/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/010914.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, September 14, 2001, Vol. 5, No. 180 Headlines 360NETWORKS: Woolridge Moves to Compel Decision on Contract ABRAXAS PETROLEUM: Drilling of Seven Wells in Canada Successful BETHLEHEM STEEL: Solicits Consent for Amendments to Indentures BORDEN CHEMICALS: Seeks Okay to Sell Substantially All Assets CAUSSA CAPITAL: Securities Fall Below TSE Listing Requirements CHARTER COMMS: $1.5BB Note Exchange Offer Extended to Sept. 21 COMDISCO: Seeks Indefinite Extension of Lease Decision Period COVAD COMMS: Escrow Arrangement Short-Circuiting Process Feared CYBERCASH: Seeks Confirmation of 100% Payout Liquidating Plan DANKA BUSINESS: Annual General Meeting Slated for October 9 EQUITABLE LIFE: Restructuring Prompts S&P to Alter CreditWatch FINOVA GROUP: Court Okays Glass As Advisor to Equity Committee GALAXY ONLINE: Late Filing of Results Expected on September 17 GST TELECOM: Seeks Extension of Exclusive Periods HARNISCHFEGER: Beloit Seeks to Expunge 14 Claims Totaling $1.8MM INTEGRATED HEALTH: Sells Clara Burke Facility in PA For $3MM LAIDLAW: Allowed to Hire Professionals Without Court Scrutiny LOEWS CINEPLEX: Reopens Manhattan Theatres on a Limited Basis LOG ON AMERICA: Hearing Before Nasdaq Postponed Indefinitely LTV CORP: Court Approves Second Extension of Exclusive Periods LTV STEEL: Starts-Up 50 Mega-Watt Cogeneration Unit in Indiana METROCALL: COO Jacoby Among American Airlines Flight 77 Victims METROMEDIA: Gets Commitment Extension for $235MM Financing NETCENTIVES: Fails to Meet Nasdaq Bid Price Requirement OWENS CORNING: Unsecured Panel Taps Buck as Benefits Consultant PACIFIC GAS: Assuming Four Amended Westside Cogen PPAs PILLOWTEX CORP: GE Capital Seeks Stay Relief to Enforce Rights PLAY-BY-PLAY TOYS: Taps SAMCO As Chairman's Financing Consultant POTLATCH CORP: Shuts Down Two Paperboard Machines in Idaho PROBEX CORP: Secures $4.1 Million Interim Financing Pact RHYTHMS NETCONNECTIONS: Subsidiaries Continue Network Operations SAFETY KLEEN: Court Approves Rittenmeyer's Engagement Terms SCHWINN/GT: Direct Focus Acquires Fitness Unit for Around $65MM SPORTS AUTHORITY: Extends Shareholders Rights Plan to 10 Years STEEL HEDDLE: Wire Business Sale Auction Slated for October 1 SUN HEALTHCARE: Court Further Extends Lease Decision Period TRANS WORLD: Bill Compton Will Retire as President on October 1 USG CORP: Injury Claimants Hire Tersigni as Financial Advisor U.S. INTERACTIVE: Court Confirms 2nd Amended Reorganization Plan VENTRO: Faces Nasdaq Delisting Due to Bid Price Non-Compliance VENTUREQUEST: Seeks Debenture Financing Alternative WEIRTON STEEL: Reaches Tentative Agreement with Guard Union WHEELING-PITTSBURGH: Extends Labor Pact with USWA to Feb 2006 WHEELING-PITTSBURGH: USWA Says Pact Crucial to Avoid Liquidation WINSTAR COMMS: Amends Blackstone's Engagement as Finance Advisor BOOK REVIEW: ONE HUNDRED YEARS OF LAND VALUES IN CHICAGO: The Relationship of the Growth of Chicago to the Rise of its Land Values, 1830-1933 ********* 360NETWORKS: Woolridge Moves to Compel Decision on Contract ----------------------------------------------------------- Wooldridge Construction Company, LLC, is a creditor and party- in-interest in 360networks inc.'s cases. Last March, David M. Green, Esq., at Salomon Green & Ostrow, in New York, relates Wooldridge entered into a written contract with the Debtors to construct certain improvements on real property located at 2730 Matthews Avenue in Memphis, Tennessee 38108. According to Mr. Green, the project provides for the construction of a 20,000-square-foot pre-cast concrete point of possession (POP) building, designed to provide security and environmental support for fiber optic and telecommunications equipment. To meet its obligations under the Contract, Mr. Green notes, Wooldridge hired numerous subcontractors and materialmen to work on the project. As required by its contract with the Debtors, Mr. Green relates, Wooldridge procured a labor and material payment bond from Fidelity & Deposit Company of Maryland to insure that its subcontractors and materialmen receive payment. As partial consideration for the issuance of the payment bond, Mr. Green says, Wooldridge's Chief Manager Jim Wooldridge executed a general agreement of indemnity. According to Mr. Green, this agreement provided for Mr. Wooldridge to personally guarantee to pay all sums, which the surety is forced to pay pursuant to the payment bond. So, Mr. Wooldridge secured this guarantee with all his personal assets except his residence. Prior to Petition Date, Mr. Green relates that Wooldridge provided all necessary labor, services and materials required under the Contract. But the Debtors failed perform its end of the bargain. Mr. Green says the Debtors refused to pay most amounts due and owing to Wooldridge, thereby materially breaching the Contract. As of this motion, Mr. Green claims, the Debtors owe Wooldridge $2,947,500 for the labor, services and materials provided under the Contract. Because of the Debtors' breach of the Contract, Mr. Green explains Wooldridge and all its subcontractors stopped all work on the property last June. Hence, the project is not completed and the Debtors' facility is not operational. As of this motion, Mr. Green outlines these incomplete Contract items: (i) entrance to the site; (ii) fencing; (iii) mechanical system; (iv) balancing of the HVAC; (v) wire mesh partitions; (vi) paving and stripping of the parking lot; and (vii) site landscaping. During that same month, Mr. Green relates Wooldridge filed a Notice of Lien Claim and sworn statement with the Shelby County, Tennessee Registrar's Office. A few days later, Wooldridge sued the Debtors in the Chancery Court of Tennessee for the Thirteenth Judicial District at Memphis, for breach of contract, to enforce the Lien, for attachment and for money judgment. But the Debtors responded in silence. However, when the Debtors filed these chapter 11 cases, the Tennessee Action was been automatically stayed. As a result of these events, Mr. Green notes, Wooldridge is unable to pay its subcontractors and materialmen who worked on the Project. These parties are owed $1,996,704, plus $363,656.99 of retainage for the labor, services and materials provided on the Project, according to Mr. Green. Mr. Green relates that the unpaid subcontractors and materialmen were forced to take all legal steps necessary to recover from Wooldridge the monies owed to them, including (but not limited to) the assertion of mechanic's and materialmen's liens against the Project, claims against Wooldridge's payment bond, and the commencement of lawsuits to recover from Wooldridge and the bonding company. If Wooldridge cannot satisfy these debts, Mr. Green explains the bonding company ultimately must pay these claims pursuant to the payment bond, then it will look to the Wooldridge Construction Company and Mr. Jim Wooldridge personally. As a result of the Debtors' failure to pay Wooldridge on the Project, Mr. Green notes, it has also been virtually impossible for Wooldridge to get bonded for future construction projects. By this motion, Wooldridge asks Judge Gropper to compel the Debtors to assume or reject the Contract within 10 days. If the Debtors elect to assume the Contract, Wooldridge contends that the Debtors must cure all defaults, provide compensation for actual pecuniary losses arising from those defaults, and provide adequate assurance of future performance. Mr. Green explains a short deadline is necessary because Wooldridge will be irreparably harmed if there is further delay. According to Mr. Green, the property to which Wooldridge's lien attaches is depreciating rapidly. Mr. Green relates that the property's mechanical system - particularly, the chillers furnished by the Debtors - is not operation. Mr. Green explains this will cause finishes such as ceilings, flooring, walls and doors to suffer damage, requiring removal and replacement. And because the final entrance and fencing around the perimeter is not yet completed, Mr. Green says, the expensive equipment located outside the building is wholly unprotected, and along with the building, they could be subject of vandalism. Mr. Green adds that the landscaping is also dying due to neglect. "All of these increase the expense of completion and the value of Wooldridge's collateral is being diminished without adequate protection," Mr. Green notes. If the Debtors fail to act promptly, Mr. Green warns that Wooldridge shall be rendered insolvent and James Wooldridge shall be in serious financial jeopardy since he guaranteed the indemnity bond assuring payment to Wooldridge's subcontractors and materialmen. He and his wife may lose all personal assets but their house, Mr. Green tells the Court. If the Debtors reject the Contract, Wooldridge asks Judge Gropper to modify the automatic stay to permit Wooldridge to proceed in the Tennessee Action and to enforce its Lien, obtain a judgment against the Debtor, and have the Debtors' property sold. In Tennessee, Mr. Green explains, the lien arises in the contractor's favor automatically upon the rendition of services. According to Mr. Green, the successful enforcement of the lien entitles the lienor to execute upon judgment in several ways, including a sheriff's sale of the underlying property. (360 Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) ABRAXAS PETROLEUM: Drilling of Seven Wells in Canada Successful --------------------------------------------------------------- Abraxas Petroleum Corporation (AMEX:ABP) Chairman and CEO, Bob Watson, commented on the Company's current operations in the Oates S.W. field, in the Montoya trend in west Texas, and the continuing success of its drilling efforts in the Caroline and Pouce Coupe areas in Alberta, Canada. "In Canada, the Company has drilled seven successful wells, none of which are currently booked as proved or probable reserves by the Company's outside engineering firms. Abraxas expects reserves of 3-5 Bcfe (gross) per well and has identified over forty additional locations in the Caroline and Pouce Coupe areas based on the recent drilling and the 3-D seismic surveys completed in each area this past winter. In the Pouce Coupe area a second well is online producing 2.2 MMcfpd and 60 Bopd (gross). A third well was tested at 5 MMcfpd and 180 Bopd (gross) and should be on production later this month. Two additional wells are awaiting completion and one well is currently drilling. In Caroline, two wells are being completed and one well is currently drilling. The Company has one rig under contract in each area and anticipates drilling one well per month in Pouce Coupe and one well every six weeks in Caroline for the foreseeable future. Abraxas has an average 85% working interest in the seven drilled wells but has a 100% working interest in the majority of the subsequent drilling locations. In the S.W. Oates area of west Texas, the Company recently commenced operations to re-enter an existing wellbore, the Hudgins 34 #1. Reentering the existing well will save approximately half of the cost of a new well and allow the Company to test the Montoya formation in a cost effective manner. The well is currently drilling vertically at approximately 13,000 feet and is expected to drill horizontally at a depth of 13,400 feet. Abraxas has finished the evaluation of its recently acquired 3-D seismic and has identified as many as 9 potential locations on its 100% working interest acreage. In addition to the Montoya formation potential, there is a shallower Devonian formation that will be evaluated. In the Montoya joint participation area with EOG Resources (NYSE:EOG), the two wells currently on production are producing a combined 11 MMcfpd (gross) and EOG expects to spud two additional wells before year end." Abraxas Petroleum Corporation is a San Antonio-based crude oil and natural gas exploitation and production company that also processes natural gas. The Company operates in Texas, Wyoming and western Canada. BETHLEHEM STEEL: Solicits Consent for Amendments to Indentures -------------------------------------------------------------- Bethlehem Steel Corporation (NYSE: BS) announced it is commencing a consent solicitation with respect to its 10-3/8% Senior Notes due 2003 for the adoption of proposed amendments to certain provisions of its Indenture dated as of September 1, 1993, as amended, under which the Notes are outstanding. The proposed amendments would permit Bethlehem Steel to complete a new $750 million Senior Secured credit facility. This new credit facility will provide Bethlehem with increased liquidity and greater financial flexibility. More specifically, the proposed amendments will allow Bethlehem to pledge as collateral for the new credit facility interests in certain non-principal steel plant assets and joint ventures currently subject to the Indenture's negative pledge covenant and allow Bethlehem's subsidiaries to guarantee the new credit facility. The proposed amendments will also allow Bethlehem to incur in the future an increased amount of debt and refinancing of debt during periods when it is otherwise unable to comply with the Indenture's Consolidated Interest Coverage Ratio. The record date to determine the noteholders entitled to consent is September 7, 2001. The consent solicitation will expire at 5:00 p.m., New York City time, on Friday, September 21, 2001, unless extended. Bethlehem Steel will pay to consenting noteholders a consent fee of $10 for each $1,000 in principal amount for which consent is validly delivered and not revoked. Bethlehem Steel Corporation is the nation's second largest integrated steel company with revenues of about $4 billion and shipments of about nine million tons. Its 14,000 employees work primarily in three major divisions -- Burns Harbor, Ind., Sparrows Point, Md. (with plate mills in Coatesville and Conshohocken, Pa.), and Pennsylvania Steel Technologies, Steelton, Pa. The corporation is a leading supplier to the North American automotive and construction industries, and is the largest supplier of plate products on the continent. At the end of June, the corporation posted total liabilities of $4.42 billion, as opposed to its total assets of $4.266 billion. BORDEN CHEMICALS: Seeks Okay to Sell Substantially All Assets ------------------------------------------------------------ Borden Chemicals and Plastic filed a motion with the Bankruptcy Court for the District of Delaware to sell substantially all of their assets in three manufacturing and distribution facilities in Geismar, Louisiana; Addis, Louisiana; and Illiopolis, Illinois. The Geismar Facility, which also contains BCP's headquarters, comprises approximately 490 acres in Ascension Parish, Louisiana, adjacent to the Mississippi River between Baton Rouge and New Orleans. Approximately twenty miles away, the Addis Facility comprises nearly 40 acres of a 220-acre site also adjacent to the Mississippi River. Finally, the Illiopolis Facility sits on approximately 45 acres in central Illinois between Springfield and Decatur. To facilitate the sale of substantially all of the Debtors' assets, BCP has begun providing information to and requesting non-binding expressions of interest from potential purchasers and propose to continue this process and to solicit binding offers under a bidding procedures program. BCP believes that the uniform Bidding Procedures it proposes are imperative for obtaining the best and highest offers for the Facilities because, without an efficient and orderly process to market and sell the Facilities, the ensuing delay could adversely affect ongoing business operations, thus causing the value of the Facilities to decline. CAUSSA CAPITAL: Securities Fall Below TSE Listing Requirements -------------------------------------------------------------- Caussa (TSE: CAU) announce that it has been advised by The Toronto Stock Exchange that it is reviewing the eligibility of Caussa's common shares for continued listing, as a result of the market value of the Corporation's securities falling below TSE requirements. The Corporation is being reviewed under the TSE's Remedial Review Process and has been granted 120 days until January 9, 2002 to comply with all requirements for continued listing. The Corporation will have an opportunity to make a submission to the TSE before any final suspension decision. Should the Corporation be unable to satisfy the TSE requirements within the Remedial Review period, it will apply to the Canadian Venture Exchange (CDNX) for a continued listing of its common shares. Caussa also announce that it has received an offer to acquire its 66.7% interest in Barberton Gold (Pty) Ltd. for approximately $100,000, which, given operational difficulties which have rendered Barberton unprofitable, Caussa has decided to accept. On October 26, 2000, Caussa announced that it had signed a letter of intent leading to the sale by Caussa to Vaaldiam Resources Ltd. of Caussa's Witkrans diamond project for 2,500,000 (later amended to 2,110,000) common shares of Vaaldiam and the payment of $250,000 in cash. Since that time, Vaaldiam has been attempting to raise funds to complete this transaction by means of a prospectus offering which is scheduled to close on or about September 28, 2001. As Caussa currently has a modest working capital deficiency (before the receipt of proceeds from the sale of Barberton Gold), it is a matter of some importance that the sale of Witkrans be successfully concluded. Should the sale of Witkrans not be concluded for any reason, Caussa's working capital position would be adversely affected which, in turn, would impair the Corporation's ability to consider other projects and indeed to remain in business as a going concern. CHARTER COMMS: $1.5BB Note Exchange Offer Extended to Sept. 21 -------------------------------------------------------------- Charter Communications Holdings, LLC and Charter Communications Holdings Capital Corporation, subsidiaries of Charter Communications, Inc. (Nasdaq:CHTR) extended their offer to exchange their outstanding $350 million of 9.625% Senior Notes due 2009, $575 million of 10% Senior Notes due 2011 and, $575.2 million of 11.75% Senior Discount Notes due 2011 with a principal at maturity of $1.02 billion for $350 million of 9.625% Senior Notes due 2009, $575 million of 10% Senior Notes due 2011 and, $575.2 million of 11.75% Senior Discount Notes due 2011 with a principal at maturity of $1.02 billion. As of Wednesday, approximately $350 million in aggregate principal amount of 9.625% Senior Notes due 2009, $573 million in aggregate principal of 10% Senior Notes due 2011, and $1.02 billion in aggregate principal of 11.75% Senior Discount Notes due 2011 have been confirmed as tendered in exchange for a like principal amount of New Notes. The Exchange Offer was scheduled to expire at 5:00 p.m. Eastern Time today. Due to certain office closings in New York, Charter has extended the expiration date for the Exchange Offer to 5:00 p.m. Eastern Time, on September 21, 2001. The New Notes have been registered under the Securities Act of 1933, as amended. The Old Notes were sold to qualified institutional buyers in reliance on Rule 144A of the Securities Act on May 15, 2001. The Old Notes were not registered under the Securities Act and may not be offered or sold in the United States except pursuant to exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Charter Communications, Inc. (Nasdaq:CHTR), a Wired World(TM) company, is among the nation's largest broadband communications companies, currently serving some 7 million customers in 40 states. Charter provides a full range of advanced broadband services to the home, including cable television on an advanced digital video programming platform marketed under the Charter Digital Cable(TM) brand; and high-speed Internet access marketed under the Charter Pipeline(TM) brand. Commercial high-speed data, video and Internet solutions are provided under the Charter Business Networks(TM) brand. Advertising sales and production services are sold under the Charter Media(TM) brand. More information about Charter can be found at http://www.charter.com At the end of June, the Company's current liabilities stood at $1.188 billion, as opposed to its current assets of $872.4 million, including cash amounting to $572.7 million. COMDISCO: Seeks Indefinite Extension of Lease Decision Period ------------------------------------------------------------- Comdisco Inc. asks Judge Barliant to extend their period within which to make decisions about the assumption or rejection of unexpired non-residential real property leases. The Debtors propose to extend the assumption-rejection period through the date of confirmation of a plan of reorganization, which will hopefully be around March 2002. John (Jack) Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, relates that the Debtors are parties to over 100 unexpired leases of non-residential real property. Until the sale processes of the Availability Solutions and Leasing businesses are concluded, Mr. Butler explains the Debtors will be unable to determine which unexpired leases potential purchasers will want to take assignment of. Mr. Butler also reminds Judge Barliant that under the asset purchase agreement with Hewlett-Packard, the Debtors have agreed to enter into a transition services agreement. Pursuant to the transition services agreement, Mr. Butler explains, the Debtors will grant HP the right to use some of their unexpired leases for 180 days after the closing of the sale. If HP is not the successful bidder with respect to the Availability Solutions business, Mr. Butler says, the Debtors may enter into a similar transition services agreement with the successful bidder providing use of the same or different leased properties during the transition period. The Debtors may also do the same with the successful bidder of the Leasing business, Mr. Butler adds. After the determination of what portions of their business they will sell and retain, Mr. Butler says, the Debtors will then begin an evaluation of the remaining businesses and their reorganization strategy. Until this is finished, Mr. Butler explains, the Debtors will be unable to determine which of the unexpired leases they need to assume to continue to operate their business. Mr. Butler notes that the size and complexity of these cases cannot be challenged. At the time the Debtors filed these cases: (a) 50 affiliated entities, as well as Comdisco, sought relief under chapter 11 of the Bankruptcy Code and administratively consolidated in these cases; (b) the Debtors have over 100,000 creditors, potential creditors and parties-in-interest; (c) the Debtors had annual gross revenue in fiscal 2000 of approximately $3.9 billion; and (d) the Debtors have approximately 2,700 employees. Because the Debtors' leased spaces are vital to their reorganization efforts, Mr. Butler says the Debtors must be very careful in rejecting and assuming the unexpired leases. Their decision will also depend on several factors such as: 1) which leases potential purchasers want to take assignment of, and 2) which leases are necessary for the Debtors' continued operations. There are also cases where an unexpired lease, that is not assigned to a potential purchaser and that is not necessary for the Debtors' continued operations, may contain favorable terms that would allow the Debtors to assume and assign such lease for value. At the present, Mr. Butler informs the Court that the Debtors' professionals are busy reviewing the unexpired leases and conducting market analysis. Mr. Butler assures Judge Barliant that the relief requested will not prejudice the landlords under the unexpired leases because the Debtors will make the required post-petition monthly payments. There's no need to worry, Mr. Butler claims, because the Debtors have the financial ability and intend to perform all of their obligations under the unexpired leases. According to Mr. Butler, the Debtors have limited secured debt obligations and have sufficient liquidity from their operations and the DIP financing to make all necessary payments under the unexpired leases. But if the Court will not grant this motion, Mr. Butler tells Judge Barliant that the Debtors may be compelled, prematurely, to assume substantial, long-term liabilities or forfeit benefits associated with some leases. This will negatively affect the Debtors' ability to operate and preserve the going-concern value of their business for the benefit of their creditors and other parties-in-interest, Mr. Butler warns. Crescent Objects Crescent Resources, a landlord of a non-residential real property in Franklin, Tennessee, is against the Debtors' motion to extend their assumption/rejection period. Joseph P. Rusnak, Esq., at Tune, Entrekin & White, P.C., in Nashville, Tennessee, admits that the Debtors were not in default under the terms of the lease agreement at the Petition Date and were able to pay all its post-petition monthly rentals due under the lease agreement. Nevertheless, Crescent contends that the Debtors' requested extension of the assumption/rejection period "through the date of confirmation of a plan of reorganization" is excessive. Mr. Rusnak says the motion is not supported by the Debtor's proof, and is not justified by either the size or complexity of these cases. According to Mr. Rusnak, the unwarranted delay prejudices Crescent because it bears the burden of delay and expense in re- letting the premises. On the other hand, Mr. Rusnak notes, the Debtors only bear the responsibility for performing its obligations under the Bankruptcy Code, with the right to forego any further obligation except to pay damages for rejection. Mr. Rusnak maintains that the requested open-ended extension is both unreasonable and burdensome to Crescent. Rather than give a blanket extension for all leases, Mr. Rusnak suggests that the Debtor should be required to justify an extension on a lease-by- lease basis for any additional time beyond the 60 days provided by the Bankruptcy Code. (Comdisco Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) COVAD COMMS: Escrow Arrangement Short-Circuiting Process Feared --------------------------------------------------------------- Leonardo, L.P., Ramius Capital Group LLC and Quattro Global Capital, LLC, current and former holders of over $52.75 million of Covad Communications Group, Inc.'s 6% Convertible Notes due 2005, submit their objection to the Debtor's Motions For (I) Order Authorizing Debtor To Assume Escrow Agreement Concerning Noteholder Distributions and (II) Entry Of The Agreed Order Between The Plaintiffs And The Debtor Granting Limited Relief From The Automatic Stay. Kevin Gross, Esq., at Rosenthal Monhait Gross & Goddess PA in Wilmington, Delaware, tells the Court that the Motions are the first step in the Debtor's effort to short-circuit the chapter 11 process, sweep significant claims of mismanagement and securities fraud under the rug, cram down a restructuring on objecting creditors without answering basic questions about feasibility and fairness, and force a distribution scheme upon all noteholders that plainly violates the priority scheme mandated by the Bankruptcy Code. Mr. Gross adds that the Debtor are coercing the Non-Consenting Noteholders and other creditors into taking nineteen cents on the dollar in cash and 15% of the reorganized company's equity in exchange for the cancellation of over $1.3 billion in debts, while at the same time leaving existing shareholders relatively unimpaired with the remaining 85% of the Debtor's equity. In addition, Mr. Gross claims that settlement insulates its officers and directors from serious charges of mismanagement and securities fraud. Mr. Gross contends that the Motions ask the Court to lock into place an integral component of a pre-negotiated plan of reorganization based on wholly inadequate and non-existent factual showings. In essence, Mr. Gross argues that the Debtor seeks to erase over $1 billion in defaulted debt for pennies on the dollar so it can go out to the markets and raise more debt it may not be able to repay. Mr. Gross adds that the Debtor wants to absolve management from any claims of fraud or mismanagement arising from the fact that the Debtor went into default less than a year after it raised half a billion dollars of new debt with which to continue its operations. This Plan cannot be hustled through the bankruptcy process on a fast track, Mr. Gross says, as it does not reflect a consensus among a broad range of all stakeholders; it does not result from a full airing of the pros and cons of the settlement; it does not assure the economic viability of the reorganized company; and it does not even attempt to establish the fairness of the quick insurance settlement of claims against officers and directors. Mr. Gross claims that the Plan is supported by only a slim majority of noteholders who undertook to set aside hundreds of millions of dollars of the Debtor's cash under an escrow agreement governed by terms negotiated and controlled only by themselves and implementing only that group's idea of a desirable plan of reorganization. Significantly, Mr. Gross states that the Motions make no disclosure as to the interests or connections of those Consenting Noteholders, or the basis for their determination that the proposed settlement and Plan are desirable. In view of the serious allegations of misconduct against Covad and its management as well as the Motions' lack of adequate disclosure, Mr. Gross informs the Court that the Non-Consenting Noteholders will shortly file a motion for appointment of an examiner. At a minimum, Mr. Gross argues that prudence dictates that the proposed class action settlement that would release valuable claims against Covad and its management must await adequate investigation of its reasonableness by an examiner and by the independent creditors and shareholders who would be adversely affected by the settlement. Moreover, Mr. Gross argues that the assumption of the Escrow Agreement also violates the rights of Non-Consenting Noteholders by unnecessarily locking all noteholders into a distribution scheme and causing a release of claims before the Debtor's disclosure has been tested through the plan confirmation process. Mr. Gross contends that the Debtor does not have the requisite number or amount of noteholder claims to gain approval of its Plan and the Court should not condone a first-day lockup of the terms of the Plan until the full due process afforded creditors under chapter 11 has been implemented. Mr. Gross adds that the proposed Plan is unconfirmable as it clearly violates the absolute priority principles and fails to make adequate disclosure as to liquidation or alternative plan values. Conversely, Mr. Gross states that there is little prejudice to the Debtor, to those noteholders consenting to the 19-cent recovery, or to the class action plaintiffs in putting off the decision whether to assume the Escrow Agreement and authorize the class action settlement. These issues will and must be fully addressed as an integral part of the plan process. Mr. Gross relates that the Escrow Agreement will continue to be a binding obligation of the Debtor until formally rejected and the class action plaintiffs must await the conclusion of the Debtor's case before they can collect on any settlement. Mr. Gross claims that any fear the Debtor has that failure to assume the Escrow Agreement and approve the class action settlement now will prevent confirmation of the Plan is baseless. Mr. Gross contends that the Court simply does not need to enter the drastic relief requested by the Motions at this time and should deny the Motions in their entirety. * * * Patricia A. Staiano, the United States Trustee, interposes her objection to Debtor's Motion Authorizing Debtor to Assume Escrow Agreement Concerning Noteholder Distributions. Joseph J. McMahon, Jr., Esq., attorney for the US Trustee, states that the Bankruptcy Code contains several provisions protecting the rights of creditors in the reorganization, examples of which are the disclosure requirements associated with the plan process and the absolute priority rule. Mr. McMahon contends that the Motion is nothing less than a "Plan B," the purpose of which is to transfer more than a quarter- billion dollars to the Noteholders if a Noteholder Entitlement Event occurs. Mr. McMahon claims that the Escrow Agreement provides that if Noteholders hold up their end of the "lock-up" bargain but the Plan filed by the Debtor is not effective as of January 15, 2002, the Noteholders get the money. Mr. McMahon tells the Court that the agreement expressly contemplates the possibility of transferring a quarter-billion dollars to the Noteholders prior to confirmation. Apparently, as part of the escrow and "lockup" agreements, Mr. McMahon claims that the Noteholder Agent holds a security interest in the escrow which is extinguished upon the Effective Date of the Plan or a Company Return Event. If the Debtor's Plan is not confirmed in a timely fashion as contemplated by the Escrow Agreement and the Noteholders get the escrowed monies, Mr. McMahon asserts that the principle underlying the absolute priority rule will be violated as trade debt holders and securities claim holders would receive no distribution while equity stays put. (Covad Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) CYBERCASH: Seeks Confirmation of 100% Payout Liquidating Plan ------------------------------------------------------------- CYCH, Inc., f/k/a CyberCash, Inc., filed its liquidating plan of reorganization with the U.S. Bankruptcy Court for the District of Delaware. The full-text copy of the Plan is available at http://researcharchives.com/bin/search?query=cybercash The plan has no impaired classes and all claimants under the plan are to be paid 100% of the unpaid amount of claim. Equity interest holders under the plan are to be paid their ratable share of equity fund in exchange for the redemption of their interests. The funding of the plan will be sourced from funds realized in the past operations, existing cash assets and liquidation of the non-cash assets. DANKA BUSINESS: Annual General Meeting Slated for October 9 ----------------------------------------------------------- Stockholders of Danka Business Systems PLC are being invited to attend the 2001 annual general meeting which will be held on Tuesday, October 9, 2001 at 11 a.m. (London time) at the Grosvenor House Hotel, Park Lane, London W1K 7TN. The business of the annual general meeting will include resolutions proposing: (1) and 2) re-election of directors; (3) re-appointment of the Company's auditors; (4) authorizations for the directors to allot ordinary shares; (5) authorizations to disapply pre-emption rights; (6) and (7) amendments to the Company's articles of association; (8) amendments to the Company's 1999 share option plan and (9) approval of a new long term incentive plan, the Danka 2001 Long Term Incentive Plan. There will also be a report on Danka's progress and comment on matters of current interest. EQUITABLE LIFE: Restructuring Prompts S&P to Alter CreditWatch -------------------------------------------------------------- Standard & Poor's revised the CreditWatch implications on its single-'B' counterparty credit and insurer financial strength ratings on U.K.-based insurer The Equitable Life Assurance Society (Equitable Life) to negative from developing. The CreditWatch revision is in expectation of Equitable Life recommending a proposal for a restructuring of its liabilities between guaranteed annuity rate (GAR) and non-GAR policyholders. At the same time, Standard & Poor's maintained the developing CreditWatch implications on its triple-'C'-minus subordinated debt rating of related entity, Equitable Life Finance PLC (guaranteed by Equitable Life). The revision of the CreditWatch implications relates only to the expected announcement of the company's plans to seek policyholder approval to restructure its liabilities. Standard & Poor's views any reduction or removal by an insurer of a policy guarantee as a partial default on its contractual obligations. (See press release "Reduction in Japanese Insurers' Guaranteed Yields to be Viewed as Default", published on Aug. 22, 2001, on RatingsDirect, Standard & Poor's Web-based credit analysis system.) Any Equitable Life proposal to restructure the interests of GAR and non-GAR policyholders would be likely to include the removal of the annuity rate guarantee from GAR policies. This action, if implemented, would constitute a selective default on Equitable Life's prior contractual obligations. The counterparty credit and insurer financial strength ratings on Equitable Life are likely to be lowered to the triple-'C' level or below when details of the company's proposed restructuring between GAR and non-GAR policyholders are announced. This rating action relates to the proposals for the restructuring of Equitable Life's liabilities (which need the agreement of the required majority of policyholders) and the potential of the company selectively defaulting on some of its contractual obligations to policyholders, notably the GAR policyholders, as a result of such an agreement. In the unlikely event that a GAR restructuring proposal to policyholder members is not forthcoming, Standard & Poor's would further review the ratings following a discussion with management on its strategic and financial plans. If, at any point, the GAR no longer becomes payable due to a restructuring action by management, the counterparty credit rating would immediately be changed to SD (selective default). A counterparty credit rating is an assessment of an obligor's overall financial creditworthiness to pay its financial obligations and does not apply to any specific financial obligations. Consequently, Standard & Poor's views Equitable Life's restructuring of its liabilities as a selective default on one or more of its financial obligations--namely one of its obligations to the GAR class of policyholder. The SD designation on the counterparty credit rating does not directly reflect on the company's ability to meet other, nonpolicy obligations. Simultaneously, on any restructuring of guaranteed obligations, the insurer financial strength rating is likely to be lowered to double-'C'. The insurer financial strength rating is an assessment of a company's ability to meet all its policy obligations and does not distinguish between different classes of policyholder. Standard & Poor's recognizes, however, that if the proposed settlement between GAR and non-GAR policyholders is agreed, Equitable Life would have more certainty regarding its liabilities and, as a result, is likely to have greater financial strength and investment flexibility. In addition, the with- profits fund would receive a capital contribution of GBP250 million from Halifax Group PLC (Halifax; AA-/Negative/A- 1+), with the potential for a further GBP250 million dependent on the 'Halifax Equitable' sales force meeting new business and profitability targets. (Halifax has no economic interest in the Equitable Life with-profits fund.). Consequently, the counterparty credit and insurer financial strength ratings would be revised at a later date to reflect Equitable Life's ability to meet its restructured policy obligations. If policyholders fail to support any proposal to restructure GARs, Standard & Poor's will again reassess the ratings following discussions with management. Meanwhile, Equitable Life's ratings reflect its weak financial profile and the substantial burden of meeting its GAR obligations. The subordinated debt rating is likely to be unaffected by any downward revision to the counterparty credit rating resulting from the company's proposed settlement. Consequently, the subordinated debt rating of triple-'C'- minus remains on CreditWatch with developing implications. The downside risks for holders of the subordinated debt reflect Standard & Poor's concerns over the potential impact of any further decline in investment markets on Equitable Life's solvency, given the company's high degree of investment leverage. Failure to achieve a satisfactory settlement would also prolong these concerns. The upside to the debt rating reflects the prospect of improved investor security if the GAR scheme is successful. Standard & Poor's will continue to monitor developments and will update the CreditWatch placement as details of the proposed settlement become clearer. FINOVA GROUP: Court Okays Glass As Advisor to Equity Committee -------------------------------------------------------------- Judge Walsh approved the application The FINOVA Group, Inc.'s Equity Committee to employ and retain Glass as financial advisors nunc pro tunc from May 18, 2001. To resolve the objection of the United States Trustee, the Court amended the Consulting Agreement to provide that: (a) The Debtors shall have no obligation to indemnify Glass and & Midanek, or provide contribution or reimbursement to Glass & Midanek, for any claim or expense that is either: (i) judicially determined to have arisen solely from Glass & Midanek's gross negligence or willful misconduct, or (ii) settled prior to a judicial determination as to Glass & Midanek's gross negligence or willful misconduct, but determined by this Court, after notice and a hearing, to be a claim or expense for which Glass & Midanek should not receive indemnity, contribution or reimbursement under the terms of the Consulting Agreement as modified by this Order; and (b) if, before the earlier of: (i) the entry of an order confirming a chapter 11 plan in these cases, and (ii) the entry of an order closing these chapter 11 cases, Glass & Midanek believes it is entitled to the payment of any amounts by the Debtors on account of the Debtors' indemnification, contribution, and/or reimbursement obligations under the Consulting Agreement (as modified), Glass & Midanek must file an application in this Court, and the Debtors may not pay any such amounts to Glass & Midanek before the entry of an order by this Court approving the payment. Judge Walsh emphasized that this requirement is intended only to specify the period of time under which the Court shall have jurisdiction over any request for fees and expenses by Glass & Midanek for indemnification, contribution or reimbursement and not a provision limiting the duration of the Debtors' obligation to indemnify Glass & Midanek. According to Judge Walsh, the compensation to be paid to Glass for financial advisory services rendered and disbursements incurred on behalf of the Committee shall be fixed by the Court, upon appropriate application. (Finova Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) GALAXY ONLINE: Late Filing of Results Expected on September 17 -------------------------------------------------------------- Galaxy OnLine Inc. (CDNX: YGO) announced that it will be making a late filing of its unaudited consolidated financial statements as at for the three and six months periods ended June 30, 2001. The recent termination of all employees, commencement of restructuring of Galaxy and its wholly-owned subsidiary Moby Dark Inc. and recent appointment of new management to handle the restructuring are the primary reasons for the late filing. It is currently anticipated that the financial statements will be filed by September 17, 2001. Galaxy acknowledges that the Ontario Securities Commission may impose a cease-trade order if the financial statements have not been filed by October 29, 2001, which is two months after the default date. GST TELECOM: Seeks Extension of Exclusive Periods ------------------------------------------------- GST Telecom, Inc. asks the Court to extend the exclusive period within which to file and solicit acceptances of a plan of reorganization to October 15, 2001 and December 14, 2001, respectively. GST explains to the Court that cause exists for the extension of such deadline as they are currently in the process of analyzing and objecting to claims and bring preference and related causes of action, all of which have a substantial effect on a plan of reorganization. In addition, the company claims that it is in the process of extensive, complex and time-consuming negotiations with various committees to form a consensual plan of liquidations. GST also seeks the Court's approval of the extension of the Removal Deadline to be extended to March 11, 2002 or 30 days after the entry of an order terminating the automatic stay with respect to the particular action sought to be removed. GST reasons out that extension of the deadline is warranted because of the current number of State Court Actions involved and the wide variety of claims. HARNISCHFEGER: Beloit Seeks to Expunge 14 Claims Totaling $1.8MM ---------------------------------------------------------------- Beloit seeks disallowance, expungement or reduction and allowance, as applicable of claims, pursuant to section 502(b) of the Bankruptcy Code, 29 Claims as follows: (A) 1 Duplicate Claim (No. 1616) in the amount of $7,203.34 filed by Mannesmann Rexroth Corp. that duplicate another claim previously filed; (B) 1 Superceded Claim (No. 12060) in the amount of $147,667.00 filed by Internal Revenue Service Department of the Treasury in Wilmington that has been superceded by another later filed claim; (C) 14 Claims totaling $1,876,614.26 that should each be expunged for one or more of the following reasons: (1) the claim has been settled, (2) the claim is a Paid Claim based on obligations that have been satisfied, (3) the claim is a No liability claim that is not enforceable against the Debtors or their property under any agreement or applicable law, (4) the claim is an Insufficient Documentation Claim because the creditor has failed to file the requisite documentation in support of the claim and has failed to comply with Rule 3001(c) ; (D) 10 claims totaling $743,307.06 that should be reduced and allowed for an amount estimated at $65,690.28 in the aggregate because after thorough review, the Debtors have determined that these are claims filed for amounts that differ from the amounts reflected on the Debtors' books and records. (E) 3 Unsecured Non-Priority Claims totalling $99,477.61 that should be reclassified as general unsecured claims because these claims are not (i) secured by liens on any property in Beloit's estate or (ii) subject to setoff under section 553 of the Bankruptcy Code, and are not entitled to priority under any subsection of section 507(a). (Harnischfeger Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 609/392-0900) INTEGRATED HEALTH: Sells Clara Burke Facility in PA For $3MM ------------------------------------------------------------ Integrated Health Services, Inc., including Clara Burke Nursing Home, Inc. (Seller), move the Court pursuant to sections 105(a), 363(b), (f) and (m), 365(a), (b), (f), and (k), and 1146(c) of the Bankruptcy Code, and Rules 2002, 6004, 6006, 7062, and 9007 of the Bankruptcy Rules, for an order approving the sale of substantially all of Seller's assets to Fox Subacute at Clara Burke, Inc. (Buyer), at an aggregate purchase price of $3,000,000.00, free and clear of liens, claims, charges, interests, encumbrances (the "Liens"), except for certain Permitted Encumbrances. Clara Burke Nursing Home, Inc. (the "CBNH"), owned and operated by the Debtors, is a 69-bed skilled nursing facility located in Plymouth Meeting, Pennsylvania. The Nursing Home is unprofitable and burdens the Debtors estates. Its pro-forma earnings before taxes, depreciation and amortization (EBTDA), as of June 30, 2001, was negative $1,544,203.00. Its pro-forma cash flow (EBTDA minus CapEx) for the same period was negative $1,589,828.00. Due to the CBNH's dismal economic performance, Seller is in substantial default of its debt service obligations under the $6,500,000 Mortgage held by Bank of Maryland. According to Thomas Myer, Vice President of the Bank, the amount currently owing to the Bank is $7,203,804.02. The Debtors do not concede that such amount is correct, and expressly reserve their right to dispute such amount in the future. The Bank, which maintains a perfected lien on substantially all of Seller's assets, aggressively marketed the CBNH by formally presenting it to fifteen prospective purchasers between April 2, 2001 and April 27, 2001. The Bank also informally presented the CBNH to several other potential purchasers who immediately expressed disinterest. Of the fifteen prospective purchasers to whom the Bank formally presented the CBNH, only two made offers to the Bank to purchase the CBNH. One such offer was from Wellness Concepts d/b/a Fox Subacute at Clara Burke, Inc. ("Buyer") and proposed a purchase price of $3.0 million. The other offer received by the Bank was from Robert Ayerle and proposed a purchase price of $2.25 million. The Debtors note that there are several reasons for the industry-wide disinterest in the CBNH. First, the CBNH is relatively small and its census is consistently poor. Second, the CBNH is a highly specialized ventilator-facility. Very few industry providers have the technical expertise to operate a ventilator-facility like the CBNH. However, Buyer has the requisite technical expertise to operate the CBNH. Third, the CBNH is not certified to participate in the Medicaid Program and, therefore, cannot increase its census by treating patients insured under the Medicaid Program. Fourth, the CBNH's physical plant is old and in need of capital improvements. Only 40 of its 69 of the CBNH's beds are located In parts of its physical plant that can be efficiently and economically operated as a skilled nursing facility. While marketing the CBNH Assets, the Bank also arranged for an Appraisal on the value of the Assets, performed by Dowling & Associates, a licensed real estate appraisal firm located in Avondale, Pennsylvania. The Appraisal indicated that the CBNH's going concern value on the Appraisal Date of April 3, 2000 was between $2.0 million and $3.25 million. The Bank believes that the current financial performance of CBNH has gone even lower than that on the Appraisal Date. Based upon the Appraisal and the Debtors' dismal economic projections for the CBNH, Seller accepted, in principle, Buyer's offer to purchase the CBNH. Negotiations culminated in the execution of a Purchase Agreement (consisting of a Contract of Sale, as amended by a side agreement) and an Operations Transfer Agreement, both dated August 20, 2001 between Seller and Buyer (collectively, the Transaction Documents). Salient provisions of the Purchase Agreement are as follows: (1) Purchase Price: $3,000,000.00; (2) Payment: On the Closing Date, Buyer shall pay to Seller the total Purchase Price either by Acceptable Check(s) payable to the order of Seller (or as otherwise directed by Seller), without intervening endorsement, or by wire transfer of immediately available federal funds to Seller's account in a commercial bank in accordance with wire transfer instructions to be furnished by Seller prior to the Closing Date, as defined in the Purchase Agreement, or by (at Seller's option) a combination of both of the aforementioned payment methods; (3) Title: Buyer agrees to purchase the Realty in "as is" condition, and subject to the Permitted Encumbrances. (4) Liens: The Realty is being sold free and clear of the Liens, except for the Permitted Encumbrances: (5) Closing: The Closing Date shall be the date of entry of the Court's order approving the Sale. The Debtors believe that the proposed Sale, which is the result of extensive arm's length, good faith negotiations, is an exercise of sound business judgment. Accordingly, the Debtors request Court approval of the Sale upon the terms and conditions contained in the Transaction Documents. (Integrated Health Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) LAIDLAW: Allowed to Hire Professionals Without Court Scrutiny ------------------------------------------------------------- In the day-to-day performance of their duties, Laidlaw, Inc. regularly call on certain professionals such as attorneys, brokers, communications and public relations professionals, human resources consultants, information technology and systems consultants, and insurance advisors, to assist them in carrying out their assigned responsibilities. Because of the size and complexity of the Debtors' businesses as well as the geographic diversity of the professionals they regularly retain, the Debtors seek to employ and pay the Ordinary Course Professionals without further order of the Court. Garry M. Graber, Esq., at Hodgson Russ, in Buffalo, New York, explains that it would be costly and time-consuming if the Debtors would be required to apply for the approval of the employment and compensation of each Ordinary Course Professional. However, Mr. Graber notes, the Debtors cannot do without the Ordinary Course Professionals either since their service is vital to the Debtors' continuing operations and their ability to reorganize. Convinced that it is in the Debtors' best interests, Judge Kaplan authorizing the Debtors to retain, employ and pay the Ordinary Course Professionals without further order of the Court, subject to these conditions: (a) No Ordinary Course Professional with monthly fees averaging in excess of $25,000.00 for services rendered to a Debtor during any Reporting Period shall receive any future payments from the Debtors until the Debtors first obtain an order of the Court authorizing the retention and employment of the professional pursuant to section 327 of the Bankruptcy Code. (b) Notwithstanding the foregoing, the Debtors may pay, without the prior review or approval of the Court, all fees and expenses incurred by an Ordinary Course Professional: (i) through and including the end of the Reporting Period in which the professional's fees first exceed the Ordinary Course Fee Limit, or (ii) prior to the professional having a material involvement in the administration of a Debtor's estate, provided, however, that, once an Ordinary Course Professional is retained in these cases all of its fees and expenses incurred from and after the Petition Date shall be subject to the review and approval of the Court in connection with the professional's final fee application. (c) Commencing with the last day of the calendar month that is at least 150 days after the entry of this Order and every four months thereafter, the Debtors shall file a statement with the Court and serve such statement on the United States trustee and any official committee of the unsecured creditors appointed in these cases, which includes the following information for each Ordinary Course Professional: (a) the name of such Ordinary Course Professional; (b) the aggregate amounts paid as compensation for services rendered and reimbursement expenses incurred by such Ordinary Course Professional during the preceding four-month period ending at the conclusion of the prior calendar month; and (c) a general description of the services rendered by such Ordinary Course Professional. The Debtors shall provide each Ordinary Course Professional that is an attorney with a form of an affidavit indicating that such attorney does not represent an interest adverse to the Debtors or their estates with respect to the matter on which the attorney is employed in accordance with section 327(e) of the Bankruptcy Code, and request that each such attorney complete the form and file it with the Court. (Laidlaw Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) LOEWS CINEPLEX: Reopens Manhattan Theatres on a Limited Basis ------------------------------------------------------------- Loews Cineplex Entertainment, Inc. said that most of its movie theatres in Manhattan reopened Wednesday on a limited schedule. The theatres were closed on Tuesday due to the extraordinary circumstances in the city. Loews Cineplex Entertainment operates 17 theatres in the five boroughs of New York City, including 13 in Manhattan. Two of the company's theatres, the Village Theatre at 66 Third Avenue and the State Theatre at 1540 Broadway, will not reopen today. Loews Cineplex intends to return to a normal schedule in Manhattan as soon as possible. Loews Cineplex has filed a motion requesting the entry of an order extending the Removal Period by approximately 120 days, from September 15, 2001 to January 14, 2002. The Company explained that this would allow them additional time to make informed decisions concerning removal of each Prepetition Action, ensuring that the Company do not forfeit valuable rights of the parties. LOG ON AMERICA: Hearing Before Nasdaq Postponed Indefinitely ------------------------------------------------------------ Log On America, Inc. (Nasdaq: LOAX - news) today announced that its hearing, scheduled for September 13, 2001, before the Nasdaq Listing Qualifications Panel to review the staff determination has been postponed. Delisting of the company's securities is stayed pending the panel's decision. There has been no new hearing date scheduled. David R. Paolo, Log On America's Chairman and CEO stated, "The family at Log On America is in shock and disbelief with the events that unfolded in the great city of New York. Our hearts go out to the families of the victims in this very difficult time of grieving. Our company does business with several firms in and around the affected area and we shared in the pain and anguish with the uncertainty of the well-being of our colleagues." Log On America is a full service provider of business ommunication technologies. The Company delivers a unique end-to- end customer experience from consultation through professional managed services. Its core services include: Business Telephone & Voicemail Systems, High-speed Internet Access, Website Creation & Hosting, Integrated Voice & Data Services, Server Collocation, Niche ASP Applications, Managed Service Level Agreements, and Network Consultancy, Architecture & Implementation (LAN,WAN,VPN). LTV CORP: Court Approves Second Extension of Exclusive Periods ------------------------------------------------------------- Judge Bodoh granted The LTV Corporation's Second Motion to extend its exclusive period by four months. Judge Bodoh further extended the period during which only they may propose a plan of reorganization and solicit acceptances for that plan by approximately four months, through and including January 7, 2002 for filing their plan, and March 7, 2002, for the solicitation of acceptances. (LTV Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-00900) LTV STEEL: Starts-Up 50 Mega-Watt Cogeneration Unit in Indiana -------------------------------------------------------------- LTV Steel Company (OTC: LTVCQ) (Cleveland, Ohio) is in the process of starting up a new 50 mega-watt (MW) cogeneration unit at their East Chicago Indiana Harbor Works steel mill. This new $60 million unit is expected to be online by October of this year and once operational, it will be capable of providing approximately 80% of the mills electrical needs. The new unit will consist of a new gas-fired boiler fueled by waste gases from an existing blast furnace and a 50MW steam turbine generator. Engineering and design is being provided by Duke/Fluor Daniel Incorporated (Aliso Viejo, CA) and the actual construction is being handled by Fluor Constructors Int'l Incorporated (Aliso Viejo, CA), both subsidiaries of the Fluor Corporation (Aliso Viejo, CA) (NYSE: FLR). Primary Energy Incorporated (Merrillville, In.), a wholly owned subsidiary of NiSource (Merrillville, In.) (NYSE: NI), provided capitalization for this project and will lease the new unit under a long-term agreement to LTV. The Indiana Harbor Works mill employs approximately 4,500 people. METROCALL: COO Jacoby Among American Airlines Flight 77 Victims --------------------------------------------------------------- Metrocall, Inc. (OTCBB:MCLLQ), the wireless messaging company based in Alexandria, Va., confirmed that the Company's Chief Operating Officer, Steven D. "Jake" Jacoby, was listed among the passengers who boarded American Airlines Flight 77 Tuesday morning. He was en route from Washington to Los Angeles to participate in the Personal Communication Industry Association (PCIA) conference and exhibition this week. * * * Metrocall had announced in April 2001 that it would file for bankruptcy reorganization under Chapter 11 of the U.S. Bankruptcy Code in conjunction with its planned merger with WebLink Inc. However, in May 2001 the company announced that it was seeking to renegotiate its agreement to combine with WebLink in light of new events, including WebLink's announcement of personnel reductions and elimination of sales distribution channels. Meanwhile, Standard & Poor's lowered its rating on Metrocall Inc.'s 9.75% senior subordinated notes due 2007 to D from single-C. The rating on unit ProNet Inc.'s 11.875% senior subordinated notes due 2005, which are guaranteed by Metrocall, was also lowered to D from single-C. These ratings were simultaneously removed from CreditWatch negative. The single-C rating on Metrocall's $200 million senior secured bank facility remains on CreditWatch with negative implications, as the company has not defaulted on payment of interest on this debt. The rating action on Metrocall's 9.75% senior subordinated notes and on ProNet's 11.875% senior subordinated notes follows the company's interest payment default on these notes, which were due June 15, 2001, and July 15, 2001, respectively. METROMEDIA: Gets Commitment Extension for $235MM Financing ---------------------------------------------------------- Metromedia Fiber Network, Inc. (MFN) (Nasdaq: MFNX), the leader in deployment of optical IP Internet infrastructure within key metropolitan areas domestically and internationally, announced that it has received an extension of its commitment letter for the $235 million of vendor financing. The commitment letter, which was scheduled to expire on September 12, 2001, has been extended until September 17, 2001. Metromedia Fiber Network, Inc., the leader in deployment of optical IP Internet infrastructure within key metropolitan areas domestically and internationally, is revolutionizing the fiber- optic industry. By offering virtually unlimited, unmetered metro-area communications capacity at a fixed cost, Metromedia Fiber Network is eliminating the bandwidth barrier and redefining the way broadband capacity is sold. MFN's optical network enables its customers to implement the latest data, video, Internet and multimedia applications. Through its subsidiaries AboveNet Communications, Inc., the architect of the Internet Service Exchange (ISX), PAIX.net, Inc., the first and leading neutral Internet exchange, and SiteSmith, a leader in delivering comprehensive Internet infrastructure managed services, MFN is a leading provider of Internet connectivity, co-location and managed services solutions for high-bandwidth and business-critical applications. The Company offers a world-class network that provides co- location services and Internet connectivity for content providers, ISPs and application service providers. Its global optical Internet uses open peering and "best exit" technology to deliver fast, scaleable and reliable connections to the Internet, and improves the Internet experience for end-users. NETCENTIVES: Fails to Meet Nasdaq Bid Price Requirement ------------------------------------------------------- Netcentives Inc.(TM) (Nasdaq: NCNT) announced that it has received a letter from Nasdaq dated September 5, 2001, informing the Company of Nasdaq's determination to delist the Company from trading on the National Market based on non-compliance with the $1.00 minimum bid price requirement for continued listing set forth in Nasdaq Marketplace Rules 4310(c)(8)(B). The Company will not file for an appeal and will be delisted from the Nasdaq National Market at the opening of business on September 13, 2001. The US Marine Corps motto, "Semper Fidelis" (always faithful), could work for Netcentives. The direct marketing company's ClickRewards Network is an Internet loyalty program, allowing clients to reward consumers with points (ClickMiles) that can be redeemed for frequent flyer miles and other merchandise. E- commerce companies such as barnesandnoble.com purchase the points and award them to online shoppers to build traffic. Netcentives also manages employee reward programs and provides e-commerce consulting services. To reduce costs, the company announced in 2001 it had cut some 165 people from its staff, closed all its satellite offices, and that it would sell its e-mail business. OWENS CORNING: Unsecured Panel Taps Buck as Benefits Consultant --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Owens Corning files an application for employment of Buck Consultants, Inc. as actuarial and benefits consultant. Buck provides expert services regarding pension plan and benefits liabilities and funding obligations. John McDonagh of The Chase Manhattan Bank, co-chair of the Committee notes that the Official Committee of Asbestos Claimants and the Legal Representative for Future Claimants supports the retention of Buck as actuarial and benefits consultant. Mr. McDonagh states that the Committee intends to share the fruits of Buck's labor with the Asbestos Committee and Futures representative as this will save the estate from having to pay additional actuarial and benefits consultants. Mr. McDonagh discloses that the Committee had selected Buck because of its extensive and diverse experience, knowledge and reputation in the actuarial benefits field. Because of its understanding of issues involved in chapter 11 cases as well, the Committee believes that it is well qualified to provide the services required. The Committee believes that the services of Buck are necessary and appropriate and will assist them in the negotiation, formulation, development and implementation of a plan of reorganization. The services Buck may perform to the Committee includes: (1) evaluating the actuarial assumptions in the Debtors' pension plan; (2) evaluating the Debtors' proposed funding requirements for the Debtors' pension plan; (3) estimating he funding requirements for the Debtors' pension plan; (4) testifying in Court on behalf of the Committee, if necessary; (5) performing any other necessary services as the Committee or the Committee's counsel may request from time to time with respect to any actuarial an benefits issue. Buck bills it services on an hourly basis plus out-of-pocket expenses, the hourly rates are: Principals $420 to $500 Consulting Actuaries $344 to $412 Benefits Consultant Administrative Consultant Associate Consulting Actuaries $244 to $328 Actuarial Managers Associate Benefit Consultants Assistant Actuaries $216 to $244 Assistant Admin. Consultant Assistant Benefits Consultant Senior Benefits Specialist $176 to $196 Senior Compensation Specialist Senior Actuarial Assistants Benefit Specialists $124 to $172 Compensation Specialists Actuarial Assistants Other Technical & Operating Personnel $124 John McGrath, principal and consulting actuary at Buck, discloses that Bcuk has provided actuarial and benefits advice to several Fortune 500 companies and other large chapter 11 cases including MCI International, Inc., Mobile Oil Corporation, Western Union, LTV Steel Company, Inc., Acme Steele Company, International, Inc., GS Industries, Inc., Laclede Steel Company, Safety-Kleen Corp., Service Merchandise Company, Inc., and Wheeling-Pittsburg Steel Corp. reorganizations. Mr. McGrath discloses that Buck has conducted a "conflict check" regarding their relations with the Debtors, creditors, equity holders, and other parties-in-interest to determine if it has nay conflicts that may bear on its retention by the Committee and discovered some relationships: (1) Buck has had professional relationships in matters unrelated to these cases with American International Group, Bingham, Dana & Gould, Arthur Andersen, Cabot Industrial Properties, Chase Securities, Inc., Coastal Refining & Marketing, CSX Transportation, Chase Manhattan Trust Co., N.A., Commerzbank, Credit Suisse First Boston, Dai-Ichi Kangyo Bank, Ltd., Dillon Reed & CO., Deutche Bank, Enron Energy, Ernst & Young, Exxon USA, First National Bank of Chicago, Fleet Boston Financial, Fleet National Bank, Goldman Sachs, Goldman Sachs Management Company, International Paper, Jackson Life, KPMG Pete Marwick LLP, Marathon Ashland Pertoleum, Merck Medco Management, Care LLC, Merill Lynch & Co., Metropolitan Life Insurance Co., Minnesota Mining & Manufacturing, Morgn Lewis & Bockius, NationsBank Montgomery Securities, Owens Corning, PDSVA Petrolea y Gas SA., Prudential Insurance of America, Prudential Relocation, Safety-Kleen, Stanford C. Bernstein & Co., Inc., Shell Oil Products Co., Shearman & Sterling Co., Cinsons & Elkins LLP, White & Case and Zurich American Insurance Company. (2) Buck is a wholly owned subsidiary of the Mellon Financial Corporation, a creditor in this action. (3) It is possible that certain employees of Buck holds interest in mutual funds or other investment vehicles that may own the Debtors' securities. (4) James C. Rotenberg, a Principal of Buck and Director of Corporate Transactions Consulting Services, was employed as an associate of Shearman & Sterling as an associate during the period 1975 to 1983. (5) the son of James C. Rotenberg, a Principal of Buck and Director of Corporate Transactions Consulting Services, is currently employed as an associate by Bingham Dana & Gould. Mr. McGrath states that Buck is not currently retained by any entity except for the Committee in connection with these chapter 11 cases and will not accept any other engagement to perform services in these cases if the Court approves the proposed employment of the Committee. Mr. McGrath adds that Buck will continue to provide professional services with parties in these cases, provided that such services is not related to these cases and is it confident it will not affect its representation of the Committee in these cases. (Owens Corning Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Assuming Four Amended Westside Cogen PPAs ------------------------------------------------------ As previously reported, four power generators -- Mid-Set Cogeneration Co., Coalinga Cogeneration Co., Salinas River Cogeneration Co., and Sargent Canyon Cogeneration Co., -- collectively known as Westside Gogen filed an Emergency Motion for Relief from the Automatic Stay in order to terminate their power contracts with Pacific Gas and Electric Company. Under prepetition agreements, Westside Cogen is obligated to provide 148 megawatts of power to PG&E each day. PG&E, of course, is obligated to pay for the power, but hasn't -- to the tune of $60 million. Ruling in that motion, Judge Montali denied Westside Cogen relief from the automatic stay, but directed PG&E to provide the QFs with current payment for current service through September 15, 2001, plus percentages of the prepetition defaults to ease the QFs financial strain. Judge Montali determined that such payment shall constitute adequate protection payments on account of the QFs interests in the Power Purchasing Agreements and as adequate assurance of PG&E's future performance under the PPAs. In this motion, pursuant to an Order of the Court governing the amendment and assumption of Power Purchase Agreements with QFs, the Debtor gives Notice, dated August 15, 2001 of its intention to amend and assume, the PPAs between PG&E and the 4 Westside Cogen Qualifying Facilities as follows, pursuant to 11 U.S.C. Section 365 and Rules 6006 and 9019 of the Federal Rules of Bankruptcy Procedure: Amount of Capacity Pre-Petition Qualifying Facility (kW) Payables ------------------- ---------- ------------- Mid-Set Cogeneration Company 46,000 $15,647,256.91 Coalinga Cogeneration Company 46,000 $13,970,709.42 Salinas River Cogeneration Company 46,000 $13,821,372.69 Sargeant Canyon Cogeneration Company 46,000 $14,553,794.85 The Notice states that pre-petition claims (the Pre-Petition Payables) resulting from PG&E's failure to pay in full the amounts due under the PPAs prior to the petition date are reduced by the Adequate Protection Payments ordered by the Court pursuant to Westside's motion for relief from the automatic stay. Pursuant to the Assumption Agreements, August 21, 2001 is the effective date for the PPA Amendments and PG&E's assumption of the PPA, provided that each QF has the right to terminate its respective Assumption Agreement and PPA Amendement for a 15-day period following the entry of the Bankruptcy Court Order approving the Assumption Agreements in the event that the respective QF cannot obtain satisfactory fuel supply and financial arrangements and approvals. Upon the effective date of assumption of the PPAs, the Pre- Petition Payables will be elevated to administrative priority status and will accrue interest and will be paid by PG&E to the QFs, provided that PG&E will continue to make the Adequate Protection Payments to the QFs. Under the agreement, 100% of the outstanding prepetition debt will be made in monthly increments of 5% of such debt (7.5% for Coalinga). The QFs waive certain potential administrative and pre-petition claims, including any claim to receive any difference between a "market rate" and the contract price for energy and capacity delivered to PG&E from and after April 6, 2001 through August 21, 2001, the effective date for PG&E's assumption of the PPA. The Official Committee of Unsecured Creditors objects to the "Assumption Payments" on the basis that the settlement with the Westside Cogen QFs is outside the established parameters of the Assumption Models because it requires continuing adequate protection payments. The Committee voices objection to the continuation of adequate protection payments past the September 15, 2001 termination date provided in the Court's Order regarding the Westside Motion for Relief from Automatic Stay, without showing of hardship by Westside for the period following September 15, 2001, the Committee reminds Judge Montali. The Committee also draws Judge Montali's attention to the continued monthly payments under the settlement with Westside totaling 100% of the outstanding prepetition debt made in monthly increments of 5% of such debt (7.5% for Coalinga) in contrast to the Assumption Models which do not require payments to be made until the earlier of dismissal or conversion of the case, the Plan effective date, and in one model, July 15, 2003 at the rate of 2% of the prepetition debt amount, monthly. The Committee tells the Court that absent justification offered for the proposed preferential treatment of the Westside Cogen QFs in relation to the other QFs, or any showing of hardship past September 15, 2001, the Agreements requiring Assumption Payments should not be approved. Response of Westside Cogen QFs Westside Cogen points out that, the Court was poised at the August 3, 2001 hearing to enter an order setting a deadline for the Debtor's assumption/rejection of the Westside PPAs (the Deadline Order), and the Adequate Protection Order continued the hearing on the Emergency Motion to September 13, 2001 for argument on various issues raised in the Emergency Motion, the Adequate Protection Order and the Deadline Order. The Westside Cogen QFs tell the Court that, the Westside PPA Amendments and the Westside Assumption Agreements reflect a resolution and compromise of the Continued Hearing Issues, in addition to providing for fixed price energy payments made under the Westside PPAs. In addition, the settlement will resolve ongoing litigation between the Debtor and Westside over the appropriateness of the Wood Decision in relation to the energy price term of the Westside PPAs (the "Wood Decision Litigation"). Westside notes that the Court's approval of the amendment and assumption agreements will render the entry of the Deadline Order and the consideration of the Continued Hearing Issues and the ongoing Wood Decision Litigation moot. The Westside Cogen QFs argue that the agreement by other QFs to accept the Assumption Models does not mean that the Westside Cogens should be forced to accept the same terms, particularly if such terms are not appropriate for the Westside Cogens. The assumption of the Westside PPAs, the QFs assert, is subject to the conditions set forth in Section 365(b)(1) of the Bankruptcy Code. Courts have stated that Section 365(b)'s requirements operate to balance the debtor's interest in assuming beneficial contracts against providing the non-debtor party with the benefit of its bargain and protecting such party from a post assumption default, the Westside Cogen QFs observe. The Westside Cogen QFs tell Judge Montali that the Debtor's agreement to the compromises set forth in the amendment and assumption agreements reflects its understanding of the unique circumstances related to the Westside PPAs and should be sustained under the business judgment standard. With respect to the Westside Cogen PPAs, the QFs relate as follows: (1) Risk of Fixed Price Contracts to Gas Fired Cogens while Fixed Price Contracts pose benefits for the Debtor they also create financial risks and exposures to gas fired cogens such as the Westside Cogens because of fuel price fluctuations and pricing. The wild fluctuations in gas prices that have occurred during the course of the PG&E Bankruptcy Case illustrate the extent of this risk. Although some of these risks may be reduced by the execution of gas supply contracts, generally only large financially secure entities (e.g. CalPine) can procure such supply contracts. The Westside Cogens do not have the capital structure to withstand fluctuations of gas prices or to secure long-term gas supply contracts independently, especially in the absence of repayment of the significant Prepetition Defaults. Accordingly, the Westside Cogens conditioned the execution of the Westside PPA Amendments, in part, on: (1) the Debtor's assumption of the Westside PPAs; and (2) the repayment of the Prepetition Default within a reasonable time. (2) Prompt Cure and Cure Compromise Section 365(b)(1) explicitly conditions a debtor's assumption of an executory contract that is in default on: (a) the immediate cure or provision of adequate assurance that the debtor will "promptly cure" such default(s); (b) the payment of compensation to the non-debtor party to the contract for any actual pecuniary loss suffered as a result of the default(s); and (c) the provision of adequate assurance of future performance of the contract. The Westside Cogens agreed to compromise their rights under Section 365(b), particularly their right to receive an immediate or "prompt cure" of the Prepetition Defaults by agreeing to the Cure Compromise which will not result in full payment for approximately 29 months (unless the Effective Date of the Plan occurs earlier). The Cure Compromise provides that the Debtor shall cure the Prepetition Defaults by making payments at the same rate and in the same amounts as the Adequate Protection Payments the Court required pursuant to the Adequate Protection Order. This repayment schedule will result in payment over a period of approximately 29 months with the final payment estimated to come due on or about December 2003 or January 2004 (unless there is an earlier Effective Date). The case law interpreting "prompt cure" provides support for approval of the Cure Compromise. While the Bankruptcy Code does not define any specific period for a "prompt cure", courts generally have given prompt its ordinary meaning as tempered by the specific factual circumstances existing in the particular case. There are several facts in this case that support a shorter cure period than of the Cure Compromise. The first fact is the significant amount of the Prepetition Defaults in relation to the Westside Cogens' capital structure. The adequacy of the Westside Cogens' capital structure is particularly important in light of its agreement to amend the Westside PPAs to provide for a fixed price energy payment rather than a payment that fluctuates with the price of gas. The second fact is that the Debtor is solvent and has the current ability to pay the Prepetition Defaults from its available cash on hand. While the amount of the Prepetition Defaults is significant to the Westside Cogens such amount is minimal in relation to both the Debtor's available cash reserves and its overall debts and assets. Additionally, the Debtor, which clearly is in the best position to determine the impact of the proposed cure payments on its cash flow, has agreed to the Cure Compromise. The third fact is that the Westside PPAs have relatively short terms remaining prior to their expiration (i.e. between three and five years). The Debtor has not yet proposed a plan and it is not clear how long it will take the Debtor to file a plan, obtain confirmation of a plan, or achieve the conditions to the Plan's "Effective Date. The Assumption Models provide for payments to commence on the Plan's "Effective Date" or alternatively to commence in July of 2003 at the rate of 2% per month through July of 2005. This date presumably will be conditioned on the CPUC approval of the Debtor's customer rates. Such approval may cause a significant delay beyond the confirmation date. Thus, the Assumption Models provide for a cure period that is potentially in excess of the terms of one or more of the Westside PPAs. Courts have been reluctant to approve proposed cure periods that are close to the remaining terms of the contracts or are coextensive with or in excess of the terms of lease or contract being assumed. (3) Release of Potential Administrative Claims In addition, the Westside Cogens have agreed to release all potential administrative claims based on the "reasonable rate" theory and all claims for pecuniary loss other than the payments of the Prepetition Defaults together with interest thereon. Additionally, the Westside Cogens released all other pecuniary loss and "reasonable rate" claims, reserving only the interest issue for later determination. (4) Litigation Risks Finally, the compromises reflected in the Westside Assumption Agreements and the Westside PPA Amendments virtually eliminate the Debtor's litigation risks and costs in connection with the assumption issues related to the Westside PPAs and the ongoing Wood Decision Litigation risks are significant given the favorable nature of the Westside PPAs, the likelihood that rejecting the Westside PPAs would be difficult, at best, and the equities that favor a prompt cure (e.g., the harm to the Westside Cogens shown in the context of the Emergency Motion, the terms of the Westside PPAs and the Debtor's solvency). If the Debtor lost litigation related to assumption of the Westside PPAs it could be forced to assume the Westside PPAs without the benefit of the fixed energy price amendment and to pay the cure amount at a significantly faster rate than the rate set forth in the Cure Compromise. Additionally, the litigation costs and the complexity of the assumption/rejection issues, the "reasonable rate" and pecuniary loss issues and the issues related to the Wood Rate Litigation all support granting the relief requested in the Motion. When such potential detriments are balanced against the minimal impact, if any, of the Debtor's payment of the proposed cure amounts in accordance with the Cure Compromise (e.g., five percent to seven and one half percent per month), it is clear that the approval of the Westside Agreements is in the best interests of the Debtor, the creditors and the Westside Cogens, the QFs assert. (Pacific Gas Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) PILLOWTEX CORP: GE Capital Seeks Stay Relief to Enforce Rights -------------------------------------------------------------- GE Capital Public Finance, Inc. is party to a Loan Agreement dated July 1996 with Opelika Industries, Inc. and the Pulaski County-Hawkinsville Development Authority. Under the Loan Agreement, GE Public Finance loaned $4,500,000 to Pulaski, who in turn agreed to issue public bonds of the same amount to finance Opelika's acquisition of certain Equipment. To secure repayment of the Loan Agreement, Opelika agreed to grant to GE Public Finance a first priority security interest in all the Equipment. This lien was perfected by GE Public Finance by filing UCC-1 Financing Statements with the Georgia Secretary of State. According to Thomas D. Walsh, Esq., at McCarter & English, LLP, in Wilmington, Delaware, Opelika paid the loan installments up to October 2000. But since Petition Date, Mr. Walsh says, the Opelika failed to make its monthly payments. As a result, GE Public Finance is getting apprehensive that their interests are not adequately protected. Mr. Walsh notes that Opelika still owes GE Public Finance over $1,350,000, while the value of the Equipment -- which continues to depreciate -- securing the Loan Agreement is less than $500,000. Moreover, Mr. Walsh says, it is clear that the Debtor has no equity in the Equipment since the value of the Equipment is $850,000 below the loan amount now owed. Mr. Walsh adds that the Hawkinsville, Georgia plant where the Equipment is located has already been closed by Opelika. Mr. Walsh informs Judge Robinson that Opelika has even retained a liquidator to sell all equipment located in that plant. Obviously, Mr. Walsh says, the Equipment is not important to the Debtors' reorganization. By this motion, GE Public Finance requests the Court for relief from the automatic stay to enforce its rights with respect to the Equipment, including, but not limited to taking possession of the Equipment; selling the Equipment; and applying the proceeds of the sale to the obligations owing to GE Public Finance. (Pillowtex Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) PLAY-BY-PLAY TOYS: Taps SAMCO As Chairman's Financing Consultant ---------------------------------------------------------------- Play By Play Toys & Novelties, Inc. (OTCBB:PBYP) has engaged SAMCO Resolution (Samco), a division of Service Asset Management Company, as a consultant to the Chairman, Tomas Duran, to assist with financing arrangements. William B. Hudson, Samco's primary consultant for the Company, began his career with Chase Manhattan Bank in the Global Credit Department in New York City. He returned to Texas and held various positions including President of Alamo National Bank in San Antonio, Senior Vice President of Mercantile Texas Corporation and Senior Vice President of First Interstate Bank of Texas. He left the commercial banking business to engage in various entrepreneurial pursuits. Before joining Samco, he was instrumental in starting several businesses. Also, The Hyslop Group, L.L.C., has been retained to assist with the responsibilities of Chief Financial Officer, until a new Chief Financial Officer is appointed. The position of Chief Financial Officer was recently vacated by Joe M. Guerra who resigned effective July 31, 2001. The Hyslop Group acts in partnership with management in the areas of corporate finance, accounting, strategic policy, general business planning, asset management and financial controls. The Company's principal consultant at the Hyslop Group is James R. Hyslop, the consulting firm's founder and principal. Prior to forming The Hyslop Group in 1994, Mr. Hyslop was Senior Vice President and Chief Financial Officer for Swearingen Aircraft, Inc. from 1992 to 1994. Before that, Mr. Hyslop served in various financial roles up through Senior Vice President, Finance and Treasurer for Tesoro Petroleum Corporation from 1977 to 1992. Juanita Lozano, in addition to her position as Controller, has been appointed to assist Tomas Duran and Samco in the Company's restructuring and financing efforts. Ms. Lozano joined the Company in March 1995 as the Financial Reporting Manager and served briefly as interim Chief Financial Officer from July 1996 to January 1997. Ms. Lozano returned to her position as the Financial Reporting Manager in January 1997 and was promoted to Controller in February 1999. Prior to joining Play-By-Play, Ms. Lozano was employed by Datapoint Corporation as Financial Analyst, where she coordinated the Marketing Division budget. Ms. Lozano is a Certified Public Accountant and received a BBA in Accounting, cum laude, from St. Mary's University in San Antonio, Texas. Richard De La Llana, Executive Vice President for Latin America, has been appointed to act as President and Managing Director of the Puerto Rico office replacing Mr. Manuel Fernandez Barroso who resigned his position as President of Caribe Sales & Marketing effective August 2, 2001. Mr. De La Llana joined Caribe Sales & Marketing in 1980 and served in various capacities culminating in Executive Vice President for Latin America at the time the Company purchased Caribe in March 1999. Mr. De La Llana was transferred to Miami in November 1999 to run the Company's Miami offices until their closure in November 2000, at which time he moved to the San Antonio office. Mr. De La Llana is a 20-year veteran in the Puerto Rican and Latin American retail sales markets where he has spent over 15 years traveling to mainland China, Hong Kong and Taiwan to source new vendors and to develop and market new products. Mr. De La Llana is a graduate of Sacred Heart University in San Juan, Puerto Rico with a degree in business administration and marketing. The Company also announced that it has reduced labor costs by approximately $900,000 domestically, as well as an approximate $3.7 million reduction in other operating costs from June 2000 through June 2001. In addition, the Company's China and Hong Kong offices were closed on July 31, 2001 in further efforts to achieve cost savings. Warner Bros. Consumer Products has issued "Notice of Termination" for several entertainment character licensing agreements due to non-payment by the Company of scheduled royalties due. One of the notices of termination applies to the Looney Tunes' United States' mass market retail distribution entertainment character licensing agreement. Associated with this licensing agreement are certain voice contracts, which apply to characters animated with licensed voices. Also included in the notices of termination are the licensing rights for Looney Tunes and other characters for distribution in Latin America and Canada. Finally, on August 24, 2001, the Company completed the sale of its Fun Services Franchise business to Giftco, Inc. of Chicago, Illinois. Play-By-Play Toys & Novelties, Inc. designs, develops, markets and distributes a broad line of quality stuffed toys, novelties and consumer electronics based on its licenses for popular children's entertainment characters, professional sports team logos and corporate trademarks. The Company also designs, develops and distributes electronic toys and non-licensed stuffed toys, and markets and distributes a broad line of non- licensed novelty items. Play-By-Play has license agreements with major corporations engaged in the children's entertainment character business. POTLATCH CORP: Shuts Down Two Paperboard Machines in Idaho ---------------------------------------------------------- Potlatch Corporation (NYSE:PCH) will shut down one of its two paperboard machines in Lewiston, Idaho, for 7 to ten days due to weak market conditions. As many as 36 employees could be affected by the temporary curtailment, which is scheduled to begin on Thursday, September 13, 2001. Potlatch is a diversified forest products company with timberlands in Arkansas, Idaho and Minnesota. * * * At June 30, 2001, the Company's financial position included long-term debt of $1.15 billion, including current installments on long-term debt of $132.6 million. Its ratio of long-term debt to stockholders' equity was 1.36 to 1 at June 30, 2001, compared to .99 to 1 at December 31, 2000. Long-term debt increased $217.4 million during the first half of 2001. The increase was due to the issuance in June of $250.0 million of senior subordinated notes due 2011 and $200.0 million under its new credit facility. Repayment of $100.0 million borrowed under its old credit facility, which had been classified as long-term debt, and the reclassification of $130.0 million to current installments partially offset the increase. Stockholders' equity declined $63.6 million, largely due to a net loss of $41.2 million and dividend payments of $24.6 million for the first half of 2001. The Company had working capital of $231.6 million at June 30, 2001, an increase of $186.8 million from December 31, 2000. The increase was largely due to increases in cash of $94.7 million, receivables of $20.8 million and prepaid expenses of $31.2 million, combined with decreases of $188.9 million in notes payable and $26.7 million in accounts payable and accrued liabilities. A decrease in inventories of $45.0 million and an increase in current installments on long-term debt of $132.3 million partially offset these amounts. Net cash provided by operations for the first six months of 2001 totaled $19.6 million, compared with $74.0 million for the same period in 2000. The decline was largely due to a $34.2 million greater net loss in 2001 and changes in working capital items using $28.4 million of cash in 2001 compared to providing $5.3 million of cash for the first six months of 2000. For the six months ended June 30, 2001, net cash used for investing was $31.9 million, compared to $73.9 million during the six months ended June 30, 2000. The decrease is attributable to a significant decline in capital expenditures in 2001. Capital spending totaled $28.7 million in the first half of 2001, compared to $72.7 million for the same period in 2000. Spending in 2001 has been focused on routine general replacement, safety, forest resource and environmental projects. Approximately $4.1 million has been spent on the modernization and expansion project at our Cook, Minnesota, oriented strand board mill. Several major projects accounted for much of the spending in the first six months of 2000, including the pulp mill in Cloquet, Minnesota, the Cook project and a recovery boiler retrofit at the Cypress Bend, Arkansas, pulp mill. With the substantial completion of our Cloquet pulp mill in late 1999 and our Cook OSB mill in January 2001, the Company expects its capital spending to total approximately $53.0 million in 2001. Net cash provided by financing was $106.9 million for the six months ended June 30, 2001, compared to net cash used for financing of $2.6 million during the same period in 2000. The change primarily reflects the debt restructuring completed in June 2001 in which the Company issued $450.0 million of debt, partially offset by debt repayments of $289.2 million. For the same period in 2000, the Company borrowed approximately $66.8 million and repaid $10.3 million. For the six month period ended June 30, 2001, the Company funded its operating losses and other cash requirements primarily through borrowings under its bank credit agreements. On June 29, 2001, the Company obtained a new credit facility providing for aggregate borrowings of up to $400.0 million. The new credit facility is comprised of a four-year term loan, in the amount of $200.0 million, and a three-year revolving line of credit of up to $200.0 million, including a $110.0 million subfacility for letters of credit, usage of which reduces availability under the revolving line of credit. PROBEX CORP: Secures $4.1 Million Interim Financing Pact -------------------------------------------------------- Probex Corp. (AMEX:PRB), an energy technology company specializing in environmental services, today said that it has recently secured interim financing totaling $4.1 million. Probex Chairman, President and CEO Charles M. Rampacek noted that, "This interim financing, from a combination of investors, including Bechtel Corporation affiliate United Infrastructure Company, LLC, and investment advisory clients of Zesiger Capital Group, LLC, is a continuing affirmation of the strength of our technology, our management team and our business plan." Rampacek added that, "We are continuing to make good progress on all of the activities necessary to obtain project financing for our planned Wellsville used oil reprocessing facility." Probex is a Dallas-based energy technology company specializing in environmental services that has developed and patented its environmentally beneficial ProTerra(TM) lubricating oil technology for reprocessing, purifying and upgrading used motor oils. ProTerra has demonstrated unparalleled advantages in the highly economic creation of premium quality base oils capable of meeting new motor oil standards without creation of waste by- products. The goal of Probex is to become a world leader in the collection and reprocessing of used lubricating oils into premium quality base lube oils through timely commercialization of its ProTerra technology. For more information about Probex, visit the company's web site at http://www.probex.com According to a recent SEC filing, the Company, in order to continue with its business plan of commercializing its patented technology for reprocessing used lubricating oil, will require significant additional capital in the short term. A significant portion of this amount will be used to finance the construction of its first reprocessing facility in Wellsville, Ohio. The remaining amount will be used for its equity share of a potential European reprocessing facility , to repay interim financing loans, for expansion and acquisition of additional used oil collectors, and for general working capital. The Company is currently working with its financial advisors to obtain approximately $125 million in project financing and believe that the Company will be successful in this endeavor. However, there can be no assurance that this additional financing will be available when needed or that, if available, such financing can be completed on commercially favorable terms. Failure to obtain additional funding, if and when needed, could have a material adverse affect on our business, results of operations and financial condition. At the end of June, the Company total current liabilities stood at $12,949,880, while its total current assets at $4,056,284. RHYTHMS NETCONNECTIONS: Subsidiaries Continue Network Operations ---------------------------------------------------------------- Rhythms Links Inc. and Rhythms Links Inc.-Virginia, wholly-owned subsidiaries of Rhythms NetConnections Inc. (OTC Bulletin Board: RTHME) and providers of enhanced broadband network services, said they will continue their network operations until the Federal Communications Commission or a court of competent jurisdiction authorizes or otherwise orders the cessation of services, pursuant to an order entered by the U.S. District Court for the Southern District of New York. Based in Englewood, Colo., Rhythms Links Inc. and Rhythms Links Inc.- Virginia provide DSL-based, broadband communication services to businesses and consumers. On August 1, 2001, Rhythms NetConnections Inc. and all of its wholly-owned U.S. subsidiaries voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the Southern District of New York. For more information concerning Rhythms visit the Company's Web site at http://www.rhythms.com SAFETY KLEEN: Court Approves Rittenmeyer's Engagement Terms ----------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware has entered an order approving employment and indemnification agreements with Ronald A. Rittenmeyer under which Mr. Rittenmeyer will become Chairman of the Board, President and Chief Executive Officer of Safety Kleen Corporation. At the same time, the Bankruptcy Court approved ermination and consulting agreements with David E. Thomas, Jr. and Grover C. Wrenn. SCHWINN/GT: Direct Focus Acquires Fitness Unit for Around $65MM --------------------------------------------------------------- Direct Focus, Inc. (Nasdaq:DFXI), a marketing company for fitness and healthy lifestyle products with a direct business model, announced that it was the successful bidder to acquire substantially all of the assets of Schwinn/GT's fitness equipment division through a bankruptcy auction, pending a final court order by the U.S. Bankruptcy Court for the District of Colorado. The Direct Focus bid was linked to a successful bid submitted by Pacific Cycle LLC for the purchase of substantially all of the assets of Schwinn/GT's bicycle division. Under the terms of the bid, Direct Focus anticipates it will pay approximately $65 million in cash for Schwinn Fitness, which will be accounted for under the purchase accounting method. The Company expects the transaction to close on or before September 21, 2001, subject to the final court order and expiration of the Hart-Scott-Rodino waiting period. Schwinn Fitness had annual revenue in 2000 in excess of $100 million and strong positive operating cash flows. Direct Focus expects this acquisition to be accretive to revenue and earnings in 2002 and beyond. "We are very pleased with the success of our bid," said Brian Cook, CEO of Direct Focus. "Our management team is very familiar with Schwinn Fitness. Kevin Lamar, who joined us as our President in June, was instrumental in growing the Schwinn Fitness business from $20 million in annual sales to over $100 million in annual sales from 1989 to 2000." "Like our purchase of the assets of Nautilus International, Inc. in January 1999 and the subsequent turnaround and growth of those operations, expansion through acquisitions is an important part of our strategy. At the end of the second quarter, we reported $94.7 million in cash and short term investments. We believe this acquisition is an excellent use of our financial and management resources, and offers significant growth opportunities." "We believe Schwinn Fitness' strong brand and quality fitness products will be an excellent fit with our growing portfolio of fitness and healthy lifestyle products," said Kevin Lamar, President of Direct Focus. "Schwinn Fitness offers a popular line of cardio-equipment, which includes treadmills, stationary bikes and steppers sold under the Schwinn and Trimline brands. These products will complement our Nautilus line of strength- building products, and we expect to gain powerful distribution synergies through the combined product lines and sales effort." Due to the recent national tragedy and the timing of this transaction, Direct Focus is not scheduling an immediate conference call. The Company expects to hold a special conference call to discuss the acquisition in more detail on Monday, September 18, 2001 (2:00 PM Pacific/5:00 PM Eastern). Further instructions will be announced. Direct Focus, Inc. is a marketing company for fitness and healthy lifestyle products with a direct business model. The Company currently markets its Bowflex line of home fitness equipment and Nautilus Sleep Systems directly to consumers, using an effective combination of television advertising, 800- call centers and Web sites. The Company also sells its Nautilus commercial fitness equipment directly to health clubs and other institutions, and its Nautilus consumer fitness products through retail athletic stores. The Company is headquartered in Vancouver, Washington. Direct Focus is located on the Web at http://www.directfocusinc.com SPORTS AUTHORITY: Extends Shareholders Rights Plan to 10 Years -------------------------------------------------------------- The Sports Authority, Inc. (NYSE:TSA), the nation's largest full-line sporting goods retailer, announced that it has extended its Shareholder Rights Plan for an additional ten years. The plan was adopted in September 1998 for a term expiring on October 5, 2001. The plan will now expire on September 11, 2011. The plan was also amended to reduce the exercise price of the rights from $50 to $35. Commenting on the plan's extension, Marty Hanaka, Chairman and Chief Executive Officer, said, "The purpose of the plan is to reduce the likelihood of certain types of offers for the Company's common shares that may not offer fair value to all shareholders, to reduce the likelihood of a third party acquiring control of the Company without paying the shareholders a fair control premium, and to preserve the bargaining power and flexibility of the Board of Directors in dealing with potential third party acquirers in order to seek to maximize value for all shareholders. The plan is substantially similar to the rights plans adopted by a large number of public companies in the United States. The extension of the plan was not in response to any present effort to acquire the Company." The Sports Authority, Inc. is the nation's largest full-line sporting goods retailer operating 198 stores in 32 states. The Company's e-tailing website http://www.thesportsauthority.com is operated by Global Sports Interactive, Inc. under a license and e-commerce agreement. In addition, an 8.4% Company-owned joint venture with JUSCO Co., Ltd. operates 30 "The Sports Authority" stores in Japan under a licensing agreement. In July, Standards & Poor affirmed its single-B corporate credit and senior secured bank loan ratings and its triple-C-plus subordinated debt rating on the company. STEEL HEDDLE: Wire Business Sale Auction Slated for October 1 ------------------------------------------------------------- Steel Heddle Corp. asks for the Court's approval uniform bidding and sale procedures for the Company's Wire Business assets. The company propose that Qualified Bids and objections to the Sale be due no later than September 25, 2001 and the Auction to be held on October 1, 2001 at the offices of Pachulski, Stang, Ziehl, Young & Jones, P.C., in Wilmington, Delaware. Debtors further propose that the Sale Hearing be held on October 3, 2001 or the first date convenient to the Court. The company believes that the Assets of the Wire Business will continue to depreciate in value and has agreed to conduct the Wire Auction in an attempt to obtain the highest and best price for the Wire Division. The company has set a base price for the Assets, which establishes the minimum price for the sale of the Assets. In order to avoid adversely affecting the bidding process at the Auction, Debtors will not disclose the Base Price to the public. Steel Heddle believes that the Wire Auction will enable Debtors to obtain the highest and best offer for the Wire Business, thereby maximizing the value of their estates. In the event the company fails to receive a viable bid for the Assets at the Wire Auction, Steel Heddle intends to withdraw the Wire Sale. Accordingly, the company believes that proceeding with the Wire Auction is in the best interest of the estates and their creditors. The company is currently operating under distressed operating conditions, with only limited financing, which are expected to continue for the foreseeable future. The company tells the Court that they presently lack sufficient financial support to continue operations for an extended period of time and the delay in consummating a sale of the Wire Business will reduce amounts available for creditors. Accordingly, the Wire Auction and the Sale Hearing must occur on an expedited basis to preserve the value of Debtors' assets and yield the greatest possible return for the benefit of creditors. SUN HEALTHCARE: Court Further Extends Lease Decision Period ----------------------------------------------------------- Sun Healthcare Group, Inc. sought and obtained the Court's authorization for a further extension of the time to assume or reject their unexpired leases of nonresidential real property and facility lease to and including the earlier of (a) December 13, 2001 and (b) the date on which an order is entered confirming a plan of reorganization for the Debtors. The unexpired leases are inextricably related to the core of the Debtors' business operations. These operations involve, among other things, the provision of long-term care services which require facilities specifically tailored to the provision of such care. Thus, the unexpired leases are critical assets of the Debtors. Inadequate time for making informed decisions may result in an inadvertent rejection of a valuable lease or a premature assumption of a burdensome lease, which may lead to substantial administrative expense obligations. Further, as long-term care facilities house elderly and infirm residents, any inadvertent or forced closure of a facility could adversely affect the health and welfare of the residents. However, the sheer number and complexity of the leases make it a daunting task reaching informed decisions as to whether to assume or reject the leases. In addition, as providers of long- term care services, the Debtors are subject to an extensive regulatory framework that will affect the assumption or rejection decisions. The Debtors remind the Court the progress that they have made, for example, the Government Stipulation, the Transfer Procedures and agreements with landlords, but negotiations with certain of the landlords have been difficult and they need additional time to make informed decisions with respect to the remaining unexpired leases in their portfolio. At the Debtors' behest, the Court granted the extension provided that such extension of time is without prejudice to the right of the Debtors' lessors to file an appropriate motion with the Court for a hearing to consider a reduction of such time, and without prejudice to the Debtors' right to request further extensions of time within which they may assume or reject the unexpired leases pursuant to section 365(d)(4) of the Bankruptcy Code. (Sun Healthcare Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) TRANS WORLD: Bill Compton Will Retire as President on October 1 --------------------------------------------------------------- Captain William F. Compton, president of TWA Airlines LLC, announced that he will retire from the company on October 1. "As Chief Executive Officer of the former TWA, Captain Compton played a pivotal role in restoring the carrier's operational strength and the workforce's confidence, as well as guiding the process that lead to our acquisition earlier this year," said Donald J. Carty, chairman and CEO of American Airlines. "Bill did a remarkable job of reversing the fortunes of TWA under enormously difficult circumstances," Carty said. "In the face of almost insurmountable odds, Bill kept the faith, motivated thousands of dedicated employees, and shared with them a vision that ultimately lead to a brighter and more secure future. "It is with profound respect and gratitude that we acknowledge Bill's service and wish him and his family every good wish in the years ahead," Carty said. "At the time of the acquisition, Don Carty asked me to stay on board to help lead TWA into the transition. The transition is now well underway and solidly on course for success, and it is an appropriate time for me to move on. I do so with a deep sense of gratitude -- to Don, to Bob Baker and to all of our colleagues at American, who stepped up to a big challenge and saved TWA, and to each of the tens of thousands of people of TWA, past and present, whose professionalism and dedication made and kept TWA the most storied name in airline history," Compton said. TWA Airlines LLC Chairman and CEO Robert W. Baker praised Captain Compton for his absolute dedication to the well-being of TWA, its customers and its employees. "Bill always recognized that customer satisfaction is the bedrock of success in the highly competitive airline industry," Baker said. "He infused TWA's people with the spirit of this service commitment, showing them how to make a great airline even greater and lifting their spirits even in the darkest of times. Bill is an executive of singular distinction, and it has been a honor and privilege to know and serve with him." Capt. Compton began his TWA career in 1968 flying Boeing 707 aircraft. He also has piloted 727, 767, DC-9, MD-80 and L1011 aircraft. As president, Capt. Compton maintained his rating as an MD-80 captain and "flew the line" on a regular basis. >From 1991 through 1995, Capt. Compton was chairman of the TWA branch of the Air Line Pilots Association and a member of ALPA's Executive Board. In the mid-1990s, he was a member of TWA's Labor/Management Task Force and coordinated a company-wide productivity task force. Capt. Compton was named to the board of directors of Trans World Airlines, Inc., in November 1993. The Board named him executive vice president - operations in December 1996. In December 1997 he was named president and chief operating officer. On May 25, 1999 he was elected President and Chief Executive Officer. Since Capt. Compton joined the management of the company, TWA has gone from a perennial last-place finisher in the monthly Department of Transportation on-time performance report to a position of industry leadership in operational reliability. TWA consistently ranks at or near the top of the industry in on-time performance and schedule completion reliability. In 1998 and 1999, TWA earned the J.D. Power Award for customer satisfaction. In 2000, TWA finished a close second among all airlines in both the short-haul and long-haul J.D. Power Award ranking. Another hallmark of Capt. Compton's leadership of TWA was a massive aircraft replacement program, which included the largest new aircraft order in the company's history. As a result, TWA's fleet went from being the oldest among the major airlines to one of the newest. In 2001, Capt. Compton steered Trans World Airlines, Inc., through the agreement for American Airlines to acquire substantially all of the assets of TWA. The agreement assured that the jobs of approximately 20,000 TWA employees were protected and continued at American and that the health insurance benefits to TWA's retirees would continue. The agreement preserved the St. Louis air service hub and service to the communities on the TWA route map. TWA's customers also benefited from the transaction through protection of their accrued frequent flyer miles. On April 9, 2001 -- just three months after announcement of the agreement -- the $4.2 billion transaction was completed. Capt. Compton became the first president of TWA Airlines LLC, a subsidiary of American Airlines established to facilitate the integration of the TWA system into American. Capt. Compton was educated at Miami-Dade College, graduating in 1967. He has been a guest lecturer at the Stanford University Graduate School of Business/Law School. He serves on numerous advisory panels, including the board of the Greater St. Louis Council of the Boy Scouts of America, Civic Progress, the St. Louis Regional Commerce and Growth Association, the St. Louis Variety Club and Webster University. TWA Airlines LLC is a subsidiary of American Airlines, Inc. Together with its Trans World Express(R) and Trans World Connection(SM) marketing partners TWA serves more than 160 destinations around the world with more than 1,000 daily flights. USG CORP: Injury Claimants Hire Tersigni as Financial Advisor ------------------------------------------------------------- The Official Committee of Asbestos Personal Injury Claimants of USG Corporation asks the Court for permission to employ the New York firm L. Tersigni Consulting P.C. as its accountant and financial advisor. Committee Member Edward Wally states that Tersigni provides expert services regarding accounting, financial and valuation matters in bankruptcy and litigation related matters. Tersigni will perform services for the Committee including, but not limited to: - Development of oversight methods and procedures so as to enable the PI Committee to fulfill its responsibilities to monitor the Debtors' financial affairs; - Interpretation and analysis of financial materials, including accounting, tax, statistical, financial and economic data, regarding the Debtors and other relevant parties; - Analysis and advice regarding additional accounting, financial, valuation and related issues that may arise in connection with plan negotiations and otherwise in the course of these proceedings. Mr. Wally elaborates that Mr. Loreto T. Tersigni, Tersigni principal, has provided consulting and expert testimony services in litigation matters such as The Babcock and Wilcox Company, Pittsburgh Corning Corporation, Owens Corning Corporation, Armstrong World Industries, and many others. Mr. Wally states that the PI Committee believes that Tersigni's services and both necessary and appropriate and will assist the PI Committee in the negotiation, formulation, development, and implementation of the plan of reorganization. The PI Committee, through its counsel, has discussed the possibility of sharing financial advisor services with counsel for both the Official Committee of Unsecured Creditors (General Committee) and the Official Committee of Asbestos Property Damage Claimants (PD Committee). The PI Committee believes that it should have its own financial advisor retained, but has agreed with other Committees to attempt to utilize the services of the Committees' financial advisors in such a way as to keep the Debtors' estates costs to a minimum. Subject to the Court's approval, Tersigni will be compensated on an hourly basis to be paid by the Debtors: Mr. Loreto T. Tersigni $395.00 Managing Director Level $300.00 Director Level $275.00 Senior Manager Level $275.00 Manager Level $225.00 Professional Staff Level $150.00-$175.00 Paraprofessional Level $ 75.00 Mr. Wally assures the Court that to the best of the PI Committee's knowledge, Tersigni is a "disinterested person" within the meaning of 101(14) of the Bankruptcy Code and as required by 327(c) and 328(a) of the Bankruptcy Code. Also, Tersigni holds no interest adverse to the Debtors' estates for the matters for which Tersigni is to be employed and Tersigni has no connections to the Debtors, their creditors or related parties herein. Tersigni has and will continue to review its files and if any conflicts or other disqualifying circumstances exist or arise, Tersigni will supplement its disclosure to the Court. (USG Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) U.S. INTERACTIVE: Court Confirms 2nd Amended Reorganization Plan ---------------------------------------------------------------- U.S. Interactive, Inc. announced that the United States Bankruptcy Court for the District of Delaware has confirmed the second amended plan of reorganization and disclosure statement in the Company's Chapter 11 proceedings. Full-text copies of the Plan and Disclosure Statement are available at http://researcharchives.com/bin/search?query=u.s.+interactive Management of the Company anticipates that the approval of the plan should pave the way for the Company's emergence from bankruptcy. The plan is designed to improve the balance sheet and financial strength of the Company. The Company's principal creditors have advised management that they presently intend to support the plan. VENTRO: Faces Nasdaq Delisting Due to Bid Price Non-Compliance -------------------------------------------------------------- Ventro(TM) Corporation (Nasdaq:VNTR) received a notice of staff determination dated September 5, 2001 indicating that the Company is not in compliance with the $1.00 minimum bid price requirement for continued listing as set forth in Marketplace Rule 4450(a)(5). Accordingly, Ventro's securities are subject to delisting from The Nasdaq National Market. Following Nasdaq's procedures, the Company has filed a request for a hearing before the Nasdaq Listing Qualifications Panel to review the staff determination. The request for a hearing defers delisting, pending the Panel's decision. The hearing date will be determined by Nasdaq and is expected to occur in mid to late October. At the hearing, the Company intends to present a plan to regain compliance and to request that the Panel permit the common stock to remain listed. However, there can be no assurance that the Panel will decide to allow the Company to remain listed or that the Company's actions will prevent the delisting of its common stock. The Company's stock will continue to be listed and traded on the Nasdaq National Market pending a final decision by the Panel. With the exception of the minimum bid price requirement, the Company is in compliance with all of Nasdaq's listing requirements. In the event the Company's shares are delisted from the Nasdaq National Market, the Company expects that its common stock will continue to be listed and trade on the NASD's OTC Bulletin Board. "Ventro is committed to enhancing shareholder value as we execute our business plan to become a leading provider of collaborative commerce solutions," said David Zechnich, Ventro's CFO. "We believe that the recent improvements in our financial condition and the acquisition of NexPrise position us well for future success. We have requested a hearing with the Nasdaq and will try to demonstrate our ability to regain and maintain compliance to remain a listed Nasdaq issuer." Ventro Corporation is a pioneer in business-to-business e- commerce. Ventro provides collaborative commerce solutions that enable companies to manage key processes with their suppliers, partners and customers, including complex procurement, collaborative product development and program management. Ventro Corporation is headquartered in Mountain View, California. For more information, please visit http://www.ventro.com VENTUREQUEST: Seeks Debenture Financing Alternative --------------------------------------------------- VentureQuest Group, Inc., a U.S. corporation, (VQGI on "Pink Sheets") announced that its Board of Directors has authorized a convertible debenture, dated September 10, 2001 for an amount not to exceed US$500,000 to be issued in installments until the end of the current fiscal year. "The authorization of this Debenture by the Board provides the Company with another financing alternative. We will, in addition, continue to focus on increasing the Company's financial resources through agreements with outside investors on a project specific basis in order to minimize dilution to our shareholders during these difficult market conditions", said Eric Hutchingame, Chairman and CEO of VentureQuest. Terms of the debenture provide an interest rate of 8% per annum payable annually in arrears and also includes the option for subscribers to convert the outstanding amount into the Company's common shares at $0.04 per share, a discount of 11.1% from the September 7, 2001 closing price of the stock. The debenture can be converted at any time prior to the due date of September 6, 2003. The closing price of the Company's stock on September 7, 2001 was $0.045 (four and one half cents) and therefore if the Company issues the debenture in its entirety, and if it is fully subscribed, and all subscribers elect to convert into the Company's common stock, the Company will be obligated to issue 12,500,000 restricted common shares, plus any shares required to satisfy any accrued and unpaid interest. VentureQuest is in the business of acquiring and consolidating emerging or underachieving transaction-based companies or opportunities that provide recurring revenue from entertainment or service transactions. Historically, the Company's working capital needs have been satisfied primarily through the Company's private placement of securities and through other debt instruments, such as convertible debentures. The Company reasonably expects to continue to do so in the future. At June 30, 2001, the Company had negative working capital of $74,491 compared to $0 at December 31, 2000. The net decrease is primarily attributed to the aggregate effect of the increase in accounts payable and accrued liabilities in association with the commencement of its operations and corporate activities, as well as the reduction in value of the marketable securities held by the Company due to negative fluctuation in market price during the reporting period. At June 30, 2001, the Company had a note receivable of $195,082 representing a note due from an unrelated company in connection with the sale of the Company's online casino operations. Under the terms of the sales agreement, the Company has agreed to receive payment on the note based on a percentage of gross revenues generated by the former subsidiary. Also at June 30, 2001, the Company had $11,587 in cash compared to $ 0 at December 31, 2000. At June 30, 2001, the Company held $178,770 in marketable securities compared with $0 at December 31, 2000. The increases are due to the reverse merger and acquisition of the Company by Gamecasters. Its total current liabilities, at the end of June, stood at $276,081, exceeding its total current assets of $201,580. WEIRTON STEEL: Reaches Tentative Agreement with Guard Union ----------------------------------------------------------- Weirton Steel Corp. (OTC Bulletin Board: WRTL) announced it has reached a tentative agreement for a new labor contract with the Independent Guard Union (IGU). Talks were held during the past week as part of the company's recently announced restructuring plan. Details of the tentative accord, affecting 23 security personnel, will be available after IGU President Joe Balzano has reviewed the labor package with his membership. "We'll meet with our members this Friday to review the package. They will then have a five-day period in which to vote," Balzano said. WHEELING-PITTSBURGH: Extends Labor Pact with USWA to Feb 2006 ------------------------------------------------------------- Wheeling-Pittsburgh Steel Corporation confirmed that it has reached a tentative agreement with the United Steelworkers of America to modify and extend the current labor contract until February 2006. The agreement is subject to approval by the company's board of directors and the bankruptcy court, as well as a ratification vote by employees who are members of the USWA union. Details of the tentative pact are not being released at this time. Wheeling-Pittsburgh Steel and the USWA began discussion on the contract extension on Aug. 20. The company's current contract with the USWA runs through Sept. 1, 2002. "The agreement is a key element in the company's plan to successfully reorganize," said Daniel C. Keaton, Senior Vice President of Human Resources and Public Relations. "The cost- reduction initiatives included will ensure that Wheeling- Pittsburgh Steel can withstand the current market conditions and successfully emerge from bankruptcy protection." Wheeling-Pittsburgh Steel President and CEO James G. Bradley stated, "I am proud of our employees and believe that this agreement lays the foundation for the company's future success. It also represents the commitment of every employee to preserve jobs, and demonstrates their determination not to allow this company to succumb to illegal foreign steel dumping." Wheeling-Pittsburgh Steel is the ninth largest domestic integrated steelmaker. It filed for Chapter 11 bankruptcy protection on Nov. 16, 2000. WHEELING-PITTSBURGH: USWA Says Pact Crucial to Avoid Liquidation ---------------------------------------------------------------- The United Steelworkers of America (USWA) announced that the new tentative agreement it has reached on changes to its 1996 contract with Wheeling-Pittsburgh Steel is the first step necessary to bring the ailing steel company out of Chapter 11 Bankruptcy and to prevent it from sliding toward liquidation. "This tentative agreement represents our Union doing more than its fair share in stabilizing Wheeling-Pitt," said USWA International President Leo W. Gerard. "Now it's crucial that the federal government provide help through Emergency Steel Loan Guarantees and for the Company's other stakeholders to participate as well." The proposed Modified Labor Agreement (MLA) preserves all of Wheeling-Pitt's current steel operations and health care benefits for the company's current and future retirees. It would also provide employees 20% ownership in the company when it emerges from Bankruptcy. "We believe this agreement provides Wheeling-Pittsburgh Steel with the tools the company needs to remain a viable employer in the future," said USWA District 1 Director and lead USWA negotiator David McCall, "and we did it without saddling our members and retirees with unbearable costs." Under the proposed agreement, all of the company's workers, union and non-union, will take a temporary wage reduction, and scheduled wage increases will be delayed but not eliminated. The company will lay off some hourly workers, but it will also lay off a proportional number of salaried personnel. The pension plan has been significantly improved. A "30-and-out" provision will enable workers with 30 years of service to retire with full pensions -- even before the age of 62. In addition, workers will participate in a new profit sharing plan, once the company emerges from Bankruptcy. Other improvements include tougher restrictions on company use of outside contractors and significant union input in decisions affecting the future of the company. WINSTAR COMMS: Amends Blackstone's Engagement as Finance Advisor ---------------------------------------------------------------- Winstar Communications, Inc. submits an amended application for an entry of an order authorizing the employment & retention of Blackstone Group L.P. as financial advisor to the Debtors, effective as of the date of commencement of these cases. The Debtors have requested Blackstone to serve as their Merger & Acquisitions Advisor to provide the financial advisory services and indicated that they no longer require the broad financial advisory services previously applied for. Edward J. Kosmowski, Esq., at Young Conaway Stargatt & Taylor, LLP states that the Debtors believe it is in the best interest of their creditors and their estates for the Debtors to retain Blackstone to analyze various potential transactions to determine the best means for maximizing value for creditors. The Debtors believe that the interest of their estates are best served by focusing Blackstone's efforts on their services in connection with: a) sale of the Debtors; b) sale of all or substantially all of the assets of the Debtors; c) investment in the Debtors by a third party under a plan of reorganization; d) merger, acquisition or other similar transaction by the Debtors in one or a series of transactions; Specifically, Blackstone will assist the Debtors by: a) Assisting in the development of financial data and presentations to the Debtors' Board of Directors, various creditors and other third parties regarding a transaction; b) Assisting the Debtors in preparing marketing materials in conjunction with a possible Transaction; c) Assisting in identifying potential buyers or parties in interest to a Transaction and assist in the due diligence process; d) Assisting and advising the Debtors concerning the terms, conditions and impact of any proposed transaction; e) Negotiating a transaction with potential buyers; f) Providing expert testimony with respect to any transaction and bidding process; The Debtors have agreed to pay Blackstone: a) a $200,000 Monthly Advisory Fee for each of the two months during the period May 6 through July 5, 2001 for services rendered in accordance with the previous agreement; b) a $100,000 monthly advisory fee for the period commencing July 6, 2001 for services rendered under the present agreement, initial and subsequent payments shall be payable in advance commencing July 6, 2001; c) a transaction fee equivalent to 1% of the first $200,000,000 of consideration plus 1.25% of the consideration above $200,000,000 payable in cash upon consummation of the transaction; and d) reimbursement of all necessary and reasonable out-of- pocket expenses commencing on April 6, 2001, incurred during this engagement payable upon rendition of invoices setting forth in reasonable detail the nature and amount of expenses. (Winstar Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) BOOK REVIEW: ONE HUNDRED YEARS OF LAND VALUES IN CHICAGO: The Relationship of the Growth of Chicago to the Rise of its Land Values, 1830-1933 ------------------------------------------------------------- Author: Homer Hoyt Publisher: Beard Books Soft cover: 519 pages List Price: $34.95 Review by Gail Owens Hoelscher This book represents the first comprehensive study of land values in a large city over a long period of time. The author's goal was to trace cyclical fluctuations in land values in an American city, in the expectation of contributing to the policy debate on taxing real estate investments. He managed to achieve much more, however. Indeed, from the viewpoint of land values, he offers a fascinating general history of Chicago through the early 1930s. He very skillfully interweaves the city's social and economic history into its land economic history, and interprets the interrelationships among them. The book covers the years 1830-1933, a period of dizzying growth, during which time Chicago grew from a cluster of a dozen log huts at the site where the Chicago River meets Lake Michigan, to a booming city of 211 square miles and a population of almost 3.5 million. Over those hundred years, ground value grew from a few thousand dollars to more than $5 billion. And what a century it was, a roller coaster of the railroad boom, the Civil War, the Great Chicago Fire, the first skyscrapers, the first World's Fair, World War I, and the Great Depression. The reader is immediately struck by the sheer size of the research project the author designed and undertook. He examined thousands of actual real estate sales and compared them with the appraisals and opinions of real estate dealers. He researched and had drawn 103 maps showing land values of specific sections of the city in various years; the evolution of the railroad; the growth of public transportation (from horse-car lines and street-car lines to elevated lines); sewer construction; the distribution of buildings of various heights; population densities; and residential areas by predominant ethnic group, among others. There are 103 data tables as well, including the value of various buildings in different years; construction of infrastructure; number and types of registered vehicles; employment and wages; mortgage rates and amounts; property sales and rents; and various comparisons with cities of similar size. The author defines a real estate cycle as "the composite effect of the cyclical movements of a series of forces that are to a certain degree independent and yet which communicate impulses to each other in a time sequence, so that when the initial or primary factor appears it tends to set the others in motion in a definite order." He found that in Chicago during the period studied, these forces, in the order in which they appeared, were population growth; rent levels and operating costs of existing buildings and new construction; land values; and subdivision activity. He divides these forces into 20 "events," all the way from the first, "gross rents begin to rise rapidly;" through to the sixth, "volume of building is stimulated by easy credit;" the eleventh, "lavish expenditure for public improvements;" the seventeenth, "banks reverse their boom policy on real estate," leading to stagnation and foreclosures; the nineteenth, "the wreckage is cleared away;" and finally, "ready for another boom." One Hundred Years of Land Values in Chicago is a source of invaluable data and analysis for students of urban land economics as well as for students of American history. The author noted that "with all its kaleidoscopic neighborhoods and its babble of tongues.with all its rough edges and its bluntness, Chicago is a city with a unique and magnetic personality." And worth reading about. ********* Bond pricing, appearing in each Monday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L. 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