile telecommunications services in Argentina
both through a cellular and PCS license in the interior of the
country and a PCS license in the Buenos Aires area. Since CTI
began operations in 1994, its customer base has increased to
about 1.1 million as of March 2001. However, the interior of the
country, CTI's primary service area where about 94% of customers
reside, has a lower population density and income per capita
than the country's average, making it more volatile and
sensitive to recessionary environments.

The incipient PCS business (which commenced operations in May
2000), increased competition, and the recession in Argentina in
1999 and 2000 impaired profitability in 2000 and resulted in
increased churn (3.7%), weak EBITDA interest coverage of 0.9x,
and funds from operations (FFO) to debt of 6.3% for the fiscal
year ended in December 2000. This trend continued in 2001 with a
deterioration of these ratios, with EBITDA coverage down to 0.7x
for the quarter and FFO to debt 3.8% for the 12 months ended
March 2001. After the PCS operation starts generating cash and
profits -- break even is expected for late 2001 -- these ratios
should improve to levels in excess of 2x and 20%, respectively.

CTI is 59.5% controlled by Verizon International Holdings Ltd.
and 23.1% owned by Telfone S.A. (from the Clarin Group, one of
the largest Argentine media groups). Verizon provides financial
flexibility for CTI and has demonstrated its commitment to the
company through several capital infusions and guarantees.
Standard & Poor's expects that continued parent support and
improving profitability should help CTI to reduce leverage.
However, the performance of the new businesses in an
increasingly competitive environment could slow the pace of
these improvements.

                   Outlook: Negative

The outlook on CTI reflects the outlook on the ratings of the
Republic of Argentina. The outlook is based on Standard & Poor's
persistent concern that the absence of an economic recovery and
the long-lasting high interest rate environment could continue
to affect financial flexibility and heighten refinancing risk.
In addition, the depressed economic activity hinders production
and revenue growth and contributes to higher demand volatility,
Standard & Poor's said.

BURKE INDUSTRIES: Ratings Drop to D In Wake Of Bankruptcy Filing
Standard & Poor's lowered its ratings on Burke Industries Inc.
to 'D' (see list below). The ratings are removed from
CreditWatch where they had been placed on May 18, 2001.

The rating actions follow the company's filing of a voluntary
petition under Chapter 11 of the U.S. Bankruptcy Code on June
25, 2001, citing the impact of the economic downturn and
increasing utility and other costs. The ratings had been placed
on CreditWatch following the company's failure to file its year-
end 2000 and first quarter 2001 financial statements with the
SEC. Burke had identified potential errors in reported inventory
valuation and operating profit and expected to report higher net
losses as a result. The company had already been experiencing
weak results, resulting in negative cash flow and tight
liquidity, Standard & Poor's said.

Ratings Lowered & Removed From CreditWatch

Burke Industries Inc.                       To           From
    Corporate credit rating                  D            CCC+
    Senior unsecured debt                    D            CCC+

EXODUS COMM.: Moody's Cuts Senior Unsecured Debt Rating to Caa1
With approximately $3.6 billion of debt securities affected,
Moody's Investors Service downgraded the ratings of Exodus
Communications, Inc. as follows:

      * senior unsecured and issuer ratings to Caa1 from B3

      * senior secured rating to B2 from B1

      * senior implied rating to B3 from B2

      * convertible subordinated debt rating to Caa2 from Caa1

Ratings lowered and placed on review for possible further
downgrade are:

      * senior secured debt lowered to B2 from B1

      * senior implied lowered to B3 from B2

      * issuer rating lowered to Caa1 from B3

      * senior notes lowered to Caa1 from B3;

        (i) 11 1/4% US$275 million, due 2008

       (ii) 11 3/8% EUR200 million, due 2008

      (iii) 10 3/4% EUR125 million, due 2009

       (iv) 10 3/4% US$375 million, due 2009

        (v) 11 5/8% US$1.0 billion, due 2010

      * convertible subordinated notes lowered to Caa2 from Caa1;

        (i) 5.0% US$72.2 million, due 2006

       (ii) 4 3/4% US$500 million, due 2008

      (iii) 5 1/4% US$500 million, due 2008

The ratings downgrade was prodded by Exodus' revised financial
guidance which has fallen short of Moody's earlier expectations.
Moody's review for further possible downgrade reflects the
rating agency's concern that Exodus' revised business model may
still be continually affected by the general economic slowdown.

Moody's said that its review will focus on the company's
liquidity status and its ability to fulfill cash flow over the
intermediate term enough to brace the company's capital needs
and sizeable debt load. Given current market conditions, Moody's
believes that the public debt or equity markets are closed to

Exodus Communications, Inc. is headquartered in Santa Clara,

FINANCIAL CORP.: Final Payment on Convertible Debt Is On July 10
Airland Corporation, as the distribution agent for the holders
for the 9% Convertible Subordinated Debentures of Financial
Corporation of Santa Barbara due 2012, has established a special
payment date of July 10, 2001 for the fourth and final payment
on the Debentures pursuant to a Chapter 11 Plan of
Reorganization of Financial Corporation of Santa Barbara,
Debtor, confirmed by the United States Bankruptcy Court for the
Central District of California (Case No. LA90-23257-NRR). The
special record date for determining Debentureholders entitled to
receive such payment is June 29, 2001 (the "Record Date").

On the Payment Date, the Agent will distribute an aggregate
amount of $251.64 per each $1,000 par value of outstanding
Debentures to the registered owners of the Debentures as of the
Record Date. This payment represents the fourth distribution of
monies by the Agent since the Plan was confirmed on March 31,
1995, and pursuant to a Global Settlement Agreement approved by
the United States District Court for the Central District of
California on April 30, 2001, will be the final payment made on
the Debentures.

In anticipation of the final Distribution, the Agent has been
holding in safe keeping your Debenture Certificate. Your final
distribution will be mailed to the address at which the third
distribution on the Debentures was mailed. In the event you wish
your payment to be made to a different address, you must provide
written notice to the Agent for receipt no later than July 9,
2001. The notice can be mailed or hand delivered at the
following addresses:

      Mail Delivery:                  Physical Delivery:
      Airland Corporation             Airland Corporation
      P.O. Box 2903                   5 Dauphin Street, Suite 101
      Mobile, Alabama 36652           Mobile, Alabama 36602
      Attn:  Matthew Metcalfe         Attn:  Matthew Metcalfe

The Agent will make payment to the order of each Registered
Owner exactly as its name (or names) is (are) shown on the face
of the Debenture certificate. Consequently, if any Debenture or
denomination thereof is transferred and registered in the name
of a subsequent holder after the Record Date and before
presentation for payment, the Agent, upon presentation, will not
make payment to the person(s) shown as Registered Owner(s) on
the Record Date but rather will make payment to the person(s) in
whose name(s) the Debenture certificate is (are) registered.

Pursuant to the Order of the District Court, upon making the
final payment the Agent will endorse each Debenture certificate
as Cancelled and Satisfied in Full, pursuant to the Global
Settlement Agreement. Thereafter, all original Debentures will
be surrendered to the Federal Deposit Insurance Corporation, as
receiver for Santa Barbara Savings and Loan Association, co-
maker of the Debentures.

GREEN ISLE: Files Chapter 11 Petition in S.D. Florida
Green Isle Partners Ltd, S.E. filed for relief under chapter 11
of the Bankruptcy Code on June 25, 2001. The case is now pending
before the Hon. Raymond B. Ray, Bankruptcy Judge, in the Fort
Lauderdale division of the United States Bankruptcy Court for
the Southern District of Florida.

The Company owns the Ritz-Carlton San Juan Hotel, Casino & Spa
near San Juan, Puerto Rico. The Hotel is operated by Ritz-
Carlton Hotel Company LLC and its affiliate, Ritz-Carlton Hotel
Company of Puerto Rico, Inc.

Prior to the bankruptcy filing, the Company sued Ritz-Carlton in
state and federal courts in Delaware complaining that Ritz-
Carlton has committed numerous acts of fraud and mismanagement
and has refused the Company full access to its books and
records. That litigation was pending at the time of the filing.

Jeffrey Levine, president of the Company's general partner,
stated, "The bankruptcy filing is a direct result of our
disputes with Ritz-Carlton and will greatly facilitate access to
our property and records, as well as enable us and our creditors
to scrutinize the conduct of Ritz-Carlton."

At the company's request, Judge Ray authorized the Company to
temporarily use its cash to operate and entered a Temporary
Restraining Order against Ritz-Carlton directing that it grant
the Company access to its books and records and requiring Ritz-
Carlton to comply with the terms of its management agreement.
Mr. Levine further stated, "The hotel will continue to operate
during the bankruptcy and provide the first class service and
facilities that our guests rightfully expect."

The Company is represented in its bankruptcy by Scott L. Baena
of the law firm of Bilzin Sumberg Dunn Baena Price & Axelrod LLP
in Miami, Florida.

GREEN ISLE: Chapter 11 Case Summary
Debtor: Green Isle Partners Ltd, S.E.
         1555 N Park Dr #101
         Weston, FL 33326

Chapter 11 Petition Date: June 25, 2001

Court: Southern District of Florida (Broward)

Bankruptcy Case No.: 01-24693

Judge: Raymond B. Ray

Debtor's Counsel: Scott Baena, Esq.
                   200 S Biscayne Blvd #2500
                   Miami, FL 33131

ICG COMMUNICATIONS: Rejecting 123 Contracts And Leases
Gregg Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom,
acting on behalf of the ICG Communications, Inc. Debtors, asks
Judge Walsh for his approval of ICG's decision to reject 123
contracts and leases of commercial property, effective as of
June 1, 2001. Mr. Galardi advises Judge Walsh that the
Creditors' Committee has reviewed this Motion prior to its
filing and supports granting the relief requested. Under these
123 leases and contracts, the Debtors use telecommunications
sites and facilities. The Debtors have determined that these
sites are not necessary to the Debtors' ongoing operations, but
remain obligated under the leases and contracts.

The Debtors say that in their business judgment it is no longer
necessary to maintain the sites subject to these leases and
contracts. The rent and other expenses due under these leases
and contracts constitute an unnecessary drain on the Debtors'
cash flow. The aggregate rent for these leases and contract is
$28,254.75 per month. By rejecting these leases and contracts,
the Debtors can minimize unnecessary administrative expenses.
Moreover, the Debtors do not believe they could realize any
value by assigning these leases and contracts to a third party.
Rejection of these leases and contracts is the best course of
action for the estate.

The Debtors waive the right to withdraw the Motion, and say they
have already returned the keys to the respective landlords and
other parties by separate letter or hand-delivery. For these
reasons, rejection is requested retroactively to June 1.

Examples of the various properties under lease or contract are:

      * 460 Decatur Street, Atlanta, Georgia, leased by Telecom
      * 1855 Gateway Blvd., Concord, California, leased by
        Telecom Group
      * 17744 Skypark Blvd., Irvine, California, leased by ICG
        Access Services
      * 18200-18400 Van Karmen Ave, Irvine, CA, leased by Telecom
      * 8105 Irvine Center Dr., Irvine, CA, leased by ICG Access
      * Various sites in Los Angeles, California, leased by
        Telecom Group
      * 4440 Von Kamen Ave., Newport Beach, CA, leased by Telecom
      * Various sites in Newport Beach, CA, leased by ICG Access
      * 1970 Broadway, Oakland, CA, leased by Telecom Group
      * 405 14th Street, Oakland, CA, leased by ICG Access
      * Various sites in San Diego, CA, leased by Telecom Group
      * 455 Market Street, San Francisco, CA, leased by ICG
        Access Services
      * Various sites in San Francisco, CA, leased by Telecom
      * Various sites in San Francisco, CA, leased by ICG Access
      * 1880 Century Park E, West Los Angeles, CA, leased by
        Telecom Group
      * 2993 S. Peoria Street, Aurora, CO, leased by Telecom
      * 3131 S. Vaughn Way, Aurora, CO, leased by Telecom Group
      * 2060 Broadway, Boulder, CO, leased by Telecom Group
      * 5475 Tech Center Dr., Colorado Springs, CO, leased by
        Telecom Group
      * Various sites in Denver, CO, leased by Telecom Group
      * Various sites in Englewood, CO, leased by Telecom Group
      * 1546 Cole Boulevard, Golden, CO, leased by Telecom Group
      * 350 Indiana Street, Golden, CO, leased by Telecom Group
      * Various sites in Greenwood Village, CO, leased by Telecom
      * 11003 Bluegrass Pkway., Louisville, KY, leased by Telecom
      * Various sites in Akron, Ohio, leased by Telecom Group
      * Various sites in Beachwood, Ohio, leased by Telecom Group
      * Various sites in Cleveland, Ohio, leased by Telecom Group
      * Various sites in Columbus, Ohio, leased by Telecom Group
      * Various sites in Fairlawn, Ohio, leased by Telecom Group
      * Various sites in Independence, Ohio, leased by Telecom
      * Various sites in Westlake, Ohio, leased by Telecom Group
      * Various sites in Nashville, Tenn., leased by Telecom
      * 2800 28th Street, Santa Monica, CA, leased by Telecom
      * 1600 West 38th Street, Austin, TX, leased by Telecom

(ICG Communications Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

ITEMUS INC.: Stung By Shooting Gallery's Deteriorating Finances
itemus Inc. (TSE:ITM, OTCBB:ITMUF), a Canadian business and
technology innovator,  announced that the financial situation at
its recently acquired Shooting Gallery subsidiary has
deteriorated substantially, primarily as a result of deferrals
of expected revenue- generating contracts and additional delays
in the disposition of certain assets. Consequently Shooting
Gallery has become unable to service its debt obligations in an
orderly manner, which has put increased pressure on itemus'
financial resources and may likely inhibit itemus' ability to
access capital, particularly in light of present market

itemus is considering all options in regard to its Shooting
Gallery investment, and expects to make a determination of its
course of action very shortly. In connection with its
acquisition of Shooting Gallery, itemus has entered into certain
agreements pursuant to which it may be responsible for certain
Shooting Gallery obligations; the potential aggregate amount of
such liabilities is less than US$10 million.

itemus' working capital resources have been strained by the cost
of operating Shooting Gallery and technology market conditions.
At its current pace of operations, itemus will require
additional capital before the end of its third quarter. itemus
is engaged in discussions concerning opportunities for the
raising of capital, but while the company is hopeful that
current negotiations will result in sufficient capital being
made available, there is no guarantee of a successful outcome,
particularly under current market conditions.

itemus also announced that Albert Gnat and Dennis Wing, two
members of itemus' board of directors, have resigned. itemus
expects to fill these vacancies shortly.

                       About itemus

itemus provides Global 2000 clients with research, strategic
services and technologies that harness the Internet for business
innovation. Organizations gain competitive advantage from:
itemus research that intersects corporate strategy,
organizational change, and emerging technologies; strategic
services to design and deploy new business models; and
technologies to build and implement next-generation solutions.
itemus architects and delivers client- specific solutions by
combining its own capabilities with a global network of
partners. itemus wholly owned subsidiaries include: Digital
4Sight, Shooting Gallery and NAME. For more information, please
visit the company's Web site at

ITEMUS: Don Tapscott Resigns As Chairman & Member of the Board
itemus Inc. (OTCBB:ITMUF, TSE:ITM) announced that Don Tapscott
has resigned his position as Chairman and a member of the Board
of Directors.

Don Tapscott will continue to work with itemus, a company that
he helped build through Digital 4Sight, to meet its goals and
business objectives.

Jim Tobin, President and Chief Executive Officer, added "We
thank Don for his contributions as Chairman and look forward to
working with him on our ongoing corporate and business
development basis."

ITEMUS INC.: Sells Personus To Cognicase Inc. for CDN$1 Million
itemus Inc. (TSE:ITM, OTCBB:ITMUF) has sold its interest in
privately owned Personus, formerly "Caught in the Web", for
approximately CDN$1.0 million in liquid securities to Cognicase
Inc. (TSE:COG, Nasdaq:COGI), a leading e-business services
provider specializing in secure and scalable real-time
transactional solutions.

JAZZTEL PLC: S&P Affirms B- Corporate Credit Rating
Standard & Poor's revised its outlook on Spain-based competitive
local exchange carrier Jazztel PLC to positive from stable, and
affirmed its single-'B'-minus long-term corporate credit ratings
on the company. At the same time, Standard & Poor's lowered its
ratings on Jazztel's senior unsecured notes to triple-'C' from
triple-'C'-plus, reflecting the heightened degree of
subordination resulting from Jazztel's new EUR200 million senior
secured credit facility.

The change in outlook reflects a reassessment of Jazztel's
financial profile following the closure of the company's senior
secured facility in April 2001. The facility has the merits of
removing near-term liquidity concerns and providing funding
until at least 2003, under conservative assumptions. The change
in outlook also reflects good ongoing execution of the company's
business plan, including the rapid growth of its customer base,
and the establishment of a strong brand name. These achievements
continue to propel the company toward becoming a viable provider
of telecommunications services to small and midsize enterprises
(SMEs) in the Iberian Peninsula (Spain and Portugal).

Jazztel's network is at an advanced stage of construction. As
network completion is not expected until 2003, however, the
company will continue to be substantially dependent on
interconnection with Telef˘nica S.A. (A+/Negative/A-1) for the
provision of its services. As the company's own network expands
and the number of direct-access customers increases, costs
from interconnection and leased lines will decrease, driving
margins up, but substantial capital expenditures will be needed
to achieve this.

In the first quarter of 2001, Jazztel increased revenues by 30%
to EUR47 million, while reducing adjusted EBITDA losses to EUR27
million from EUR35 million in the previous quarter. Under the
current business plan, the company expects to become EBITDA
positive in the second half of 2002. Standard & Poor's expects
Jazztel's financial profile to remain aggressive over the medium
term as it debt finances losses and network buildout costs to
the end of 2004, when the company expects to breakeven on free
operating cash flow.

Standard & Poor's corporate credit ratings provide an assessment
of a company's ability and willingness to service its
obligations on an ongoing basis. The ratings on specific issues
take into account the prospects for recovery in the case of
ultimate default. The lowering of the ratings on Jazztel's
unsecured notes, therefore, does not reflect any lessening of
Jazztel's ability or willingness to service these obligations.
The new EUR200 million senior secured credit facility, however,
which ranks prior to the notes, effectively increases the amount
of priority debt and liabilities of the group to more than 30%
of adjusted total assets. Under Standard & Poor's subordination
criteria, this level of priority obligations necessitates a two-
notch differential between the corporate credit rating and the
unsecured debt ratings.

                     Outlook: Positive

The outlook reflects Standard & Poor's expectations that Jazztel
will continue to display good operational performance. For the
ratings to be upgraded, Jazztel will need to display a solid
improvement in direct-access revenues, consistent with its
target of becoming EBITDA positive in 2002, and breakeven on
free cash flow by 2004, Standard & Poor's said.

KASPER A.S.L.: Banks Agree To Waive Debt Covenant Defaults
Kasper A.S.L., Ltd. (OTC BB: KASP) has concluded the previously
reported negotiations with the lenders to the Company's
Revolving Credit Facility, led by The Chase Manhattan Bank. The
Company has entered into a waiver and amendment agreement that
reflects the support the Company has received from its lenders,
restores the Company's compliance to the financial covenants of
the Facility, and provides for enhanced financial flexibility
for the pursuit of its short- and long-term strategic plans.

Kasper is actively engaged in discussions with an ad hoc
committee of its noteholders for the purpose of reaching a
financial restructuring that would improve the Company's capital
structure. As previously announced, the Company did not make its
March 31, 2001 and September 30, 2000 semi-annual interest
payments of approximately $7.2 million each to holders of its
13% Senior Notes.

Kasper A.S.L., Ltd. is a leading marketer and manufacturer of
women's suits and sportswear, as well as career dresses. The
Company's product lines are sold in over 2,000 retail locations
throughout the United States, Europe, the Middle East, Southeast
Asia and Canada, and the Company's retail outlet stores. The
Company currently distributes its products under the KASPER
KLEIN(TM), LeSUIT(R), and ALBERT NIPON(R) labels. The Company
also licenses its ANNE KLEIN(R), ANNE KLEIN2(TM), KASPER(R) and
ALBERT NIPON(R) labels for various men's and women's products.

LUCENT TECHNOLOGIES: Fitch Downgrades Debt Ratings To Low-B's
Fitch has downgraded the rating on Lucent Technologies' senior
unsecured debt to 'BB' from 'BBB-' and assigned a rating to
Lucent's senior secured credit facility at 'BBB-'. The
commercial paper rating was downgraded to 'B' from 'F3'. The
Rating Outlook is Negative.

This rating action for the senior unsecured debt reflects the
continued uncertainty and event risk associated with Lucent
during its restructuring period. While Fitch expects Lucent to
return to positive cash flow from operations during fiscal 2002,
the difficult conditions and lack of visibility within the
telecommunications equipment sector pose considerable
difficulties with respect to Lucent's meeting its revenue
objectives. In addition, Lucent faces considerable event risks
associated with the business restructuring. If Lucent achieves
profitable operating cash flows in the timeframe expected, this
will be more a function of cost control efforts versus
profitable and sustained growth. Given the market conditions and
the difficulty in forecasting future operating results, expected
profitability remains uncertain.

The rating for the secured credit facility incorporates the
adequate asset coverage provided for the secured debt, Lucent's
strength in its core business, and strong relationships with the
large service providers. The two-notch differential between the
secured and unsecured debt is a result of the potentially high
secured debt to total debt ratio, the event risks associated
with the restructuring and overall negative trends within the
industry. Additionally, concerns exist with the anticipated
capital spending levels of the large service providers in this
current market environment.

A growing concern is the company's vendor financing exposure.
While the company continues to review its vendor financing
practices and has material reserves, the credit quality of
Lucent and the high risk nature of the commitments in the
portfolio are a significant credit consideration.

Recent market conditions have also contributed to disappointing
results with the March IPO of Agere and the forthcoming expected
sale of Optical Fiber Solutions (OFS). Lucent realized
approximately $2 billion less in debt reduction from the Agere
IPO and expected proceeds from OFS will be materially less than
initially anticipated. Although the sale of OFS should provide
significant liquidity, consolidated EBITDA will be impacted as a
result of the sale.

Lucent has successfully negotiated many obstacles in its
restructuring, most notably the completion of its $6.5 billion
credit facility. As of the last quarter, Lucent had achieved
$300 million in annualized cost reductions and expects to attain
$2 billion in savings by the end of the fiscal year. The staff
reductions, in excess of 10,000 employees, should be materially
complete by July. Additionally, Lucent has accelerated further
workforce reductions by offering voluntary severance plans to
14,000 retirement eligible employees. The approximate cost
savings are in the $600 million to $900 million range. Working
capital improvements are expected to exceed the $2 billion
target set by Lucent's management.

While Lucent has additional refinancing needs due to the $750
million of debt maturing in July, Lucent should be able to
maintain sufficient liquidity in the near-term. Although OFS
will generate less than expected proceeds, the transaction will
generate significant liquidity along with other anticipated
financing sources including the sale of its two manufacturing
plants, accounts receivable securitization, and an expected
real estate financing. Even though these events are expected to
provide an ample liquidity cushion in the near term, sustained
growth in Lucent's business remains a concern.

Resolution of the Rating Outlook is dependent on Lucent
executing the planned financing transactions and meeting
forecasted operating results over the next two quarters.

MAII HOLDINGS: Receives Nasdaq's Delisting Notice
MAII Holdings, Inc. (Nasdaq/NM:MAII) announced that it received
a Nasdaq Staff Determination on June 19, 2001, indicating that
MAII no longer complies with certain Nasdaq National Market
requirements for continued listing. Specifically, MAII lacks
tangible business operations, and the Staff has determined that
delisting of MAII's common stock on the Nasdaq National Market
is appropriate under Marketplace Rule 4330(a)(3).

On December 31, 2000, MAII Holdings, Inc. completed the sale of
its medical business assets to ICN Pharmaceuticals, Inc.
(NYSE:ICN) for cash of $14.4 million. As of March 31, 2001, the
Company had a strong balance sheet consisting of approximately
$28 million in cash and approximately $3 million in liabilities.

The Company has requested a hearing before a Nasdaq Listing
Qualification Panel to review the Staff Determination. There can
be no assurance that the Panel will grant MAII's request for
continued listing.

MOLDOVA: Fitch Cuts Long-Term Foreign Currency Rating to CC
Fitch, the international rating agency, has downgraded the
Long-term foreign currency rating of Moldova to 'CC' from 'CCC+'
amid concern over the late payment of a USD3.7mln semi-annual
coupon on its USD75mln 2002 eurobond and its implications for
the authorities' willingness and capacity to repay their
international debts. Payment was due on 13 June, and the
government is now well into its 21-day grace period, which
expires on 3 July.

The local currency rating has also been downgraded to 'CCC' from
'B-'. The Outlook on the ratings is Negative, and failure to
meet the coupon payment by 3 July will prompt a further
downgrade to the default category. Even if the coupon payment is
made, the 'CC' rating will still apply to Moldova as there are
serious doubts over the country's ability to repay the USD75mln
2002 eurobond, which matures in June next year. The country has
recently confirmed its intention to approach the Paris Club for
a debt restructuring. If this is successful it is highly likely
that Paris Club creditors will demand that the eurobond is also
restructured under a burden-sharing clause. Meanwhile, the
suspension of the country's IMF programme is putting pressure on
the balance of payments, and could lead to a rapid depletion of
foreign exchange.

The problems surrounding the bond coupon payment bring Moldova's
repayment capacity into the immediate spotlight. While there is
sufficient foreign exchange to cover the semi-annual coupon, our
discussions with the authorities lead us to believe that there
is no defined strategy over how this will be achieved. The
government is experiencing serious cash flow problems, and
appears to be prioritising the payment of wage and pension
arrears over timely debt servicing. While cash flow and
technical problems have prompted late coupon payments in the
past (albeit within the grace period), the latest event is the
first instance of such a lengthy delay. Fitch will be monitoring
developments closely over the coming days.

NABI: S&P Puts CCC- and CCC+ Ratings On Credit Watch
Standard & Poor's placed its triple-'C'-plus corporate credit
and triple-'C'-minus subordinated debt ratings for Nabi on
CreditWatch with positive implications. The action reflects the
company's announcement that it has signed a definitive agreement
to sell 47 of its 56 antibody collection centers to Australian-
based CSL Ltd. for $152 million in cash.

The low speculative-grade ratings on Boca Raton, Fla.-based
Nabi, a large independent processor of human plasma and a
leading provider of human-antibody-based drugs, had been lowered
because of the company's overextended financial position.
However, with the proceeds from the pending sale, which is
scheduled to close during the third quarter of 2001, the
company's financial profile will significantly improve.

The sale also represents a restructuring of operations so that
the company can focus on its higher-margin, polyclonal-antibody-
based drugs to treat infectious and autoimmune diseases.
Although sales of its commodity antibody products were
rebounding, higher donor fees and increased regulatory
compliance costs have curtailed that business' contribution to

Standard & Poor's will monitor developments regarding the sale
and will review Nabi's business and financial strategy before
resolving the CreditWatch listing.

NEXTMEDIA OPERATING: S&P Assigns B+ Corporate Credit Rating
Standard & Poor's assigned its single-'B'-plus corporate credit
rating to NextMedia Operating Inc. The outlook is stable.

At the same time, Standard & Poor's assigned its single-'B'-
minus rating to the proposed $170 million senior subordinated
notes due 2011 being offered under Rule 144A by NextMedia.

In addition, a single-'B'-plus bank loan rating is assigned to
NextMedia's $125 million senior secured revolving credit

Proceeds from the senior subordinated notes will be used to
repay the credit facility and fund acquisitions including a
portion of the pending $92 million purchase of outdoor
advertising assets from PNE Media Corp.

The ratings reflect NextMedia's expanding portfolio of radio
stations in medium-and small-size markets and outdoor
advertising properties in the top 50 markets, as well as assured
access to additional equity to temper financial risk. Offsetting
factors include high financial risk from ongoing debt-financed
acquisitions, competitive radio and outdoor advertising markets,
a limited combined operating history and a relatively small cash
flow base.

Including pending transactions, NextMedia will have completed 21
acquisitions for $418 million since the company's inception in

NextMedia owns and operates 41 FM and 15 AM radio stations in
nine rated markets ranked between 78 and 262, as well as some
Chicago and Dallas suburbs. The company also has more than 4,100
outdoor advertising bulletin and poster displays located
primarily in New York and New Jersey, Hartford, Baltimore,
Washington D.C., and Philadelphia.

Radio provides about 68% of NextMedia's revenue and EBITDA. The
stations are geographically diversified, with no single market
providing more than 10 percent of total revenue. Many of the
company's stations have leading revenue shares in their markets.
Following station acquisitions, NextMedia boosted sales
intensity, which helped it generate radio revenue growth of
16% and 6% year-over-year in the last quarter of 2000 and first
quarter of 2001, respectively. For the 2000 fourth quarter,
overall industry growth was about 1%, while in the 2001 first
quarter, industry revenue declined by approximately 7%.

Nevertheless, further revenue growth at NextMedia may be more in
line with market rates following initial sales effort
improvements. The company also faces competition from larger
consolidated operators in many of its markets, which may also
restrain growth.

A majority of NextMedia's outdoor displays are being acquired
from PNE Media. This business' EBITDA before corporate expense
margin of 47% is in line with other operators. In addition, the
company operates 22,000 alternative displays located in retail
and entertainment venues, including restaurants, supermarkets,
theaters, sports arenas, and gas stations. NextMedia competes
against larger outdoor advertising operators in most of its
markets. Growth in this business involves more capital spending
than radio, but nonetheless offers promise.

NextMedia's pro forma EBITDA margin for the 12 months ended
March 31, 2001, was somewhat below average at about 30%, due to
small company size and acquisition-related expenses. Pro forma
EBITDA coverage of interest for the same period was thin at 1.4
times (x) and debt divided by EBITDA was about 7x. Capital
spending needs are moderate, largely for outdoor advertising
site construction and radio studio upgrades. About $5.1 million
cash and modest discretionary cash flow provide liquidity. Bank
borrowing availability is currently minimal. Equity has been an
important funding source and Standard & Poor's expects that the
company will continue to use equity to temper the financial risk
of further acquisition activity. NextMedia has a $75 million
equity commitment from Goldman Sachs that the company may call
at its discretion for general purposes, including debt reduction
to lower total debt to EBITDA to 6x.

The bank loan rating on the $125 million senior secured
revolving credit facility is single-'B'-plus, at the same level
as the corporate credit rating. The facility is secured by
assets and subsidiary stock of NextMedia. Although broadcasting
licenses cannot be used as collateral, Standard & Poor's
believes that the security provided in the form of subsidiary
stock of broadcast licensees is significant in light of license
scarcity value. Standard & Poor's simulated default scenario
assumed that the revolving loan facility was fully drawn, and
both cash flow and resale multiples were assumed to be at
distressed levels. Elements of a default scenario could include
stress from further debt-financed acquisitions, failure to
realize sufficient cash flow improvement at acquired media
operations, an advertising decline, or a combination of these
factors. Lenders can expect to recover more than a typical
unsecured creditor in the event of a default or bankruptcy,
based on Standard & Poor's simulated default scenario, although
it is not clear that a distressed enterprise value would be
sufficient to cover the entire loan facility.

                      Outlook: Stable

Maintenance of key credit measures, continuing positive
operating trends, and access to equity financing are important
to ratings stability amid expected ongoing acquisition activity,
Standard & Poor's said.

                     Ratings Assigned

NextMedia Operating Inc.              Ratings
      Corporate credit rating            B+
      Subordinated debt rating           B-
      Senior secured bank loan rating    B+

OWENS CORNING: Moves To Transfer Visionaire Assets To Non-Debtor
As part of Owens Corning's vision of becoming the leading
distributor and supplier of a complete line of home-improvement
products, Owens Corning entered into a strategic alliance
agreement with Theo Kalomirakis Enterprises, Inc., a leading
designer of home theatre products, in connection with Owens
Corning's proprietary integrated home theatre and media room
system known as Visionaire FX which is intended to revolutionize
home theatre construction and installation.

The Visionaire FX Home Theatre System is designed as a totally
integrated system of components which include pre-assembled
acoustical treatment panels and "plug 'n play" electronics that
are designed to be superior to traditional materials currently
used in home theatre construction and installation in terms of
design, quality and ease of installation. TKE has designed and
manufactured two "Studio Line" designs for the Visionaire FX

In order to facilitate the distribution of the Visionaire FX
System, Owens Corning is proposed to create a franchise program
which is designed to license residential construction
contractors and home remodelers to become authorized dealers and
installers of Visionaire FX Systems. In connection with the
implementation of the franchise program, and as required by
federal and state law, Owens Corning intends to provide to each
prospective franchisee a Uniform Franchise Offering Circular,
the offering prospectus required to be delivered when offering
and selling franchises.

In structuring the franchise program, Owens Corning is proposing
to create a new, wholly-owned, non-debtor subsidiary to conduct
franchise operations for Visionaire FX. This subsidiary would be
a Delaware limited liability company, and in exchange for the
transfer of the TKE Agreement, certain training materials and
installation manuals, the UFOC and non-exclusive licensing
rights in the Owens Corning name and trademarks, Owens Corning
would receive a 100% equity interest in the newly formed entity.

By Motion, the Debtors seek authority to create a non-debtor
subsidiary and transfer the Visionaire assets to such non-debtor
subsidiary as part of the Visionaire FX Home Theatre System.
Several sound business reasons exist for the proposed creation
of a separate, non-debtor subsidiary and the transfer of assets
to such subsidiary. First, as a limited liability company the
new subsidiary would act as a shield to protect the assets of
Owens Corning and its related entities. This is essential in a
franchising situation where the offer and sale of franchises is
regulated at the state and federal levels, and particularly in
the contest of a new franchise program that will evolve over
time. Second, federal law and state franchise disclosure
requirements dictate that the UFOC include a disclosure of the
franchisor's audited financial statements and all other
franchises offered by the franchisor and its affiliates. This
disclosure may be streamlined where each franchise concept is
maintained in a separate subsidiary. Because the UFOC is a
marketing tool as well as a disclosure document, Owens Corning
believes that it is in the best interests of the estate to
streamline as much as possible the disclosure of competing

Item 2 of the UFOC requires a biographical disclosure of each
direction, principal officer, and any other executive with
management responsibility for the franchise system. In addition,
the litigation and bankruptcy disclosures required in Items 3
and 4 of the UFOC must include information with respect to
certain litigation and bankruptcy proceedings involving the
individuals listed in Item 2 of the UFOC. It would be extremely
burdensome for Owens Corning to meet such disclosure
requirements were the Visionaire FX franchise system operated at
the Owens Corning level. Thus, creating a separate subsidiary
allows Owens Corning to comply with the disclosure requirements
of the UFOC without being unduly burdened. Additionally, Owens
Corning intends to name as the directors, executive officers and
management executives of the new subsidiary individuals who are
closely involved with the Visionaire FX program and with the
home-theatre industry in order to increase the marketability of
the Visionaire FX. If Owens Corning were to simply place the
directors and officers of Owens Corning into those positions the
marketability and credibility of the Visionaire FX could be

Finally, it is possible that Owens Corning may bring a joint
venture partner into the Visionaire FX project. The creation of
a separate subsidiary would help Owens Corning accomplish that
goal in the easiest and most expeditious manner.

Fair and reasonable compensation for this transaction is
provided. In exchange for the transfer of the TKE Agreement,
which is the backbone of the entire Visionaire FX project,
certain training materials and installation manuals, the UFOC,
and non-exclusive licensing rights to the Owens Corning name and
trademarks, Owens Corning will receive a 100% equity interest in
the newly formed entity. Thus there is more than adequate
consideration for this transaction. (Owens Corning Bankruptcy
News, Issue No. 12; Bankruptcy Creditors' Service, Inc.,

PACIFIC GAS: Paying Pre-Petition Property Taxes
Pacific Gas and Electric Company owns real and personal property
in 49 counties in California Each year, the California State
Board of Equalization determines the aggregate value of all real
and personal property owned by PG&E in the state and allocates
that value among each of the Counties. The Counties accordingly
bill PG&E for taxes based on these allocated property values.

To the extent the taxes are unpaid, each County obtains a
statutory first priority lien against the real property of PG&E
located in such County. The taxes owed to the Counties are paid
in two installments, the first of which is due on December 10,
and the second of which is due on April 10 of the following

Following the filing of its Chapter 11 petition, PG&E divided
the installment due on April 10, 2001 into two portions-one
based on the period from January 1 through April 5 (the "Pre-
Petition Taxes), and the other based on the period from April 6
through June 30, 2001 (the "Post-Petition Taxes"). PG&E paid the
Post-Petition Taxes but did not pay the Pre-Petition Taxes, due
to the general prohibition on the payment of pre-petition debt
by debtors under the Bankruptcy Code.

The amounts of the Pre-Petition Taxes owed to each of the
Counties range from a low of $14,690 to a high of $7,329,994,
and total $41,224,488, in the aggregate, exclusive of any
penalties assessed for late payment.

As a result of PG&E's failure to pay the entire installments due
on April 10, delinquent penalties of 10% have attached to the
Pre-Petition Taxes. (In addition, redemption fees and monthly
penalties may become payable with respect to the unpaid Pre-
Petition Taxes.) However, the local tax collector or auditor of
each County has the authority to cancel the delinquent penalties
upon a determination that the failure to make a timely payment
is due to reasonable cause and circumstances beyond the
taxpayer's control, and occurred notwithstanding the exercise of
ordinary care in the absence of willful neglect.

The Claims for Pre-Petition Taxes Are Secured Claims. Pursuant
to California Revenue and Tax Code ("Tax Code") Section 2187,
"{e}very tax on real property is a lien against the property
assessed." Further, pursuant to Tax Code Section 2189, "[a] tax
on personal property is a lien on any real property on the
secured roll also belonging to the owner of the personal
property, if the personal property is located upon that real
property on the lien date, and if the fact of the lien is shown
on the secured roll opposite the description of the real
property." Pursuant to Tax Code Section 2192, taxes declared to
be liens on real property "have priority over all other liens on
the property, regardless of the time of their creation." Since
the Pre-Petition Taxes are taxes on state-assessed real and
personal property, levied by the Counties pursuant to Tax Code
2151 and Government Code 25202, they constitute first priority
liens against the real property owned by PG&E to which they
relate. Accordingly, the Pre-Petition Taxes became liens on the
applicable real properties on January 1, 2000 and the Counties
are fully secured creditors.

Furthermore, the Debtor notes that the failure to pay such
claims would cause undue hardship on many of the Counties, which
may depend on the property taxes paid by PG&E to finance the
delivery of essential goods and services to its residents.
Although some counties have sufficient to weather the delay, it
would be inequitable to pay some Counties and not others, and
that such payments would be difficult to administer on a County
by County basis if a determination of the needs of the
respective Counties were a prerequisite to payment.

Based on these reasons, PG&E moved the Court for authorization
to pay the Pre-Petition Taxes to those Counties that waive the
delinquent penalties, on the grounds that the claims for such
taxes are fully secured claims, the payment of such claims will
reduce the estate's liability for such penalties and does not
prejudice any other creditors and parties.

Various County Taxing Authorities responded to the motion. They
welcomed payment of the pre-petition taxes but queried whether
PG&E's payment of the secured taxes to counties may be
conditioned upon the waiver of the late charge imposed under
state law. Certain counties also disputed the assessed values
related to unpaid real property taxes quoted by Charles M.
Marre, the Director of Capital Accounting of PG&E.

PG&E responded by reminding the Objecting Counties that in
filing the motion, PG&E was trying to expedite payment of
certain real property secured taxes to 49 counties in
California, so that the filing of its chapter 11 petition would
not impose an unintended hardship on the Counties. It would be
inappropriate for the Counties to seek the Court's order
authorizing the payment of the Pre-petition taxes plus the 10%
delinquency penalties and redemption fees, or to seek payment of
the pre-petition taxes but with their right to claim the
penalties preserved, the Debtor says.

PG&E makes it clear that its motion does not compel waiver of
the delinquency penalties. However, the Debtor reminds the
Counties that if they do not wish to accept the earlier payment
and prefer to litigate the issue of whether penalties are in
fact payable on the pre-petition taxes, they will have to wait
until a later date, such as the date of confirmation of a plan
of reorganization, to receive payment of those taxes and any
penalty ultimately determined to be allowable.

Having considered the motion and the opposition, Judge Montali
issued an order authorizing and directing PG&E to pay the
Counties the undisputed portion of the Pre-petition taxes. The
order further authorizes PG&E to negotiate and compromise any
dispute with any of the Counties related to penalties, fees or
other charges with respect to the pre-petition taxes, without
further order of the Court. (Pacific Gas Bankruptcy News, Issue
No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900)

PAXSON COMMUNICATIONS: S&P Rates New Senior Sub Notes At B-
Standard & Poor's assigned its single-'B'-minus rating to the
proposed $200 million senior subordinated notes due 2008 issued
by Paxson Communications Corp. under Rule 144A with registration

At the same time, Standard & Poor's assigned its double-'B' bank
loan rating to the company's proposed $360 million senior
secured credit facilities due 2006.

Offering proceeds will be used to repay Paxson's 11.625% senior
subordinated notes, its 12% redeemable preferred stock, and its
existing credit facilities. Consequently, ratings on the repaid
notes and credit facilities are withdrawn. All other ratings on
Paxson are affirmed (see list below).

The ratings on Paxson continue to reflect the high business and
financial risk of the company's start-up television network amid
a competitive, slow-growth industry environment. Financial risk
stems from very high leverage from acquisition-related debt and
expensive debt-like preferred stock, weak EBITDA and negative
discretionary cash flow. Factors offsetting these risks include
the substantial credit and business support Paxon receives from
the financially much stronger National Broadcasting Co. Inc.
(NBC) unit of General Electric Co., Paxson's improving audience
ratings, a lower cost programming strategy, rising
profitability, and station asset values.

Paxson launched its family oriented network in 1998 and has
gradually improved audience ratings while controlling
programming costs. The network reaches about 83% of U.S.
television households, largely through 65 owned and operated UHF
TV stations. Following the 1999 relaxation of FCC television
station ownership rules, NBC made a $415 million convertible
preferred stock investment in Paxson and has been instrumental
in strengthening the company's programming and sales efforts.
NBC provides network sales services and programming support. NBC
owned and operated stations and affiliates have joint sales
agreements with Paxson stations in their markets, helping reduce
Paxson's operating costs. Paxson, the NBC Network and its
affiliates are also pursuing joint programming strategies.

Infomercials, which run during non-primetime periods, generate
more than 40% of Paxson's revenue and represent a highly
profitable income base because of the absence of programming
expense. Greater network distribution and higher audience
ratings have enabled the company to increase infomercial rates.
Prime time audience ratings improved during the past year by
more than 20%, but Paxson's conventional programming revenue and
cash flow generating ability is weak. Revenue yield from
audience ratings is well below average due to factors that could
include higher median audience age, advertiser unfamiliarity,
and the presence of direct response ads that may detract from
the network's image.

Paxson launched the network with expensive, popular off-network
dramas, which helped draw initial audiences, but restrained cash
flow growth. To address profitability, Paxson has focused its
new programming efforts on lower cost, original productions to
which it retains rights. As the proportion of self-produced
programs on the network has increased, audience ratings have
continued to rise.

NBC's preferred investment will represent about 32% of Paxson's
common stock upon conversion. NBC also has the right to acquire
up to 49% of Paxson and operational control, subject to expanded
relaxation of FCC station ownership rules. Standard & Poor's
believes that Paxson is a strategic investment for NBC and is
important to that company's long term, multi-channel programming
strategy. In the event that NBC operational control does not
occur due to regulatory restrictions, NBC still should see
increasing benefits from the current joint programming and sales
efforts with Paxson.

Paxson generates minimal EBITDA and will not likely generate
discretionary cash flow in the medium term. EBITDA coverage of
interest is fractional. Capital spending for digital television
conversion will require meaningful amounts of cash during the
next year or so. A March 31, 2001, pro forma cash balance of
about $75 million, noncore station sales, and a proposed
receivables securitization provide liquidity in addition to the
approximately $72 million credit facility undrawn amount.
Financial pressure will increase in 2003 with the onset of cash
dividend payments on the debt-like 12.5% preferred stock. Bank
interest coverage and leverage covenant tests become constraints
when they take effect in 2004.

The rating on the bank loan is double-'B', two notches higher
than the corporate credit rating. The senior secured credit
facilities consist of a $25 million revolving facility, a $50
million term loan A and a $285 million term loan B. The
facilities are secured by a first priority lien on assets and a
pledge of subsidiary stock, including equity interests in
broadcast license-holding subsidiaries. Although broadcasting
licenses cannot be used as collateral, Standard & Poor's
believes security in the form of broadcasting subsidiary stock
is significant and should provide good protection to lenders in
light of spectrum scarcity. Standard & Poor's simulated default
scenario assumed that the revolving loan was fully drawn and
station resale multiples were at distressed levels. Elements of
a default scenario could include unsatisfactory progress in
improving cash flow or unavailability of external financing.
Standard & Poor's used a discrete asset value analysis that
considered the pending sale of unprofitable stations by USA
Networks Inc. The collateral evaluation also took into account
the Paxson stations' UHF status, with their weaker signals than
VHF stations, and the station group's extensive 65% U.S.
household coverage. Based on this analysis, Standard & Poor's
expects that the collateral would be more than sufficient to
suggest full recovery of the $360 million loan, even at
distressed resale multiples.

                       Outlook: Stable

Standard & Poor's imputation of financial and operating support
from strategic investor NBC, as well as improving operations,
are important to rating stability. Barring an FCC rule change
that would permit an NBC buyout, Paxson will be under increasing
pressure to grow EBITDA as it approaches 2003 and 2004 financial
hurdles, Standard & Poor's said.

                       Ratings Assigned

Paxson Communications Corp.                          Ratings
    $200 mil. senior subordinated notes                 B-
    $360 mil. senior secured credit facilities          BB

                       Ratings Affirmed

Paxson Communications Corp.                          Ratings
    Corporate credit rating                             B+
    Preferred stock rating                              CCC+

PHARMACEUTICAL FORMULATIONS: Discloses Recapitalization Plan
Pharmaceutical Formulations, Inc. (OTC: PHFR) announced its
plans for recapitalization of the Company.

Over the past 12 months, PFI has made major strides in improving
its operations, obtaining new business, increasing sales to
current customers, and restructuring its debt. In a continuation
of the process of returning the Company to profitability, PFI is
announcing two major steps directed toward a recapitalization
that would convert a significant portion of its current debt to

The Company currently has preferred stock outstanding in the
amount of $2.5 million which is held entirely by ICC Industries
Inc. Unpaid dividends on this stock, issued in 1996, amount to
$1 million. ICC has given notice to the Company to convert this
preferred stock and the unpaid dividends into common stock. In
accordance with the terms and conditions of the preferred stock,
ICC has given the Company three months notice of conversion. The
conversion price is equal to the average of the daily market
prices of the common stock for 30 consecutive trading days,
commencing 45 days prior to the conversion date. The conversion
takes place after the three months notice period expires. In the
meantime, the Company has the right to redeem the preferred

In addition, PFI is proposing a rights offering to its
shareholders. If successful, this offering will convert most or
all of the ICC debt that has been created by working capital
infusions to the Company over the past three years, into equity.
This offering will enhance the Company's ability to return to a
profitable operation.

The Company proposes to begin the preparation of the necessary
documentation and obtain SEC and other required approvals such
that the offering will be made by October of 2001.

The Company has, with the recent filing of its 10Q, commenced
the process necessary to return the trading of its stock to the
OTC Bulletin Board.

ICC Industries Inc., the holder of approximately 20 million
shares (65%) of the common stock of PFI, is a major
international manufacturer and marketer of chemical, plastic and
pharmaceutical products with 2000 sales in excess of $1.6

PENN NATIONAL: S&P Rates $300MM Mixed Shelf At B/B-/CCC+
Standard & Poor's assigned its preliminary single-'B'/single-
'B'-minus/triple-'C'-plus ratings to Penn National Gaming
Inc.'s $300 million mixed shelf registration filed under Rule
415. Proceeds from the potential sale of senior unsecured or
subordinated debt securities, preferred stock and/or common
stock may be used for general corporate purposes including debt
repayment, capital expenditures, potential acquisitions, and
share repurchases. At the same time, Standard & Poor's affirmed
its existing ratings on the company (see list below). The
outlook is stable.

Ratings reflect Penn National's high debt levels, competitive
market conditions in markets served, and increased capital
expenditures, offset by the company's relatively diverse cash
flow base, the improved operating performance at the company's
Charles Town facility, and the steady source of cash flow from
the company's 11 off-track wagering facilities (OTWs) in

Wyomissing, Pa.-based Penn National Gaming owns and operates
riverboat gaming facilities in Bay St. Louis and Biloxi, Miss.,
and Baton Rouge, La. In addition, the company owns and operates
a gaming facility in Charles Town, W.Va., OTWs and racetracks in
Pennsylvania and New Jersey, and manages a gaming facility in
Ontario, Canada. The acquisitions of the Bay St. Louis and
Boomtown Biloxi properties from Pinnacle Entertainment Inc.
(double-'B'-minus/Negative/--) in 2000, followed by the
acquisition of CRC Holdings (unrated entity) in 2001 have helped
to diversify Penn National's cash flow base and expand its reach
in the riverboat gaming industry.

The Bay St. Louis asset has been a steady cash flow generator
over the last few years, despite an intense competitive market
environment. The company has begun a $30 million expansion of
the property, which should enhance its competitive position
longer term. Boomtown Biloxi's EBITDA increased by 15% during
the quarter ended March 31, 2001 due to revenue and volume gains
and cost controls, despite the competitive environment on the
Gulf Coast. Boomtown has expansion possibilities if an
unfavorable ground lease is resolved and the competitive
environment stabilizes.

Penn National's Charles Town complex has performed very well,
and operating results have recently been enhanced by the
addition of more slot machines and increased volumes. For the
quarter ended March 31, 2001, the property generated
approximately $11 million in EBITDA, up from $6.7 million during
the previous year period. There are currently more than 1,900
machines operational, and the company is planning to add
machines in the near term. Penn National's 10 OTW facilities
have high margins, and cash flow has been relatively steady over
the past few years.

Pro forma for the acquisition and based on current operating
trends, total debt to EBITDA is expected to be in the mid 4
times (x) area, and EBITDA coverage of interest is expected to
be in the 2x-2.5x range. Capital expenditures include the
building of a hotel at Bay St. Louis and the expansion of the
Charles Town complex, which will include a hotel, a covered
parking structure, and facility expansion.

                     Outlook: Stable

Ratings stability reflects the expectation that Penn National's
overall operating performance will remain relatively stable and
that the company's consolidated financial profile will improve
in the intermediate term.

                     Ratings Affirmed

Penn National Gaming Inc.
       Corporate credit rating   B+
       Senior secured debt       B+
       Subordinated debt         B-

PILLOWTEX CORP.: Court Grants Kenwood Silver Relief From Stay
Judge Robinson granted Kenwood Silver Company's motion for
relief from automatic stay.

Kenwood sought an order for relief to continue its lawsuit
against the Pillowtex Corporation Debtors. Prior to the Petition
Date, Kenwood initiated a negligence action against Fieldcrest
to recover the damages it suffered from a fire that occurred in
January 1998.

The fire started inside Fieldcrest Store in an outlet center in
Commerce, Georgia. Directly beneath Fieldcrest's store was
Oneida Factory Store, a retail store operated by Kenwood. When
the sprinkler system was activated, Kenwood's store was soaked.
The water caused the ceiling tiles to burst resulting in
extensive damage to the finished stock, displays, shelving,
carpeting and other tenant improvements in Oneida Factory Store.

Jennifer L. Scoliard, Esq., at Cozen and O'Connor, in
Wilmington, Delaware, assures Judge Robinson that Kenwood will
limit its recovery to the insurance proceeds of the Debtors'
relevant insurance policies in effect at the time of the

Kenwood understands Fieldcrest has a liability policy of
insurance with Kemper Insurance that was in effect at the time
of the loss and covers Kenwood's claim.

Kenwood, Ms. Scoliard adds, will also waive any deficiency claim
against the Debtors' estates, so long as the Debtors' insurance
policies were in effect at the time of the accident. If it
weren't, then Kenwood merely seeks to liquidate its claim.
(Pillowtex Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

PSINET INC.: Honoring Prepetition Employee Benefits
PSINet, Inc. sees an urgent need for continuing to pay their
employees after commencement of their chapter 11 cases. The
Debtors' Employees are paid on a two-week pay cycle. The most
recent payday for most Employees was May 30, 2001, for service
provided through June 1, 2001. To the extent any payroll checks
have not been honored and paid, or any direct deposit electronic
fund transfers have not been completed, as of the Petition Date,
the Employees will be unable to receive their pay for services
performed during the last pay cycle absent further order of the
Court. Furthermore, the remaining prepetition wages, salaries
and commissions owed Employees will become due in the ordinary
course of the Debtors' business on June 15, 2001 and subsequent
payroll dates.

The Debtors note that a critical component of the value of
PSINet's business lies in network operations, customer and
vendor relationships and operating systems, all of which would
deteriorate if Employees began leaving in large numbers. To
continue operation and preserve the value of their businesses,
the Debtors must be able to continue paying Employee wages,
salaries and commissions and providing other Employee benefits
in the ordinary course of business.

Accordingly, the PSINet Debtors sought and obtained the Court's
order, pursuant to Sections 105(a), 363 and 507(a) of the
Bankruptcy Code, authorizing them, in their sole discretion, to:

      (a) pay unpaid prepetition wages, salaries, commissions,
          withholding taxes, reimbursable business expenses and
          certain other amounts owed to or on behalf of employees
          in the ordinary course of business;

      (b) pay prepetition claims with respect to employee benefit

      (c) continue the prepetition employee benefit plans;

      (d) allow use of accrued prepetition vacation and leave

      (e) directing all banks to honor prepetition checks for the
          related payment.

As of the Petition Date, the Debtors' aggregate workforce
consisted of approximately 720 employees, including employees in
sales, marketing, engineering, network operations, customer
support, hosting centers, information systems, finance, legal,
human resources and executive positions.

The Debtors estimate, as of the Petition Date,

      (a) approximately $0.5 million of unpaid prepetition wages,
          salaries, commissions, reimbursable business expenses,
          garnishments, and withholding and payroll-related
          taxes, and

      (b) approximately $1.1 million of unpaid prepetition
          liabilities and employee contributions for Employee
          welfare benefit plans.

As of May 2, 2001, the Debtors had approximately $320 million in
unencumbered cash and cash equivalents. The Debtors anticipate
that existing cash reserves and postpetition revenues will be
sufficient to pay all prepetition Employee Obligations in
accordance with the motion and order on an ongoing basis and in
the ordinary course of the Debtors' business.

Summary of Employee Benefit Plans and Programs

(1) Salaries, Wages and Commissions:

     Most Employees are either paid on an hourly or salary basis.
Certain sales associates and other Employees also earn

The sales force is paid according to varying commission
structures supplemented by a base salary. Commissions are
typically based on (i) satisfactory completion of management
initiatives, (ii) compliance with minimum revenue retention
requirements and (iii) attainment of new booking or contract
upgrade targets, based on the value of each contract,
calculated according to a percentage that varies by the
representative's position and relative performance as
measured against a monthly sales quota.

Sales representatives are also eligible to receive percentage
commissions for certain contracts based on the extent to
which customer billings exceed minimum contractual revenue
commitments over specified periods.

(2) Travel and Expense Reimbursement Policy:

     Employees are reimbursed for travel and business
entertainment expenses incurred in compliance with the Debtors'
travel and expense reimbursement policies. All reimbursable
expenses must be supported by written documentation, including
original receipts for all amounts in excess of $25.
Reimbursement of business expenses must be approved by the
employee's supervisor. Relocation expenses may be approved on a
case-by-case basis. On average, employees in the aggregate incur
reimbursable business expenses of $20,000 to $40,000 per week.
Because there is typically an average delay of three weeks in
submission of reimbursable expense receipts by traveling
salespersons and other employees, the Debtors estimate that the
total amount of reimbursable expenses owed as of the Petition
Date may be approximately $90,000.

(3) PSINet 401(k) Plan:

     All active Employees (excluding a small number of interns)
who are 21 years of age with service of at least 19 hours per
week are eligible to participate at the beginning of the first
full pay cycle in the month following the date of hire.
Employees may make a tax-deferred contribution of the lesser of
$10,500 or 12% of their eligible earnings per year. PSINet will
match 100% of the first $1,000 of an employee's contribution per
year and 2 25% of any remaining employee contributions during
that period. The employer's contribution is fully vested after
two years. This plan is administered by Merrill Lynch.

(4) Medical and Prescription Drug Insurance Plan:

     All full-time active Employees (excluding a small number of
interns) are eligible for coverage from their date of hire. The
plan is self-funded; as designed, PSINet is to contribute
approximately 75 to 80% of the cost of the program and the
Employees are to contribute the remainder. These funds are
used to pay claims and administrative costs. The Employee
portion is paid through contributions withheld from salary and
wages and through deductible and co-pay amounts.

With certain restrictions, the Employees have a choice of three
programs: a Preferred Provider Organization (PPO), an Exclusive
Provider Organization (EPO) or an Out-of-Area program (OOA).
These programs are administered by United Healthcare and Blue
Cross (with respect to the PPO in Michigan and Minnesota).
Benefits payable to employees under the plan are limited to a
cumulative life-time limit of $2 million per employee. The
Debtors have purchased stop-loss policies from United Healthcare
and Blue Cross that cover claims in excess of $150,000 or
$100,000, respectively, per employee per year. The Debtors pay
aggregate monthly premiums of approximately $12,000, which the
Debtors pay in arrears.

(5) Dental Insurance Plan:

     All full-time active Employees (excluding a small number of
interns) are eligible for coverage from their date of hire. The
plan is self-funded; as designed, PSINet is to contribute
approximately 75 to 80% of the cost of the program and the
Employees are to contribute the remainder. These funds are used
to pay claims and administrative costs. The Employee portion is
paid through contributions withheld from salary and wages and
through deductible and co-pay amounts. Total benefits cannot
exceed $2000 per person annually. MetLife administers this

(6) Vision Insurance Plan:

     All full-time active Employees (excluding a small number of
interns) are eligible for coverage from their date of hire. The
plan is self-funded; as designed, PSINet is to contribute
approximately 75 to 80% of the cost of the program and the
Employees are to contribute the remainder. These funds are used
to pay claims and administrative costs. The Employee portion is
paid through contributions withheld from salary a and wages and
through deductible and co-pay amounts. Vision Service Plan
administers this program.

(7) Life Insurance and Accidental Death and Dismemberment

     All full-time active Employees (excluding a small number of
interns) are eligible from their date of hire. PSINet offers
Basic Life and Accidental Death and Dismemberment Insurance, for
which the premiums are paid entirely by PSINet; and Optional
Life Insurance and Voluntary Accidental Death & Dismemberment
Program, which are fully paid for by the participating Employees
through payroll deductions. All three programs are administered
by MetLife. All benefits are fully insured.

(8) Short-Term Disability Insurance:

     All full-time active Employees (excluding a small number of
interns) are automatically covered from their date of hire.
PSINet is entirely selfinsured and pays the full cost of the
plan. The plan is administered by MetLife.

(9) Long-Term Disability Insurance:

     All full-time active Employees (excluding a small number of
interns) are automatically covered from their date of hire.
PSINet is fully insured and pays all premiums. The plan is
administered by MetLife. In additional, all full-time 3 active
Employees may elect Buy-Up Long Term Disability coverage, which
is fully paid for by the participating Employees through payroll

(10) Flexible Spending Accounts:

      All full-time active Employees (excluding a small number of
interns) are eligible to participate. The program calls for
Employees to bear the entire cost on a pre-tax basis. Employees
can elect to deposit a maximum of $5000 annually into a Medical
Flexible Spending Account and can deposit a maximum of $5,000
into a Dependent Care Flexible Spending Account. The amount that
can be deposited into the Dependent Care Flexible Spending
Account could be less, depending on Employee's marital status,
compensation and the compensation of the Employee's spouse.
Employees may continue to participate in the Flexible Spending
Account programs following termination from employment for the
remainder of the year in which the employee is terminated.

(11) Vacation, Sick Leave and Personal Leave:

      All regular full-time employees who are scheduled to work
at least 40 hours per week are eligible to accrue paid vacation
at an annual rate of two weeks during the first year of
employment and three weeks per year thereafter. Executives
are typically eligible to accrue four weeks of vacation each
year. Employees may carry over unused vacation from year to
year, up to a maximum of 30 days (some legacy employees are
currently permitted to carry more than 30 days of accrued
vacation, although it must be used by the end of the year);
however they are only reimbursed for unused accrued vacation
upon termination or in cases of personal hardship (not to exceed
30 days, unless required by state law).

As of May 2001, the Employees were carrying accrued vacation
with an aggregate value of approximately $3.0 million. Full-
time Employees are also eligible to accrue both sick leave (7.5
days per year) and floating holidays (2 days per year).
Employees may carry over accrued sick leave from year to year up
to a maximum of three weeks, but they are not able to carry over
accrued floating holidays from year to year and are not
reimbursed for unused sick leave or floating holidays upon
termination or at any other time. Employees are also eligible
for military leave, bereavement leave, jury duty leave and leave
in accordance with the Family and Medical Leave Act.

(12) Employee Assistance Program:

      All Employees are automatically eligible for coverage from
their date of hire. The Employee Assistance Program is paid
entirely by PSINet and provides counseling and referral
services. The Program is administered by United Behavioral
Health, a division of United Healthcare.

(13) Tuition Reimbursement Plan:

      All full-time active Employees (excluding a small number of
interns) who are regularly scheduled to work at least 40 hours
per week are eligible to participate following completion of six
consecutive months of service. Employees may obtain
reimbursement for up to $5000 tuition per year for certain pre-
approved job-related undergraduate, graduate or technical
certification courses. Reimbursement is conditioned on
satisfactory completion of the coursework. As of April 5,
2001, 30 Employees had been approved to take an aggregate of
56 courses for a total future tuition reimbursement cost of
$49,160. (PSINet Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

RAYTHEON: Sees Higher Costs to Complete 2 Construction Projects
Raytheon Company (NYSE: RTN) has several preliminary estimates
of the cost to complete two Massachusetts construction projects
for Sithe Energies Inc., that were abandoned by Washington Group
International (WGI) and which Raytheon is completing pursuant to
performance guarantees. Some of these preliminary estimates
assume significant increases in liquidated damages, construction
management costs and project contingencies, which would cause
the total liability to be higher than the March 2001 estimate.
Raytheon now expects the eventual liability on these two
projects to range between $450 million and $700 million,
compared to the earlier estimate of $325 million.

Raytheon has assembled a team of project management experts to
conduct critical reviews of the construction schedule associated
with each of the estimates it has received. Optimizing the
construction schedule would have a material favorable impact
upon the size of any incremental charges related to the Sithe

"What is most important is that the Raytheon team focuses its
full attention on getting these projects back on schedule in
order to minimize the impact of WGI's abandonment," said Daniel
P. Burnham, Raytheon's chairman and chief executive officer.
"Further precision with respect to both timing and cost will
require completion of a more refined construction schedule."

As previously disclosed, Raytheon sold its engineering and
construction business to WGI on July 7, 2000, and had guaranteed
performance of certain projects to the project owners. WGI
announced in March 2001 that it had severe liquidity problems.
Raytheon took over performance of the two Sithe projects in
March 2001, following the abandonment and default by WGI of its
obligations with respect to those projects. Raytheon previously
disclosed a potential liability of up to $450 million for 50
construction projects for which it has performance guarantees,
including $325 million for the two Sithe projects. As was
described at the time, Raytheon's analysis was based on
estimates provided by WGI of the cost to complete them.

Under the sale agreement for Raytheon's former engineering and
construction business, WGI is required to indemnify Raytheon for
all amounts expended by Raytheon to complete the projects, and
Raytheon is entitled to full cash reimbursement for these
amounts and full set-off against any WGI claims against
Raytheon. Due to the bankruptcy filing by WGI, Raytheon does not
intend to recognize for accounting purposes the value of its
claims against WGI, although it intends to pursue all avenues to
maximize its recovery.

With headquarters in Lexington, Mass., Raytheon Company is a
global technology leader in defense, government and commercial
electronics, and business and special mission aircraft.

RELIANCE GROUP: Trustee Appoints Unsecured Creditors' Committee
The United States Trustee appoints these nine unsecured
claimants to the Official Committee of Unsecured Creditors in
Reliance Group Holdings, Inc.'s Chapter 11 cases:

       Craig Litsey
             c/o Wells Fargo Bank Minnesota, as Indenture Trustee
             Sixth Street and Marquette Avenue
             Minneapolis, MN  55479
             (612) 667-4160

       Russ Paladino
             c/o HSBC Bank USA, as Trustee
             452 Fifth Avenue
             New York, NY  10018-2706
             (212) 525-1324

       Raymond G. Kennedy
       Mohan V. Phansalkar
             c/o Pacific Investment Management Company
             840 Newport Center Drive
             Newport Beach, CA  92660
             (949) 720-6180

       Eric R. Johnson
             c/o Conseco Capital Management
             11825 N. Pennsylvania Street
             Carmel, IN  46032

       John A. Menke
             c/o Pension Benefit Guaranty Corporation
             1200 K Street, NW
             Washington, DC  20005
             (202) 326-4020 ext. 3059

       David C. Woodward
             7 Lancaster Gardens
             London SW 19 5 DG UK
             (44) 208-879-7188

       Christine Howard
             245 East 40th Street, Suite 30 B
             New York, NY  10016

(Reliance Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

VACATION VILLAGE: Creditor Moves For Sale to Recover Loan
The Vacation Village's largest creditor, Foothill Capital, is
moving ahead with plans to force a sale of the hotel-casino to
recover a $19 million loan. The disclosure statement filed by
Foothill -- which describes how the planned asset sale will be
executed -- was approved on June 15 by U.S. Bankruptcy Judge
Robert Jones, some eight months after the 24-acre property on
the south end of the Las Vegas Strip filed for Chapter 11
bankruptcy protection. A hearing on the Foothill plan is set for
July 23.

Philip Abramowitz, Vacation Village's attorney, maintains that
Vacation Village still expects to get refinancing in time to pay
off its creditors and "pull out of the Chapter 11 plan." "Our
goal is still to pay off Foothill. I've seen the commitment
letter from the bank for a loan. We have no plans to lay off any
of the hotel-casino's 350 workers," he said. Vacation Village
filed Chapter 11 in November in an attempt to halt Foothill's
foreclosure of the company's debt. (New Generation Research,
June 25, 2001)

VIATEL INC.: Court Approves Proposed Bidding Procedures
The United States Bankruptcy Court for the District of Delaware
has approved Viatel, Inc.'s (OTC: VYTLQ) motion for bidding
procedures to be employed in the conduct of an auction to sell
all of the Company's remaining assets -- either as a whole or in
segments. These assets consist principally of Viatel's 8,700-
route kilometer, pan-European, fiber-optic network and its
trans-Atlantic cable system.

The businesses previously conducted by Viatel in the U.K.--
including the U.K. link to its network on the European continent
-- are now under the control of a court-appointed administrator.
However, the Company characterized its relationship with the
Administrator as a most constructive one and said it anticipates
that a purchaser of the network assets on the Continent would
also be able to reach an agreement with the Administrator to
acquire the U.K. link.

The Company cautioned that the amount of recovery for U.S.
creditors remains speculative. In its filing, the Company said
that if no buyers participated in the auction that it was likely
the network would be liquidated piecemeal under the laws of the
European jurisdictions in which the assets are located.

Deadline for submission of bids is on July 31, 2001.

WARNACO GROUP: Paying Prepetition Employee Obligations
The Warnaco Group, Inc. employs approximately 4,822 workers
(including 841 part-time workers) in the United States and 360
employees in Canada. Approximately 556 of the employees work at
the Debtors' jeanswear manufacturing facilities in Duncansville,
Pennsylvania and Nesquehoning, Pennsylvania.  About 175
employees work at the Debtors' principal domestic distribution
and warehousing facility located in Abbeville, South Carolina,
and are members of the Union of Needletrades, Industrial and
Textile Employees.

The Debtors are parties to various salary and wage policies,
savings plans, insurance plans and other programs designed to
provide benefits for their union and non-union employees.  The
Debtors tell the Court they must continue to pay the pre-
petition wages and salaries of their employees when due as well
as all savings plans, insurance plans and compensation policies.
It is necessary to ensure the ongoing services of the Debtors'

J. Ronald Trost, Esq., at Sidley Austin Brown and Wood, in New
York, cautions that any delay in paying the compensation could
severely disrupt the Debtors' relationship with their employees
and irreparably impair the employees' morale at the very time
their dedication, confidence and cooperation are most critical.
Mr. Trost explains the Debtors must also continue their
corporate policy of permitting certain employees to incur
business-related expenses and seek repayment by submitting
appropriate invoices or vouchers as evidence of these out-of-
pocket disbursements.

Estimated accrued compensation owed to employees and estimated
withholding taxes as of June 10, 2001:

Wages (net payroll)                             $2,370,322.19
Out-of-Pocket Expenses (travel)                  1,371,500.00
Federal Withholding Payables                       569,172.36
State and Local Withholding Payables               161,870.36
FICA and Medicare (employee contribution)          249,159.65
Unemployment Taxes                                 612,025.56
Section 125 (employee withholding)                 147,114.80
After Tax Deductions
       Medical                                       14,137.48
       Life Insurance (supplemental)                  4,437.29
       Other                                         15,350.09
       Foreign Taxes                                108,000.00
       Union Dues/Health & Welfare                  120,794.17
       LTD/STD (at employee's option)                 8,010.42
Garnishments/Child Support                          15,596.56
Credit Union                                       117,044.97
401(k) Plan (employee contribution)                 85,859.84
Tuition Reimbursement                                6,116.75
Relocation Expenses                                 75,388.44
Medical Executive Reimbursement Plan                 6,568.92
Vacation Pay                                       430,000.00

Pre-petition amounts owed to providers of benefits estimated as
of June 10, 2001:

Pension Actuarial Services                      $  101,418.00
Health/Welfare Consulting Services                 145,833.00
Workers' Compensation Broker and Consulting Fees     7,518.00
Workers' Compensation Monthly Premium               38,837.00
401 (k) Company Stock Match                         53,277.00
Short-Term Disability Administrative Fees              604.00
Medical/Dental/Life Insurance Premium & Expenses:
       Employer                                     558,427.88
       Employee                                     601,986.39
Wire Transfers to SAS for
     Medical/STD Claims Payments                     67,819.49
Commissions Owing to Outside Sales Force           472,303.66

Finding that the Debtors' Motion is well taken, Judge Gonzalez
authorizes the Debtors to honor these prepetition obligations.
Nothing in Judge Gonzalez' First Day Order constitutes
assumption or rejection of any executory contract. (Warnaco
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

WASHINGTON GROUP: Court Approves Issuance of Bonds
Washington Group International, Inc. announced that it has
reached agreement with Federal Insurance Company to provide
bonding for two major infrastructure projects in Colorado and

In addition to approving the two infrastructure bonds, the court
presiding over Washington Group's financial reorganization also
authorized Washington Group to enter in a further agreement with
Federal Insurance Company to provide bonding capacity for other
joint venture projects and projects that the company intends to
pursue alone, subject to the approval of Washington Group's

"This is another positive step in our accelerated financial
restructuring and an important barometer in gauging the
financial community's confidence in Washington Group's
operational performance and financial health," said Stephen G.
Hanks, Washington Group President and Chief Executive Officer.

Washington Group International, Inc., is a leading international
engineering and construction firm. 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.

                     Markets Served

Energy, environmental, government, heavy-civil, industrial,
mining, nuclear-services, operations and maintenance, petroleum
and chemicals, process, pulp and paper, telecommunications,
transportation, and water-resources.

WASHINGTON GROUP: Promotes Williams & Therrien to Key Positions
Washington Group International, Inc., a leader in the
engineering and construction industry, announced that as part of
an ongoing initiative to refocus and integrate the company, two
company veterans, G. Bretnell Williams and Greg P. Therrien have
been promoted.

As an operational President, Mr. Williams will continue to serve
as executive sponsor for selected Washington clients, but will
assume additional responsibilities in working with the Office of
the Chairman on three priority corporate initiatives. Greg P.
Therrien, formerly Executive Vice President - Operations of the
company's Industrial/Process unit, has been named President of
Washington Industrial/Process.

"Bret Williams is among the preeminent executives in industrial
engineering and construction today. His experience and talent
make him ideally suited to tackle these additional challenges
which are so pivotal to our company's revitalization," said
Stephen G. Hanks, Washington Group President and Chief Executive
Officer. "And I've worked with Greg for more than two decades:
he knows this business, this company, and is energized to
aggressively manage safety, quality, cost, and schedule for our
Industrial/Process clients."

Mr. Williams will work closely with the company's operating unit
Presidents to: 1) implement an operational culture that
optimizes the company's engineering, procurement, construction
and project management throughout the corporation; 2) realign
the company's regional office structure; and 3) ensure that
shared corporate services improve in quality and become more
cost effective.

Mr. Williams, who has been engaged in business development and
operations of industrial projects for more than four decades,
started his career with Washington Group as Vice President of
Marketing in 1976. He later served as President of the company's
H.K. Ferguson Company and was named Executive Vice President -
Industrial Operations in 1991, and President of Washington
Industrial/Process earlier this year. Mr. Williams graduated
from Yale University with an engineering degree.

Greg P. Therrien, formerly Executive Vice President - Operations
of the company's Industrial/Process unit, has been promoted to
President of Washington Industrial/Process. Therrien, a 22-year
employee of Washington Group has spent the majority of his
career with the company managing automotive industry projects
and is a seasoned industry veteran. Before being named Executive
Vice President - Operations, Mr. Therrien served as Senior Vice
President of Washington Industrial Manufacturing in Cleveland
and was responsible for all of Washington Group's worldwide
automotive, industrial manufacturing, and building operations.
He earned a degree in Construction Management from Washington
State University.

WEINER'S STORES: Intends To Wind-Down Operations & Sell Assets
Weiner's Stores Inc. (OTCBB:WEIR), a 76-year old Houston-based
family retailer, announced that it planned to cease all business
operations and proceed with an orderly wind-down of its business
and a sale of its assets. The company soon expects to file, in
its current Chapter 11 case (00-3955-PJW) in the United States
Bankruptcy Court for the District of Delaware, the motions
necessary to execute an orderly wind-down of its business and
sale of substantially all its assets. The company and its board
of directors had explored a wide variety of options, including,
partial liquidation around a smaller group of core stores, a
financial sale of all or part of its business, or an equity
infusion, before determining that an orderly wind-down of
operations offered the best alternative for the benefit of its
secured lender and creditors.

Raymond J. Miller, chairman and chief executive officer, stated,
While we were encouraged by our performance in Chapter 11 during
fall 2000 and the early results from the redesigned
merchandising and marketing programs in early 2001, accelerated
softness in apparel sales starting shortly after Easter 2001
combined with the effects of tropical storm Allison in June 2001
generated operating losses and capital constraints that were too
deep to weather.

The company stated that it could not predict the extent to which
the sale of its assets would be sufficient to satisfy the claims
of all creditors. However, the company expects that no assets
would be available for distribution to stockholders.

Mr. Miller further stated, The company is in the process of
finalizing an arrangement with a third party to conduct going-
out-of-business sales at the remaining stores. Current Weiner's
Stores Inc. employees are expected to continue to staff the
stores during the process. The company anticipates that the
closing sales will be completed by the middle to end of
September. An orderly wind-down of the corporate
office/distribution center will begin immediately.

The company filed a voluntary Chapter 11 petition in the United
States Bankruptcy Court for the District of Delaware on Oct. 16,

Weiner's is a convenient neighborhood family retailer that
offers a complete assortment of branded products for value-
conscious consumers. Currently, approximately 2,700 associates
are employed at the 97 stores that are operated in Texas,
Louisiana, Mississippi and Alabama.

WINSTAR COMM.: Lucent Technologies Asks For Relief From Stay
Lucent Technologies is a secured creditor of Winstar
Communications, Inc. with a pre-petition claim of approximately
$758,700,000 as well as an unsecured pre-petition claim
exceeding $100,000,000.

In October 1998, Lucent and the Debtors were parties to a supply
agreement that called for Lucent to supply products and services
to the Debtors for Winstar's network building projects.  This
agreement was terminated by Lucent for cause on April 12, 2001.

Last May 2000, WVF-I, Winstar, The Bank of New York, and Lucent
entered into a credit agreement that is a $2,000,000,000 senior
secured facility.  Lucent agreed to provide financing for, among
other things, the products and services purchased by the Debtors
under the Lucent Supply Agreement.  The initial borrower under
the credit agreement was WVF-I, a subsidiary of Winstar.  Last
December, Winstar named WVF-LU2 as a replacement borrower under
the Lucent Credit Agreement.

But when the Debtors' filed these chapter 11 cases, Lucent's
lending commitments under the Lucent Credit Agreement
automatically terminated. At the same time, the principal amount
of the loans then outstanding, with its accumulated interest and
all fees and other obligations of the Borrowers (WVF-1 and WVF-
LU2) automatically became due and payable.

Borrowings outstanding under the Lucent Credit Agreement
currently total $758,700,000.  These borrowings financed the
purchase of equipment from Lucent, the purchase of equipment
from third parties, and the purchase of services from Lucent.
Because of the Lucent Supply Agreement and the Lucent Credit
agreement, the Debtors were able to acquire products and
services for their network building projects.

In the event of default under the Lucent Credit Agreement,
Lucent may:

       (a) Terminate the financing commitments,

       (b) Declare the loans outstanding to be due in whole
           immediately, and

       (c) Direct The Bank of New York, as collateral agent,
           among other things, to sell or dispose of collateral
           whether or not in its or Lucent's possession and apply
           the proceeds to pay down the outstanding obligations
           under the Lucent Credit Agreement.

The Lucent Credit Agreement and related agreements restrict the
existence of competing security interests in respect of the
collateral. As a result, Lucent's security interest in the
collateral is exclusive and there are no competing security
interests in the collateral.

The Lucent declared a default under the Lucent Credit Agreement
on April 16, 2001.

As contemplated in the Lucent Supply Agreement and the Lucent
Credit Agreement, Lucent sold certain equipment to Winstar group
entities. Winstar ordered stingers and kitted cabinets in
Phoenix Warehouse:

Description                 QTY   Unit Price         Total
-----------                 ---   ----------       ----------
Stinger                      53       $1,035          $54,855
Stinger                       2            0                0
Stinger                     130          855          111,150
Stinger 48 Port SDSL        464        7,650        3,549,600
Naviaccess software option  472        1,798          848,538
Stinger                     472        3,105        1,465,560
Stinger                       2        1,035            2,070
Stinger                     122        1,035          126,270
Stinger 48 Port LPM         234          855          200,070
Stinger                     398        1,080          429,840
Kitted Cabinet              200        9,000        1,800,000
                Total                               $8,587,953

The Phoenix Warehouse Collateral was ordered by Winstar pursuant
to various purchase orders including WVF1-3721 on or about
September 29, 2000 and purchase order WNE5825 on or about March
29, 2000.

Lucent has valid, perfected, nonavoidable, first-priority liens
on the Phonenix Warehouse Collateral.  Under the terms of the
Lucent Credit Agreement and related agreements, no other
entities may claim a security interest in the Phoenix Warehouse

By this motion, Lucent asks Judge Farnan to:

       (a) Terminate the automatic stay with respect to the
Phoenix Warehouse Collateral, and

       (b) Permit Lucent to foreclose on and liquidate that
collateral and apply the proceeds to its claims against the
Borrowers under the Lucent Credit Agreement and documents
related thereto.

But if Judge Farnan finds that the automatic stay should be
continued at this time, Lucent asks the Court to:

       (1) Permit them to maintain possession of the Phoenix
Warehouse Collateral to preserve its value, or

       (2) Require the Debtors to pay Lucent, until further order
of this Court, adequate protection payments sufficient to
protect Lucent's interest in the Phoenix Warehouse Collateral,

       (3) Grant Lucent such other and further relief as would
result in Lucent's receiving the unquestionable equivalent of
Lucent's interest in the Phoenix Warehouse Collateral.

Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, notes that the Debtors have not paid
Lucent for the Phoenix Warehouse Collateral despite a notice of

If Lucent is not permitted to foreclose on the collateral
promptly, Mr. DeFranceschi says, the collateral will decline in
value to Lucent's disadvantage.  This decline in value will be
even more harmful to Lucent if the Phoenix Warehouse collateral
is turned over to the Debtors.  At present, the Phoenix
Warehouse Collateral has substantial value to Lucent and could
be readily resold to other customers or used by Lucent for other
business purposes.  Allowing Lucent to foreclose on and
liquidate the Phoenix Warehouse collateral is the only way to
provide Lucent with adequate protection of its interest in the
Phoenix Warehouse Collateral, Mr. DeFranceschi argues.

The Debtors did not take possession of the Phoenix Warehouse
Collateral before the Petition Date, Mr. DeFranceschi notes, but
instead left $8,600,000 worth of valuable equipment in another
warehouse for storage at Lucent's expense.

Lucent believes the Debtors do not need the Phoenix Warehouse
Collateral for their network building projects because it is not
used in the operation of the Debtors' existing network and it is
not necessary to an effective reorganization of the Debtors'
business. (Winstar Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

ZEPHION NETWORKS: Files Chapter 11 Petition in Wilmington
Zephion Networks Inc. filed for chapter 11 bankruptcy protection
in the U.S. Bankruptcy Court in Wilmington, Delaware. In its
chapter 11 petition, the Falls Church, Va.-based company, which
provides Internet access solutions and network services, cited
assets of $171.6 million and debts of $170.4 million, as of
April. Zephion said it doesn't believe it will have funds
available to distribute to its unsecured creditors. The petition
estimated the number of creditors at between one and 15. Those
owning 5 percent or more of Zephion Networks' voting securities
are Broadband Office Inc. and KPCB Holdings. On May 9, Broadband
Office filed its own chapter 11 petition in Delaware.

Zephion Networks' subsidiary Zephion Networks Communications
Inc. also filed a chapter 11 petition. The court web site also
indicates a petition was filed by Zephion Communications of
Virginia Inc., although Zephion Networks' petition doesn't
specifically list the entity as a filing affiliate. Zephion
Networks Communications and Zephion Communications of Virginia
are listed by Zephion Networks as its top and only two unsecured
creditors, each with a contingent $10.5 million claim in
connection with a guarantee. (ABI World, June 26, 2001)

ZEPHION NETWORKS: Chapter 11 Case Summary
Lead Debtor: Zephion Networks, Inc.
              2950 Gallows Road
              Falls Church, VA 22042

Debtor affiliates filing separate Chapter 11 petition:

             Zephion Networks Communications, Inc.
             Zephion Communications of Virginia, Inc.

Chapter 11 Petition Date: June 25, 2001

Court: District of Delaware

Bankruptcy Case Nos.: 01-02111, 01-02113 and 01-02114

Debtors' Counsel: Charlene D. Davis, Esq.
                   The Bayard Firm
                   222 Delaware Avenue, Suite 900
                   P.O. Box 25130
                   Wilmington, DE 19899
                   (302) 655-5000

ZYMETX INC.: Shares Kicked Off Nasdaq, Now Trading On OTCBB
ZymeTx, Inc. (OTCBB:ZMTX), a biotech company engaged in viral
disease detection, diagnosis and management, announced that it
has been advised by Nasdaq that the Company's common shares have
been delisted from the Nasdaq National Market.

Effective June 20, 2001, the Company's common shares are trading
on the NASD Over-the-Counter (OTC) Bulletin Board, and its
ticker symbol continues to be ZMTX.

The decision by the Nasdaq Listing Qualifications Panel to
delist ZymeTx's securities was based on the Company's failure to
maintain the net tangible asset and minimum bid price
requirements for continued listing.

The Company is currently reviewing its options, including the
possibility of appealing the Qualifications Panel's decision to
delist the Company's securities from the Nasdaq Stock Market, in
light of the fact that it was in the process of taking steps to
address Nasdaq's concerns, including preparing to seek
shareholder approval to raise up to $7.5 million of additional
equity and to implement a reverse split of its common stock.

                       About ZymeTx, Inc.

ZymeTx, Inc., headquartered in Oklahoma City, is a biotechnology
company engaged in the development of technology to produce
products for the diagnosis and treatment of viral disease, viral
management and disease surveillance. The company developed
ZstatFlur, the world's first rapid point-of-care test capable of
detecting both Influenza A and B, and the National Flu
Surveillance Network? (NFSN), a network of physician sites
across the country that use ZstatFlu to track influenza in their
communities and practices. Additional information on ZymeTx and
NFSN can be obtained by accessing the web sites at and


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

Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Go to order any title today.

For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter is a daily newsletter co-published by
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Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L.
Metzler, Bernadette de Roda, Aileen Quijano and Peter A.
Chapman, Editors.

Copyright 2001.  All rights reserved.  ISSN: 1520-9474.

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