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/raid1/www/Hosts/bankrupt/TCR_Public/011231.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, December 31, 2001, Vol. 5, No. 254 Headlines 360NETWORKS: Court Approves Settlement Pact with Williams Comms. AMC ENTERTAINMENT: Plans to Sell $150M 10-Year Bonds in 2002 ASSOCIATED MATERIALS: S&P Puts Low-B Ratings on Watch Developing BHF-BANK: Fitch Junks Rating Over Deteriorating Profitability BETHLEHEM STEEL: Selling Nitrogen Oxide Allowances for $6MM BRIDGE INFO: Court Okays BSG's Engagement as Balloting Agent BURLINGTON: Gets Approval to Hire Ordinary Course Professionals BUYERS UNITED: Restructures Demand Notes & Cuts Operating Costs CALYPTE BIOMEDICAL: Calls on Townsbury to Make Equity Investment COMPANHIA SUZANO: Fitch Ratchets Secured Export Notes Up to BB CONSUMER PORTFOLIO: Fitch Ratchets Junk Ratings Down A Notch CORAM HEALTHCARE: Confirmation Blow-Up Isn't Helping Company COVAD COMMS: Chanin Capital Distributes Payments to Bondholders ECHOSTAR: Inks Pact with Vivendi for $1.5 Billion Investment ECHOSTAR DBS: S&P Rates $700MM Senior Unsecured Notes at B+ ENRON CORPORATION: Seeks Approval of Proposed Notice Procedures GENEVA STEEL: Amends Forbearance Pact with Term Loan Lenders GENSCI REGENERATION: Case Summary & Largest Unsecured Creditors GLOBIX CORP: Considers Bankruptcy Filing with Prepackaged Plan GOOD SAMARITAN: Fitch Affirms BB+ Rating On Mass. Revenue Bonds HAYES LEMMERZ: Brings-In Lazard for Advice on Financial Matters IMP INC: Subba Mok Takes Over 72% Controlling Equity Interest INTERTAPE POLYMER: Refinances Credit Facilities & Senior Notes JAM JOE: Requesting Delaware Court to Extend Exclusive Periods LERNOUT & HAUSPIE: Will Decide on Leases on Confirmation Date LONE STAR: S&P Drops Ratings Over Financial Policy Concerns MCMS INC: Wishes to Extend Plan Filing Period through January 15 MAGNUM HUNTER: S&P Places Low-B Ratings on Watch Positive MARINER POST-ACUTE: Intercompany Claims Bar Date Moved to Jan 22 MATLACK SYSTEMS: Pushing for Third Extension of Removal Period METALS USA: Bank of America Proposes to Set-Off Mutual Debts MYWEB INC.COM: No Longer Complies with AMEX Listing Guidelines NATIONSRENT: Will Continue Existing Workers Compensation Program NET2000: Wants Extension of Schedules Filing Deadline to Dec. 31 OMNI ENERGY: Completes Restructuring of Senior Credit Facilities PACIFIC GAS: Parent & Committee Ink Plan Support Agreement POLAROID CORP: Int'l Specialty Calls for Decision on Contract RESIDENTIAL ACCREDIT: Fitch Downgrades 1999-QS13 Due to Losses STANDARD MOTOR: S&P Concerned About Subpar Credit Measures SUN HEALTHCARE: Enters Pact to Reduce Insurers' Claim to $1MM TXU ELECTRIC: Reaches Agreement to Sell 2 Power Plants to Exelon TELESYSTEM INT'L: Clarifies Intentions Re ClearWave Conv. Loans TREESOURCE: Bankruptcy May Cripple Ability to Fully Utilize NOLs UNIVERSAL AUTOMOTIVE: Exercise Period for Warrants Extended WAVERIDER COMMS: Fails to Meet Nasdaq Listing Requirements * BOND PRICING: For the week of Dec. 31, 2001 - January 2, 2002 ********* 360NETWORKS: Court Approves Settlement Pact with Williams Comms. ---------------------------------------------------------------- Judge Gropper approved the Settlement Agreement entered into by 360networks, inc., and its debtor-affiliates, with Williams Communications LLC. Prior to petition date, Williams Communications LLC, had 20 agreements and amendments with the Debtors, in which the Debtors and Williams would provide each other with conduits, unactivated fiber, and collocation space, perform construction services and provide maintenance services. Moreover, Williams asserted in Court that 360networks inc., and its debtor-affiliates are in default under certain of the Agreements. Thus, to resolve this dispute, the parties negotiated into a settlement agreement. According to Shelley C. Chapman, Esq., at Willkie, Farr & Gallagher, in New York, New York, the Court's approval of the Settlement Agreement will provide a substantial benefit to the Debtors and their estates: (1) the Debtors would retain a substantial customer and retain and obtain indefeasible rights to use vital components of their network without costly litigation. (2) the Debtors would enter into certain maintenance agreements with Williams, which would provide the Debtors with future revenues. (3) the Debtors would receive a net benefit of over $1,000,000 in current amounts due upon approval of the Settlement Agreement. (4) the Debtors will be able to effectively suspend payments for certain unused collocation space from Williams while retaining the right to obtain and use such space when needed in the future for a significantly smaller reservation fee. The Settlement Agreement, which provides a substantial benefit to the Debtors, has these salient provisions: (a) All of the Agreements would be treated as executory contracts for the purposes of the Settlement Agreement only, with no admission being made with respect to the characterization of any other contracts or agreements of the Debtors; (b) All of the Agreements would be assumed (as modified); (c) Upon the Closing, the Parties shall execute two additional maintenance agreements, for the Portland- Sacramento route and the Chicago route, and 360 USA shall renew the Reno-Sacramento License; (d) All payments due on or before August 31, 2001, with respect to any Assumed Contract or any New Contract, including but not limited to all lease payments, O&M payments, basic collocation charges, splicing and interconnection charges, cable installation, duct lease payments, duct purchase payments, IRU payments and any other periodic payments, shall be netted and mutually discharged as of the Closing, and any difference shall be irrevocably discharged by the Parties; (e) The Parties would remain liable only for ongoing obligations and payments under the Assumed Contracts other than the 360 Fixed Payments and Williams Fixed Payments. The Debtors believe these obligations and payments to be minimal; and (f) The collocation space currently provided by Williams and not in use by 360 USA on the Atlanta-Jacksonville-Miami route and the Dallas-Houston-Atlanta-D.C. route (including adjacent spurs) would be terminated and 360 USA would be granted of right of first refusal on such collocation space for a significantly smaller reservation fee. (360 Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) AMC ENTERTAINMENT: Plans to Sell $150M 10-Year Bonds in 2002 ------------------------------------------------------------ DebtTraders reports that AMC Entertainment is mulling the sale of its $150 million ten-year bonds in 2002 despite a wave of bankruptcies by other cinema companies. The report also says that the company will use the proceeds from the sale to help pay its purchase of theater operator GC Companies for $195 million. DebtTraders analysts Blythe Berselli and Daniel Fan advise that the price of AMC's 9.500% bonds due on February 1, 2011 has recovered to 97.5 from a low of 57 since the beginning of the year. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=AMC2 ASSOCIATED MATERIALS: S&P Puts Low-B Ratings on Watch Developing ---------------------------------------------------------------- Standard & Poor's placed its ratings on Associated Materials Inc. on CreditWatch with developing implications. The action follows the company's announcement that it has engaged Salomon Smith Barney Inc. to assist it in evaluating strategic alternatives, including a possible sale of the company. Developing implications mean that the ratings could be raised, lowered, or affirmed depending on the outcome of the company's strategic review. Purchase by a financially strong competitor or entity with complementary businesses that enhances the company's business profile would improve the chances for an upgrade. Conversely, combination with a firm in a leveraged transaction, or with a more heavily indebted company, could lead to a downgrade. Dallas, Texas-based Associated Materials is a medium-size manufacturer of vinyl siding and windows used primarily in residential repair and remodeling. Products are distributed through more than 80 company-owned supply centers across the U.S. The company also manufactures electrical cable used in mining, offshore drilling, transportation, and other specialty industries. The company has performed well over the past few years, producing credit measures above current rating category medians. However, the company's below-average business profile has limited upside rating potential. Standard & Poor's will monitor developments and make a ratings decision when details of a potential transaction are known. Ratings Placed on CreditWatch with Developing Implications Associated Materials Inc. Ratings Corporate credit rating BB Senior secured bank loan rating BB+ Subordinated debt B+ BHF-BANK: Fitch Junks Rating Over Deteriorating Profitability ------------------------------------------------------------- Fitch, the international rating agency, downgraded the individual rating of BHF-Bank (BHF) to 'C' from 'B/C'. The bank's long-term rating of 'A+', short-term of 'F1' and support of '3' are affirmed. The Rating Outlook for the Long-term rating remains Stable. The rating action reflects the deterioration of BHF's underlying profitability in 2001, with reduced commission and trading revenue from equity markets business hitting earnings, while the corporate banking division continued to produce poor results, suffering from persistently high loan loss provisions. The sharp fall in equities market activity in 2001, combined with a decrease in stock market values, has had a negative impact on most of BHF's divisions. Following the sale of BHF USA, effective at end-June 2001, the bank has foregone approximately EUR100mln in revenues, mainly in commission and interest income. It has also shed some expenses, although total costs remained fairly flat at the Q3 stage in 2001. BHF's capitalization is low for a bank of this type compared internationally, but would be raised to a more satisfactory level if it realized 'hidden reserves' in its equities portfolio. Extraordinary income from the sale of participations (around EUR300 million in 2000, and EUR205 million in 3Q01) has contributed to a strong bottom line performance, but this has not helped capitalization because ING has taken a fairly hefty dividend. With the sale of BHF USA to Deutsche Postbank and transfer of the poorly performing UK corporate portfolio to ING, BHF's asset quality has improved and credit risk is reduced. However, the resulting concentration on the German market leaves BHF more exposed to shocks in the German economy. In 2001, loan loss provisions are likely to exceed EUR200mln as a result of difficulties in the US portfolio and domestic corporate book. Although the US operation has now been sold, BHF has retained some of the risk on corporate lending. The domestic corporate loan book is also being gradually unwound, but the global economic downturn, which is hitting Germany harder than most other European countries, is likely to take its toll on the remaining portfolio. While Fitch expects loan loss provisions to fall somewhat in 2002, they are likely to remain relatively high. BETHLEHEM STEEL: Selling Nitrogen Oxide Allowances for $6MM ----------------------------------------------------------- Nitrogen Oxide Allowances are the "limited authorization to emit 1 ton of NO [oxides of nitrogen] during a specified NO allowance control period." In Pennsylvania, Nitrogen Oxide Allowances are allocated by the state's Department of Environmental Protection, issued to a company for use during specified future years based on the company's historic use in operating certain fossil fuel fired combustion units and electric generating facilities. Allocation is completed when the Pennsylvania Department of Environmental Protection causes the Nitrogen Oxide Allowances to be physically listed in the name of the company on the United States Environmental Protection Agency Nitrogen Oxide Allowance Tracking System, an online computer system accessible via the Internet. Once allocated, Nitrogen Oxide Allowances may be transferred to a third party by sale, trade, or other means. Jeffrey L. Tanenbaum, Esq., at Weil, Gotshal & Manges LLP, in New York, tells Judge Lifland that as a result of prior permanent shutdowns of Bethlehem Steel Corporation's boilers and boiler house in Bethlehem, Pennsylvania, the Debtors were allocated and presently have available 331 Nitrogen Oxide Allowances per years for years 2003 through 2007. A commercial marketplace for the buying, selling, and trading of Nitrogen Oxide Allowances and other similar items has developed, Mr. Tanenbaum confides. And as a result of that marketing system, Mr. Tanenbaum says, the Debtors and Aquila Energy Marketing Corporation entered into the Bethlehem - Aquila Energy Marketing Agreement for Purchase and Sale of Nitrogen Oxide Allowances, dated July 13, 2001. According to Mr. Tanenbaum, Aquila agreed to pay $3,625 per ton of Nitrogen Oxide Allowances, for a total purchase price of $6,000,000. The principal terms and conditions of the Sale Agreement are: Property: 331 tons per year of Nitrogen Oxide Allowances for the years 2003 through 2007. Purchase Price: $6,000,000 ($3,625.38 per ton times 331 tons). Transfer of (a) Simultaneous with the execution of the Sale Nitrogen Oxide Allowances: Agreement, Aquila was required to deliver to the Debtors an irrevocable letter of credit from Credit Lyonnais in the amount of $750,000. (b) Within 4 business days after the Debtors certify to Aquila that the Nitrogen Oxide Allowances have been allocated to the Debtors, Aquila shall either increase the Deposit Letter of Credit to the full amount of the Purchase Price or shall, in an exchange with the Debtors for the Deposit Letter of Credit, deliver to the Debtors a new irrevocable letter of credit in the full amount of the purchase price. (c) Within 3 business days after the Debtors receive the Upgraded Letter of Credit, the Debtors and Aquila shall take such action that may be required to effect the transfer. (d) Within 3 business days after the transfer, Aquila shall pay the Debtors the purchase price in full by wiring it to the Debtors' account, and immediately upon receipt of the purchase price the Debtors shall return the Upgraded Letter of Credit to Aquila. (e) Except as provided in the Sale Agreement, the Debtors shall not make a demand on either the Deposit Letter of Credit or the Upgraded Letter of Credit until after the Debtors have transferred the Nitrogen Oxide Allowances to Aquila and Aquila has failed to pay the Debtors the purchase price in full. Each Party shall be liable for payment of any taxes, charges, or fees billed to it, including but not limited to its attorneys,' brokers,' or consultants' fees, in connection with the transactions contemplated by this Agreement. Thus, by this motion, the Debtors request: (i) authority to assume the Sale Agreement conditioned upon the modifications set forth, provided that the Court authorizes the sale of the Nitrogen Oxide Allowances to Aquila, and (ii) (a) approval of the sale of the Nitrogen Oxide Allowances to Aquila pursuant to the terms of the Sale Agreement or such other party, is any, that submits the highest and best offer therefore, free and clear of all liens, claims, and encumbrances, and (b) authorization to transfer title to the Nitrogen Oxide Allowances exempt from any applicable transfer taxes. According to Mr. Tanenbaum, assumption of the Sale Agreement at this time will enable the Debtors to bring into their estates cash consideration totaling approximately $6,000,000 by selling an asset that is otherwise not necessary or beneficial to the Debtors' estates. Mr. Tanenbaum points out that the Debtors have no use for the Nitrogen Oxide Allowances that they currently own, and the purchase price by Aquila is the best offer the Debtors have received to date. Absent approval of the sale transaction, Mr. Tanenbaum notes, the Debtors may be deprived of cash consideration totaling $6,000,000 for an asset they simply cannot use. Given the length of time that the existence of the Nitrogen Oxide Allowances has been on the market, Mr. Tanenbaum adds, it is unlikely that any other party will submit a higher and better offer. Mr. Tanenbaum makes it clear that the sale nevertheless remains subject to higher and better offers. "The terms and conditions of the Sale Agreement were negotiated by the Debtors and Aquila at arm's length and in good faith," Mr. Tanenbaum declares. Accordingly, the Debtors request that the Court determine Aquila to be acting in good faith and entitled to the protections of a good faith purchaser under the Bankruptcy Code. The Debtors believe that a private sale is appropriate under the circumstances, Mr. Tanenbaum continues. To ensure that appropriate notice of the sale has been given, Mr. Tanenbaum reports, the Debtors are providing notice of this motion to all parties that might be interested in bidding on the Nitrogen Oxide Allowances, in additional to continuous listing on several web sites. Mr. Tanenbaum claims that a public auction would only entail delay and attendant expense with no likelihood of benefit to the Debtors. The Debtors propose that the Nitrogen Oxide Allowances be sold to Aquila pursuant to the terms of the Sale Agreement, but subject to higher and better offers. (Bethlehem Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) BRIDGE INFO: Court Okays BSG's Engagement as Balloting Agent ------------------------------------------------------------ At the behest of Bridge Information Systems, Inc., and its debtor-affiliates, Judge McDonald approved the employment of Bankruptcy Support Group - as balloting agent for the Debtors. David M. Unseth, Esq., at Bryan Cave LLP, in St. Louis, Missouri, tells the Court that Bankruptcy Support Group has acted as the balloting agent in connection with numerous bankruptcy cases of comparable size. Thus, in the Debtors' opinion, Bankruptcy Support Group is well qualified to serve as their balloting agent. According to Mr. Unseth, Bankruptcy Support Group will perform any and all actions necessary or appropriate in connection with the balloting process in connection with the Debtors' plan of liquidation, including: (a) Assisting the Debtors with the solicitation and calculation of ballots on the Debtors' plan of liquidation; and (b) Assisting the Debtors with any other matters relating to the balloting process, including assisting the Debtors with the claims reconciliation process. Glenda Presley, an associate with Bankruptcy Support Group, advises Judge McDonald that the firm will be compensated for its professional services on an hourly basis. The hourly rates of the Bankruptcy Support Group employees range from $45 to $125 per hour. Moreover, Ms. Presley affirms that Bankruptcy Support Group has no financial connection with the Debtors, their estate, or any of their other attorneys and accountants. Ms. Presley assures the Court of the firm's disinterestedness, asserting that "Neither I, Bankruptcy Support Group, nor any employee thereof, insofar as I have been able to ascertain, holds or represents any interests adverse to that of the estate, or Debtors, in the matters upon which Bankruptcy Support Group is to be engaged." (Bridge Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON: Gets Approval to Hire Ordinary Course Professionals --------------------------------------------------------------- The Court authorizes Burlington Industries, Inc., and its debtor-affiliates to retain, employ and pay the Ordinary Course Professionals for a period of one year following the Petition Date, through and including November 15, 2002. The Debtors are allowed renew the filing of this motion on or before the expiration of the first interim term. These are the conditions to the Debtors' retention, employment and payment of the Ordinary Course Professionals: (a) No Ordinary Course Professional shall have any material involvement in the administration of a Debtor's estate without such Debtor first receiving an order of the Court authorizing the retention and employment of the professional, pursuant to section 327 of the Bankruptcy Code. (b) No Ordinary Course Professional (other than UNIFI) with monthly fees averaging in excess of $50,000 for services rendered to a Debtor during the preceding 4-month period ending at the conclusion of the prior calendar month 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. (c) If UNIFI's monthly average fees for services rendered to a Debtor during the preceding two-month period ending at the conclusion of the prior calendar month exceeds $30,000, UNIFI shall not receive any future payments from the Debtors until the Debtors first obtain an order of the Court authorizing the retention and employment of UNIFI. (d) Notwithstanding the foregoing, the Debtors may pay, without the prior review or approval of the Court, all fees and expenses incurred by any Ordinary Course Professional: (i) in an aggregate amount not to exceed $225,000 for the first reporting period and $200,000 for each reporting period thereafter, and (ii) prior to the professional having a material involvement in the administration of a Debtors' estate, provided that no Ordinary Course Professional may receive a payment in excess of $225,000 for the first reporting period or $200,000 for any reporting period thereafter until the Excess Payment is approved by the Court; and provided further that once an Ordinary Course Professional is retain 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. With respect to UNIFI, the aggregate payment limitation shall be $75,000 for the first UNIFI reporting period and $60,000 for each UNIFI reporting period thereafter. (e) No Ordinary Course Professional shall receive payment for post-petition services rendered until such professional files an affidavit with the Court, setting forth that such professional does not represent or hold any interest adverse to the Debtors or their estates with respect to matters for which the professional seeks retention. (f) The Debtors shall serve each Retention Affidavit by first- class mail, on the U.S. Trustee, counsel to the DIP Lenders and counsel to the statutory committee of unsecured creditors appointed in these chapter 11 cases. (g) The first Reporting Period shall cover the period from the Petition Date through and including March 31, 2002. The first UNIFI Reporting Period shall cover the period from the Petition Date through and including January 31, 2002. On or before the date that is 30 days after the end of each Reporting Period or UNIFI Reporting Period, the Debtors shall file a statement with the Court, and serve that statement on the U.S. Trustee, counsel to the DIP Lenders and counsel to the Committee, which includes these information: (i) any Ordinary Course Professionals employed by the Debtors during the particular reporting period; and (ii) for each Ordinary Course Professional: (1) its name, (2) the aggregate amounts paid as compensation for services rendered and reimbursement of expenses incurred by such professional during the particular reporting period, and (3) a general description of the services rendered by such professional. Judge Walsh makes it clear that the Service Providers do not constitute professionals within the scope of the motion. Thus, the Court authorizes the Debtors to treat the Service Providers on par with other vendors and service providers in the Debtors' chapter 11 cases. (Burlington Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) BUYERS UNITED: Restructures Demand Notes & Cuts Operating Costs --------------------------------------------------------------- Buyers United, Inc. (OTC Bulletin Board: BYRS), a national business and residential consumer membership organization that offers discount monthly essential services, announced the restructuring of some of its short-term debt as well as the implementation of other cost cutting measures. Effective December 4, 2001, demand notes in the aggregate amount of $2,400,000, held by the company's chairman and CEO, were extended to July 5, 2003, allowing the company to move this debt from short-term to long-term for accounting purposes. "As the company's largest shareholder and creditor, I wanted to do something to show my great confidence in the company, its management and its future," said Theodore Stern, Chairman of the Board of Directors and CEO. "We believe that 2002 will be a great year for our company and lead it into an even better year in 2003," stated Stern. "Because our company markets essential services at reduced prices, we feel that we will thrive in a strong or weak economy," said Stern. "Mr. Stern's debt restructuring is a boost to our financial statements and shows his commitment to our company," said Paul Jarman, COO. "In addition to extending Mr. Stern's notes, we have made other significant operating improvements. By moving from an Oracle-based system to a Microsoft-based platform, we are now able to perform IT functions more efficiently with substantial cost savings," said Jarman. "With these and other cost-cutting measures we have reduced our total monthly operating expenses by over 15%," concluded Jarman. Over the next 90 days, the company's focus will be to continue to bolster its sales force, increase its membership and expand its base of strategic partners. Buyers United, Inc. (OTC Bulletin Board: BYRS.OB) provides its members discounted monthly essential goods and services such as long-distance and Internet access. Buyers United has created a number of unique rebate programs that help its members "zero- out" monthly living expenses and the cost of those services. Buyers United gives consumers access to savings on essential services. It offers superior value with rebates and credits to members for shopping through its portal and for referring new customers. For more information on the company's complete range of products and services visit the company's Web site at http://www.buyersonline.com CALYPTE BIOMEDICAL: Calls on Townsbury to Make Equity Investment ---------------------------------------------------------------- On November 13, 2001, Calypte Biomedical Corporation issued a draw down notice to Townsbury Investments Limited in connection with the common stock purchase agreement dated August 23, 2001 evidencing a standby equity-based credit facility between Calypte and TIL. This notice required TIL to purchase up to $180,000 of Calypte's common stock pursuant to a pricing formula in the stock purchase agreement. The settlement period began on November 14, 2001, and ended on December 12, 2001, and settled on December 17, 2001. In place of the issuance of common stock on November 30, 2001, the interim settlement date for the drawdown period, Calypte issued a short-term promissory note to TIL on December 3, 2001 in the amount of $90,000. At the final settlement date on December 17, 2001, TIL purchased a total of 917,478 shares of the Company's common stock at an average purchase price of $0.196 per share, resulting in proceeds of $168,895 net of brokerage, escrow and other fees. Of those proceeds, $90,000 was used to pay off the short-term promissory note issued by Calypte to TIL and the remaining $78,895 was paid and released from escrow to Calypte by TIL. Ladenburg Thalmann & Co. received $9,000 in brokerage fees and the escrow agent received $1,000 in escrow fees in connection with this drawdown. Calypte Biomedical's urine-based HIV-1 test is touted as having several benefits over blood tests, and has received FDA approval for use in professional laboratories. The test is also available in China, Indonesia, Malaysia, and South Africa. The company would like to extend its HIV test by making it faster and adapting it for over-the-counter sale. The firm is working on urine- and blood-based tests for other diseases and participates in a national HIV testing service known as Sentinel. Calypte Biomedical also owns about 30% of Pepgen, which is developing an interferon-based drug to treat multiple sclerosis. As of September 30, 2001, the company's balance sheet is upside-down with total stockholders' equity deficit of about $4 million. COMPANHIA SUZANO: Fitch Ratchets Secured Export Notes Up to BB -------------------------------------------------------------- Fitch has upgraded the secured export notes of Companhia Suzano de Papel e Celulose to 'BB' from 'BB-'. The Rating Outlook is Stable. The rating change reflects improvements in the company's business and financial profile during the past couple of years. Since the beginning of 1999, Suzano's competitiveness has improved as a result of the large devaluation of the Brazilian real and the low level of inflation that has ensued, which have lowered the company's production cost structure. As a result, Suzano's EBITDA margins have been approximately 30% during 1999, 2000, and 2001 (periods that represent different moments in the price cycle for pulp and paper) - after being near 15% during 1996, 1997, and 1998. In 1999 and 2000, the company improved its focus and liquidity by shedding non-core assets such as Global Telecom for $93.0 million, Igaras Papeis e Embalagens for $200.0 million and Riverwood Suzano Embalagens for $12.5 million. The cash from these sales has been kept at a wholly owned subsidiary of the company, Suzanopar Investments. This offshore subsidiary is almost debt free. In May 2001, Suzano increased its position in pulp and paper when it acquired Companhia Vale do Rio Doce's (CVRD) 50% stake in Bahia Sul's common stock and CVRD's 18.94% stake in Bahia Sul's preferred stock for $320 million. This purchase gave Suzano ownership of 100% of Bahia Sul's common shares and 72.82% of its total equity. Rather than using the cash at Suzanopar Investments, the company borrowed money to pay for this transaction. Bahia Sul is one of the lowest cost producers of hardwood pulp in the world, due to its modern pulp and paper mills and its fast growing eucalyptus plantations. Bahia Sul has an annual production capacity of 600,000 tons of bleached eucalyptus kraft pulp and 215,000 ton of paper. It also owns 77,000 hectares of plantations in Brazil. As of September 30, 2001, Suzano (parent company accounting for pulp and paper operations) had a net debt-to-EBITDA ratio of 5.9 times and an EBITDA-to-interest coverage of 2.3x. For this time period, Bahia Sul's net leverage ratio was 3.2x and its interest coverage ratio was 3.9x. A pro forma estimation of the consolidated balance sheets of Bahia Sul and Suzano (parent company accounting for pulp and paper operations) shows improvements vis-a-vis those of Suzano currently. On a pro forma basis, EBITDA-to-interest expense ratio for the nine months ended Sept. 30, 2001, would be 2.9x and the net debt-to-EBITDA ratio would be 4.4x. The credit profile of the Suzano Pulp and Paper entity should also benefit from the cash that is currently held at Suzanopar Investments. As of September, Suzanopar Investments had $392 million of cash and marketable securities. Since that time period, $140 million has been transferred to Suzano Petrochemicals. The balance is expected to remain with Suzano Pulp and Paper. Debt service coverage levels for the future flow securitization have also improved over the past two years. The transaction currently performs with a relatively healthy coverage level of greater than 5x. This is an increase from the 3x levels seen two years ago. Approximately 30% of Suzano sales are designated to the export market and contribute to the cash flow covering the securitization. CONSUMER PORTFOLIO: Fitch Ratchets Junk Ratings Down A Notch ------------------------------------------------------------ Fitch downgrades the subordinated debt rating of Consumer Portfolio Services Inc. (CPS) to 'CCC-' from 'CCC'. The Rating Outlook remains Negative. The rating action follows Fitch's review of management's plan for financing and integrating the pending acquisition of MFN Financial Corporation (MFN) in a transaction valued at approximately $100 million. The acquisition, which is expected to close in the first quarter of 2002, will be funded entirely with debt. The rating downgrade for CPS is based on Fitch's concern of the company's weak capitalization position especially in relation to the current economic environment, the acquired risk profile of MFN's balance sheet, and the dependence on secured financing to fund its operation. In Fitch's assessment, CPS' capitalization profile is weak. Securitization-based residual assets totaled $123 million or 199% of total equity at September 30, 2001. The value of these securitization-based residual assets is based on assumptions related to asset quality and prepayment speeds. Fitch assesses a significant risk-weight to these assets in its internal capitalization model. Injection of common equity into the capital structure is not likely. In addition, internal capital formation is poor due to a lack of profitability. As a subprime automobile lender, CPS maintains a high-risk loan portfolio. With the acquisition of the higher risk MFN portfolio, the risk profile of CPS will move up noticeably. To date, asset quality has performed within initial expectations, but Fitch expects losses to accelerate in a weakening economic environment. CPS' funding profile has improved but remains volatile. In September 2001, CPS completed a $68.5 million securitization with a financial guaranty insurance policy issued by Financial Security Assurance Inc. CPS currently has a $75 million secured revolving note purchase facility with a one-year expiration. The company remains heavily reliant on secured financing and securitization for funding, and it depends on cash flow from previously executed securitizations to fund its day-to-day operations. Based in Irvine, California, CPS is an independent subprime automobile finance company. As of September 30, 2001, CPS maintained $318 million in managed automobile finance receivables. CORAM HEALTHCARE: Confirmation Blow-Up Isn't Helping Company ------------------------------------------------------------ Coram Healthcare Corporation's net revenue for the three months ended Septebmer 30, 2001 decreased $9.1 million, or 8.8%, to $93.8 million in the three months ended September 30, 2001 from $102.9 million in the three months ended September 30, 2000. The decrease is primarily due to a permanent reduction, effective July 1, 2001, in the Average Wholesale Price ("AWP") for, among others, the antibiotic drug Vancomycin. The direct impact of the AWP reduction resulted in an unfavorable pricing variance of $3.2 million for the three months ended September 30, 2001 compared to the three months ended September 30, 2000, the sale of CPS on July 31, 2000 (CPS had net revenue of $8.4 million during the three months ended September 30, 2000) and a $0.2 million decline in net revenue attributable to the Company's subsidiary, CTI Network, Inc. These decreases are partially offset by net revenue increases from initiatives to focus on core infusion therapies. Gross profit decreased $2.1 million to $25.1 million, or a gross margin of 26.8%, in the three months ended September 30, 2001 from $27.2 million, or a gross margin of 26.4%, in the three months ended September 30, 2000. The gross margin percentage increase is primarily due to a more favorable product/therapy mix and the sale of CPS, which had a lower gross margin percentage than that of the infusion business segment, thereby causing a lower blended consolidated percentage during the three months ended September 30, 2000. However, commencing on July 1, 2001, there was an offsetting decrease in gross profit due to reductions in the AWP reimbursement rates for Vancomycin and certain other drugs used in the company's operations. For the nine months ended September 30, 2001 as compared to the nine months ended September 30, 2000 Coram Healthcare experienced a net revenue decrease of $80.4 million, or 21.9%, to $287.5 million from $367.9 million in the nine months ended September 30, 2000. The decrease is primarily due to the sale of CPS on July 31, 2000 (CPS had net revenue of $61.4 million during the nine months ended September 30, 2000), a $1.9 million decline in net revenue attributable to CTI and a permanent reduction, effective July 1, 2001, in the AWP for, among others, the antibiotic drug Vancomycin. The direct impact of the AWP reduction resulted in an unfavorable pricing variance of $1.0 million for the nine months ended September 30, 2001 compared to the nine months ended September 30, 2000. Additionally, a decrease in infusion net revenue of approximately $17 million is due, in part, to the termination of the Aetna National Ancillary Services Agreement, effective April 12, 2000. Gross profit decreased $15.4 million to $80.1 million, or a gross margin of 27.9%, in the nine months ended September 30, 2001 from $95.5 million, or a gross margin of 26.0%, in the nine months ended September 30, 2000. The gross margin percentage increase is primarily due to a more favorable product/therapy mix and the sale of CPS, which had a lower gross margin percentage than that of the infusion business segment, thereby causing a lower blended consolidated percentage during the nine months ended September 30, 2000. However, commencing on July 1, 2001, there was an offsetting decrease in gross profit due to reductions in the AWP reimbursement rates for Vancomycin and certain other drugs used in the company's operations. In publishing its Sept. 30 results, Coram said: "The company's Consolidated Financial Statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business. However, as a result of the Debtors' bankruptcy filings and circumstances relating thereto, including the company's leveraged financial structure and cumulative losses from operations, such realization of assets and liquidation of liabilities is subject to significant uncertainty. During the pendency of the Debtors' Chapter 11 bankruptcy proceedings, the Company may sell or otherwise dispose of assets and liquidate or settle liabilities. Further, a confirmed plan of reorganization in the Chapter 11 proceedings could materially change the amounts reported in the Condensed Consolidated Financial Statements. The company's ability to continue as a going concern is dependent upon, among other things, confirmation of a plan of reorganization, future profitable operations, the ability to comply with the terms of the company's financing agreements, the ability to remain in compliance with the physician ownership and referral provisions of Stark II and the ability to generate sufficient cash from operations and/or financing arrangements to meet its obligations." As previously reported in the Troubled Company Reporter, Judge Walrath denied confirmation of Coram's Second Amended Plan on Christmas Eve. COVAD COMMS: Chanin Capital Distributes Payments to Bondholders --------------------------------------------------------------- Chanin Capital Partners announced that bondholders of Covad Communications Group, Inc., (OTC Bulletin Board: COVD) received distributions pursuant to the terms of the Company's Chapter 11 plan of reorganization, which was confirmed by the U.S. Bankruptcy Court for the District of Delaware on December 13, 2001. Chanin Capital Partners served as financial advisor to the Ad- Hoc Committee of Noteholders who negotiated the principal terms of Covad's plan of reorganization with the company on behalf of the bondholders. Through the pre-negotiated plan of reorganization, Covad eliminated $1.4 billion in high-yield and convertible bondholder debt by paying bondholders approximately 19 cents on the dollar in cash plus 15 percent of the equity in the reorganized company. "Our representation of the bondholders in Covad was a seminal event in the restructuring process," said Randall Lambert, managing director of Chanin Capital Partners. "The structure of the transaction, although untraditional, matched the needs and desires of both the debtor and bondholders. This type of transaction will be replicated in other restructurings." Chanin Capital Partners was retained during June of 2001. Negotiations between bondholders and the company continued over the summer and had the commitment of 55% of the Noteholders to support the pre-negotiated plan of reorganization. The plan was strongly endorsed by all constituents and more than 90% of each voting class of creditors submitted ballots in acceptance of the plan in the final bankruptcy voting, concluded on December 7, 2001. The Chapter 11 bankruptcy proceeding, including the pre- negotiated plan of reorganization and confirmation, took just over four months, an exceptionally expeditious manner for a complex case with many parties involved. Covad's bankruptcy case was unique in many respects demonstrating that a telecommunications company that had over- leveraged to build-out its network could successfully reorganize. The reorganization allowed Covad to eliminate virtually all of its debt, and emerge from bankruptcy as a going concern rather than being forced to liquidate like several of its competitors. The Company's reorganization illustrated the importance of addressing an over-leveraged situation early on and engaging in productive negotiations with creditors in order to preserve values, retain flexibility to explore all restructuring alternatives and maximize recoveries to its creditors and shareholders. Chanin Capital Partners is a nationally-recognized, specialty investment bank providing the following financial services: Financial Restructurings, Mergers and Acquisitions, Corporate Finance and Private Placements, Valuations and Fairness and Solvency Opinions, and Principal Investments. The professionals of Chanin Capital Partners have privately placed over $5 billion in debt and equity securities, completed over $60 billion in financial restructuring transactions, consummated over $20 billion in merger and acquisition transactions, and provided hundreds of companies with valuations and fairness and solvency opinions. Please visit our website at http://www.chanin.com For further information, please contact Leslie Brownstein, Marketing Coordinator of Chanin Capital Partners, +1-310-445- 4010, lbrownstein@chanin.com. ECHOSTAR: Inks Pact with Vivendi for $1.5 Billion Investment ------------------------------------------------------------ On December 14, 2001, EchoStar Communications Corporation, Vivendi Universal, S.A. and certain stockholders of EchoStar entered into definitive agreements in connection with the announcement of a proposed $1.5 billion investment by Vivendi Universal in EchoStar and the formation of a strategic alliance with EchoStar to offer new programming and interactive television services to consumers. EchoStar Communications dishes out a smorgasbord of entertainment. The #2 US direct broadcast satellite (DBS) TV provider (behind DIRECTV), the company operates the DISH Network, providing programming to nearly 6.5 million subscribers in the continental US. Subsidiaries develop DBS hardware such as dishes and integrated receivers and deliver video, audio, and data services. EchoStar has teamed up with Gilat Satellite Networks (a partner with Microsoft) and Colorado startup WildBlue to develop satellite-based two-way broadband Internet access. CEO Charles Ergen owns about 51% of the company but has more than 91% of the voting power. EchoStar has agreed to buy Hughes Electronics, DIRECTV's parent. ECHOSTAR DBS: S&P Rates $700MM Senior Unsecured Notes at B+ ----------------------------------------------------------- Standard & Poor's assigned its single-'B'-plus rating to Echostar DBS Corp.'s $700 million senior unsecured notes due 2009, and placed the rating on CreditWatch with positive implications. The issue will be sold under Rule 144A with registration rights. Proceeds of the notes will be used to finance a portion of the cash component of the proposed merger of Echostar DBS's parent, EchoStar Communications Corp. (EchoStar), with Hughes Electronics Corp. (Hughes) in a transaction valued at about $26 billion. If the merger is not completed, proceeds from the notes will be used to finance EchoStar's acquisition of Hughes' 81% stake in PanAmSat Corp., for the construction, launch, and insurance of additional satellites, and for general corporate purposes. In addition, Standard & Poor's ratings on EchoStar and its subsidiary Echostar DBS, and its corporate credit rating on EchoStar Broadband Corp. (an intermediate holding company), remain on CreditWatch, but the implications have been revised to positive from developing. Standard & Poor's single-'B' rating on EchoStar Broadband's senior unsecured notes remains on CreditWatch with positive implications. The positive CreditWatch listing follows the announcement of a $1.5 billion equity investment in Echostar by Vivendi Universal. This investment reduces the amount of debt that will be required to finance the Hughes and/or PanAmSat acquisition, effectively eliminating a downside rating risk. The upside potential for the ratings reflects the significant cost and revenues synergies that could be achieved if DirecTV operations are combined with those of EchoStar, as well as the overall improved competitive position of the combined company. Cost synergies include reduced programming, general, and administrative expenses, and lower subscriber acquisition costs. Opportunities for increased revenue would come from the significant addition of markets with access to local programming, and from advertising revenues, a result of a larger subscriber base and broader reach. Upside rating potential in a non-merger scenario would be a function of the final capital structure of the EchoStar and PanAmSat combination, which would be enhanced by Vivendi's investment. Nonetheless, integration challenges and high leverage could potentially limit the rating at the 'B+' level for either merger. As part of this agreement, Vivendi will receive contingent value rights (CVR), intended to provide downside protection for its equity investment. The maximum payment under the CVR is $225 million if the pending merger with Hughes is consummated, or $525 million if the pending merger is not consummated. Any amount owed under these rights would be settled three years after completion of the merger or 30 months after the merger agreement terminates. In any case this payment will be made in cash or in EchoStar shares, at EchoStar's option. The investment is accompanied by an eight-year strategic alliance in which Vivendi will develop and provide EchoStar's subscribers a variety of programming and interactive television services. Vivendi's equity investment is expected to be completed in the first quarter of 2002. Rating Assigned and Placed on CreditWatch Positive Echostar DBS Corp. RATING $700 million senior unsecured notes due 2009 B+ Ratings Remaining on CreditWatch, Implications Revised to Positive EchoStar Communications Corp. RATING Corporate credit rating B+ Subordinated debt B- EchoStar Broadband Corp. Corporate credit rating B+ Echostar DBS Corp. Corporate credit rating B+ Senior unsecured debt B+ Rating Remaining on CreditWatch Positive EchoStar Broadband Corp. Senior unsecured debt B DebtTRaders reports that Echostar DBS Corp.'s 10.3757% bonds due on October 1, 2007 (ECHOST2) are trading slightly above par, between 105.5 and 106.5. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=ECHOST2 ENRON CORPORATION: Seeks Approval of Proposed Notice Procedures --------------------------------------------------------------- More than ten thousand creditors, parties in interest and stockholders may be entitled to receive notice in the Chapter 11 cases of Enron Corporation, and its debtor-affiliates. Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New York, tells Judge Walsh that notice of all pleadings and other papers filed in these cases to all such entities is unnecessary and would be extremely burdensome and costly to the estates, as a result of photocopying and postage expenses as well as other expenses associated with such large mailings. Thus, by this motion, the Debtors propose to establish a master service list, which would include: (i) the Office of the United States Trustee for the Southern District of New York; (ii) the Debtors; (iii) the attorneys for the Debtors' post-petition lenders; (iv) the attorneys for any official committee appointed in the Debtors' chapter 11 cases; (v) any party whose interests are directly affected by a specific pleading; (vi) those persons who have formally appeared and requested service in this proceeding pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure; and (vii) the Securities and Exchange Commission, the Internal Revenue Service and other government agencies to the extent required by the Bankruptcy Rules and the Local Rules. With respect to this initial proposed Master Service List, Mr. Sosland notes, the Debtors propose to include the 20 largest unsecured creditors of each Debtor and of each subsequently filed Debtor. If a Committee is formed, the Debtors will add the attorneys for the Committee to the Master Service List and remove the 20 largest unsecured creditors. According to Mr. Sosland, notice would be limited to the Master Service List with respect to all matters covered by Bankruptcy Rule 2002, with the express exception of: (a) notice of the first meeting of creditors pursuant to Section 341 of the Bankruptcy Code; (b) the time fixed for filing proofs of claims; (c) the time fixed for filing objections and the hearing to consider approval of a disclosure statement or confirmation of a plan of reorganization; and (d) notice of and transmittal of ballots for accepting or rejecting a plan of reorganization. The Debtors will update the Master Service List on a monthly basis to include the names and addresses of any party-in- interest who has made a written request for notice since the prior month, Mr. Sosland assures the Court. Further, Mr. Sosland says, the Debtors will submit to the Court upon the completion of noticing any particular matter, either an affidavit of service or certification of service annexing the list of those parties receiving notice. Mr. Sosland conveys to the Court the Debtors' belief that the administration of their chapter 11 cases would be more efficient and cost effective is their request to limit notice is granted. "Therefore," Mr. Sosland contends, "the relief requested in this motion is in the best interest of the Debtors' estate and creditors, and will not prejudice the rights of any party in interest in these cases." (Enron Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENEVA STEEL: Amends Forbearance Pact with Term Loan Lenders ------------------------------------------------------------ On December 21, 2001, Geneva Steel LLC (Nasdaq: GNVH) repaid all of the remaining outstanding amounts on its revolving credit facility and cash collateralized a letter of credit issued under its revolving credit facility. All commitments under the revolving credit facility were terminated. Effective as of such date, Geneva also amended and restated its forbearance agreement with the lenders under its $110 million term loan, which is 85% guaranteed pursuant to the Emergency Steel Loan Guarantee Program. The forbearance agreement provides, among other things, that the lenders will continue to forbear from exercising any rights based upon alleged defaults related to Geneva's previously announced temporary shutdown until the close of business on January 11, 2001, unless certain events occur. These events include the commencement of a bankruptcy proceeding by or against Geneva, Geneva's failure to operate in accordance with its budget, or a default under the term loan agreement not covered by the forbearance agreement. The term loan is secured by a first-priority lien on Geneva's accounts receivable, inventory and fixed assets. The forbearance agreement permits Geneva, upon written request to the lenders for release of collateral, to use up to $6 million of the proceeds from the sale of inventory and collection of accounts receivable, not to exceed certain weekly amounts, through January 11, 2002, in accordance with its budget. There can be no assurance that such amounts will be sufficient, if released, to fund the Company's obligations or that the Company will obtain any relief beyond January 11, 2001. "We are pleased we have repaid our revolving credit facility in accordance with our budget and the terms of the facility," said Ken Johnsen, President and CEO. "We are also grateful for the cooperation of our vendors during this period while we continue to seek additional financing and further cooperation from our term lenders." Geneva owns and operates an integrated steel mill in Vineyard, Utah. The Company manufactures steel plate, hot-rolled coil, pipe and slabs for sale primarily in the Western and Central United States. GENSCI REGENERATION: Case Summary & Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Gensci Regeneration Sciences 2 Goodyear Irvine, CA 92618 Bankruptcy Case No.: 01-20439 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Gensci Orthobiologics Inc. 01-20438 Type of Business: Gensci Regeneration Sciences provides therapeutic application for the regeneration and repair of degenerative or damaged bone and soft tissue. Gensci Orthobiologics Inc. manufactures and distributes human tissue based products to hospitals for the treatment of musculoskeletal disease and injury. Chapter 11 Petition Date: December 20, 2001 Court: Central District of California (Sta. Ana) Judge: Robert W. Alberts Debtors' Counsel: Marc J. Winthrop, Esq. 3 Civic Plaza #280 Newport Beach, CA 92660 949-720-4100 A. Gensci Regeneration Sciences Total Assets: $2,400,000 Total Debts: $600,000 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Osteotech Judgment $14,500,000 Attn: Corporate Officer 51 James Way Eatontown, NJ 07724 Tel: 732 542 2800 Cameron Clokie Services Rendered $33,000 Ernst & Young, LLP Services Rendered $13,000 Ogilvey Renault Services Rendered $10,000 B. Gensci Orthobiologics Inc. Total Assets: $12,100,000 Total Debts: $22,000,000 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Osteotech Judgment $14,500,000 Attn: Corporate Officer 51 James Way Eatontown, NJ 07724 Tel: 732 542 2800 Howery Simon Arnold & Services Rendered $2,267,177 White Attn: Corporate Officer 550 S. Hope Street Suite 1400 Los Angeles, CA 90071-2627 Tel: 213 892 1800 Dr. Stephen Jefferies Trade Debt $1,686,546 Attn: Dr. Stephen Jefferies 3692 Wingfield Drive York, PA 17402 Tel: 302 226 3265 Dr. Cameron Clokie Royalty $378,150 Attn: Corporate Officer 40 Blythe Hill Road Toronto, Ontario Canada M4N-3L7 Tel: 416 481 9090 Carr America Realty Corp. Lease $277,170 Attn: Corporate Officer PO Box 642907 Pittsburgh, PA 15264 Tel: 724 942 3855 James DeMesa M.D. Termination Agreement $138,862 Depuy Acromed Sales Commission $113,606 Bell Boyd and Lloyd Services Rendered $66,037 Fed Ex Corporation Services Rendered $41,294 Skeletech Services Rendered $39,622 Ion Beam Applications Services Rendered $29,350 KPMG, LLP Services Rendered $23,145 Stradling Yocca Services Rendered $21,605 Carlson & Smith Sidley Austin Services Rendered $20,901 The Irvine Company Lease $17,752 ATE, Inc. Services Rendered $16,450 Ross Systems, Inc. Services Rendered $12,150 Sustema Concepts, Inc. Services Rendered $7,868 Lyon & Lyon LLP Services Rendered $6,688 CDW Supplies $5,723 GLOBIX CORP: Considers Bankruptcy Filing with Prepackaged Plan -------------------------------------------------------------- Globix Corporation (Nasdaq: GBIX) reported financial results for its fourth quarter and fiscal year ended September 30, 2001. Revenue for the fourth quarter of 2001 was $25.0 million compared to $25.9 million in the prior year quarter. For the fiscal 2001 year, revenue was $104.2 million compared to $81.3 million in the previous year. EBITDA loss (loss before net interest, income taxes, depreciation and amortization and restructuring charges) was $22.2 million for the fourth quarter of 2001 compared to $15.3 million in the same quarter last year and $15.5 million in the fiscal 2001 third quarter. As compared to the fiscal 2001 third quarter, the fiscal 2001 fourth quarter was adversely affected by a $3.5 million write-off of network assets impaired by the financial viability of a supplier and a $4.0 million increase in bad debt expense. For fiscal 2001, EBITDA loss was $64.7 million as compared with $59.3 million in the prior year. During the fourth quarter of fiscal 2001, the Company recorded a restructuring charge of $18.0 million related to the estimated termination costs of certain leases, and the write-off of leasehold improvements, excess equipment and employee termination costs. For the fourth quarter of 2001, net loss attributable to common stockholders was $73.6 million. For the fiscal year, net loss attributable to common stockholders was $220.1 million. "Cost reductions and the management of working capital remained a constant focus during the year," said Brian Reach, Chief Financial Officer. "We ended the fiscal 2001 year with $111.5 million in cash, which was ahead of expectations." Globix also announced that it is in discussions with an informal committee of bondholders representing approximately 48% of the Company's outstanding $600 million issuance of 12-1/2% senior notes. The discussions concern a financial reorganization of the Company through a pre-packaged bankruptcy proceeding that would be aimed at significantly reducing the Company's debt burden. The Company is in similar discussions with its preferred stockholders. While there can be no assurance that these discussions will lead to an agreement, it is likely that any such agreement would result in the bondholders and preferred stockholders owning nearly all of the equity in the reorganized company, resulting in a near total dilution of the existing common stockholders' interest in the Company. Peter Herzig, Chief Executive Officer, said, "We are encouraged by the overall results for the fiscal year and are optimistic that we will be able to reach agreement with our bondholders and preferred stockholders. This past year was a challenging one for our company and our industry in general. The events of September 11, coupled with turbulent market and economic conditions and the dot-com fall out, have affected all participants in our market. We are seeking to greatly reduce our debt burden so that we will have the necessary liquidity to focus on the competitive advantage Globix enjoys as a premium provider of complex hosting services. While I believe these most recent developments, along with the growth and operational accomplishments Globix achieved during this past fiscal year will provide a strong platform for our future, we do not believe we will meet the fiscal 2002 guidance previously provided. In light of ongoing discussions with our bondholders, we expect to provide new guidance when we release our financial results for the first quarter ended December 31, 2001." Globix is a leading provider of advanced Internet hosting, network and applications solutions for business. Globix delivers services via its secure state-of-the-art Internet Data Centers, its high-performance global backbone and content delivery network, and its world-class technical professionals. Globix provides businesses with cutting-edge Internet resources and the ability to deploy, manage and scale mission-critical Internet operations for optimum performance and cost efficiency. As of September 30, 2001, the company reported an upside-down balance sheet, with total stockholders' equity deficit standing at $237 million. GOOD SAMARITAN: Fitch Affirms BB+ Rating On Mass. Revenue Bonds --------------------------------------------------------------- (In a press release issued Dec. 20 the statistics for 2000 operating margin and 2001 operating margin, excess margin, debt service coverage, and personnel expenses have been updated. The amended press release follows.) Fitch has affirmed its 'BB+' rating on approximately $14.2 million Massachusetts Health and Educational Facilities Authority revenue bonds, Goddard Memorial Hospital, series B and $8 million Massachusetts Health and Educational Facilities Authority revenue bonds, Cardinal Cushing General Hospital, series A. Goddard Memorial Hospital and Cardinal Cushing General Hospital merged in 1994 and is now known as Caritas Good Samaritan Medical Center (Good Samaritan). Fitch downgraded Good Samaritan to 'BB+' from 'BBB-' in March 2000 mainly due to the loss of an 80-member physician group. This resulted in a 24% decline in discharges in 2000, which led to a rate covenant violation. Fiscal 2000 results included an operating margin of negative 9.3%, MADS coverage of 0.1x and 42.5 days cash on hand. The rating affirmation is based on improved unaudited fiscal 2001 financial performance. Good Samaritan was successful in employing 40 of the physicians who originally left and have been able to recoup the majority of the lost volume. However, utilization still remains below previous levels with 10,288 discharges in fiscal 2001 discharges compared to 12,141 discharges in fiscal 1999. Operating and excess margins have improved to negative 4.4% and negative 3.6%, respectively. Debt service coverage has also increased with MADS coverage of 0.6x. Good Samaritan has entered into a forbearance agreement, which prohibits bondholders from accelerating payment if there is an event of default, and will expire in 2005. Good Samaritan's viability lies in its ability to recruit and retain a physician base, maintain sufficient volume, and control expenses. Good Samaritan is in the process of recruiting several more physicians and Fitch believes the employment of physicians is a necessary strategy, however, the losses on the owned practices will have to be closely monitored. Labor costs are high and comprised 56.5% of total operating revenue in fiscal 2001. Fitch expects personnel expense to continue to rise due to the nationwide nursing shortage. Although Good Samaritan is on the road to recovery, Fitch believes these and other major challenges ahead may place downward pressure on the rating. Good Samaritan is part of Caritas Christi Health Care System, which does not guarantee any of the medical center's existing or future debt. Good Samaritan is located in Brockton, MA, approximately 21 miles west of Boston and operates 224 beds. HAYES LEMMERZ: Brings-In Lazard for Advice on Financial Matters --------------------------------------------------------------- Hayes Lemmerz International, Inc., and its debtor-affiliates present to the Court an application for an order authorizing the employment and retention of Lazard Freres & Co. LLC as financial advisors and investment bankers for the Debtors, nunc pro tunc to the Petition Date for the purpose of providing financial advisory and investment banking services to the Debtors during these chapter 11 cases. Kenneth A. Hiltz, the Debtors' Chief Finance Officer and Chief Restructuring Officer, tells the Court that Debtors seek to retain Lazard as their financial advisors and investment bankers because Lazard and its senior professionals have an excellent reputation for providing high quality investment banking services to debtors and creditors in bankruptcy reorganizations and other debt restructures, and extensive knowledge of the Debtors' financial and business operations. In its capacity as the Debtors' pre-petition financial advisors and investment banker, Lazard has developed knowledge of the Debtors' financial and business operations and worked with the Debtors on numerous matters. In addition to Lazard's understanding of the Debtors financial history and business operations and the industry in which the Debtors' operate, Mr. Hiltz submits that Lazard and its senior professionals have extensive experience in the reorganization and restructuring of troubled companies, both out-of-court and in chapter 11 proceedings. Lazard's employees have advised debtors, creditors, equity constituencies and government agencies in complex financial reorganizations, which involve over $150,000,000,000 in restructured debt. Mr. Hiltz relates that the professionals of Lazard have been employed as investment bankers in a number of troubled company situations, including the chapter 11 cases of Owens Corning, Fruit of the Loom, Vlasic Foods International, Armstrong Worldwide Industries, Fine Host, Master Graphics, American Pad & Paper, Stone & Webster, Wireless One, Sun Healthcare Group, CAI Wireless Systems & USN Communications. Lazard is familiar with the Debtors' business and financial affairs and is well-qualified to provide the services required by the Debtors. Prior to the Petition Date, the Debtors engaged Lazard to provide advice in connection with the Debtors' attempts to complete a strategic restructuring, reorganization and/or recapitalization and to prepare for the commencement of these cases. In providing pre-petition services to the Debtors in connection with these matters, Lazard's professionals have worked closely with the Debtors' management and other professionals and have become well-acquainted with the Debtors' operations, debt structure, business and operations and related matters. Accordingly, Lazard has developed significant relevant experience and expertise regarding the Debtors that will assist it in providing effective and efficient services in these cases. Should the Court approve the Debtors' retention of Lazard as investment bankers, Lazard will continue, without interruption, to perform the services for the Debtors as described herein. Mr. Hiltz maintains that the resources, capabilities, and experience of Lazard in advising the Debtors are crucial to the Debtors' successful restructuring. An experienced financial advisor such as Lazard fulfills a critical need that complements the services offered by the Debtors' other restructuring professionals. Lazard will concentrate its efforts on formulating strategic alternatives, negotiating with the Debtors' banks, bondholders, and other creditor constituencies, and assisting the Debtors to formulate and implement a viable reorganization plan. Prior to retaining Lazard, Mr. Hiltz informs the Court that the Debtors' senior management interviewed senior personnel of and considered proposals from other investment banking firms. The Debtors evaluated each firm on a number of criteria, including: the overall restructuring experience of each firm and their professionals; the overall financial advisory and investment banking capabilities of such firm; the firm's experience in advising large companies in chapter 11; the likely attention of the senior personnel of the firm; and the compensation to be charged. After due consideration of the above and as an exercise of their business judgment, the Debtors concluded that Lazard was best qualified to provide financial advisory and investment banking services to the Debtors at a reasonable level of compensation. The professional services that Lazard will render to the Debtors as reasonably requested are expected to include: A. Review and analyze the Debtors' business, operations and financial projections; B. Evaluate the Debtors' potential debt capacity in light of its projected cash flows; C. Assist in the determination of an appropriate capital structure for the Debtors; D. Assist in the determination of a range of values for the Debtors' on a going concern and liquidation basis; E. Advise the Debtors on tactics and strategies for negotiating with its various groups of Creditors and/or other stakeholders; F. Render financial advice to the Debtors and participate in meetings or negotiations with Creditors and/or other stakeholders in connection with any Restructuring Transaction; G. Advise the Debtors on the timing, nature, and terms of any new securities, other consideration or other inducements to be offered to its Creditors and/or other stakeholders in connection with any Restructuring Transaction; H. Assist the Debtors in preparing any documentation required in connection with the implementation of a Restructuring Transaction; I. Provide financial advice and assistance to the Debtors in developing and obtaining confirmation of a plan of reorganization, as the same may be modified from time to time; J. Assist the Debtors with respect to any potential sale of any subsidiaries, divisions or assets to a third party resulting in a Business Combination, including assistance and advice with respect to the structure of and negotiations relating to the Sale Transaction and participation in any solicitation and marketing efforts that may be undertaken by the Debtors related to the Sale Transaction, including preparation of solicitation materials or similar documents and contact with third parties in connection with the Debtors' marketing efforts; K. Assist in arranging financing for the Debtors; L. Advise and attend meetings of the Debtors' Board of Directors and committees; M. Provide testimony, including expert testimony where warranted, in any proceeding in any judicial forum; and N. Provide the Debtors with other customary general restructuring advice. The Debtors have been advised that fees for the services rendered in these cases will be as follows: A. Monthly Advisory Fees - The Debtors shall pay Lazard a monthly financial advisory fee of $200,000 in cash for each month during Lazard's engagement. Monthly Advisory Fees paid or payable during the first 12 months of Lazard's engagement under the Engagement Letter shall be credited against the Restructuring Transaction Fee. Monthly Advisory Fees incurred after the first 12 months of Lazard's engagement under the Engagement Letter shall not be credited against any fee payable under the Engagement Letter; B. Restructuring Transaction Fee. In the event the Debtors consummate a Restructuring Transaction, the Debtors shall pay Lazard a Restructuring Transaction fee in the amount of $8,800,000 in cash, payable promptly upon closing of such Restructuring Transaction; C. Sale Transaction Fees: a. If, whether in connection with the consummation of a Restructuring Transaction or otherwise, the Debtors consummate a Sale Transaction incorporating all or substantially all of their assets of the majority of the Debtors' equity interests, Lazard shall act as the investment banker in connection therewith. Lazard's compensation for such services shall be the Monthly Advisory Fees and the Restructuring Transaction Fee. b. In the event that the Debtors consummate a Sale Transaction relating to certain of the Debtors' business lines, divisions or operating groups, the Debtors shall pay Lazard a fee in cash based on the Aggregate Consideration. Any Limited Sale Transaction in which Lazard does not act as the investment banker will not result in a cash fee payable to Lazard. One- half of any Limited Sale Transaction Fee shall be credited against any subsequently payable Restructuring Transaction Fee; and c. Any fee described above shall be paid upon closing of the applicable Sale Transaction, provided that Lazard recognizes that is must comply with any applicable provisions of the Bankruptcy Code. Barry W. Ridings, Managing Director of Lazard Freres & Co. LLC, states that the Firm also will seek reimbursement for reasonable out-of-pocket expenses, and other fees and expenses, including reasonable expenses of counsel, if any. Lazard will follow its customary expense reimbursement guidelines and practices in seeking expense reimbursement from the Debtors. As part of the overall compensation payable to Lazard under the terms of the Engagement Letter, the Debtors have agreed to certain indemnification and contribution obligations. Lazard and the Debtors believe that such provisions are customary and reasonable for financial advisory and investment banking engagements, both out-of-court and in chapter 11. The Debtors request approval of the terms of Lazard's engagement, including the terms of the Engagement Letter and the indemnification provisions contained in the Indemnification Letter. The Debtors believe that the fee structure and indemnification provisions set forth in the Engagement Letter are reasonable terms and conditions of employment and should be approved. Mr. Ridings believes that the fee structure and indemnification provisions appropriately reflect the nature of the services to be provided by Lazard and the fee structures and indemnification provisions typically utilized by Lazard and other leading financial advisory and investment banking firms, which do not bill their clients on an hourly basis and generally are compensated on a transactional basis. The Debtors also believe that the fee structure and indemnification provisions are reasonable terms and conditions of employment in light of industry practice, market rates charged for comparable services both in and out of the chapter 11 context, Lazard's substantial experience with respect to financial advisory and investment banking services, and the nature and scope of work already performed by Lazard prior to the Petition Date and to be performed by Lazard in these chapter 11 cases. During the period prior to the Petition Date, Mr. Ridings informs the Court that the Debtors paid Lazard $600,000 for pre- petition services rendered and $30,000 for out-of-pocket expenses. The Pre-petition Payments represent Monthly Financial Advisory Fees and reimbursement of out-of-pocket expenses for the months of October, November and December 2001. (Hayes Lemmerz Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) IMP INC: Subba Mok Takes Over 72% Controlling Equity Interest ------------------------------------------------------------- On November 30, 2001, IMP, Inc., a Delaware corporation, completed the sale and issuance of an aggregate of 5,482,284 shares of IMP's common stock to Subba Mok LLC, a Delaware limited liability company, Manohar Malwa, Au Wah and Lee Shiu Hon for an aggregate purchase price of $6.0 million pursuant to a Stock Purchase Agreement dated September 28, 2001. Subba Mok's members include Subba Rao Pinamaneni, IMP's Chairman of the Board, Sugriva Reddy, IMP's former Chief Executive Officer, John Chu, IMP's Vice President and General Manager of Standard Products, Moiz Khambaty, IMP's Vice President of Technology, Tarsaim Batra IMP's Chief Operating Officer and Vice President of Manufacturing, K.Y. Mok and Dilip Kumor V. Lakhi. In connection with the closing of the transactions contemplated by the Stock Purchase Agreement, IMP, IMP's previous majority stockholder, Teamasia Mauritius, and one of its affiliates amended certain terms of the outstanding $3.5 million principal amount of convertible debentures held by Teamasia, which otherwise would have become due and payable in May and June 2001, as follows: (1) the maturity date was extended for one year; (2)interest will accrue at the prime rate and be payable on the maturity date; and (3) the conversion rate was reduced from $8.75 to $3.45, the closing price of IMP's common stock on May 10, 2001 (after giving effect to the 1-for-5 reserve stock split effective on September 26, 2001). In addition, IMP issued to Teamasia a warrant to purchase 319,800 shares of common stock at an exercise price of $1.10 per share. Teamasia will continue to be entitled to nominate one director for election to IMP's Board of Directors for so long as it continues to own at least five percent of IMP's outstanding stock. As a result of the transactions described above, Subba Mok owns approximately 72% of IMP's outstanding common stock. These transactions constitute a change in control of IMP. About 80% of the company's sales come from its silicon wafer foundry services, through which it makes integrated circuits (ICs) for customers such as International Rectifier (30% of sales) and National Semiconductor (15%). IMP also makes its own analog and mixed-signal microchips. The company makes data communications ICs (including small computer system interface -- SCSI -- terminators) and power management ICs (including voltage regulators and lamp drivers) for communications, computer, and systems control applications. More than four-fifths of sales are to US customers. India-based Teamasia Semiconductor owns more than 60% of IMP. As of September 30, 2001, the company suffered strained liquidity as its total current liabilities exceeded its total current assets by about $500,000. INTERTAPE POLYMER: Refinances Credit Facilities & Senior Notes -------------------------------------------------------------- Intertape Polymer Group Inc. (NYSE:ITP) (TSE:ITP.) announced that it has completed a refinancing of both its borrowing credit facilities and $274 million senior notes. The new credit facility, which is secured by a pledge of the Company's assets, includes a three year committed $50 million revolving credit facility, a $35 million revolving two year term facility, and a $60 million revolving four year term facility. Security being granted to these facilities will be shared with the senior notes. Proceeds under the new facilities were applied to repay outstanding bank indebtedness of the Company of $125 million. The new facilities bear interest at rates varying up to 320 basis points over prime and up to 395 basis points over LIBOR, subject to adjustment. These reflect the current rates that the Company has been subject to since June 2001. Of the $274 million of outstanding senior notes, as amended, $25 million Series A Notes, originally issued in 1999, bear interest at the rate of 9.91% per annum, $112 million Series B Notes bear interest at the rate of 10.06% per annum, and $137 million Senior Notes, originally issued in 1998, bear interest at a rate of 9.07% per annum. In addition to amending the interest rates on the Senior Notes, financial covenants have been amended to be generally consistent with the financial covenants under the new credit facility. The new bank facilities contain the mechanics to have the rates decline to 0 basis points over prime and 75 basis points over LIBOR based on the Company's achievement of certain financial covenant thresholds. In addition, both the bank facilities and the revised senior notes contain financial conditions to the release of all security. Melbourne F. Yull, Chairman and CEO commented that "We are pleased by the support of our Lenders in a difficult economic environment. Resolution and closure of the refinancing allows Management to continue to pursue the Company's strategic objectives. These objectives require that the Company's capital base be well structured and flexible to allow the Company to grow and expand in the current economic environment. We are satisfied that we have the proper capital base in place now that we have completed this refinancing." JAM JOE: Requesting Delaware Court to Extend Exclusive Periods -------------------------------------------------------------- Jam Joe, LLC asks the U.S. Bankruptcy Court for the District of Delaware to issue an order extending their exclusive periods to file a chapter 11 Plan and to solicit acceptances of that plan through March 29, 2002 and May 31, 2002, respectively. The Debtors seek an extension of their Exclusivity Periods to allow the Brandywine Wilminton location sale to proceed smoothly, to permit them to continue an orderly reorganization and to ensure that the Plan submitted accounts all the interests of the Debtors, their estates, and their creditors. Even though their cases are not among the largest, the Debtors assert that it is quite complicated considering that they do not have numerous individuals to devote to their reorganization efforts. "Operating the quite popular Brandywine Greenville restaurant does not leave Mr. Dietz much time for anything else," the Debtors added in their motion. Jam Joe, L.L.C. filed for bankruptcy protection Under Chapter 11 of the U.S. Bankruptcy Code on July 23, 2001 in the District of Delaware. Christopher S. Sontchi, Esq. at Ashby & Geddes represents the Debtors in their restructuring efforts. LERNOUT & HAUSPIE: Will Decide on Leases on Confirmation Date ------------------------------------------------------------- Allan S. Brilliant, Esq., at Milbank, Tweed, Hadley & McCloy LLP, asks, on behalf of Lernout & Hauspie Speech Products N.V. and its affiliated debtors Dictaphone Corporation and L&H NV Holdings USA, Inc., Judge Wizmur for entry of an order further extending the time period during which the Debtors may assume or reject unexpired leases and executory contracts. Dictaphone asks that the time period be extended for it to and including the earlier of (a) the effective date of a confirmed Plan of Reorganization relating to Dictaphone, or (b) February 28, 2002. L&H NV and L&H Holdings ask that their time periods be extended to and including the earlier of (a) the effective date of a confirmed Plan of Reorganization relating to L&H NV or L&H Holdings, or (b) April 22, 2002. The Debtors collectively have identified 179 leases which relate to corporate offices, storage facilities, and consolidated warehouse and office facilities to which a member of the Debtors is a party. Of these leases, 161 relate to properties located in the United States and Canada, while 18 relate to properties located outside of the United States and Canada. Furthermore, the distribution of the leases among the Debtors is: Dictaphone 155 Leases or subleases L&H NV and Holdings 24 Leases or subleases Dictaphone reminds Judge Wizmur she has authorized the prior rejection of 11 leases in the states of Illinois, Florida, Connecticut, Michigan, Colorado, Missouri, Wisconsin, Pennsylvania, and Tennessee. The Debtors urge that this fourth extension, like others before it, should be granted "routinely", and remind Judge Wizmur that multiple extensions are permitted. Since the inception of these cases, the Debtors say they, in addition to handling exigent administrative matters and business complications confronted in any complex Chapter 11 case, have been working diligently to (a) develop a reorganization plan that maximizes values for creditors, and more specifically, (b) to file the L&H Joint Plan and L&H Joint Disclosure Statement, and the Third Amended Disclosure Statement and Plan for Dictaphone. This process is described as "arduous and time-consuming", given the size and complexity of the Debtors' estates and the numerous intercreditor issues that have arisen in these cases. Dictaphone says it anticipates beginning solicitation of acceptances of its plan in January 2002, and intends to notify lessors and other affected parties as soon as possible during this process whether their Dictaphone leases will be assumed, assumed and assigned, or rejected. The requested extension of time will provide an "appropriate amount of time" for L&H NV and L&H Holdings to finalize the distribution scheme to their respective creditors, to amend the L&H Joint Plan and Disclosure Statement accordingly, to maximize the value of their assets for the benefit of their creditors, to seek approval of the L&H Joint Plan, as amended, and following approval, to solicit acceptances or rejections of this Plan. Preoccupied with these events and the exigencies of these complex cases, neither Dictaphone nor the L&H Debtors have been able to complete a thorough analysis of their respective leases. Without the requested extension, the Debtors say they will be forced to make decisions prematurely relating to the leases. An extension of time during which the Debtors may determine exactly how to deal with each of the leases is warranted, especially considering the tasks confronting the Debtors in the months ahead. Judge Wizmur promptly grants this Motion. (L&H/Dictaphone Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) LONE STAR: S&P Drops Ratings Over Financial Policy Concerns ----------------------------------------------------------- Standard & Poor's lowered its ratings on Lone Star Technologies Inc., and removed them from CreditWatch where they were placed on October 9, 2001. The current outlook is stable. The ratings had been placed on CreditWatch as a result of Lone Star's plan to acquire the assets of North Star Steel Co.'s tubular steel division for $430 million. Although Lone Star has not completed the North Star acquisition, the downgrade reflects the recognition of a more aggressive financial policy than had been initially incorporated into the ratings on Lone Star. In addition, the former ratings had reflected recognition of the inherent volatility of oil and gas markets. However, the favorable supply-and-demand fundamentals that existed when Standard & Poor's originally rated Lone Star were expected to be sustained for a longer period, which would have allowed Lone Star to improve its capital structure to levels commiserate with the initial ratings. However, since mid-2001, reduced industrial demand and modest production increases have caused natural gas inventories to swell at a record pace. Consequently, Lone Star's financial profile will not meet expectations, as oil and gas prices, drilling rig counts, and Lone Star's product volumes have rapidly fallen. Lone Star is a leading U.S. manufacturer of oil country tubular good (OCTG) products, which are used in the completion and production of oil and natural gas wells, and line pipe, which is used in the transmission of oil and natural gas. The company is also a leading manufacturer of the specialty tubing products that are used in power generation, automotive, construction, agricultural, and industrial applications. Markets served by the company are highly competitive and volatile and subject to extended periods of weak demand, excess capacity, and high import penetration. OCTG sales correlate directly with drilling activity and helped buoy Lone Star's sales and profitability through the first half of 2001. Spurred by record oil and gas prices late in 2000, the U.S. drilling rig count in 2001 exceeded 1,200. However, due to the recent glut in supply, natural gas prices have fallen from a high of $10.00 per 1000 British thermal units (mmbtu) to approximately $2.70 per mmbtu currently, and operators have reduced reinvestment. This is manifested by a declining rig count, which has now fallen below 900. Depending on the depth and magnitude of the economic recession, the severity of the weather this winter, and the demand for oil and gas, the U.S. natural gas rig count could fall to as low as 600. Standard & Poor's believes that a rebound in U.S. drilling activity would not be likely before late 2002. Owing to weakening business trends, Lone Star's EBITDA interest coverage declined to 3.8 times for the quarter ended September 30, 2001, from 7.8x in the previous quarter. Profitability is expected to worsen in the near term, as distributors (the company's main customers) are expected to limit purchases until there is a meaningful rebound in oil and gas prices. In the near term, cash generation is expected to be insufficient to meet the company's debt service and capital spending needs and the company will need to draw down some of its cash balances ($103 million as of Sept. 30, 2001). Lone Star's capital needs are relatively modest; the magnitude of cash depletion is dependent on the severity and length of the downturn in oil and gas drilling. Although there is some additional debt capacity at the revised rating level, management is expected to limit its' spending while its market prospects remain challenging. Outlook: Stable Lone Star's excess cash balances and availability under its revolving credit facility should provide the financial flexibility needed to sustain its operations in this current downturn. Ratings Lowered and Removed from CreditWatch Ratings Lone Star Technologies Inc. To From Corporate credit rating BB- BB Subordinated debt B B+ MCMS INC: Wishes to Extend Plan Filing Period through January 15 ---------------------------------------------------------------- MCMS, Inc. asks the U.S. Bankruptcy Court for the District of Delaware to extend the period during which only the Debtors may file a plan or plans of reorganization and solicit acceptances of that plan through January 15, 2002 and May 15, 2002 respectively. Since the Petition Date, the Debtors have focused their efforts almost exclusively on selling substantially all of their assets, including the completion of an auction process. The Debtors have been unable to devote the time and resources necessary to devise a viable plan but are focused on ensuring the survival of their business to preserve and maximize its value for the benefit of their creditors and estates. MCMS, Inc., a global leading provider of advanced electronics manufacturing services to original equipment manufacturers filed for Chapter 11 protection on September 18, 2001 in the U.S. Bankruptcy Court for the District of Delaware. Eric D. Schwartz, Esq. and Donna L. Harris, Esq. at Morris, Nichols, Arsht & Tunnell represent the Debtors in their restructuring effort. When the company filed for protection from its creditors, it listed $173,406,000 in assets and $343,511,000 in debt. MAGNUM HUNTER: S&P Places Low-B Ratings on Watch Positive --------------------------------------------------------- Standard & Poor's placed its ratings on Magnum Hunter Resources Inc., on CreditWatch with positive implications. The CreditWatch listing follows the recent announcement that Magnum Hunter and Prize Energy Corp. have entered into a definitive merger agreement. According to the merger agreement, Prize shareholders will receive $24 per common share payable in 2.5 shares of Magnum Hunter common stock for each Prize Energy share, plus a minimum of 25 cents per share to a maximum of $5.25 per share. The cash component will be based on an average price calculation of Magnum Hunter's share price. As of Sept. 30, 2001, Prize had about $251 million of long-term debt. The combined entity, which will retain the Magnum Hunter name, will be 51% owned by Magnum Hunter shareholders and 49% owned by Prize shareholders. The transaction significantly increases Magnum Hunter's scale in its core onshore properties. The combined Magnum Hunter will have a total proved developed reserve base of about 970 billion cubic feet equivalent (bcfe; 55% natural gas) using December 31, 2000 reserve figures. Daily production for the nine months ended September 30, 2001 averaged about 225,000 cubic feet equivalent. Although the cash component of the acquisition price will be determined near the close of the transaction, the combined company's financial leverage is expected to decrease from Magnum Hunter's current level. Standard & Poor's will resolve the CreditWatch listings and ultimate ratings when the transaction closes, following further discussions with management. Ratings Placed on CreditWatch with Positive Implications Magnum Hunter Resources Inc. Corporate credit rating B Senior unsecured debt B Shelf debt sr unsecd/pfd stk (prelim) B/CCC+ MARINER POST-ACUTE: Intercompany Claims Bar Date Moved to Jan 22 ---------------------------------------------------------------- The Mariner Health Group Debtors, the Mariner Post-Acute Network, Inc, Debtors, the MHG Committee, the MPAN Committee, the MHG Secured Lenders and the MPAN Secured Lenders have agreed to extend the Stipulated Bar Date for intercompany claims and claims by non-debtor affiliates by an additional approximately 60 days, to and including January 22, 2002. (Mariner Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) MATLACK SYSTEMS: Pushing for Third Extension of Removal Period -------------------------------------------------------------- Through their attorneys, Matlack Systems and its Debtor affiliates asks for a third extension on the time period within which they may remove Pre-Petition Civil Actions through February 11, 2002. The Debtors believe that it is prudent to seek a third extension to remove Pre-Petition Actions asserting that the extension will afford them an additional opportunity to make fully informed decisions regarding these actions. Matlack, North America's No. 3 tank truck company, provides liquid and dry bulk transportation, primarily for the chemicals industry. The company filed for chapter 11 protection last March 29, 2001, in the U.S. Bankruptcy Court for the District of Delaware, and is represented by Richard Scott Cobb, Esq., at Klett Rooney Lieber & Schorling. Matlack's 10Q Report, filed with the Securities and Exchange Commission on March 31, 2001, lists assets of $81,160,000 and liabilities of $89,986,000. METALS USA: Bank of America Proposes to Set-Off Mutual Debts ------------------------------------------------------------ In the days leading up to the bankruptcy of Metals USA, Inc., and its debtor-affiliates, Bank of America N.A. operated under its normal operating procedures, advancing funds as requested and reconciling accounts at the end of each day. Prior to petition date, Debtors' bank was unable to complete the second step of those standard operating procedures, the reconciliation. By motion, Bank of America, as agent for a group of secured lenders, asks the Court for relief from automatic stay to net out the mutual debts and claims which arose between the Debtors and the Agent out of different pre-petition transactions. Demetra L. Liggins, Esq., at Winstead Sechrest & Minick P.C. in Dallas, Texas, relates that the on the petition date, Debtors made withdrawals and transferred funds by wire from their numerous bank accounts at Bank of America to numerous third parties amounting to approximately $8,000,000. While Bank of America transferred the funds as requested by the Debtors, standard operating procedures did not allow it to post or reconcile those transfers until later in the day. However, Ms. Liggins states that when time came to post and reconcile those transfers, Debtors had filed for bankruptcy and their accounts had been administratively frozen. As a result, Bank of America is now in the position of having given money to the Debtors, as it cannot setoff those amounts against the Debtors' accounts as it would have in the ordinary course. In the days leading up to bankruptcy, Ms. Liggins informs the Court that a computer error in Bank of America's reconciliation system resulted in wire transfers which were initiated by Debtors from certain accounts not being posted to those accounts, even though beneficiaries had received the payments. As a result, for approximately 4 day prior to petition date, Debtors were receiving advances amounting to $5,000,000 without being reconciled. Bank of America traced the source of the error and was about to cure it when Debtors filed for bankruptcy. Consequently, Bank of America again is in the position of having given money to the Debtors, as it cannot setoff those amounts against the Debtors' accounts as it would have in the ordinary course. (Metals USA Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) MYWEB INC.COM: No Longer Complies with AMEX Listing Guidelines -------------------------------------------------------------- MyWeb Inc.com (Amex:MWB) announced that the Company has received notice from the American Stock Exchange indicating that the Company no longer complies with Exchange's continued listing guidelines due to losses in two of its most recent fiscal years with equity below $2 million as well as publicly held market shares with aggregate value of less than $1 million, as set forth in Sections 1003(a)(i), 1003(a)(iv), 1003(b)(i) and 1003 (f)(iii) of the Company Guide, and that its securities are, therefore, subject to being delisted from the Exchange. The Company has appealed this determination and requested a hearing before a committee of the Exchange. There can be no assurance Company's request for continued listing will be granted. NATIONSRENT: Will Continue Existing Workers Compensation Program ---------------------------------------------------------------- NationsRent Inc., and its debtor-affiliates sought and obtained an entry of an order authorizing them to continue their existing workers' compensation programs in all states in which they have employees and pay certain pre-petition workers' compensation claims, premiums and related expenses. Daniel J. DeFranceschi, Esq., at Richards Layton & Finger, P.A. in Wilmington, Delaware, relates that since September 1, 2000, the Debtors have maintained a high-deductible workers' compensation program with Travelers Property Casualty Corporation in all of the Covered States other than Ohio and West Virginia. Under the Insured Program: A. insurance coverage is provided for workers' compensation claims up to the statutory limits, with a $250,000 deductible; and B. the Debtors are obligated to pay an annual premium of $1,027,764. To secure the Debtors' obligations under various insurance policies with Travelers, Mr. DeFranceschi explains that Travelers has required the Debtors to post collateral in the form of two irrevocable letters of credit issued by Fleet National Bank for the benefit of Travelers, in the face amounts of $4,478,000 and $6,500,000, respectively. As of the Petition Date, the aggregate amount of Insured Claims outstanding was approximately $350,000. Mr. DeFranceschi informs the Court that the Debtors participate in "monopolistic" workers' compensation insurance programs in the states of Ohio and West Virginia. The Funded Programs are funded through and administered by the Ohio Bureau of Workers' Compensation and the Workers' Compensation Division of the West Virginia Bureau of Employment Programs, respectively. Under the Funded Programs, the Debtors pay fixed premiums to the appropriate state agency on a quarterly or semi-annuals basis depending upon the Debtors' payroll for employees working in the applicable state during the coverage period. Mr. DeFranceschi states that the premiums are adjusted retroactively based on a final audit of the Debtors' payroll system. All workers' compensation claims paid under such state Funded Programs are administered by the applicable state agency, which pays the workers' compensation claims in full. The Debtors estimate that the aggregate amount of premiums accrued but not yet paid as of the Petition Date under the Ohio Funded Program is approximately $63,000 while the aggregate amount of premiums accrued as of the Petition Date under the West Virginia Funded Program is approximately $16,000. Mr. DeFranceschi contends that it is critical that the Debtors be permitted to continue the Workers' Compensation Programs and ensure that any Pre-petition Premiums, Insured Claims, fees, assessments, retained amounts, claim expenses, amounts under the Deductible and other related amounts are paid. The Debtors otherwise would be required to make alternative arrangements for workers' compensation coverage at a much higher cost because such coverage is required under all applicable state workers' compensation laws, with severe penalties if an employer fails to comply with such laws. In fact, if workers' compensation coverage is not maintained as required by such laws, without interruption, employees could bring lawsuits for potentially unlimited damages, the Debtors' ongoing business operations in certain states could be enjoined and the Debtors' officers could be subject to criminal prosecution. If the Debtors fail to pay the Travelers Premium, the pre- petition Insured Claims and other amounts due to Travelers, the Debtors anticipate that Travelers would simply draw down the Travelers Letters of Credit to pay such claims. Furthermore, the Debtors believe that any delay in the timely payment of the Pre- petition Premiums, the pre-petition Insured Claims or other amounts due to Travelers would have a negative impact on the morale of the Debtors' current employees at a lime when the support of such employees is most critical. The Court also authorized the Debtors to pay all costs incident to the insured Program, such as processing costs and accrued but unpaid charges for the administration of the Insured Program. As of the Petition Date, Mr. DeFranceschi the aggregate amount of outstanding Pre-petition Processing Costs was approximately $25,900.15 Mr. DeFranceschi submits that payment of the Pre-petition Processing Costs is justified because failure to pay such amounts might disrupt the provision of services by third-party providers under the Insured Programs. By paying the Pre-petition Processing Costs, the Debtors may avoid even a temporary disruption of such services and thereby ensure that their current and former employees obtain all workers' compensation benefits without interruption and the Debtors remain in compliance with applicable state law at all times. The Court also directs that all applicable banks and other financial institutions be directed, when requested by the Debtors, in the Debtors' sole discretion, to receive, process, honor and pay any and all checks drawn on the Debtors' accounts with respect to the Workers' Compensation Programs, including Pre-petition Premiums, fees, assessments, retained amounts, claim expenses, amounts under the Deductible, pre-petition Insured Claims and Pre-petition Processing Costs, whether such checks are presented prior to or after the Petition Date, provided that sufficient funds are available in the applicable accounts to make such payments. The Debtors represent that each of these checks can be readily identified as relating directly to the authorized payments with respect to the Workers' Compensation Programs and believe that checks other than those relating to authorized payments will not he honored inadvertently. (NationsRent Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) NET2000: Wants Extension of Schedules Filing Deadline to Dec. 31 ---------------------------------------------------------------- Net2000 Communications, Inc., asks the Court to extend their deadline to file Schedules and Statements through December 31, 2001. The Debtors submit to the Court that a significant amount of information must be accumulated, reviewed and analyzed to properly prepare the Schedules and Statements. Since the Debtors operate in multiple locations, it will be impossible for them to complete this undertaking prior to the current deadline, not to mention the unavoidable personnel shortages. Presently, the Debtors estimate that the December 31, 2001 extension will provide them sufficient time to gather the necessary information, confirm that information and prepare the Schedules and Statements. Net2000 Communications, Inc., providers of state-of-the-art broadband telecommunications services to high-end customers, filed for chapter 11 protection on November 16, 2001 in the U.S. Bankruptcy Court for the District of Delaware. Michael G. Wilson, Esq. at Morris, Nichols, Arsht & Tunnell represents the Debtors in their restructuring effort. When the Company filed for protection from its creditors, it listed $256,786,000 in assets and $170,588,000 in debts. OMNI ENERGY: Completes Restructuring of Senior Credit Facilities ---------------------------------------------------------------- Omni Energy Services Corp. (Nasdaq: OMNI) announced that it has completed the restructuring of the terms of its senior credit facilities and extended their maturity dates. The company also announced that it has exercised its option to purchase its aviation fleet, which was previously operated under a long-term lease agreement. "The strategic realignment of our senior credit facilities allows OMNI to pursue certain near term business opportunities," said James C. Eckert, Chairman and Chief Executive Officer of OMNI. "The restructuring of these facilities helps position us and provides us the needed flexibility to take advantage of these future events as they occur. Under the terms of the new credit agreements, our debt service requirements and cost of borrowing are reduced. The maturity dates are extended into the third quarter of 2004." Additionally, OMNI exercised its option to purchase its aviation fleet, which was previously operated under a long-term lease agreement. The lease had a remaining term of about eight years with a fair market purchase option at the end. The negotiated purchase price is well below the fair market value of the fleet with financing terms much more favorable than those under the current agreement. "The timing was right to exercise our option under the aviation lease agreement," said Eckert. "Under the revised agreement our monthly obligation is reduced by 27%. We anticipate the offshore aviation division will become a more integral part of our business operations in 2002 and this restructuring facilitates this growth potential." Headquartered in Carencro, La., OMNI provides a broad range of integrated services to both geophysical and exploration and production companies engaged in the acquisition of on-shore seismic data. The Company provides its services through several business units: Seismic Drilling, Helicopter Support, Permitting and Seismic Survey. OMNI specializes in operations in logistically difficult and environmentally sensitive terrain. PACIFIC GAS: Parent & Committee Ink Plan Support Agreement ---------------------------------------------------------- Prior to filing the Amended Plan, the Committee of Pacific Gas and Electric Company participated with the Proponents in the negotiation and development of the Plan. On September 19, 2001, the Debtor, its Parent and the Committee entered into the Support Agreement pursuant to which the parties agreed to take all commercially reasonable actions and use their respective best efforts to achieve timely confirmation and consummation of a plan consistent with the term sheet attached as an exhibit to the Support Agreement. The Committee acknowledges that the Plan is consistent with such term sheet. Under the terms of the Support Agreement, so long as no Support Termination Event has occurred, the Committee shall: (a) fully support the Plan, (b) advocate in all material respects the Plan and the Restructuring Transactions, (c) recommend that all parties entitled to vote do so in favor of the Plan, (d) advocate and support all approvals and required orders concerning the Plan and the Restructuring Transactions, (e) support the extension of the Debtor's exclusivity under section 1121 of the Bankruptcy Code, and (f) respond affirmatively to all inquiries concerning the Plan and the Restructuring Transactions. In addition, except as permitted or contemplated by the Support Agreement, the Committee will not: (a) object to the confirmation of the Plan or otherwise commence any proceeding to oppose, modify, amend or alter the Plan or any of the other documents to be prepared in connection therewith, each of which shall be consistent with the terms of the Support Agreement, (b) consent to, support or participate in the formulation of any plan of reorganization or liquidation other than the Plan, (c) directly or indirectly seek, solicit, support or encourage any plan of reorganization other than the Plan, or any sale, proposal or offer of dissolution, winding up, liquidation, reorganization, merger or restructuring of the Debtor or any of its affiliates that could reasonably be expected to prevent, delay or impede the successful implementation of the Restructuring Transactions contemplated by the Plan, or (d) take any other action not required by law that is inconsistent with, or would materially delay, confirmation or consummation of the Plan. As consideration for the Committee's support of the Plan, the Proponents agreed to include certain provisions beneficial to the unsecured creditors in the Plan. First, the Debtor will pay all accrued but unpaid pre-petition and Post-Petition Interest through the Confirmation Date on all Allowed Claims within 10 days after the Confirmation Date or as soon as practicable thereafter. In addition, except as provided in the Support Agreement, following the Confirmation Date, the Debtor will pay Post-Petition Interest in arrears on a quarterly basis through the earlier of the Effective Date or the occurrence of a Support Termination Event, with the exception of certain Allowed Claims for which the Debtor will pay accrued interest pursuant to and on the interest payment dates set forth in the applicable instrument. In the event of a Support Termination Event, the Debtor reserves the right to recharacterize the amounts paid pursuant to the Support Agreement as payment upon the applicable Allowed Claims, but will not otherwise seek to recover any portion of such payments. The Debtor does not envision seeking to recharacterize any amounts paid on account of Post-Petition Interest unless the Plan is not confirmed and Post-Petition Interest is not payable pursuant to a subsequent plan. Second, the Proponents will take all commercially reasonable actions prior to the Effective Date to ensure that the debt securities issued or sold under the Plan will trade at or above par upon issuance. The Committee shall also have reasonable observation rights in the process of issuing the debt securities. Finally, each creditor in Classes 4(f), 5, 6, 7 and 9 shall be entitled to its pro rata share (based on the face value of notes or other non-Cash obligations received) of a $40.0 million placement fee. The Committee's obligations under the Support Agreement are conditioned upon the satisfaction or waiver of the following: (a) the Proponents shall make all necessary filings with the FERC by December 31, 2001, (b) the Bankruptcy Court shall enter the Confirmation Order by June 30, 2002, (C) the Proponents must obtain indicative ratings of investment grade from S&P and Moody's for all debt securities to be issued or sold under the Plan, (d) the Proponents shall receive all necessary regulatory approvals by December 31, 2002, (e) the Proponents shall resolve any tax issues raised by the Plan in a manner reasonably satisfactory to the Committee by December 31, 2002, and (f) the Effective Date must occur by March 31, 2003. The obligations of the parties under the Support Agreement shall terminate upon the occurrence of a Support Termination Event, if not otherwise waived by the applicable party. A "Support Termination Event" means any of the following: (a) a breach of the Support Agreement by one or more of the parties, or (b) a material adverse change in (i) the Debtor's prospects, business, assets, operations, liabilities or financial performance, (ii) the prospects for timely completion of the Debtor's reorganization as contemplated, (iii) the prospects for the sale at par of all debt securities issued or sold under the Plan, or (iv) the Chapter 11 Case. (Pacific Gas Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) POLAROID CORP: Int'l Specialty Calls for Decision on Contract ------------------------------------------------------------- International Specialty Products Inc. and ISP Freetown Fine Chemicals Inc. ask Judge Walsh for an order compelling Polaroid Corporation, and its debtor-affiliates to: (i) immediately assume or reject its executory contract, or (ii) pay market rate pricing for products delivered post- petition, should the Debtors need more time to assume or reject the executory contract or the Debtors ultimately reject such executory contract. International Specialty Products is a leading multinational manufacturer of specialty chemicals and mineral products. International Specialty Products and ISP Freetown entered into a certain Supply and License Agreement dated February 1998 with Polaroid Corporation. According to Michelle McMahon, Esq., at Connolly, Bove, Lodge & Hutz LLP, in Wilmington, Delaware, the Supply Agreement was an integral part of a larger transaction relating to the sale by Polaroid of its Freetown Chemical Manufacturing Plant to International Specialty Products. "It should not be considered independent of the larger sales transaction," Ms. McMahon emphasizes. Under Polaroid's ownership, Ms. McMahon relates, the Plant was utilized to process dyes and polymers for use in Polaroid's instant imaging system. "The parties recognized, however, that the products produced by the Plant were essential to Polaroid's manufacturing operations and required provision for a steady and secure supply over a long-term period," Ms. McMahon informs Judge Walsh. With the sale of the Plant, Ms. McMahon continues, the parties entered into a strategic and long-term relationship whereby International Specialty Products would supply these products to Polaroid, in exchange for Polaroid's commitment to purchase the products from them over a set term consistent with the terms and conditions of the Supply Agreement. The parties recognized that the Plant was a dedicated supply source for Polaroid, Ms. McMahon adds. According to Ms. McMahon, International Specialty Products and Polaroid entered into an Agreement for the sale of the Plan for a total purchase price of $64,750,000. "The Asset Purchase Agreement specifically contemplates the Supply Agreement as part of a series of agreements that the parties would enter into in connection with the sale of the Plant," Ms. McMahon explains. Under the Supply Agreement, Ms. McMahon explains, International Specialty Products would supply Polaroid with various fine chemicals and polymers for an initial period of 5 years -- from February 19, 1998 through February 19, 2003. Ms. McMahon relates that the pricing mechanism of the Supply Agreement is tripartite, wherein Polaroid contracted to pay: (i) a capacity reservation fee of $1,166,667 per calendar month, (ii) an allocable reimburseable cost, which averages approximately $550,000 per month, and (iii) costs of raw materials. "All 3 elements of the pricing formula as well as the initial length of the Supply Agreement were essential terms of the relationship between International Specialty Products and Polaroid," Ms. McMahon says. In addition, Ms. McMahon relates, the prices charged for the products pursuant to the Supply Agreement have a built-in volume discount. Without all three elements of the pricing mechanism extending over the entire term of the Supply Agreement, Ms. McMahon tells the Court that the cost of producing the products would be significantly higher. Ms. McMahon informs Judge Walsh that the Debtors have made demands on International Specialty Products at the volume discount rate but the Debtors have not made a decision on the assumption of the Supply Agreement. "This exposes International Specialty Products to great prejudice," Ms. McMahon claims. If the Debtors decides to assume the Agreement, Ms. McMahon asserts, it should be with all of the benefits and burdens of the Supply Agreement. In the alternative, Ms. McMahon says, the Debtors should pay the market rate pricing for goods which is in excess of the contract price - for products delivered post- petition - if the Debtors need more time to assume or reject the Supply Agreement or if the Debtors ultimately reject the Agreement. Since there is no market for the products that International Specialty Products manufactures for Polaroid pursuant to this Supply Agreement, Ms. McMahon notes, International Specialty Products would have to dictate the "market rate pricing" taking into account its expected return under the Supply Agreement itself. Ms. McMahon asserts that the equities are in International Specialty Products' favor because the Debtors: (i) have a relatively small debtor in possession financing facility, which affects its long-term liquidity, (ii) have announced that they have no intention of reorganizing on a stand-alone basis, and (iii) are looking to sell their assets. "It is likely that the Debtors, within the next few months, may have to liquidate their assets if they cannot obtain the necessary capital infusion or locate a purchaser for the assets. This uncertainty provides substantial risk to the non-debtor party to a dedicated supply contract, such as International Specialty Products," Ms. McMahon contends. Moreover, Ms. McMahon tells the Court that International Specialty Products has made repeated requests for adequate assurance - since early August this year - with respect to Polaroid's performance under the Supply Agreement. Ms. McMahon adds that International Specialty Products has also repeatedly sought to meet with Polaroid to consensually resolve the issues. But Polaroid refused and merely stated that it needed time to hold discussions with its consultants, Ms. McMahon informs Judge Walsh. "Polaroid has been in material breach of the Supply Agreement since August 7, 2001 when International Specialty Products made a demand for, among other things, adequate assurance and payment of all outstanding charges. To date, Polaroid has failed to provide either. Thus, Polaroid is not entitled to the benefits of this Supply Agreement if it cannot meet the burdens," Ms. McMahon argues. It is apparent that Polaroid is attempting to delay discussions in hopes of securing individual products for the short term, Ms. McMahon observes, while not fulfilling its entire obligations under the Supply Agreement that is the basis for the monthly charges under the Agreement. "Polaroid should not be allowed to blow hot and cold," Ms. McMahon complains. If Polaroid receives the benefit of the bargain, Ms. McMahon insists that Polaroid must adopt all of the burdens as well. (Polaroid Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392- 0900) RESIDENTIAL ACCREDIT: Fitch Downgrades 1999-QS13 Due to Losses -------------------------------------------------------------- Fitch takes rating action on the following Residential Accredit Loans Inc. (RALI) mortgage pass-through certificates: * RALI 1999-QS13, class B1 ($1,600,271 outstanding), rated 'BB' is placed on Rating Watch Negative; * RALI 1999-QS13, class B2 ($802,376 outstanding), rated 'B' is downgraded to 'CCC'. The action is the result of a review of the level of losses incurred to date and the current high delinquencies relative to the applicable credit support levels. As of the November 25, 2001 distribution: RALI 1999-QS13 remittance information indicates that 2.12% of the pool is over 90 days delinquent, and cumulative losses are $862,410 or 0.32% of the initial pool. Class B1 currently has 0.61% of credit support, and Class B2 currently has 0.09% of credit support remaining. STANDARD MOTOR: S&P Concerned About Subpar Credit Measures ---------------------------------------------------------- Standard & Poor's placed its ratings on Standard Motor Products Inc., on CreditWatch with negative implications. The CreditWatch placement reflects Standard Motor's weaker-than- expected operating results and higher-than-expected debt use in the past few quarters, leading to subpar credit protection measures, and Standard & Poor's increasing concern that the company will not be able to achieve the improvement in financial measures factored into the ratings. Standard Motor serves the engine management and temperature control segments of the automotive aftermarket. Revenues are split almost evenly between the two product areas. Standard Motor's operating results have come under pressure during the past two years due to higher-than-expected product returns in its temperature control segment; inventory reduction efforts by the company and several major retail customers; and weather-related drops in demand. As a result, credit protection measures have remained below expected levels. The ratings were based on the expectation that debt to EBITDA would improve to the 4 times level in the near term and settle in the 3.0x- 3.5x range over the longer term. Last year, debt to EBITDA was about 4.5x, and based on current operating performance, this measure is likely to deteriorate somewhat this year. For the first nine months of 2001, net income totaled $3.8 million, compared with $11.8 million for the same period of 2000. Standard Motor's debt levels fluctuate during the year due to the seasonality of the temperature control business, with the peak borrowing period occurring in the first half of the year. At Sept. 30, 2001, balance sheet debt totaled about $244 million, up slightly from the $203 million level at December 31, 2000. Debt levels are expected to decline somewhat in the fourth quarter. Standard & Poor's will meet with management to discuss near-term operating prospects and the potential for debt reduction over the near to intermediate term. If it appears that the company will not be able to achieve the improvement in credit protection measures factored into the ratings, the ratings are likely to be lowered. Ratings Placed on CreditWatch Negative Standard Motor Products Inc. Corporate credit rating BB Senior unsecured debt BB Subordinated debt B+ SUN HEALTHCARE: Enters Pact to Reduce Insurers' Claim to $1MM ------------------------------------------------------------- On July 6, 2001, certain Insurers -- namely, Connecticut General Life Insurance Company, The Equitable Life Assurance Society of the United States, CIGNA Employee Benefits Services, Inc. and Healthsource, Inc., United Healthcare Group (on its own behalf and on behalf of its subsidiaries Unites Healthcare, Uniprise, Evercare, and as administrator for the Metropolitan Life Insurance Company and the Travelers Insurance Company), and Aetna Life Insurance Company including any and all interest of the Prudential Insurance Company of America -- filed a proof of claim totaling $20,559,008 against Sun Healthcare Group, Inc., and its debtor-affiliates. The claim consists of amounts the Insurers allegedly paid to the Debtors for rehabilitation serviced for which they were wrongfully billed. The Debtors dispute all of the allegations asserted by the Insurers in the claim. In a stipulation memorializing their covenant, the parties agree that: (A) The aggregate amount of the Insurers' claim, number 12605, is reduced from $20,559,008 to $1,000,000, and allowed in that lesser amount. (B) For purposes of voting on the Debtors' Joint Plan of Reorganization and for the purpose of receiving their ratable proportion of any distribution to the general unsecured claimants, the Insurers' claim shall be classified as a general unsecured claim and shall be an allowed claim in the amount of $1,000,000. (C) This agreement is in full and final settlement of the Insurers' claim. (Sun Healthcare Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) TXU ELECTRIC: Reaches Agreement to Sell 2 Power Plants to Exelon ---------------------------------------------------------------- On December 20, 2001, TXU Electric announced an agreement to sell two of its Dallas/Forth Worth gas-fired electric generating plants to Exelon Generation, a subsidiary of Exelon Corp., for $443 million in cash. The two plants, which have a combined capacity of 2,334 megawatts (MW), are the 893-MW Mountain Creek Steam Electric Station (Dallas) and the 1,441-MW Handley Steam Electric Station (Fort Worth). The transaction includes a purchase power and tolling agreement for TXU Electric's new merchant energy subsidiary, to purchase power during summer months for the next five years. The transaction is expected to be completed in early 2002. The company is a subsidiary of utility holding company TXU (formerly Texas Utilities) which supplies energy to more than 11 million customers in Australia, Europe, and Texas. TXU Electric serves 2.6 million Texans and has a generating capacity of 21,100 MW. The company, in late October, received waiver of provisions under indentures from its debenture holders. TELESYSTEM INT'L: Clarifies Intentions Re ClearWave Conv. Loans --------------------------------------------------------------- Telesystem International Wireless Inc., announces a clarification to the facts previously disclosed in the offer launched by the Company on December 11, 2001 to purchase all its outstanding Units in exchange for 5.46 subordinate voting shares of TIW for each Unit tendered. As previously disclosed in the December 2001 Units Offer and in the January 2001 ClearWave N.V. prospectus filed with the securities commissions of each of the provinces of Canada and with the Securities and Exchange Commission in the United States, TIW currently holds demand loans from ClearWave. These Loans were made over the past two years to fund general corporate needs of ClearWave, including the making of capital calls in subsidiaries as required from time to time to fund network expansion and other related purposes. The Loans outstanding are approximately US$92.8 million as of November 30, 2001. Subject to compliance with applicable securities laws and regulation, the Toronto Stock Exchange policies, as well as corporate approval from ClearWave, these Loans are convertible at TIW's option into Class B subordinate voting shares of ClearWave. Furthermore, because ClearWave is a reporting issuer under Canadian securities law and regulation, the conversion of the Loans requires compliance with applicable related party transaction rules. In response to certain inquiries from the Unitholders, TIW wishes to clarify that it does not intend to convert the Loans unless and until ClearWave has been afforded sufficient time to give all holders of ClearWave securities an opportunity to subscribe for Class B subordinate voting shares of ClearWave so as to maintain their pro rata equity interest in ClearWave after the conversion of the Loans. TIW expects to file and deliver to Unitholders a Notice of Change to the Units Offer as soon as practicable. TIW is a global mobile communications operator with 4.9 million subscribers worldwide. The Company's shares are listed on The Toronto Stock Exchange ("TIW") and NASDAQ ("TIWI"). TREESOURCE: Bankruptcy May Cripple Ability to Fully Utilize NOLs ---------------------------------------------------------------- TreeSource Industries Inc.'s net sales for the three months ended October 31, 2001 decreased $1.2 million (2.9%), as compared to the three months ended October 31, 2000. This decrease was principally caused by a 6% decrease in lumber sales volume partially offset by a 3% increase in the weighted average net lumber sales price. The decrease in lumber sales volume resulted from the curtailment of operations of Central Point Lumber Co., Morton Forest Products Co., North Powder Lumber Co., and Pacific Hardwoods-South Bend Co. during fiscal 2001. Gross profit for the quarter ended October 31, 2001 was 5.0% of net sales, compared to negative 1.7% of net sales for the quarter ended October 31, 2000. Unit manufacturing costs on a consolidated basis in the three months ended October 31, 2001 decreased 14% as compared to the three months ended October 31, 2000. A significant portion of this decrease relates to the closure of facilities with higher than average unit manufacturing costs. The combined unit manufacturing costs for just the four currently operating mills (Glide, Spanaway, Trask and Tumwater) decreased 2% for the three months ended October 31, 2001 as compared to the three months ended October 31, 2000. This decrease in unit manufacturing costs was due to both improved mill productivity and an increase in total operating hours. During the three months ended October 31, 2000, the production at several mills was curtailed in response to then- existing poor market conditions. As of October 31, 2001, the Company had available an estimated $47 million in federal net operating losses and $35 million in state net operating losses to offset future taxable income. Due to the bankruptcy, substantial doubt exists regarding the Company's ability to fully utilize these NOLs. As a result, the Company fully reserved for the NOLs generated during the three months ended October 31, 2001. The Company periodically reviews the above factors and may change the amount of the valuation allowance as facts and circumstances dictate. Comparison of Six Months Ended October 31, 2001 and 2000 Net sales for the six months ended October 31, 2001 decreased $6.0 million (7.0%), as compared to the six months ended October 31, 2000. This decrease was principally caused by a 12% decrease in lumber sales volume partially offset by a 5% increase in the weighted average net lumber sales price. The decrease in lumber sales volume resulted from the curtailment of operations of Central Point Lumber Co., Morton Forest Products Co., North Powder Lumber Co., and Pacific Hardwoods-South Bend Co. during fiscal 2001. Gross profit for the six months ended October 31, 2001 was 7.8% of net sales, compared to negative 1.4% of net sales for the six months ended October 31, 2000. Unit manufacturing costs on a consolidated basis in the six months ended October 31, 2001 decreased 17% as compared to the six months ended October 31, 2000. A significant portion of this decrease relates to the closure of facilities with higher than average unit manufacturing costs. The combined unit manufacturing costs for just the four currently operating mills (Glide, Spanaway, Trask and Tumwater) decreased 4% for the six months ended October 31, 2001 as compared to the six months ended October 31, 2000. This decrease in unit manufacturing costs was due to both improved mill productivity and an increase in total operating hours. During the six months ended October 31, 2000, several of the mills curtailed production in response to then-existing poor market conditions. As of October 31, 2001, the Company had available an estimated $47 million in federal net operating losses and $35 million in state net operating losses to offset future taxable income. Due to the bankruptcy, substantial doubt exists regarding the Company's ability to fully utilize these NOLs. For the six months ended October 31, 2001 the Company utilized previously reserved NOLs to offset any potential income tax expense related to current period earnings. This utilization of NOLs resulted in no income tax expense for the current period. UNIVERSAL AUTOMOTIVE: Exercise Period for Warrants Extended ----------------------------------------------------------- Concerning shares issued in connection with the exercise of warrants, Universal Automotive Industries, Inc. has extended the expiration of the exercise period for the Warrants from 5:00 p.m. New York City time on December 31, 2001 to 5:00 p.m. Chicago time on January 15, 2002. No other term or condition relating to the Warrants or their exercise has been amended. Founded in 1981 as a general auto parts distributor, the company makes and distributes aftermarket brake products, including drums, rotors, disc pads, relined brake shoes, and hoses. Universal Automotive sells its value-line brake parts under the Universal Brake Parts (UBP) brand and private labels; it sells premium products under the Ultimate name. Products are sold to national retailers and warehouse and specialty distributors in North America. The firm's eParts eXchange (EPX) subsidiary operates a B2B Internet platform for buyers and sellers of automotive aftermarket parts. Executives Arvin Scott, Yehuda Tzur, and Sami Israel own about 45% of the company. As of September 30, 2001, the company's liquidity is strained, as its current liabilities exceeded current assets by over $300,000. WAVERIDER COMMS: Fails to Meet Nasdaq Listing Requirements ---------------------------------------------------------- WaveRider Communications, Inc. (Nasdaq:WAVC), a leading global provider of fixed wireless Internet access products, announced it received a Nasdaq Staff Determination on December 21, 2001 indicating the Company did not comply with the minimum net tangible assets and the minimum stockholders' equity requirements for continued listing on The Nasdaq National Market as set forth in Marketplace Rule 4450(a)(3), and that its securities are, therefore, subject to delisting from The Nasdaq National Market. The Company has requested a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. There can be no assurance the Panel will grant the Company's request for continued listing on the Nasdaq National Market or the Company's alternate request to list its stock on the Nasdaq Small Cap Market. If the Panel does not approve either request, the Company's stock may be eligible for quotation on the OTC Bulletin Board. A hearing date has not yet been determined. WaveRider Communications Inc. -- http://www.waverider.com-- is a leading wireless information technology company that develops, manufactures and markets products for data communications and Wireless Internet Networking (WIN). WaveRider's high performance products use direct sequence spread spectrum technology and operate in the license-free 900 MHz and 2.4 GHz ISM frequency bands. NCL Series Wireless Bridges and Routers provide the wireless connection between single or multiple computer networks. Integrated network management features ensure data is quickly forwarded to its intended destination based on network conditions. WaveRider's LMS (Last Mile Solution) Product Family connects wireless modems that offer high-speed connections to the Internet for business and residential customers. WaveRider is traded on the NASDAQ National Market, under the symbol WAVC. * BOND PRICING: For the week of Dec. 31, 2001 - January 2, 2002 --------------------------------------------------------------- Following are indicated prices for selected issues: Amresco 9 7/8 '05 29 - 30 (f) Asia Pulp & Paper 11 3/4 '05 23 - 26 (f) AMR 9 '12 91 - 93 Bethlehem Steel 10 3/8 '03 10 - 12 (f) Chiquita 9 5/8 '04 85 - 87 (f) Conseco 9 '06 42 - 44 Enron 9 5/8 '03 17 - 19 (f) Global Crossing 9 1/8 '04 11 - 12 Level III 9 1/8 '04 48 - 50 McLeod 11 3/8 '09 23 - 25 NWA 8.70 '07 80 - 82 Owens Corning 7 1/2 '05 33 - 35 (f) Revlon 8 5/8 '08 40 - 42 Royal Caribbean 7 1/4 '06 72 - 76 Trump AC 11 1/4 '06 63 - 65 USG 9 1/4 '01 74 - 76 (f) Westpoint 7 3/4 '05 33 - 35 Xerox 5 1/4 '03 93 - 95 ********* 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. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.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. Yvonne L. Metzler, Bernadette C. de Roda, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2001. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $575 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***