TCR_Public/020215.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

             Friday, February 15, 2002, Vol. 6, No. 33


ADVANCED LIGHTING: S&P Junks Ratings on Increased Financial Risk
ADVANTICA RESTAURANT: Extends Sr. Note Exchange Offer to Tues.
AMERICAN MEDIA: S&P Rates New Subordinated Notes at B-
BALANCED CARE: Resolves Pending Litigation vs. Health Care REIT
CEDARA SOFTWARE: Pays Down Subordinated Debt by Additional $1MM

COURTYARD BY MARRIOTT: S&P Holds Low-B Sr. Secured Debt Rating
DELTA AIR LINES: Discloses 4.95% Equity Stake in priceline
ENERGY VISIONS: Intends to Raise CDN$357K via Private Placement
ENRON CORP: Committee Taps Houlihan Lokey for Financial Advice
ENVIRO-RECOVERY: Creditors File Involuntary Chapter 11 Petition

EUPHONIX INC: Gets Approval to Restructure Promissory Notes
EXODUS COMMS: Fleet Wants Monthly Payment of Postpetition Rent
FACTORY CARD: Plan Confirmation Hearing Scheduled for March 20
FEDERAL-MOGUL: Future Claimants Tap Young Conaway as Counsel
FOCAL COMMS: Morgan Stanley Discloses 11.3% Equity Stake

GLOBAL CROSSING: Signs-Up Arthur Andersen as Auditors
GLOBO CABO: S&P Drops and Places Low-B Ratings on Watch Negative
GLOBOPAR: S&P Concerned About Diminished Financial Flexibility
HAMPTON IND.: Hires McGladrey to Replace Deloitte as Auditors
HEARTLAND TECHNOLOGY: Fails to Meet AMEX Listing Guidelines

ICG COMMS: Court Extends Time to Remove Litigation Until May 8
IT GROUP: Gets Okay to Pay $3MM Prepetition Employee Obligations
INFERTEK INC: Process to Cease Business Operations Underway
INTELLICORP: Fails to Comply with Nasdaq Listing Requirements
KMART CORP: Court Approves Professionals' Compensation Protocol

LIONBRIDGE TECHNOLOGIES: Rory Cowan Discloses 9.15% Equity Stake
LITTLE ERIC: Case Summary & 2 Largest Unsecured Creditors
LOOK COMMS: CCAA Plan Gives Bell Canada Unit 34% Equity Stake
LUIGINO'S INC: S&P Affirms B+ Rating Following Recapitalization
MANHATTAN IMAGING: Case Summary & Largest Unsecured Creditors

MCLEODUSA INC: Taps Skadden Arps as Counsel in Chapter 11 Case
MCLEODUSA INC: Holders of 40% of Bonds Back Reorganization Plan
METALS USA: Court Approves Uniform Asset Sales Procedures
MIKOHN GAMING: Seeking Strategic Alternatives to Enhance Value
MONTANA POWER: Completes Restructuring to Become Touch America

NATIONSRENT: Committee Taps Lowenstein Sandler as Counsel
NETCENTIVES INC: Trilegiant Acquires Patents from Asset Auction
PACIFIC AEROSPACE: Dismisses KPMG and Hires Andersen as Auditors
PACIFIC GAS: Entering into Supplemental Agreements with 21 QFs
PACIFIC GAS: Says CPUC's Term Sheet Not Credible & Won't Work

PACIFICARE HEALTH: Q4 2001 Financial Results Reach Expectations
PENN NATIONAL GAMING: Commences Sale of 2.5 Million Shares
PEOPLEPC INC: Special Shareholders' Meeting Set for Tuesday
PRECISION AUTO CARE: Rights Offering to Expire on March 15, 2002
PRINTING ARTS: Wants Removal Period Deadline Moved to April 30

PROVANT: Rejects IIR's Proposal to Buy $47MM Bank Debt Position
PSINET INC: Court Okays Staubach to Dispose of 4 Properties
SOLA INT'L: S&P Revises Outlook over Continued Weak Performance
SUN HEALTHCARE: Judge Walrath Confirms Plan of Reorganization
SUPERIOR TELECOM: S&P Cuts Ratings On Weakening Fin'l Condition

TELESYSTEM INT'L: Extends Purchase Offer for Units to Feb. 28
TELESYSTEM INT'L: Commission Rejects Highfields' Hearing Request
TERAGLOBAL COMMS: WallerSutton Takes Over Controlling Interest
U.S. INDUSTRIES: First Quarter Net Loss Nearly Doubles to $7MM
VANGUARD AIRLINES: Set to Revise Loan Guarantee Application

WILLIAMS COMMS: Will Give Banks a Restructuring Plan by Feb. 25

BOOK REVIEW: Creating Value Through Corporate Restructuring:
              Case Studies in Bankruptcies, Buyouts, and Breakups


ADVANCED LIGHTING: S&P Junks Ratings on Increased Financial Risk
Standard & Poor's lowered its corporate credit rating on
Advanced Lighting Technologies Inc., a designer, manufacturer,
and marketer of metal halide lighting products, to triple-'C'-
plus from single-'B' due to increased financial risk.

At the same time, all ratings were removed from CreditWatch
where they were placed December 19, 2001. The Solon, Ohio-based
company has about $135 million in debt. The outlook is now

"The downgrade is based on ADLT's weaker-than-expected operating
performance, significantly deteriorating credit protection
measures, a heavy debt burden, and very constrained liquidity,"
said Standard & Poor's credit analyst Brian Janiak.

Although Standard & Poor's believes the company's debt reduction
following the December 13, 2001, sale of its lighting fixture
business, along with the cost-saving actions taken in the first
quarter of fiscal 2002, will lead to better credit protection
measures over time, the improvement may be delayed due to the
current challenging economic environment.

The ratings reflect the company's niche market position in the
metal halide lighting business and its established relationship
with major lighting manufacturers, largely offset by the
company's weak financial profile as evidenced by a heavy debt
burden and very limited financial flexibility.

Although sales, excluding the fixture subsidiaries, were
relatively flat for the first six months of fiscal 2002 ended
December 31, 2001, the company reported a $10.7 million loss
from operations compared with income from operations of $7.6
million for the same period in the previous year. The company's
poor operating performance is primarily due to the overall weak
U.S. economy, reduced demand for its metal halide products,
higher operating costs as a percentage of sales, and competitive

Poor operating performance during a time of very high debt
levels has resulted in very weak credit protection measures,
with total debt to EBITDA of about 7.9 times and EBITDA interest
of about 1.8x as of Dec. 31, 2001, on a trailing 12-month basis
(pro forma for asset sales and excluding non-recurring charges).

Financial flexibility is limited with about $15 million
available under a $25 million revolving credit facility and $1.8
million in cash as of December 31, 2001. Liquidity will remain
constrained because of the company's $4 million interest payment
due in March 2002 on its 8% senior notes, annual debt maturities
of about $3.6 million, significant capital expenditures and R&D
costs to operate its businesses, and its restrictive financial

If it appears the company's operating performance and credit
protection measures will remain below expected levels for an
extended period, and its current liquidity position will remain
constrained, the ratings could be lowered.

ADVANTICA RESTAURANT: Extends Sr. Note Exchange Offer to Tues.
Advantica Restaurant Group, Inc. (OTCBB: DINE) said that it has
extended to 5:00 p.m., New York City time, on February 19, 2002,
its offer to exchange up to $204.1 million of registered 12.75%
senior notes due 2007 to be jointly issued by Denny's Holdings,
Inc. and Advantica for up to $265.0 million of Advantica's
11.25% senior notes due 2008, of which $529.6 million aggregate
principal amount is currently outstanding.

The exchange offer was scheduled to expire at 5:00 p.m., New
York City time, on February 12, 2002. Except for the extension
of the expiration date, all other terms and provisions of the
exchange offer remain as set forth in the exchange offer
prospectus previously furnished to the holders of the Old Notes.

To date, an aggregate of approximately $64.0 million Old Notes
have been tendered for exchange.

Advantica Restaurant Group, Inc. is one of the largest
restaurant companies in the United States, operating over 2,300
moderately priced restaurants in the mid-scale dining segment.
Advantica owns and operates the Denny's, Coco's and Carrows
restaurant brands. FRD Acquisition Co., the parent company of
Coco's and Carrows and a wholly owned subsidiary of Advantica,
is classified as a discontinued operation for financial
reporting purposes and is currently under the protection of
Chapter 11 of the United States Bankruptcy Code effective as of
February 14, 2001. For further information on the Company,
including news releases, links to SEC filings and other
financial information, please visit Advantica's website at

DebtTraders reports that Advantica Restaurant Group's 11.250%
bonds due 2008 (ADVRES1) are trading between 73 and 76. See
real-time bond pricing.

AMERICAN MEDIA: S&P Rates New Subordinated Notes at B-
Standard & Poor's said that it assigned its single-'B'-minus
rating to publisher American Media Operations Inc.'s privately
placed, Rule 144A $150 million 10-1/4% series B senior
subordinated notes due 2009.

At the same time, Standard & Poor's said it had affirmed its
existing ratings on the Boca Raton, Florida-based company. The
corporate credit rating is single-'B'-plus and the outlook is
stable. The company has approximately $750 million in
outstanding debt.

"The company plans to use half of the proceeds of the new notes
issue to redeem its stock from EMP Group LLC," said Standard &
Poor's analyst Hal F. Diamond. "The transaction results in a
modest increase in financial risk at a time when circulation and
profitability are under pressure."  Mr. Diamond noted that that
the company's free cash flow is expected to be adequate because
of low working capital and capital expenditure requirements.

Standard & Poor's said that its ratings on the company continue
to reflect its solid competitive position in the tabloid
publishing market niche, offset by a small subscriber base and
limited operational diversity.

American Media publishes the National Enquirer, Star, and the
Globe, which are the top three U.S. tabloid titles. A new,
experienced management team has been implementing a business
strategy since 1999 to drive single-copy circulation through
enhanced editorial content and aggressive promotion.
Nevertheless, newsstand circulation at the three core
publications has continued to decline, despite a publication
redesign and a national television advertising campaign.
Standard & Poor's noted that the October 2001 anthrax incident
at the company's Boca Raton headquarters has exacerbated the
secular decline in circulation, but that circulation levels
have improved since the incident, although they remain below
previous levels.

BALANCED CARE: Resolves Pending Litigation vs. Health Care REIT
On December 21, 2001, Balanced Care Corporation, IPC Advisors
S.a.r.l. and Health Care REIT Inc. (HCN), entered into a Master
Lease Offer under which the Company and Health Care REIT agreed
to resolve certain pending litigation against the Company that
resulted from the Company's failure to perform its obligations
under existing lease and loan documents with Health Care REIT,
subject to the negotiation of final documentation that has now
been completed. In accordance with the Master Lease Offer, (a)
the Company, IPC and HCN entered into a Settlement Agreement and
a Release Agreement, each dated January 31, 2002, which provide
for the mutual release of liability in connection with the
Defaults and for dismissal of the Pending Litigation, (b) the
Company entered into a Master Lease with HCN relating to the
Company's facilities located in Lebanon, Loyalsock, Bloomsburg
and Saxonburg, PA and Sagamore Hills, OH effective January 1,
2002, (c) the Company agreed to pay $2.0 million to HCN
($250,000 in cash, $1.5 million pursuant to a note that provides
for a discounted payoff if the note is paid in full prior to
April 1, 2006, and $250,000 in cash over the next 12 months),
(d) IPC purchased from HCN for $5.0 million certain promissory
notes of the Company that provided working capital for the
facilities leased from HCN having an aggregate outstanding
principal balance (including accrued interest) of $6.4 million,
(e) the Company transferred the operations of its Merrillville,
IN and Westerville, OH facilities to a third party operator
designated by HCN effective January 9, 2002 and (f) the Company
transferred the operations of its Morristown and Oak
Ridge, TN facilities to a third party operator designated by HCN
effective January 31, 2002.

The Master Lease Agreement has an initial term of 14 years, and
has three five-year renewal terms. Under the Master Lease
Agreement, the Company has several options to acquire the
facilities. The Company has the right to assign the purchase
options under the Master Lease Agreement to IPC or its
affiliates without HCN's prior consent. The Master Lease
Agreement is guaranteed by the Company and certain of its
subsidiaries (BCC). The Company has entered into an assignment
agreement with IPC providing that under certain circumstances
IPC may exercise the purchase options under the Master Lease
Agreement in BCC's stead. In such event, IPC will become the
owner of the properties that are currently subject to the Master
Lease Agreement.

IPC has agreed to allow the Company to accrue interest on the
Debt at an annual rate of 12%, which amount will be added to
principal. Certain of the promissory notes constituting the Debt
originally bore interest at an annual rate of 14% and default
rates in excess of such amount up to 18.5%. The Debt (except for
that certain promissory note in the original principal amount of
$1 million, matures on the earlier to occur of (i) November 1,
2008 and (ii) the date on which the fee simple interest to the
facilities is acquired from HCN under the purchase options. The
$1,000,000 Note matures on October 1, 2008.

The company operates about 65 assisted living and skilled
nursing facilities for middle and upper income seniors in 10
states. Its Outlook Pointe assisted living facilities offer 24-
hour personal and health care services, including help with
bathing, eating, and dressing. The Balanced Gold program
provides services aimed at improving residents' cognitive,
emotional, and physical well-being. Like many assisted-living
providers, Balanced Care is having trouble paying its rent, due
in part to an increase in supply that grew faster than demand. A
Luxembourg-based investment firm owns more than 50% of the
company. At June 30, 2001, the company reported an upside-down
balance sheet, showing a total shareholders' equity deficit of
about $9 million.

CEDARA SOFTWARE: Pays Down Subordinated Debt by Additional $1MM
Cedara Software Corp., (TSE:CDE/Nasdaq:CDSW) announced that it
has reached settlement with holders of an additional $1.0
million of promissory notes which were exchangeable into
convertible subordinated debentures, which debentures in turn
were convertible into common shares of the Company at $2.50 per
share. The $1.0 million of promissory notes outstanding have
been exchanged for 400,000 common shares. Of the $7.1 million of
promissory notes originally outstanding, this settlement brings
the total converted to common shares to $4.5 million or
1,800,000 common shares. The Company also announced that an
additional $350,000 of promissory notes were settled by
exchanging the notes for unsecured convertible debentures with a
corresponding principal amount due five years from the date of
issuance, bearing interest at 5% and convertible into common
shares at a conversion price of $2.50.

Michael Greenberg, Chairman and CEO of Cedara said, "This
additional settlement with the note holders results in a
$1,350,000 reduction in the current liabilities of the Company,
and a $1,000,000 increase in shareholders' equity."

The Company also announced the completion of a new banking
arrangement that allows for a $9.0 million operating line. As
part of the new banking arrangement, Analogic Corporation
(Cedara's largest shareholder) has guaranteed the bank operating
facility by way of a letter of credit.

Cedara Software Corp., based in the greater Toronto area, is a
leading healthcare imaging software developer. Cedara serves
leading healthcare original equipment manufacturers (OEMs) and
value-added resellers (VARs) and has long-term relationships
with companies such as Cerner, GE, Hitachi, Philips, Siemens,
and Toshiba. Cedara offers its OEM customers a rich array of
end-to-end imaging solutions. The Cedara Imaging Application
Platform (IAP(TM)) is a development environment supporting
Windows and Unix. This continuously enhanced imaging software is
embedded in 30% of MRIs sold today. Cedara offers components and
applications that address all modalities and aspects of clinical
workflow, including 3D imaging and advanced post-processing;
volumetric rendering; disease-centric imaging solutions for
cardiology; and streaming DICOM for web-enabled imaging. Through
its Dicomit Dicom Information Technologies Inc. subsidiary,
Cedara provides ultrasound and DICOM connectivity solutions to
OEM customers.

COURTYARD BY MARRIOTT: S&P Holds Low-B Sr. Secured Debt Rating
Standard & Poor's said that it affirmed its ratings on Courtyard
by Marriott II L.P.'s (CBMII). At the same time, the double-'B'-
minus corporate credit and single-'B' senior secured debt
ratings were removed from CreditWatch, where they were placed on
September 21, 2001.

The actions reflect Standard & Poor's expectation that the
limited-service hotel portfolio of CBMII will generate adequate
cash flow to support the ratings, despite the more challenging
lodging environment since the September 11 terrorist attacks and
in the slowing economy.

While the cushion available to meet senior note interest is
expected to decline somewhat, Standard & Poor's believes it
remains adequate, given expectations for cash flow, and the
added structural benefit to holders as a result of the
subordination of certain operating fees and expenses payable
to Marriott International Inc., the strong hotel operator with
which Bethesda, Maryland-based CBMII is aligned.

The outlook is negative.

"We expect little improvement in 2002 cash flow, as a result of
the difficult lodging environment," said credit analyst Craig
Parmelee. But he added that Standard & Poor's expects that
beyond 2002, CBMII will generate operating cash flow more in
line with the higher pre-2001 levels.

Mr. Parmelee said, "Ratings could be lowered if the operating
environment is weaker than anticipated, putting additional
pressure on credit protection measures."

Senior note holders benefit from the subordination of certain
operating fees and expenses that are payable to Marriott
International. These fees and expenses include a portion of the
base management fee, the entire incentive management fee, and
ground rent that is due to Marriott.

DELTA AIR LINES: Discloses 4.95% Equity Stake in priceline
On January 31, 2002 and February 1, 2002, Delta sold an
aggregate of 1,728,571 shares of priceline common stock in
transactions on the Nasdaq National Market for an aggregate
sales price of approximately $10,852,008.03. The Open Market
Sales are summarized as follows: (a) Delta sold 850,000 shares
on January 31, 2002 at an average price per share of $6.12 and
(b) Delta sold 878,571 shares on February 1, 2002 at an average
price per share of $6.43.

Immediately after the consummation of the Open Market Sales,
Delta beneficially owned 11,801,153 shares of priceline common
stock. The shares beneficially owned by Delta after consummation
of the Open Market Sales represented approximately 4.95%
(assuming the exercise of Delta's right to purchase all
4,675,000 shares of priceline common stock pursuant to the
Amended 1999 Warrant and the exercise of Delta's right to
purchase the remaining 4,537,199 shares of priceline common
stock pursuant to the 2001 Warrant) of the shares of priceline
common stock outstanding on November 12, 2001. As a result of
the Open Market Sales, Delta ceased to be the beneficial owner
of more than 5% of priceline's common stock on February 1, 2002.

Delta Air Lines, the #3 US carrier (behind UAL's United and
AMR's American), is expanding its US regional operations while
building a global alliance. With hubs in Atlanta, Dallas/Fort
Worth, Cincinnati, New York City (Kennedy), and Salt Lake City,
Delta flies to 205 US cities and about 45 foreign destinations.
It also serves more than 220 US cities and nearly 120
destinations abroad through code-sharing agreements. In the US,
Delta owns regional carriers Delta Express, Atlantic Southeast,
and COMAIR. Internationally, it has formed the SkyTeam alliance
with Air France, AeroMexico, and Korean Air Lines to compete
with rival alliances Star and Oneworld. Delta also owns 40% of
computer reservation service WORLDSPAN.

As reported in the September 25, 2001, edition of the Troubled
Company Reported, Standard & Poor's lowered its corporate
credit, senior secured debt and senior unsecured debt ratings on
Delta Air Lines Inc., to the low-B level, and were placed on
CreditWatch with negative implications.

The downgrades, S&P said, reflected the severe impact of sharply
reduced air traffic since the September 11 terrorist attacks in
New York City and Washington, D.C., with expectations for only a
slow recovery in the coming months. This worsens significantly
an already grim airline industry outlook, with depressed
business travel and higher labor costs.

The extent of the downgrades was determined principally by:

     * The risk of a downward rating action prior to the current
       crisis, and thus how much credit "cushion" was available
       within those ratings;

     * The cash and bank lines available to Delta Air Lines Inc.,
       as well as the amount of owned, unsecured aircraft that
       could be used in secured debt or sale-leasebacks to raise
       further funds; and

     * The ability of Delta Air Lines to reduce cash operating
       expenses and commitments for capital spending.

DebtTraders reports that Delta Air Lines' 9.750% bonds due 2021
(DELAIR4) are trading between 87.5 and 90. See
real-time bond pricing.

ENERGY VISIONS: Intends to Raise CDN$357K via Private Placement
Energy Visions Inc. (EVI.S/CDNX and OTCBB: EGYV), announced its
intention to raise up to CDN$357,500 in a non-brokered private
placement. The offering will consist of up to 650,000 units at a
price of CDN$0.55 per unit. Each unit is comprised of one common
share and one common share purchase warrant. Each common share
purchase warrant entitles the holder thereof to purchase one
common share at the price of CDN$0.75 for a period of 12 months
from the closing date. Closing is expected to occur prior to the
end of February 2002.

The common shares and the purchase warrants will be sold on a
private placement basis in the Province of Ontario pursuant to
certain exemptions from the registration and prospectus
requirements of Ontario securities legislation. The closing of
the private placement will be subject to CDNX regulatory
approval. The net proceeds of the private placement are intended
for general corporate purposes while EVI considers a proposal
for a major acquisition.

EVI has approved in principle a proposal by Rabih Holdings Ltd.
to acquire a controlling interest in Pure Energy Inc., which
owns 100% of the issued and outstanding shares in Pure Energy
Battery Inc., located in Amherst, Nova Scotia. The proposal is
subject to approval from the NSBI (Nova Scotia Business Inc.)
board on a debt-restructuring package as well as various
regulatory agencies. The ability of EVI to complete the proposed
transaction involves a number of risks and uncertainties and
there is no assurance that the proposed transaction will be
completed. At September 30, 2001, the company had a working
capital deficiency of $310,000.

For further information please contact Wayne Hartford at (416)
733-2736 or EVI Head Office - Ottawa (613) 990-9373 or. The
company's Web site is at

ENRON CORP: Committee Taps Houlihan Lokey for Financial Advice
The Official Committee of Unsecured Creditors of Enron
Corporation, and its debtor-affiliates seeks the Court's
authority to retain Houlihan Lokey Howard & Zukin Financial
Advisors, Inc., as its financial advisor under a general
retainer, nunc pro tunc to December 17, 2001.

Committee Co-Chair Julie J. Becker from The Williams Companies,
Inc., explains that Houlihan Lokey was selected based on the
firm's global presence and extensive knowledge and expertise in
bankruptcy and corporate reorganization.  Because of Houlihan
Lokey's experience in business reorganizations, the Committee
believes the firm is exceptionally well qualified to serve as
its financial advisors in these cases.

Houlihan Lokey is expected to provide these services to the

   (a) Evaluating the assets and liabilities of the Debtors and
       their subsidiaries;

   (b) Analyzing and reviewing the financial and operating
       statements of the Debtors and their subsidiaries;

   (c) Analyzing the business plans and forecasts of the Debtors
       and their subsidiaries;

   (d) Evaluating all aspects of DIP financing, cash collateral
       usage and adequate protection therefore, and any exit
       financing in connection with any plan of reorganization
       and any budgets relating thereto;

   (e) Helping with the claim resolution process and
       distributions relating thereto;

   (f) Providing such specific valuation or other financial
       analyses or opinions as the Committee may require in
       connection with the case;

   (g) Assessing the financial issues and options concerning:

       -- the sale of any assets of the Debtors, either in whole
          or in part, and

       -- the Debtors' plan(s) of reorganization or any other
          plan(s) of reorganization and assisting the Committee
          in negotiating the terms thereof;

   (h) Preparation, analysis and explanation of the Plan to
       various constituencies;

   (i) Providing testimony in court on behalf of the Committee;

   (j) Providing litigation support to Committee Counsel in any
       contested matter before the Court.

Pursuant to the terms of an Engagement Letter, and subject to
Court approval, Houlihan will be paid:

-- Monthly Fee:

   The Company shall pay Houlihan Lokey a monthly fee of $350,000
   on each monthly anniversary of the Effective Date of the
   Engagement Letter.  The Monthly Fees shall be considered fully
   earned when due and are non-refundable regardless of whether
   any Transaction is consummated.  In the event that, during the
   term of the engagement, it is reasonably expected by the
   Committee that there will be a period of sustained inactivity
   or significantly low activity, the Committee and Houlihan
   Lokey shall agree in "good faith" to a reduced monthly fee
   that is commensurate with the work that is expected to be
   required of Houlihan Lokey during that period.

-- Transaction Fee:

   Houlihan Lokey shall be entitled to an additional fee of
   $9,500,000 shall be earned upon the closing or consummation of
   a Transaction and shall be paid upon the effective date of a
   Chapter 11 plan of reorganization or liquidation.  Of the
   Transaction Fee, $4,000,000 shall be subject to these credits
   of the Monthly Fees earned by Houlihan Lokey:

   (a) 25% of the Monthly Fees earned after the first 9 months of
       the engagement, and

   (b) 50% of the Monthly Fees earned after the first 18 months
       of the engagement.

   In addition, the Committee reserves the right to object to the
   Reserve Amount (net of any credits of the Monthly Fees applied
   to such amount) in the event the Committee can establish that
   such amount (given the entire compensation to be received by
   Houlihan Lokey pursuant to the terms of this Agreement) was
   not reasonable based upon the services actually provided by
   Houlihan Lokey.

-- Reimbursement of Expenses:

   In addition to any other payments and regardless of whether
   any Transaction is consummated, Houlihan Lokey shall be
   reimbursed for all out-of-pocket expenses that are reasonably
   incurred in connection with its services.  Such fees and
   expenses will include, but not be limited to, travel expenses,
   communication charges, database charges, copying expenses, and
   delivery and distribution charges.

-- Tail Period:

   Notwithstanding any termination of the Engagement Letter,
   Houlihan Lokey shall be entitled to full payment, in cash, of
   the Transaction Fees so long as a Transaction is consummated
   with the consent or approval of the Committee (by majority
   vote) during the term of the Engagement Letter, or within 6
   months after the date of termination of the Engagement Letter.

-- Indemnification:

   The Debtors shall indemnify Houlihan Lokey to the fullest
   extent lawful, from and against any and all losses, claims,
   damages or liabilities -- except for any liability resulting
   from Houlihan's bad faith, self-dealing, willful misconduct or
   gross negligence.

Eric Siegert, Managing Director of Houlihan Lokey Howard & Zukin
Financial Advisors Inc., assures the Court that the terms and
conditions of the Engagement Letter were heavily negotiated
between the Committee and Houlihan Lokey.

Mr. Siegert acknowledges that the Monthly Fee and the
Transaction fee are somewhat larger than that ordinarily charged
by the firm. "But this is due to the fact that this is one of
the largest and most complex restructuring efforts ever
undertaken in the United Sates, and that Houlihan Lokey will be
required to dedicate more professionals and other resources to
this engagement," Mr. Siegert explains.

Mr. Siegert maintains that the firm is a "disinterested person"
as the term is defined in Section 101(14) of the Bankruptcy
Code. After conducting a check on the Houlihan Lokey's
relationship with the parties-in-interest in these cases, Mr.
Siegert tells Judge Gonzalez that the firm holds no materially
adverse interest as to the matters upon which Houlihan Lokey is
to be retained. But should the firm discover additional facts,
Mr. Siegert promises to file a supplementary affidavit with the
Court immediately. (Enron Bankruptcy News, Issue No. 12;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

ENVIRO-RECOVERY: Creditors File Involuntary Chapter 11 Petition
On January 25, 2002, several creditors of Enviro-Recovery, Inc.
and Superior Water Logged Lumber Company, Inc. filed involuntary
petitions against each company under Chapter 11 of the United
States Bankruptcy Code. The actions were filed at the United
States Bankruptcy Court in the Western District of Wisconsin,
located in Eau Claire, Wisconsin, Case Numbers 02-10456-11
(Enviro) and 92-10457-11 (Superior).

The Company is engaged primarily in the production of lumber and
wood products from old growth forest timber recovered from the
bottom of the lakes and rivers of North America. Lumber sales
are made to customers located mainly in the upper Midwestern
region of the United States.

EUPHONIX INC: Gets Approval to Restructure Promissory Notes
Over the last 12 months, Euphonix, Inc., (OTCBB:EUPH) has made a
number of strategic changes to enhance its long-term growth and
financial operating results. These changes included the decision
to focus on its core business of large format mixing consoles.
During these trying economic and political times, Euphonix has
continued to invest in current and new product development.
While the Company's overall headcount has been reduced, there
have been staffing increases in engineering and marketing.

As part of its plan to enhance its future financial operating
results, the Company announced on Feb. 7, 2002, that its Board
of Directors had unanimously approved the filing of Form 15 with
the Securities and Exchange Commission. Filing Form 15 allows
Euphonix to suspend its obligations to file periodic reports
with the Securities and Exchange Commission, including Forms 10-
Q and 10-K. As a result, Euphonix is now a privately held
company. One of the practical effects of this decision will be
to remove the burdensome accounting, legal and administrative
costs associated with SEC reporting, which has been a material
cost element of the Company's operating cost. The projected
accounting and legal cost savings will help to bring the
Company's expenses more in line with its revenues and will
enable the Company's management to focus more of its time on
other business issues.

Euphonix also recently garnered the necessary shareholder
approval for its $6.0 million line of credit secured in November
2001 and the restructuring of the Company's existing promissory
notes, which included extending the maturity dates to December
2003. The $6.0 million line of credit will be used to support
investment in new product development and future operations. The
line of credit was obtained from Dieter Meier and Walter Bosch,
significant shareholders and creditors of Euphonix who also
serve on the Company's Board of Directors.

On August 1, 2001, Jeffrey Chew was appointed CEO of the Company
after rejoining Euphonix in January 2001 as COO. From 1991 to
1997, Mr. Chew was employed by Euphonix, where his last position
was Chief Financial Officer and VP Finance, which included
responsibilities for manufacturing operations, and in 1995 led
the Company's IPO. From 1997 to 2000, Mr. Chew was CFO for and then Sierra Imaging, where he led the merger of
Sierra with Conexant.

In December 2001, Andrew Wild rejoined Euphonix as VP of
Marketing, during 1991 to 1996 he was VP Sales and Marketing at
Euphonix. Mr. Wild was CEO of DSP Media, an Australian-based
digital audio workstation company, for the past two years. While
his focus is on marketing, Mr. Wild will be very involved in
sales activities, especially in the US.

In January 2002, Euphonix appointed Martin Kloiber as the
Executive Vice President of Technology. Kloiber was previously
head of new technology developments at the Company and is a
member of the Euphonix Board of Directors. Kloiber holds a
degree in music and electronics, and has been working as an
independent music producer and engineer since 1984. In 1992,
Kloiber co-founded, designed and acted as chief engineer for
Soundproof Studios in Los Angeles. Soundproof is home to
European music duo, Yello and includes a Euphonix System 5
console and R-1 multi-track recorder.

Chairman of the Board, musician and filmmaker, Dieter Meier
explained the reasoning behind the new investment and the
company's goals, "First I invested by buying stock about 4 years
ago. Then I got closer to Euphonix and supported the development
of the first fully digital large format console, System 5,
because I was convinced that in a world of propeller planes,
this company was working on a jet engine. To aggressively attack
the large format post and broadcast market, my group of
investors recently decided to commit sufficient funds in the
order of six million dollars." He added, "I want to make
Euphonix very profitable and very strong...we are in business
for the long haul."

On the subject of the staffing changes, Dieter commented, "We
need to be more market driven as a company, providing solutions
for customers in the broadcast, post and music markets. Andrew
Wild and Martin Kloiber both have a great deal of experience in
the audio industry and can help to make Euphonix number one."

Euphonix is a leading manufacturer of large format digital audio
consoles and digital peripherals for broadcast, post and music
production. More information is available at 650/855-0400 or on
the Euphonix Web site at

EXODUS COMMS: Fleet Wants Monthly Payment of Postpetition Rent
Fleet Business Credit LLC moves the Court for entry of an order
requiring Exodus Communications, Inc., and its debtor-affiliates
to pay monthly rent due for the rental of personal property
until those leases are assumed or rejected amounting to a total
of $643,565.64 and for allowance of administrative claim in the
current amount of $1,023,375.50 or in the alternative, relief
from the automatic stay.

Regina A. Iorii, Esq., at Ashby & Geddes in Wilmington,
Delaware, contends that the Debtors are delinquent in their
rental payments to Fleet under the lease amounting to a total of
$643,565.64. Because the Debtors filed their bankruptcy petition
in September 2001, the 60-day breathing period provided for in
section 365(d)(10) has expired and the Debtors must comply with
their obligations under the leases and schedules.
Notwithstanding this obligation, the Debtors have not fully
complied with their obligations under the leases and have not
made any rental payments since December 2001.

As the Debtors are continuing to possess and use the personal
property leased under the master leases and schedules without
compensating Fleet for the use of property, Ms. Iorii contends
that Fleet is entitled to adequate protection of its ownership
interests. The adequate protection payments should consist of
the full lease payments as required under the leases and
schedules. (Exodus Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

FACTORY CARD: Plan Confirmation Hearing Scheduled for March 20
                        DISTRICT OF DELAWARE

In re                            :    Chapter 11 Case Nos.
FACTORY CARD OUTLET CORP, and    :    99-685 (EIK)
FACOTRY CARD OUTLET OF           :    99-686 (EIK)
     AMERICA LTS.,                :
                                  :    (Jointly Administered)
            Debtors.              :



   1.  On February 5, 2002, Factory Card Outlet Corp. and Factory
Card Outlet of America Ltd. (collectively, the "Debtors") filed
with the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court") an amended joint plan of
reorganization, dated February 5, 2002 (the "Plan").  On
February 5, 2002, after notice and a hearing, pursuant to
sections 1125 and 1126(b) of title 11 of the United States code
(the "Bankruptcy Code"), the Bankruptcy Court approved the
disclosure statement with respect to the Plan, forms of ballot,
balloting instructions and solicitation procedures, and
established voting deadlines and procedures for a tabulation of
votes (the "Disclosure Statement Order").  Pursuant to the
Disclosure Statement Order, the Bankruptcy court has set March
13, 2002 as the deadline by which votes must be actually
received by the Debtors' balloting agent on or before 5:00 p.m.
Pacific Time.

    2.  A hearing to consider confirmation of the plan, including
the substantive consolidation of the Debtors (for Plan purposes
only) provided for thereunder, and any objections thereto will
be held before the Honorable Erwin I. Katz, United States
Bankruptcy Judge at the United States Bankruptcy court for the
Northern District of Illinois, 219 South Dearborn Street,
Courtroom 760, Chicago, Illinois 60604 on March 20, 2002 at
10:00 a.m., Central Time, or as soon thereafter as counsel may
be heard (the "Confirmation Hearing").  The Confirmation Hearing
may be adjourned from time to time without further notice other
than an announcement of the adjourned date or dates at the
Confirmation Hearing or at an adjourned Confirmation Hearing.

    3.  In accordance with the Disclosure Statement Order, all
notices, copies of the Plan, the approved disclosure statement,
ballots, and balloting instructions will be mailed to the
holders of claims and equity interests of record as of January
31, 2002, who are entitled to vote on the Plan.  Holders of
claims or interests who are not entitled to vote on the Plan
shall receive a separate notice of non-voting status outlining
the Debtors' proposed treatment of their nonvoting claims of

    4.  Any objections to the Plan, including the substantive
consolidation of the Debtors (for Plan purposes only) provided
for thereunder, shall be in writing, shall set forth the name of
the objectant, the nature and amount of any claims or interests
held by the objectant against the Debtors, the basis for the
objection and the specific grounds therefore and (a) shall be
filed with the Clerk of the Bankruptcy Court, together with
proof of service, no later than 4:00 p.m., Eastern time, on
March 13, 2002 at the United States Bankruptcy Court for the
District of Delaware, 844 King Street, Wilmington, Delaware
19801 and (b) must be served so as to be received on or before
4:00 p.m., Eastern Time, on March 13, 2002 on (i) Attorneys for
the Debtors, Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New
York, NY 10153 Attn:  Richard P. Krasnow, Esq.; (ii) Attorneys
for the Debtors, Richards, Layton & Finger, P.A., One Rodney
Square, PO Box 551 Wilmington, DE 19899, Attn:  Daniel J.
DeFranceschi, Esq., (iii) Office of the United States Trustee,
844 King Street, Suite 2313, Lockbox 35, Wilmington, DE 1981-
3519; (iv) Attorneys for the Creditors Committee, Otterbourg,
Steindler, Houston & Rosen, P.C., 230 Park Avenue, New York, NY
10169, Attn:  Scott L. Hazan, Esq.; (v) Attorneys for the Equity
Committee, sidley Austin Brown & Wood, 10 S. Dearborn Street,
Chicago, IL 60603, Attn:  Bryan Krakauer, Esq.; (vii) Attorneys
for the Equity Committee, Rosenthal, Monhait, Gross & Goddess,
P.A., Mellon Bank Center, PO Box 1070, Suite 1401, Wilmington,
DE 19899-1070, Attn:  Kevin Gross, Esq.; (viii) Attorneys for
the Debtors' Postpetition Lenders, Choate, Hall & Steward,
Exchange Place, 53 State Street, Boston, MA 02109, Attn:  Peter
Palladino, Esq.; (ix) Attorneys for the Debtors' Postpetition
Lenders Morris, Nichols, Arsht & Tunnell, 1201 North Market
Street, PO Box 1347, Wilmington, DE 19899, Attn:  Derek C.
Abbott, Esq; and (x) the United States Securities and Exchange
Commission, Midwest Regional Office, 500 West Madison Street,
Chicago, Illinois 60661, Attn:  Jolene M. Wise, Esq.  Replies to
objections to the Plan, if any, may be filed no later than 4:00
p.m. Eastern Time on march 19, 2002.

                               Dated: Wilmington, Delaware
                               February 5, 2002

                               Richard P. Krasnow
                               WEIL, GOTSHAL & MANGES LLP
                               767 Fifth Avenue
                               New York, New York 10153
                               (212) 310-8000

                               Daniel J. DeFranceschi (No. 2732)
                               RICHARDS, LAYTON & FINGER, P.A.
                               One Rodney Square
                               PO Box 551
                               Wilmington, Delaware 19899
                               (302) 658-6541

                               Attorneys For Debtors

FEDERAL-MOGUL: Future Claimants Tap Young Conaway as Counsel
Eric D. Green, Esq., the proposed legal representative for
future asbestos-related claimants of Federal-Mogul Corporation,
and its debtor-affiliates, moves the Court for entry of an order
authorizing his employment and retention of Young Conaway
Stargatt & Taylor LLP as counsel, effective January 7, 2002.

The Future Claimants' Representative seeks to retain Young
Conaway because its attorneys have extensive experience and
knowledge in the field of corporate reorganization, debtors and
creditors' rights and in particular, the resolution of asbestos-
related liabilities. Accordingly, the futures representative
believes that Young Conaway is well qualified to represent him
in these cases.

Mr. Green relates that Young Conaway has substantial experience
in bankruptcy cases affecting the rights of mass-tort asbestos
claimants, having represented the legal representative for
unknown bodily injury claimants in the Celotex bankruptcy cases,
currently  represents the unknown asbestos bodily injury
claimants in The Babcock & Wilcox Co., and the Owens Corning
cases and also represents the Debtor in the asbestos-related
chapter 11 case of Fuller-Austin Insulation Co.

The services that Young Conaway will perform to enable the
Future Representative to execute his duties and responsibilities
in connection with these cases include:

A. provide legal advice with respect to the Future
    Representative's power and duties as Future Representative
    for the Future Claimants;

B. taking any and all actions necessary to protect and maximize
    the value of the Debtors' estates for the purpose of making
    distributions to Future Claimants and to represent the
    Futures Representative in connection with negotiating,
    formulating, drafting, confirming and implementing a plan
    of reorganization and performing such other functions
    reasonably necessary to effectively represent the interest
    of Future Claimants;

C. preparing on behalf of the Future Representative the
    necessary applications, motion, objections, answers, orders,
    reports and other legal papers in connection with the
    administration of these cases;

D. performing other legal services and other support requested
    by the Future Representative in connection with these cases.

James L. Patton Jr., Esq., at Young Conaway Conaway Stargatt &
Taylor LLP, relates that the Firm intends to apply for
compensation for professional services rendered in connection
with these cases and for reimbursement of actual and necessary
incurred. The attorneys and paralegals presently designated to
represent the Futures Representative and their current standard
hourly rates are:

       James L. Patton Jr. (Partner)           $475 per hour
       Edwin J. Harron (Associate)              330 per hour
       Timothy E. Lengkeek (Associate)          220 per hour
       Sandi Van Dyk (Paralegal)                130 per hour

(Federal-Mogul Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

FOCAL COMMS: Morgan Stanley Discloses 11.3% Equity Stake
Morgan Stanley Dean Witter & Co. report the beneficial ownership
of 19,321,789 shares of the common stock of Focal Communications
Corporation, which represents 11.2763% of the outstanding common
stock of the Company.  Accounts managed on a discretionary basis
by Morgan Stanley Dean Witter & Co. are known to have the right
to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of such securities.  No such
account holds more than 5 percent of the class.  Morgan Stanley
Dean Witter & Co. possess the shared powers to vote and dispose
of the stock held.

Focal Communications gets right to the point: The competitive
local-exchange carrier (CLEC) provides local and long-distance
voice services over more than 500,000 access lines in more than
20 US metropolitan markets. Targeting large corporations, it
also offers such data services as Internet access and remote
access to LANs, ISPs, and value-added resellers. Focal owns and
operates switches and leases transport capacity; it typically
provides its services over T1 lines. Nearly 70% of Focal's lines
are used for data traffic, and the company has rolled out
broadband digital subscriber line (DSL) service. Focal also
offers equipment colocation for ISPs. Investment firm Madison
Dearborn owns 35% of the company. At June 30, 2001, the company
recorded a total shareholders' equity deficit of $23 million.

GLOBAL CROSSING: Signs-Up Arthur Andersen as Auditors
Global Crossing Ltd., and its debtor-affiliates ask that the
Court to approve their employment of Arthur Andersen to, without

A. audit financial statements and assist in preparing and filing
      financial statements and disclosure documents required by
      the SEC and statutory and/or other regulatory authorities
      around the world;

B. audit examinations of any benefit plans as may be required by
      the Department of Labor or by the Employee Retirement
      Income Security Act and provide consultation with respect
      to other employee matters;

C. review unaudited quarterly financial statements of the
      Debtors as required by applicable law or regulations, or as
      requested by the Debtors;

D. provide other tax consulting and preparation services;

E. assist in preparing financial disclosures required by the
      Court, including the schedules of assets and liabilities,
      the statement of financial affairs and monthly operating

F. assist the Debtors, and other financial professionals
      retained by the Debtors, with the preparation of their
      business plan on a collaborative basis so as not to be
      duplicative in effort or expense;

G. assist the Debtors by analyzing operations and identifying
      areas of potential cost savings and operating efficiencies;

H. assist in the coordination of responses to creditor
      information requests and interfacing with creditors and
      their financial advisors;

I. assist Debtors' legal counsel, to the extent necessary, with
      the analysis and revision of the Debtors' plan or plans of

J. attend meetings and assist in discussions with the Creditors'
      Committee, the U.S. Trustee, and other interested parties,
      to the extent requested by the Debtor;

K. consult with the Debtors' management on other business
      matters relating to its chapter 11 reorganization efforts;

L. assist with such other matters as Debtors' management or
      legal counsel and Andersen may mutually agree.

Mitchell C. Sussis, the Debtors' Corporate Secretary, tells the
Court that Andersen's services as auditors and accounting, tax
and financial advisors are necessary in order to enable the
Debtors to execute their duties as debtors and debtors in
possession. The services to be rendered by Andersen are not
intended to be duplicative in any manner with the services
performed and to be performed by any other party retained by the
Debtors and the firm will undertake every reasonable effort to
avoid any duplication of their respective services. Andersen is
well qualified to perform the auditing and accounting, tax, and
financial advisory services as described above, and the Debtors
know of no reason why Andersen should not be retained.

Andersen partner James M. Lukenda relates that, in accordance
with Andersen's historical billing practices with the Debtors,
the firm provides fixed-fee or reduced hourly billing rate
arrangements with the Debtors for non-restructuring related
Audit Services, and anticipates providing fixed-fee or reduced
hourly billing rate arrangements with the Debtors for non-
restructuring related Audit Services, relating to the review of
the Debtors' quarterly financial statements for 2002, audits of
various benefit plans for the year ended December 31, 2001, and
statutory audits of financial statements for Debtor and non-
Debtor subsidiaries/affiliates throughout the world. The fee for
the services will be $1,125,000 plus out of pocket expenses.
Billings will be made as follows:

       2001 Q1 and Q2 Reviews      $125,000 (previously billed)
       October 10, 2001            $200,000
       November 10, 2001           $200,000
       December 10, 2001           $200,000
       January 10, 2002            $200,000
       February 10, 2002           $200,000

For all other advisory services, Mr. Lukenda states that
Andersen will seek to be compensated for services actually
rendered on an hourly basis at the firm's customary rates and
disbursements incurred. The customary hourly rates of Andersen
are as follows:

       Partners/Principals                   $425 - 600
       Managers/Directors                    $310 - 525
       Seniors/Associates/Consultants        $180 - 495
       Staff/Analysts/Paraprofessionals      $ 90 - 250

Mr. Lukenda asserts that Andersen has not had any prior
association with the Debtors, any creditors of the Debtors, or
any other parties in interest in these chapter 11 cases, or
their respective attorneys and accountants, identified at the
present time, except that:

A. As independent auditors, Andersen has audited the financial
      statements of the Debtors since fiscal 1997. Andersen has,
      since the date of appointment as auditors, also performed
      various accounting advisory, transaction advisory, and tax
      services for the Debtors.

B. Andersen has performed professional services in unrelated
      matters for certain parties of interest including: The
      Pacific Capital Group, CISCO Systems Inc., Sonus Networks
      Inc., Qwest Communications Corporation, ABN Amro bank N.V.,
      Alliance Capital Management, Allstate Insurance, Bank
      Leumi, Bank of America, Bank of China, Bank of Nova Scotia,
      Bank of Tokyo Mitsubishi, Bank One, Black Diamond Capital
      Mgmt., LLC, Caravelle Advisors LLC, CIBC Oppenheimer,
      Citibank, First Union, Industrial Bank of Japan, Indosuez,
      JP Morgan/Chase, Morgan Stanley Dean Witter, Pacific
      Investment Management Company, Sumitomo Trust & Banking
      Co., West LB, Banc One, Trust Company of the West, Alcatel,
      Lucent, Cisco, Sonus Networks Limited, Versatel Telecom
      Europe, Enron, United States Trust Company of New York,
      Canadian Imperial Bank of Commerce, Citicorp USA, Inc.,
      Salomon Smith barney, Inc., West LB, Pacific Capital Group,
      Inc., and Softbank Corp. None of the entities represent
      more than 1.0% of Andersen's annual revenues. Andersen has
      not been retained to assist any of these entities with
      regard to these chapter 11 cases.

C. Andersen has worked, continues to work, and has mutual
      clients with Weil Gotshal, Skadden, Arps, Slate, Meagher, &
      Flom LLP, tax counsel, Simpson Thatcher & Bartlett, general
      counsel, and Milbank Tweed Hadley & McCloy LLP, counsel
      to the Debtors' bank group. Andersen has coordinated
      efforts with these firms on common client engagements and
      has been retained directly by these firms for professional

D. The Debtors have numerous additional creditors, equity
      security holders and other parties with whom they maintain
      significant business relationships and these creditors,
      equity security holders and other parties may be
      represented by counsel in addition to those firms
      identified. Andersen may have audit, tax, financial
      advisory, consulting or other professional relationships
      with such entities or persons or Andersen may, from time to
      time, perform professional services for such entities or
      persons unrelated to the Debtors or their business affairs.

E. Asia Global Crossing Ltd. and certain of its subsidiaries
      have engaged Andersen to perform audits of their December
      31, 2001 financial statements. Andersen has, since the date
      of appointment as auditors, also performed various
      accounting advisory, transaction advisory, and tax services
      for the Asia Global Crossing Ltd. and its subsidiaries.

F. Certain Debtors' have also engaged Andersen to perform
      various statutory audits as required by local regulation
      throughout the world.

G. Andersen received a retainer of $750,000 from the Debtors in
      connection with this case for pre-petition services and
      services to be rendered subsequent to January 28, 2002 and
      to be applied to Andersen's final allowance for services in
      this case.

Within the one-year and ninety day periods prepetition, Mr.
Lukenda informs the Court that Andersen received compensation of
approximately $13,800,000 and $4,325,000, respectively and
inclusive of the retainer above, from the Debtors related to
services provided including attest and audit services, assisting
in the preparation of various forms and reports required to be
filed with the Securities and Exchange Commission and other
regulatory entities, rendering tax return preparation and tax
consulting services, transaction advisory services, and
restructuring assistance. (Global Crossing Bankruptcy News,
Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900)

GLOBO CABO: S&P Drops and Places Low-B Ratings on Watch Negative
Standard & Poor's lowered its foreign and local currency
corporate credit and senior unsecured debt ratings on Globo Cabo
S.A. to single-'B'-plus from double-'B'-minus. At the same time,
the ratings were placed on CreditWatch with negative
implications. The downgrade of Globo Cabo follows that of its
controlling shareholder, Globopar S.A.

The ratings on Globo Cabo incorporated Standard & Poor's
perception that the company was strategic to distributing
content produced at TV Globo Ltda., and Globosat, and therefore
counted on operating and financial support from Globopar,
benefiting Globo Cabo's rating. Due to Globopar's own diminished
financial flexibility, such capacity to provide support is now
more limited.

The ratings on Globo Cabo reflect the challenges of operating in
a volatile economy, as well as the company's high indebtedness
and the currency mismatch between debt and cash generation.
These weaknesses are partially offset by Globo Cabo's leading
market position in pay-TV, the favorable growth prospects for
non-traditional pay-TV services, as well as the above-mentioned
support albeit diminished from Globopar.

To reduce its vulnerability to exchange-rate fluctuations, Globo
Cabo has been working with controlling shareholders to rearrange
its capital structure. At the same time, the company is working
with bankers to resolve the refinancing of short-term maturities
with longer-term instruments. These actions should bring debt
levels more in line with the company's capacity to generate cash
and to amortize debt. Additionally, the company is implementing
a significant cost reduction plan, which includes cuts in
workforce, outsourcing, capturing of synergies with Net Sul,
renegotiation of programming contracts to include multi-year
contracts or more predictable prices, and more selective
investment decisions.

These measures have already resulted in stronger profitability
in the third quarter of 2001, when the EBITDA margin improved to
27.8% of sales, compared to 22.2% in the previous quarter.
EBITDA to interest ratio improved slightly to 1.2x. Still,
overall, financial ratios are in line with Standard & Poor's
expectations, and should remain stable, as Globo Cabo is
focusing on revenue growth from existing customers and on
leveraging the usage of the existing network.

The CreditWatch on Globo Cabo ratings will be resolved together
with the rating action taken on Globopar, which will depend on
the debt reduction strategies of Globopar.

GLOBOPAR: S&P Concerned About Diminished Financial Flexibility
Standard & Poor's lowered its foreign currency corporate credit
and senior unsecured ratings on Globopar S.A. and TV Globo Ltda.
to single-'B'-plus from double-'B'-minus. At the same time,
Standard & Poor's lowered its local currency corporate credit
ratings on Globopar and TV Globo to single-'B'-plus from double-
'B'. The foreign currency ratings were placed on CreditWatch
with negative implications, while the local currency rating
remain on CreditWatch with negative implications since May 21,

The downgrade reflects the company's diminished financial
flexibility and Standard & Poor's expectations that credit
measures will continue to be under pressure over the
intermediate term.

The local currency rating was placed on CreditWatch with
negative implications in May 2001, reflecting the group's weak
performance in the previous two quarters (fourth quarter 2000
and first quarter 2001), together with its inability to meet
Standard & Poor's expectations of continuous improvement in
Globopar's financial profile through significant leverage
reduction and sustainable cash flow generation.

While Standard & Poor's had originally expected only a one-notch
downgrade of the local currency rating, the economic
environment, as well as its impact on Globopar's financial
performance, have been worse than originally anticipated. The
foreign currency ratings, which were already one notch lower
that the local currency ratings, were lowered by one notch.

Lower advertising revenues and weak performance at smaller
subsidiaries have depressed cash generation and resulted in
deterioration in the group's financial profile. The devaluation
of the real in the past few months has put substantial stress on
the group's financials, because revenues and cash are generated
in reais, while debt service is mostly U.S. dollar-denominated.
As a consequence, the group's cash position, which was important
to offsetting considerable refinancing risk, was significantly

After the conclusion of Globo Cabo's recapitalization plan in
1999, and the significant excess liquidity brought by the sale
of 30% of to Telecom Italia, Standard & Poor's
expected the group to reduce debt. However, capital requirements
at subsidiaries, for investments and financial support, the
devaluation of the currency and sharp decrease in advertising
revenues in 2001, have reduced the group's cash position and
consequently its financial flexibility.

The EBITDA margin of TV Globo, the group's main generator of
free cash flow, fell by 50% due to significant decline in
business confidence and advertising spending brought about by
the 2001 Argentine crisis and the energy rationing. As a result,
TV Globo experienced a decrease in revenues of some 13% but was
unable to reduce costs proportionally. Profitability and cash
flow measures in the last 12 months (LTM) ended September 2001
were very weak, with the EBITDA margin for the period reaching a
low 10%, pushing interest coverage ratios (EBITDA to interest)
down to 0.5x, compared to 0.7x in the same period in 2000. The
group's capital structure also deteriorated with the real
devaluation and low free cash flow: debt to capital reached 63%
and debt to EBITDA soared to 15.2x in the LTM ended September
2001, compared to 48% and 9.2x, respectively in 2000. As of
September 2001, net debt position has increased by $340 million
from December 2000.

Standard & Poor's understands that TV Globo's capacity to
generate cash will improve in 2002 since the Soccer World Cup
and presidential elections should improve advertising revenues.
Appreciation of the local currency should have a positive impact
on results also. At the same time, Standard & Poor's expects
management will take appropriate steps to reduce debt and
improve financial ratios.

The CreditWatch will be resolved as soon as management
determines and communicates a timely plan to improve its
financial profile.

Globopar is a holding company for units involved in cable-TV
production and distribution, DTH satellite, publishing, and
Internet-related services. Globopar is analyzed on a
consolidated basis with its subsidiaries including TV Globo, the
principal units of which guarantee Globopar's rated debt. In
its analysis, Standard & Poor's makes certain adjustments to
Globopar's consolidated numbers, one of them being the
incorporation of debt of non-consolidated affiliated and
subsidiary companies guaranteed by Globopar.

HAMPTON IND.: Hires McGladrey to Replace Deloitte as Auditors
Effective January 28, 2002, Hampton Industries, Inc. dismissed
its prior independent accountant, Deloitte & Touche LLP. The
decision to change accountants was approved by the audit
committee of Hampton's Board of Directors.

Deloitte's independent auditors' report dated March 28, 2001 on
Hampton's consolidated financial statements as of and for the
years ended December 30, 2000 and January 1, 2000 appearing in
Hampton's Annual Report on Form 10-K for the year ended December
30, 2000 contained a disclaimer of opinion as illustrated in the
following explanatory paragraphs:  "The accompanying
consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As described
in Note B to the consolidated financial statements, the
Company's recurring losses from operations, default of certain
financial covenants and borrowing base limitations under its
senior credit facility, and the Company's plan to sell all or a
portion of the Company's assets raise substantial doubt about
its ability to continue as a going concern."

"Because of the possible material effects of the uncertainty
referred to in the preceding paragraph, we are unable to
express, and we do not express an opinion on the consolidated
financial statements and the financial statement schedule for
the year ended December 30, 2000."

Effective January 28, 2002, Hampton engaged McGladrey & Pullen
P.C. as its principal accountant.

HEARTLAND TECHNOLOGY: Fails to Meet AMEX Listing Guidelines
Heartland Technology, Inc., (Amex: HTI) reported that Gordon
Newman has resigned from the board of directors, effective
February 11, 2002. Newman was a Class I director whose term of
office ran through the company's 2003 annual meeting.

The company also reported that it has been informed by staff of
the American Stock Exchange that the company does not currently
meet certain guidelines for listing on the exchange and the
company's continued listing eligibility is being reviewed.

Heartland Technology has filed Form 8-K reports with the
Securities and Exchange Commission regarding each of these

ICG COMMS: Court Extends Time to Remove Litigation Until May 8
Judge Walsh approves ICG Communications, Inc. and its debtor-
affiliates' motion to further extend the time within which they
may remove proceedings pending as of the commencement of their
chapter 11 cases.  The time by which they may file notices of
removal with respect to any pending actions is further extended
until the earliest of:

    (a) May 8, 2002;

    (b) 30 days after entry of an order terminating the automatic
        stay with respect to any particular Action sought to be
        removed; and

    (c) the effective date of a plan of reorganization for the
        Debtors. (ICG Communications Bankruptcy News, Issue No.
        17; Bankruptcy Creditors' Service, Inc., 609/392-0900)

IT GROUP: Gets Okay to Pay $3MM Prepetition Employee Obligations
The IT Group, Inc., and its debtor-affiliates are authorized to
reimburse employee expenses in the amount of $750,000, employee
benefits in the amount of $2,110,000 and workers compensation
claims in the amount of $200,000 as set forth in the DIP budget
for the period January 22 to February 15, 2002. (IT Group
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

INFERTEK INC: Process to Cease Business Operations Underway
Infertek, Inc. (OTCBB: IFRKE), (Frankfurt SMQ:FSE), (formerly announced that it has initiated the process of
curtailing its operations.

Although the results of Infertek's operations have continued to
improve in recent months, they have not resulted in any
significant net positive cash flow, and the Company's financial
condition has continued to deteriorate. In recent months,
Infertek's existing and potential customers have identified the
existence of the company's indebtedness to its principal
creditor as a reason for declining to award new business to
Infertek. In the last months, Infertek attempted but was
unsuccessful in negotiating with this creditor an exchange of
this indebtedness for equity, and Infertek has not made the
interest payments on this indebtedness that came due in January
and February 2002. In view of these circumstances, the audit of
the Company's financial statements for its fiscal year ended
September 30, 2001 has not been completed by its new auditors,
and Infertek was not able to timely file its annual report on
Form 10-KSB. As a consequence, cessation of quotation of its
shares of common stock on the Over-the-Counter Bulletin Board is
imminent, and the Company has filed a certification to terminate
the registration of its shares of common stock under the United
States Securities Exchange Act of 1934 and suspending its
obligations to file periodic reports with the United States
Securities and Exchange Commission.

Because virtually all of its assets consist of intangibles
having little if any value without technical and other support
services related to those assets, Infertek will attempt to
retain its key support staff as long as feasible under the
circumstances to continue to fully serve its customers and
retain existing value as an operating unit. Infertek is
presently seeking a purchaser for all or a portion of its
assets, together with an assignment of staff related to the
operations associated with those assets, in an attempt to
realize some value in order to make partial payment to its

Infertek, Inc., develops and markets software technology,
services and solutions for content and knowledge management
through the use and application of its proprietary technology
known as kServer. To date the company has targeted the public
sector, travel and transportation and international trade market
verticals and has successfully delivered its products and
services to a wide number of clients in the United States,
Canada, Europe and Mexico. The company's partnership strategy
aims to introduce its product offering in other vertical markets
by positioning Infertek's partners (kPartners) and methodology
(kMethodology) on a unique system that enables and empowers
individuals and organizations to deliver and implement robust
web strategies. Additional information can be obtained by
visiting the company's Web site at http://www.infertek.comor by
contacting Anna Stylianides at (604) 904-8359, toll- free at
(888) 689-9891 or by email at

INTELLICORP: Fails to Comply with Nasdaq Listing Requirements
IntelliCorp, Inc. (Nasdaq:INAI), a leading provider of eBusiness
and eCRM solutions for the SAP community, announced that it
received a Nasdaq Staff Determination on February 7, 2002,
indicating that the Company fails to comply with the net
tangible assets or the minimum stockholders' equity requirements
for continued listing set forth in Marketplace Rule
4310(c)(2)(B), and that its securities are, therefore, subject
to delisting from the Nasdaq SmallCap 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.

IntelliCorp is a leading solutions and services firm focused on
the implementation of Sales Side B2B, B2C and B2R solutions
requiring extensive technical integration and business process
expertise. Today's competitive climate requires the tight
integration of eBusiness channels with back-office systems to
drive business growth, and increase customer satisfaction and
retention. IntelliCorp has deep capability and experience with
SAP R3,, Siebel eBusiness Applications, and a number
of other dominant software suites and components. In addition,
IntelliCorp offers a suite of software solutions, tools, and
applications for business process management and support of the
integration and management of SAP's back office systems.
Headquartered in Mountain View, CA, the company has offices
across the United States and throughout Europe. IntelliCorp's
web site is

KMART CORP: Court Approves Professionals' Compensation Protocol
Kmart Corporation, and its debtor-affiliates sought and obtained
the Court's authority to establish these procedures for
compensation and reimbursement of court-approved professionals:

   (a) On or before the last day of each month following the
       month for which compensation is sought, each professional
       will submit a monthly statement to:

          (i) The Debtors at Kmart Corporation
              31110 West Big Beaver Road
              Troy, Michigan 48084-3163
              Attn: Janet Kelley
                    Senior Vice President & General Counsel;

         (ii) Counsel to the Debtors
              Skadden, Arps, Slate, Meagher & Flom (Illinois),
              333 West Wacker Drive, Suite 2100
              Chicago, Illinois 60606
              Attn: John Wm. Butler, Jr.;

        (iii) Counsel to the administrative agents
              for Debtors' post-petition lenders
              Morgan Lewis & Bockius
              101 Park Avenue, New York, New York 10178
              Attn: Robert H. Scheibe and Jay Teitelbaum


              Katten Muchin Zavis
              525 West Monroe Street, Suite 1600
              Chicago, Illinois 60661
              Attn: Jeff Marwil and Brian Swett;

         (iv) Counsel to any official committee appointed in
              these cases (who shall serve a notice of appearance
              on the Master Service List promptly after its
              retention); and

          (v) The United States Trustee
              U.S. Trustee, Region 11
              Northern District of Illinois
              227 West Monroe Street, Suite 3350
              Chicago, Illinois 60606

       Each such person receiving such a statement will have 20
       days after the Monthly Statement Date to review the

   (b) At the expiration of the 20-day period, the Debtors shall
       promptly pay 90% of the fees and 100% of the disbursements
       identified in each monthly statement, except such fees or
       disbursements as to which an objection has been served.
       Any professional who fails to submit a monthly statement
       shall be ineligible to receive further payment of fees and
       expenses as provided herein until such time as the monthly
       statement is submitted. The first statements shall be
       submitted and served by each of the professionals by March
       29, 2002 and shall cover the period from the commencement
       of this case through February 28, 2002;

   (c) In the event that any of the Debtors, the United States
       Trustee, the Debtors' post-petition lenders or the
       Committee has an objection to the compensation or
       reimbursement sought in a particular statement, such party
       shall, within 20 days of the Monthly Statement Date, serve
       upon the respective professional and the other persons
       designated to receive monthly statements, a written
       "Notice of Objection to Fee Statement" setting forth the
       precise nature of the objection and the amount at issue.
       Thereafter, the objecting party and the Professional whose
       statement is objected to shall attempt to reach an
       agreement regarding the correct payment to be made. If the
       parties are unable to reach an agreement on the objection
       within 20 days after receipt of such objection, the
       objecting party may file its objection with the Court and
       serve such objection on the respective professional and
       the other parties designated to receive monthly statements
       parties and the Court shall consider and dispose of the
       objection at the next interim fee application hearing. The
       Debtors will be required to pay promptly those fees and
       disbursements that are not the subject of a Notice of
       Objection to Fee Statement.

   (d) Approximately every 4 months, each of the Professionals
       shall file with the Court and serve on the parties
       designated to receive monthly statements, on or before the
       45th day following the last day of the compensation period
       for which compensation is sought, an application for
       interim Court approval and allowance, pursuant to section
       331 of the Bankruptcy Code, of the compensation and
       reimbursement of expenses requested for the prior 4
       months. The first such application shall be filed on or
       before June 17, 2002 and shall cover the period forth the
       commencement of these cases through April 30, 2002. Any
       professional who fails to file an application when due
       shall be ineligible to receive further interim payments of
       fees or expenses as provided herein until such time as the
       application is submitted.

   (e) The pendency of an application or a court order for
       payment of compensation or reimbursement of expenses, and
       the pendency of any Notice of Objection to Fee Statement
       or other objection, shall not disqualify a Professional
       from the future payment or compensation or reimbursement
       of expenses. Neither the payment of, nor the failure to
       pay, in whole or in part, monthly interim compensation and
       reimbursement as provided herein shall bind any
       party-in-interest or this Court with respect to the
       allowance of applications for compensation and
       reimbursement of Professionals.

   (f) Each member of the Committee in this case shall be
       permitted to submit statements of expenses and supporting
       vouchers to counsel for the Committee who shall collect
       and submit such requests for reimbursement in accordance
       with the procedure for monthly and interim compensation
       and reimbursement of Professionals.

The Debtors contend that these procedures will streamline the
professional compensation process and enable the Court and all
other parties to monitor the professional fees incurred in these
Chapter 11 cases more effectively. (Kmart Bankruptcy News, Issue
No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900)

LIONBRIDGE TECHNOLOGIES: Rory Cowan Discloses 9.15% Equity Stake
Rory J. Cowan may be deemed to beneficially own 2,850,748 shares
of the common stock of Lionbridge Technologies, Inc. as of
December 31, 2001. Such shares include 154,164 shares of common
stock deemed to be beneficially owned by Mr. Cowan by virtue of
options exercisable within 60 days of December 31, 2001.  The
amount of stock held represents 9.1% of the outstanding common
stock of Lionbridge.  Mr. Cowan has sole power to vote or direct
the vote of the 2,696,584 shares, and the sole power to dispose
or to direct the disposition of the 2,696,584 shares.

Lionbridge Technologies, Inc. provides solutions for
worldwidedeployment of technology and content to global 2000
companies inthe technology, life sciences and financial services
industries. At June 30, 2001, the company reported a working
capital deficiency of about $7 million.

LITTLE ERIC: Case Summary & 2 Largest Unsecured Creditors
Debtor: Little Eric Shoes Ltd
         1331 Third Avenue
         New York, NY 10021

Bankruptcy Case No.: 02-22209

Chapter 11 Petition Date: February 11, 2002

Court: Southern District of New York (White Plains)

Debtors' Counsel: Eric C. Kurtzman, Esq.
                   Kurtzman Lipton Matera Gurock & Scuderi
                   9 Perlman Drive
                   Spring Valley, NY 10977
                   Tel: (845) 352-8800
                   Fax: (845) 352-8865

Total Assets: $100,000 to $500,000

Total Debts: $1 million to $10 million

Debtor's Largest Unsecured Creditors:

Entity                      Nature Of Claim       Claim Amount
------                      ---------------       ------------
Gildman Shoes Ltd.          Sub lease on          $978,600
1333 Third Avenue           Premises
New York, NY 10021

Chase Manhattan Bank        Revolving Line of      $14,287

LOOK COMMS: CCAA Plan Gives Bell Canada Unit 34% Equity Stake
Bell Canada Enterprises Inc., (BCE) announced that it now holds,
through its subsidiary Teleglobe Inc., 7,982,654 Class A shares
of Look Communications Inc., representing approximately 34% of
Look's issued and outstanding common equity. This follows the
implementation of Look's Plan of Compromise and Arrangement
under the Companies' Creditors Arrangement Act.

Most of these Class A shares were issued under the Plan against
release of BCE's claims as secured and unsecured creditor with
the balance representing BCE holdings in Look prior to the
implementation of the Plan.

As part of an arrangement between BCE, Telesystem Ltd. and Look,
dated August 9, 2001, BCE and Telesystem Ltd. agreed to vote, or
refrain from voting, their shares in Look in accordance with the
recommendations of Look's management and that for a period of
two years, neither they nor their affiliates would grant any
further financial assistance to Look nor acquire any additional
equity interest in or assets of Look.

BCE is Canada's largest communications company. It has 23
million customer connections through the wireline, wireless,
data/Internet and satellite services it provides, largely under
the Bell brand. BCE leverages those connections with extensive
content creation capabilities through Bell Globemedia which
features some of the strongest brands in the industry - CTV,
Canada's leading private broadcaster, The Globe and Mail,
Canada's National Newspaper and Sympatico-Lycos, the leading
Canadian Internet portal. As well, BCE has extensive e-commerce
capabilities provided under the BCE Emergis brand and serves
international customers through BCE Teleglobe, a global
connectivity, content distribution and Internet hosting company.
BCE shares are listed in Canada, the United States and Europe.

LUIGINO'S INC: S&P Affirms B+ Rating Following Recapitalization
Standard & Poor's affirmed Luigino's Inc., a leading company in
the frozen-entree category, a single-'B'-plus corporate credit
rating. About $169 million of debt was outstanding as of October
7, 2001.

At the same time, Standard & Poor's said that it has revised its
to stable from positive. The outlook revision reflects Standard
& Poor's belief that credit measures will remain appropriate for
the current rating, given Luigino's expected use of debt to
facilitate its acquisitive growth strategy.

"The outlook reflects Standard & Poor's expectations that the
company will retain its solid market positions and maintain a
financial profile in line with the current ratings," commented
Standard & Poor's credit analyst Ronald Neysmith.

The ratings reflect South Duluth, Minn.-based Luigino's Inc.'s
relatively high debt levels following its recapitalization and
subsequent debt-financed purchase of The All-American Gourmet
Co. (AAG) and their Budget Gourmet name brands from Heinz. This
is partially mitigated by the company's strong position in the
highly competitive frozen entr‚e segment in North America.

Products are sold under the Michelina's and Budget Gourmet name
brands. Luigino's operates primarily in the "popular" segment of
the frozen-entr‚e category, selling nondiet entrees priced below
$2.00. The company holds a No. 1 market position in this
segment, with about a 54% share by volume, and a No. 3 position
in the larger frozen-entree category, with about a 20% share.
While the company competes with several larger, financially
stronger companies, Luigino's has established a good niche
within the industry.

MANHATTAN IMAGING: Case Summary & Largest Unsecured Creditors
Debtor: Manhattan Imaging Associates, P.C.
         c/o Robinson Brog Leinwand Greene Et Al
         1345 Avenue Of The Americas
         31st Floor
         New York, NY 10105

Bankruptcy Case No.: 02-10646

Type of Business: The Company operates a medical
                   imaging/radiology imaging center.

Chapter 11 Petition Date: 02/13/2002

Court: Southern District of New York (Manhattan)

Debtor's Counsel: Robert R. Leinwand, Esq.
                   Robinson Brog Leinwand Greene Genovese &
                      Gluck P.C.
                   1345 Avenue of the Americas
                   31st Floor
                   New York, NY 10105
                   Tel: (212) 586-4050

Total Assets: $5,194,769

Total Debts: $5,328,079

Debtor's 20 Largest Unsecured Creditors:

Entity                               Claim Amount
------                               ------------
Jeffery M. Brown Associates, Inc.    $380,802
330 Seventh Ave., 18th Floor
New York, NY 10001

Maureen Matturi                      $320,029
870 UN Plaza Apt. 288
New York, NY 10017

Diagnostic Radiology                 $200,000

Joel N. Bloom, M.D.                  $112,428

Joan A. Kedziora, M.D.               $106,000

A.D. Winston Corp.                   $102,057

David A. Inkeles                     $100,128

S.C. Management                       $40,975

Dancker, Sellew & Douglas             $36,027

GE Healthcare Financial Services      $22,822

GE Healthcare Financial Services      $20,066

Benjamin Golub, Esq.                  $19,558

Nixon Gallager Co.                    $17,638

Ewen Parker Xray Corp.                $13,648

Computer Administration               $13,582

Oxford Health Plans                    $8,528

Aetna/US Heathcare                     $8,164

Mallinkrodt, Inc.                      $5,067

Em Parker                              $4,917

Guardian                               $4,331

MCLEODUSA INC: Taps Skadden Arps as Counsel in Chapter 11 Case
McLeodUSA Inc., seeks to employ Skadden, Arps, Slate, Meagher &
Flom (Illinois) as Counsel in its Chapter 11 case.

Randall Rings, McLeodUSA's Group Vice President, Secretary and
General Counsel, says Skadden, Arps has acquired extensive
knowledge of the Debtor and its businesses and is uniquely
familiar with the Debtor's capital structure, financing
documents and other material agreements after having performed
extensive legal work for the Debtor in connection with certain
corporate, financing, litigation, securities, and other
significant matters since October 2001.

Before commencing the Chapter 11 case, the Debtor sought the
services of Skadden Arps with respect to, among other things,
advice regarding restructuring matters in general and
preparation for the potential commencement and prosecution of a
Chapter 11.

Specifically, Skadden Arps will:

   (a) advise the Debtor with respect to its powers and duties as
       debtor and debtor in possession in the continued
       management and operation of its business and properties;

   (b) attend meetings and negotiate with representatives of
       creditors and other parties in interest and advise and
       consult on the conduct of the Chapter 11 case, including
       all of the legal and administrative requirements of
       operating in Chapter 11;

   (c) take all necessary action to protect and preserve the
       Debtor's estate, including the prosecution of actions on
       its behalf, the defense of any actions commenced against
       its estate, negotiations concerning all litigation in
       which the Debtor may be involved and objections to claims
       filed against the estate;

   (d) prepare on behalf of the Debtor all motions, applications,
       answers, orders, reports and papers necessary to the
       administration of the estate;

   (e) negotiate and prepare on the Debtor's behalf plan(s) of
       reorganization, disclosure statement s) and all related
       agreements and/or documents and take any necessary action
       on behalf of the Debtor to obtain confirmation of such

   (f) advise the Debtor in connection with any sale of assets;

   (g) appear before this Court, any appellate courts, and the
       U.S. Trustee, and protect the interests of the Debtor's
       estate before such courts and the U.S. Trustee; and

   (h) perform all other necessary legal services and provide all
       other necessary legal advice to the Debtor in connection
       with this chapter 11 case.


The Debtor agrees to pay Skadden Arps by the hour under the
Firm's bundled rate structure:

       Partners                                  $480 to $695
       Counsel and Special Counsel               $470
       Associates                                $230 to $470
       Legal Assistants and Support Staff        $80 to $160

The Debtor paid Skadden Arps a $250,000 retainer.  Further, in
the one-year period prior to the Petition Date, the Debtor paid
Skadden Arps $4,470,047.

                  Disinterestedness of Professionals

David S. Kurtz, Esq., the Skadden member leading the engagement,
assures the Court that neither he, his Firm, its members,
counsel or associates have any connection with the Debtor, its
affiliates, its creditors or any other party in interest, or its
respective attorneys and accountants.  Mr. Kurtz is convinced
that Skadden is "disinterested," as that term is defined in
Bankruptcy Code section 101(14), and holds or represents no
interest adverse to the estate.

Out of an abundance of caution, Mr. Kurtz discloses that Skadden
represents some party in virtually every large corporate
restructuring in and outside the United States.  Accordingly,
Skadden has many connections and relationships with parties-in-
interest in the Debtor's case and with their professionals.  Mr.
Kurtz assures Judge Katz that none of these other
representations involve matters that are adverse to McLeodUSA's
interests. (McLeodUSA Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

MCLEODUSA INC: Holders of 40% of Bonds Back Reorganization Plan
McLeodUSA Incorporated, one of the nation's largest independent
competitive local exchange carriers, reported financial and
operating results for the quarter and year ended December 31,

Revenues for fourth quarter were $453.7 million, an increase of
11% over fourth quarter of 2000. EBITDA (earnings before
interest, taxes, depreciation and amortization) for the fourth
quarter, excluding restructuring charges of $6.8 million
associated with the Company's previously announced
recapitalization, was $46.1 million. This was an increase of 74%
over EBITDA of $26.6 million for the same quarter of 2000.
Reported net loss per share for this quarter was $0.31 compared
to $0.26 in the prior year.

Revenues were $1.8 billion for the year 2001, an increase of 30%
over $1.4 billion in the prior year. Excluding restructuring and
one-time charges described below, EBITDA for the year was $128.3
million, an increase of 111% over EBITDA of $60.8 million for
the year 2000. The Company's reported net loss per share for the
year was $4.50 versus $0.95 for the year 2000.

In addition to the fourth quarter charge, the Company recorded
restructuring charges of approximately $2.9 billion in the third
quarter 2001 related to its refocused strategy, including write-
downs of goodwill, other long-lived assets, inventory associated
with discontinuing operations, and charges associated with a
reduction in force and facilities consolidation. The Company
also took a non-cash charge to operating income of $35 million
in the third quarter 2001 associated with balance sheet
adjustments to various accounts such as prepaid expenses,
receivables and bad debt reserves.

     Summary of Recapitalization and Financial Restructuring

On January 31, 2002, the Company announced that it had signed
lock-up agreements with an ad hoc committee of holders of
McLeodUSA senior notes to support a recapitalization of the
Company. Under the terms of the recapitalization, the
bondholders will receive up to $670 million in cash, $175
million of new preferred stock convertible into 15% of the
reorganized Company's common stock, and 5-year warrants to
purchase an additional 6% of the common stock for $30 million.
The ad hoc committee, which holds 23% of the bonds, voted
unanimously in favor of the plan, which will eliminate
approximately $3.0 billion of bond debt.

Additionally, the Company has signed lock-up and support
agreements with stockholders holding approximately 45% of its
Preferred Series A, Series D and Series E shares, including
funds managed by Forstmann Little & Co., to support the
recapitalization plan.

McLeodUSA has recently been informed by the advisors to the ad
hoc committee of the bondholders, that holders representing a
total of approximately $1.2 billion of bonds, or 40% of the
outstanding bonds, have expressed support for the reorganization
plan that was negotiated with the ad hoc committee. Included in
the $1.2 billion are bondholders representing approximately $690
million, or 23%, who have signed lock-up or support agreements
to vote in favor of the transaction.

Also on January 31, 2002, with the support of its Board of
Directors, Secured Lenders, Forstmann Little, the bondholders'
ad hoc committee and certain of its preferred stockholders, the
Company filed a pre-negotiated plan of reorganization through a
Chapter 11 bankruptcy petition filed in the United States
Bankruptcy Court for the District of Delaware, in order to
complete its recapitalization as expeditiously as possible. The
Chapter 11 case includes only the parent company, McLeodUSA
Incorporated. The operating subsidiaries, which include
McLeodUSA Telecommunications, McLeodUSA Publishing, Illinois
Consolidated Telephone Company, and McLeodUSA Purchasing L.L.C.,
are not part of the bankruptcy proceeding.

On February 5, 2002, the Company announced that the United
States Bankruptcy Court for the District of Delaware approved
orders for all of the Company's first day motions related to the
Chapter 11 filing on January 31, 2002. The first day orders
allow the parent company to conduct business as usual relative
to all of its customers, employees and suppliers and to maintain
its existing cash management systems.

The Court also set February 28, 2002 as the date for the hearing
to approve the parent company's disclosure statement and April
5, 2002 as the date for the confirmation hearing for the parent
company's Plan of Reorganization. It is expected that the plan,
if approved, could be implemented in April 2002.

As previously announced, in connection with the recapitalization
transaction, the Company entered into a definitive agreement
with United Kingdom-based Yell Group to purchase McLeodUSA
Publishing Company for $600 million. Under the terms of the
agreement, McLeodUSA Incorporated will retain its distinctive
branding on directories published in its 25-state footprint
through a five-year Branding and Operating Agreement, which
includes renewal options. The Company has received notification
of early termination of the waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 for this transaction.

                          Cash Position

The Company had approximately $140 million in cash available as
of January 31, 2002, and had secured a commitment for a $110
million exit financing facility from a group of lenders arranged
by JPMorgan, Bank of America and Citibank. This exit revolver
may be increased to as much as $160 million and would be
available to McLeodUSA at the completion of the recapitalization
subject to customary conditions. Accordingly, based on such cash
availability, the Company did not require nor expect to obtain
debtor-in-possession financing.

As previously announced, the Company and its Secured Lenders
amended their existing $1.3 billion senior secured credit
facility to permit the use of proceeds from the sale of the
publishing business to retire outstanding bond debt in
connection with the plan. The Company and its Secured Lenders
have also modified the credit agreement to allow the Company to
retain and use the proceeds from all currently identified future
asset sales of non-core businesses and surplus assets for
general working capital purposes in addition to capital
expenditures. Subject to the consummation of the plan of
reorganization, the Company plans to eliminate $425 million of
bank debt by

      (i) a reduction of its current revolver commitment by $140

     (ii) a paydown of its term loan by $60 million ($35 million
          from the Forstmann Little investment and $25 million
          from the directory publishing proceeds), and

    (iii) offer for sale its regulated incumbent local exchange
          subsidiary Illinois Consolidated Telephone Company.

The ICTC sale process is expected to begin after the completion
of the recapitalization and occur within the subsequent 14
months, with up to $225 million of the proceeds applied to
reduce the Company's term loans.

                     Non-Core Asset Sales

In conjunction with the Company's plan to divest non-core
assets, the following announcements were recently made:

      --  On November 19, 2001, McLeodUSA reached an agreement to
sell the non-core assets of RuffaloCODY to present and former
management of the entity. The transaction was completed on
December 5, 2001.

      --  On December 7, 2001, McLeodUSA agreed to sell certain
Internet/data assets and wholesale dial-up Internet Service
Provider customer base (formerly part of Splitrock Services) to
Level 3 Communications, Inc. This transaction was completed on
January 24, 2002.

      --  On January 24, 2002, the Company announced that it had
completed the sale of its customer-premise equipment company,
Integrated Business Systems, to Inter-Tel Technologies, Inc.

McLeodUSA provides integrated communications services, including
local services, in 25 Midwest, Southwest, Northwest and Rocky
Mountain states. The Company is a facilities-based
telecommunications provider with, as of December 31, 2001, 42
ATM switches, 60 voice switches, 485 collocations, 525 DSLAMs,
over 31,000 route miles of fiber optic network and more than
8,600 employees. Visit the Company's Web site at

DebtTraders reports that McLeodusa Inc.'s 11.375% bonds due 2009
(MCLD2) are trading between 24.5 and 25.5. See
real-time bond pricing.

METALS USA: Court Approves Uniform Asset Sales Procedures
Metals USA, Inc., and its debtor-affiliates sought and obtained
from Judge Greendyke approval of uniform Sales Procedures and
Bidding Protections for general use in future sales of their

Jonathan C. Bolton, Esq., at Fulbright & Jaworski LLP in
Houston, Texas, states that a number of asset sales are expected
within the next few months.  Prior to the Petition Date, the
Debtors had already consolidated their facilities and operations
and implemented substantial cost-cutting.  These non-core asset
sales will implement management's cost-cutting measures and
liquidity enhancement outlined in August 2001.

The Debtors are currently in negotiations concerning a number of
assets sale and some of these may need to be presented in the
Court soon.  According to Mr. Bolton, the Debtors want to
establish a regular procedure to bring these various
negotiations to conclusion, in which the Debtors will provide a
blacklined copy to the court if the final contract is different
from the standard Asset Purchase Agreement, where the court will
have pre-approved a standard deposit requirement, Sale
Procedures and Bidding Protections including a break-up fee and
where Debtors and prospective purchasers must justify any
departures from the pre-approved terms.

The Uniform Sale Procedures provide that:

A. The Debtors will initiate negotiations with a potential
      purchaser by sending the Asset Purchase Agreement form and
      obtain the contemplated five percent deposit. The Debtors
      will promptly file a motion to sell these particular
      assets to that initial qualified bidder. The Debtors will
      then provide notice to any identified potential purchaser,
      or any purchaser who requests a copy, and parties-in-
      interest in these cases.

B. The Debtors will seek a preliminary hearing on the Sale
      motion to have the Sale Procedures and Bidding Protections
      applied to the Initial Qualified Bidder. These will
      include a break-up fee greater than one percent of the
      proposed cash purchase price or the standard break-up fee
      of $50,000.

C. The Debtors will propose at the preliminary hearing to
      conduct an auction three weeks after the preliminary
      hearing and will request a final Sale Hearing four weeks
      after the Preliminary hearing.

D. The Debtors will permit and assist other qualified
      prospective purchasers that sign a confidentiality
      agreement to perform reasonable due diligence on the assets
      including the opportunity to meet with management and
      access to data.

E. The Debtors will require prospective new buyers to
      demonstrate that they are qualified bidders and sign an
      Asset Purchase Agreement form and put up a deposit.

F. The Debtors will then conduct an auction to determine whether
      the initial qualified bidder or another is the successful
      bidder. Any auction will be conducted according to the
      terms of the Sale Procedures.

G. The initial qualified bid will be the opening offer at the
      auction. To determine whether a higher bid is being
      offered, the competing bid must exceed the purchase price
      by not less than the sum of the break-up fee and a $50,000
      overbid. Bidding increments after the initial overbids
      shall be made in minimum increments of $50,000.

H. After the auction, the Debtors will propose final approval of
      the successful bidder at a final sale hearing. No further
      bids will be considered after that.

Mr. Bolton submits that it is important to approve in advance
the general principles and procedures for selling the assets as
these will aid in negotiating transactions and aid the Court,
the Creditors' Committee and the Bank Group in analyzing and
approving them.  These procedures will also ensure an orderly
process and secure the highest and best price for the assets
that are up for sale. (Metals USA Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

MIKOHN GAMING: Seeking Strategic Alternatives to Enhance Value
Standard & Poor's said that it placed its single-'B' ratings of
Mikohn Gaming Corp., on CreditWatch with developing
implications, which means the ratings could be either raised or
lowered. The action followed Mikohn's announcement that it has
engaged Jefferies & Co. to help in developing and evaluating
strategic alternatives to enhance stockholder value. These
alternatives may include mergers, acquisitions, or other
potential business combinations, as well as the possible sale of
operating units and product lines that no longer fit the
strategic objectives of the developer and manufacturer of
proprietary branded slot machines and table games.

Las Vegas, Nevada-based Mikohn Gaming also makes interior and
exterior casino signage, progressive jackpot systems, and both
player and game-tracking systems.

Standard & Poor's will evaluate the impact on credit quality
upon the announcement of a transaction or strategic plan.

MONTANA POWER: Completes Restructuring to Become Touch America
The Montana Power Company (NYSE: MTP) said it completed its
planned restructuring in order to become a stand-alone
telecommunications company, Touch America Holdings, Inc.
Beginning yesterday morning, Touch America Holdings, Inc.,
became the listed company on the New York and Pacific stock
exchanges under the symbol TAA.  All outstanding shares of
Montana Power have been converted to shares of Touch America
Holdings on a one-for-one basis.

Wednesday's announcement completes Montana Power's
reorganization to allow the final step -- the sale of the
utility -- to happen.

On September 21, 2001, The Montana Power Company (MPC)
shareholders approved the restructuring plan and the related
sale of Montana Power's electric and natural gas transmission
and distribution utility to NorthWestern Corporation.  Montana
Power and NorthWestern also have received all regulatory
approvals for completing the utility transaction.

Under the restructuring completed Wednesday, MPC merged into The
Montana Power, L.L.C., a Montana limited liability company and
wholly owned subsidiary of Touch America Holdings.

As a result of the merger, each common shareholder of MPC will
be deemed to receive one share of Touch America Holdings' common
stock for each MPC common share held.  Also, MPC's Preferred
Stock, $6.875 Series shareholders will be deemed to receive one
share of Touch America Holdings' Preferred Stock, $6.875 Series
for each such MPC preferred share held.  MPC's Preferred Stock,
$4.20 Series and $6 Series will be redeemed. Instructions for
exchanging shares or redeeming preferred stock are being or will
be mailed to affected shareholders.

Following the merger, The Montana Power, L.L.C., constituting
MPC's utility business, will be sold to NorthWestern.  As a
result of these transactions, Touch America Holdings will become
the owner of the telecommunications operating business, Touch
America, Inc.

"This restructuring is a necessary step for the utility sale and
for Touch America to become a separate telecommunications
company," said Bob Gannon, Montana Power and Touch America's
chairman and chief executive. "With the completion of the
utility sale, Touch America will become a stand-alone fiber-
optic network and broadband products and services
telecommunications company focused on superior customer

According to Gannon, with the utility sale and the transition
completed Touch America will emerge as a unique telecom company
with a state-of-the-art fiber-optic network and operations
support systems, a wide range of leading broadband products and
services, no debt, and cash in the bank. "This was the vision of
the company on March 28, 2000, when Montana Power announced that
it would sell its energy businesses in coal, oil and gas, and
independent power as well as its utility to become a stand-alone
telecommunications company under Touch America," he said.

Touch America is a national fiber-optic network and broadband
products and services company, providing customized voice, data,
and video transport, as well as Internet services, to wholesale
and businesses customers.  Branded TOUCHAMERICA, the
telecommunications company's fiber network is one of the largest
and highest capacity long haul networks in the U.S.
TOUCHAMERICA provides private line services as well as the
latest in IP, ATM and Frame Relay transport protocols.  Touch
America is in the process of transitioning from a subsidiary of
The Montana Power Company to a stand-alone company under Touch
America Holdings, Inc., which will become the traded company. At
June 30, 2001, Montana Power had a working capital deficit of
$137 million. For more information about Touch America, see

NATIONSRENT: Committee Taps Lowenstein Sandler as Counsel
The Official Committee of Unsecured Creditors submits its
application to the Court to employ and retain Lowenstein Sandler
PC as its general counsel in NationsRent Inc., and its debtor-
affiliates' Chapter 11 cases.

Committee Chairman James Schaeffer tells the Court that that the
firm was selected because of the experience and knowledge of its

The professional services expected of Lowenstein include:

A. Advise the Committee members with respect to the Committee's
      duties and powers;

B. Assist the Committee in investigating the acts, conduct,
      assets, liabilities and financial condition of the Debtors,
      the operation of the Debtors' businesses, potential claims
      and any other matter pertinent to the cases or to the
      formulation of Plan of Reorganization Plan;

C. Participate in the formulation of a Reorganization Plan;

D. Assist the Committee in requesting the appointment of a
      Trustee or Examiner should action be necessary; and

E. Perform other legal services that the Committee may require.

Mr. Schaeffer says that aside from reimbursement of out-of-the-
pocket expenses, Lowenstein will also be compensated based on
the hourly rates of its professionals, which are:

            Partners          $275 to $475
            Counsel           $230 to $325
            Associates        $135 to $275
            Legal Assistants   $70 to $125

Lowenstein member Kenneth A. Rosen tells the Court that after
extensive inquiry, it was found that the firm previously
represented the Debtors in 1998 in connection with the
negotiation of an employee severance agreement in New Jersey.
The Debtors' financial creditors, Bank of America, Fleet
National Bank, GE Capital Corporation and Lasalle National Bank
Association are also clients of Lowenstein. Combined, they
represent 1.1% of the firms revenues for the fiscal year 2001.

Because of its representations of some of the lenders under the
Debtors' secured credit facility in matters wholly unrelated to
the Debtors' Chapter 11 cases, Mr. Rosen submits that Lowenstein
in behalf of the Committee will not file or prosecute any
adversary proceeding against the pre-petition or post-petition
Bank Group with respect to the amount, extent, priority or
validity of its liens or to recover a monetary judgment. If such
an adversary proceeding is to be filed, the Committee shall be
represented by its local counsel, The Bayard Firm.

In addition, Mr. Rosen states that Lowenstein is also performing
services to some of the Debtors' equipment lessors in matters
unrelated to these Chapter 11 cases. These include Fleet Capital
Corporation, which represents .1% of Lowenstein's earnings for
the fiscal year 2001 and Lasalle National Leasing Corporation's.
The Lasalle Business Credit represents .5% of Lowenstein's
earnings for the fiscal year 2001. Mr. Rosen assures the Court
that Lowenstein will not be representing the Committee in any
adversary proceeding involving the said Fleet Capital and
Lasalle. If such a proceeding is to take place, the Committee
will be represented by The Bayard Firm.

Mr. Lowenstein admits that Lowenstein does not have knowledge of
the full list of the Debtors' creditors or shareholders. One or
more creditors may be a client of Lowenstein in some capacity
and certain creditors of the Debtors may be divisions or
subsidiaries of companies represented by Lowenstein. Thus, even
a conflict check on the entire list of the Debtors' creditors
may not reveal a complete picture. (NationsRent Bankruptcy News,
Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900)

NETCENTIVES INC: Trilegiant Acquires Patents from Asset Auction
Trilegiant Loyalty Solutions, the leading provider of incentive
and loyalty programs, has won the rights to all of Netcentives'
patents relating to online delivery of incentive programs.  A
personalized email, rewards and recognition solutions firm,
Netcentives declared Chapter 11 in October 2001.  The ensuing
asset auction included US Patent Number 5,774,870 issued to
Netcentives in June 1998 as well as US Patent Number 6,009,412
issued in December 1999.  As the owner of the patents,
Trilegiant Loyalty Solutions will assume most of the existing
licensing agreements and pursue additional agreements as they
relate to the scope of the patents.

"Trilegiant Loyalty Solutions has followed the life of these
patents since they were originally filed," Trilegiant Loyalty
Solutions President Marti Beller, said. "We believe these are
very strong patents and we plan to quickly capitalize on the
competitive advantage that these patents naturally provide us in
our marketplace."

"We are thrilled to gain ownership over Netcentives'
intellectual property," Scott Lazear, Senior Vice President of
Strategic Business Development, added. "Our clients and
prospects are looking to us to provide them with feature rich,
customized loyalty solutions that have a proven ROI. These
patents allow us the freedom to develop those solutions, without
restrictions, at a very compelling price."

Trilegiant Loyalty Solutions offers full service capabilities
including strategic marketing, program design and
implementation, creative services as well as ongoing marketing
and customer service support. Trilegiant Loyalty Solutions'
product line contains end-consumer programs, like Performance
Points, that stimulate usage and retention, as well as internal
incentive programs, like Employalty, which motivate and incent
employees by aligning their behaviors with client objectives. In
addition to Points Solutions, Concierge, 24-Hour Travel Centerr
and Personal Identity Protection are some of the 30 plus Product
Enhancements offered. These solutions all focus on the same
objectives: increased brand awareness, competitive
differentiation and sustained growth of revenue.

Trilegiant Loyalty Solutions is a division of Trilegiant
Corporation, a leader in the membership services and loyalty
businesses, providing products and services that touch the lives
of more than 100 million Americans. Trilegiant's membership
business offers exceptional value, savings, convenience and
protection to its customers through services such as Shoppers
Advantage(R), AutoVantage Gold(SM) and PrivacyGuard(R).
Trilegiant's loyalty business is the leading provider of full-
service loyalty solutions to the financial services industry and
other industries where product differentiation and customer
retention are the primary focus. Trilegiant, which is based in
Norwalk, Connecticut, is the successor to Cendant Membership
Services, Inc. and Cendant Incentives.

San Francisco-based Netcentives Inc., is a provider of
personalized email, rewards and recognition solutions. The
company offers a broad suite of offline and online products
including email communications, sales force incentives, loyalty
and rewards solutions for retail and financial institutions.
Netcentives continues to differentiate itself through
itsintegrated marketing approach, which includes experienced
client service teams, leading-edge technology and expert
consulting. More than 300 companies have partnered with
Netcentives to drive their revenue and reduce costs. On October
5, 2001, Netcentives filed for Chapter 11 reorganization in the
U.S. Bankruptcy Court for the Northern District of California in
San Francisco.

PACIFIC AEROSPACE: Dismisses KPMG and Hires Andersen as Auditors
On January 29, 2002, Pacific Aerospace & Electronics, Inc.
dismissed KPMG LLP as its independent accountant. KPMG had
served as the Company's independent accountant since 1998. The
decision to change its independent accountant was recommended by
the Company's Finance and Audit Committee and approved by its
Board of Directors.

KPMG's report on the Company's consolidated financial statements
for the fiscal year ended May 31, 2001, contained a separate
paragraph stating that: "[T]he Company has suffered recurring
losses from operations and has a net capital deficiency at May
31, 2001, which raise substantial doubt about the entity's
ability to continue as a going concern."  This audit report also
contained a separate paragraph stating that: "Because of the
significance of the uncertainty discussed in the preceding
paragraph, we are unable to express, and we do not express, an
opinion on the accompanying 2001 consolidated financial

KPMG's report on the Company's consolidated financial statements
for the fiscal year ended May 31, 2000, also contained a
separate paragraph stating that: "[T]he Company has suffered
recurring losses from operations, which raise substantial doubt
about the entity's ability to continue as a going concern."

                      New Independent Accountant

On January 30, 2002, Pacific Aerospace & Electronics engaged
Arthur Andersen LLP as its independent accountant to audit its
financial statements for the fiscal year ending May 31, 2002.
The decision to engage Arthur Andersen was recommended by its
Finance and Audit Committee and approved by its Board of

PACIFIC GAS: Entering into Supplemental Agreements with 21 QFs
Pacific Gas and Electric Company sought and obtained the Court's
approval of 21 Supplemental Agreements with Qualifying

         Log No.  Qualifying Facility
         -------  -------------------
         25C250   Badger Creek Limited
         10P005   HL Power Company (Honey Lake)
         10C003   Collins Pine
         13H042   Nelson Creek Hydro
         13Hl32   Digger Creek
         15H002   Henwood Associates (Salmon Creek Hydro)
         13H0l3   Snow Mt. Hydro, Cove
         13H057   Snow Mt. Hydro, Lost Creek 1
         l3H04l   Snow Mt. Hydro, Lost Creek 2
         13H016   Snow Mt. Hydro, Burney Creek
         l3H035   Snow Mt. Hydro, Ponderosa
         19H004   Norman Ross Burgess
         13C038   Burney Forest Products
         13H047   Malacha
         01W095   BNY Western Trust (Northwind Energy)
         l3H004   T&G Hydro
         04H062   MacFadden Farms
         04H061   Yolo County Flood Control (Indian Valley Hydro)
         25C130   Texaco, Fee A
         25C186   Texaco, Fee B
         25C168   Texaco, Fee C
         25C193   Texaco, McKittrick
         25C246   Texaco, SE Kern River
         19C010   Pacific Lumber

The Supplemental Agreements are substantially similar to the
Supplemental Agreements approved by the Court on December 21,
2001, except for these additional provisions agreed to by the
QFs and not objected to by the Committee:

(a) the QFs' waiver of their entitlement for semi-monthly (as
     opposed to monthly) payment for deliveries of energy under
     the QFs' Power Purchase Agreements (PPAs);

(b) the QFs' withdrawal, within seven days of a bankruptcy court
     order approving the Supplemental Agreements, of any claims
     the QFs filed in the bankruptcy case, other than the Section
     503 administrative expense claims provided for in paragraph
     3(g) of the Supplemental Agreements with respect to PG&E's
     prepetition defaults (the Payables) under the PPAs and
     interest thereon or other claims specifically reserved in
     the Supplemental Agreements;

(c) for purposes of administrative efficiency, PG&E's
     reservation of discretion to accelerate the payment schedule
     o the Payables for those QFs owed less than $100,000 in
     Payables, so that PG&E may make fewer than twelve payments;

(d) the QFs' representation that it is the sole holder of all
     right, title and interest to the Payables, and that in the
     event it assigns any interest in the Payables to a third-
     party (the transferee), it will: (1) so notify PG&E; (2)
     forward any payments of Payables to the transferee; and (3)
     indemnify PG&E from any claims by the transferee to collect
     the Payables from PG&E. (Pacific Gas Bankruptcy News, Issue
     No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900)

PACIFIC GAS: Says CPUC's Term Sheet Not Credible & Won't Work
Pacific Gas and Electric Company issued the following statement
in response to the filing made in U.S. Bankruptcy Court by the
California Public Utilities Commission.  On January 16, the
Court ordered the CPUC to submit no later than Wednesday a term
sheet outlining its alternative proposal for the utility to
emerge from bankruptcy:

      "The Court asked the CPUC to prepare a credible term sheet.
The proposal outlined [Wednes]day is not credible and will not
work.  It will not work because it overstates the available
cash, understates the debt and undermines the utility's ability
to invest in electric system reliability.  Most striking is the
fact that the CPUC continues to misunderstand the meaning of
creditworthiness.  The CPUC's term sheet will not restore PG&E
to creditworthy status and thus condemns the state to remain in
the power business."

PACIFICARE HEALTH: Q4 2001 Financial Results Reach Expectations
PacifiCare Health Systems Inc. (Nasdaq:PHSY), announced that pro
forma net income for the fourth quarter ended Dec. 31, 2001, was
$11.8 million before the effect of a restructuring charge.

Including the charge, the reported loss for the quarter was
$26.4 million. This compares with pro forma fourth quarter 2000
net income of $17.7 million excluding a net restructuring charge
that resulted in reported earnings per diluted share of $0.35.

For the year ended Dec. 31, 2001, the company's pro forma
earnings per diluted share totaled $1.68. Reported EPS for the
full year was $0.55 per share. This compares with year-ago
reported earnings of $4.58 per diluted share.

Howard G. Phanstiel, PacifiCare's president and chief executive
officer, said: "The fourth quarter was in line with our
expectations, despite continuing challenges in Texas. Operating
results excluding Texas exceeded our guidance, thus providing
further evidence that our turnaround continues. We are also
making good progress on our initiatives to transform PacifiCare
from an HMO into a diversified consumer health organization.

"We made significant investments in our infrastructure to
support a more competitive business model and a broader product
line, including our new PPO, Medicare Supplement and Select
Hospital products. Our pharmacy benefit management and
behavioral health subsidiaries are steadily building their
unaffiliated membership and increasing their profitability. We
fully expect that the actions taken in 2001 to strengthen our
health plans and grow our specialty businesses will enhance our
margins beginning in 2002 and will move us toward the completion
of our turnaround."

As previously disclosed, the $59.4 million pre-tax restructuring
charge in the 2001 fourth quarter was taken in connection with
the implementation of a profit improvement and cost-savings
program. The charge reflects severance payments and facilities
and fixed asset impairment costs related to a consolidation of
operations and a 15% reduction in workforce, which will take
place over the course of 2002. Including the benefits of new
information technology outsourcing arrangements, the profit
improvement and cost-savings program is expected to generate
annualized savings of $80 to $90 million by 2003.

                     Revenue and Membership

Fourth quarter 2001 revenue of $2.9 billion was 3% below the
same quarter a year ago due to a 17% decrease in commercial
membership and a 10% decrease in Medicare+Choice membership.
Partially offsetting the impact of the membership decline were
increases in commercial HMO premium yields of 13% and Medicare
premium yields of 8%. For the full year, revenue rose 2% to
$11.8 billion in 2001 compared with 2000.

PacifiCare's HMO health plan membership was approximately 3.4
million on Dec. 31, 2001, down 16% year-over-year and 4% below
the third quarter of 2001. The reduction in commercial
membership primarily was the result of planned exits from
unprofitable commercial markets and products, implementing
appropriate premium rate increases, and terminating contracts
with higher-cost network providers. The decrease in
Medicare+Choice membership primarily was due to county exits in
2001 and freezes on new enrollment.

Other income, principally from the company's specialty
businesses, grew 41% from the fourth quarter of 2000, primarily
due to the strong performance of the company's pharmacy benefit
management subsidiary, Prescription Solutions. Prescription
Solutions continued to grow its unaffiliated membership, which
increased another 8% in the fourth quarter and a stellar 79%
year-over-year. PacifiCare Behavioral Health unaffiliated
membership grew 13% over the course of 2001.

Net investment income decreased 26% from the year-ago quarter
primarily due to the impact of lower interest rates on
marketable securities yields.

                      Health Care Costs

The consolidated medical loss ratio (MLR) of 89.5% increased 30
basis points from the third quarter of 2001 and 20 basis points
compared with the fourth quarter of 2000. The Medicare MLR in
the fourth quarter was 91.3%, 230 basis points higher than the
third quarter of 2001. The increase was due to anticipated
seasonal increases in hospital inpatient and outpatient
utilization, as well as expectations for higher rates of
elective utilization prior to the implementation of Jan. 1, 2002
benefit changes.

The fourth quarter commercial MLR of 86.9% declined 260 basis
points from the prior quarter. The improvement was attributable
primarily to commercial premium rate increases and less than
anticipated member utilization in the company's indemnity and
behavioral health businesses, which resulted in favorable
changes in estimates.

           Selling, General & Administrative Expenses

The selling, general and administrative (SG&A) expense ratio of
10.8% for the fourth quarter of 2001 increased by 50 basis
points year-over-year, primarily due to lower revenues, but also
due to the cost of introducing new products. It rose 30 basis
points from the third quarter because of the reduction in
revenues, as well as seasonally higher costs related to annual
open enrollment. SG&A expenses rose 1% to $308.5 million in the
fourth quarter, and totaled $1.2 billion for the year,
comparable with the prior year.

                     Other Financial Data

Medical claims and benefits payable totaled $1.1 billion at Dec.
31, 2001, which was comparable with the total at Sept. 30, 2001,
despite a 4% sequential decrease in membership. Days claims
payable for the fourth quarter decreased 40 basis points to 40.2
compared with the third quarter.

The decrease was due primarily to the reduction in insolvency
reserves as the company made payments in the fourth quarter for
physician group bankruptcies, and to faster claims payments.
Consistent with the company's stated strategy, in the fourth
quarter the claim turnaround period was shortened by another 7%,
bringing the total reduction for the year to 24%.

Days claims receipts on hand was 6.2 days at Dec. 31, 2001, a
slight decrease from the third quarter and 46% below the amount
on hand at the close of 2000.

Earnings before interest, taxes, depreciation, amortization, and
the restructuring charge totaled $79.4 million in the fourth
quarter of 2001, compared with $89.6 million in the third
quarter. Free cash flow, defined as net income plus depreciation
and amortization, less capital expenditures and the
restructuring charge, was $25 million.

On Jan. 2, 2002, the company made a $25 million debt repayment
on the company's term facility using proceeds generated by its
new outsourcing agreement with IBM, which purchased PacifiCare's
information systems equipment.

                         2002 Outlook

Commenting on the company's outlook for the current year,
Phanstiel said: "Our previously announced 2002 EPS guidance of
$3.55 to $3.65, including the favorable amortization impact of
FAS 142 and excluding non-cash charges related to changes in
accounting for the balance sheet carrying value of goodwill,
reflects our expectations for margin improvement as we enhance
our focus on profitable markets and product lines and benefit
from commercial premium rate increases, medical management
initiatives, and increased unaffiliated membership in our
specialty companies.

"We also expect to partially offset inadequate premium increases
from the federal government for our Medicare products with
benefit reductions and partial or full exits from counties where
we could not continue to provide an affordable, quality
Medicare+Choice product to seniors. As we reduce the company's
Medicare+Choice membership, we are accelerating our focus on
resuming commercial membership growth. We believe we are well-
positioned to continue attracting new membership to our
commercial product lines and to our specialty businesses
throughout 2002 and beyond."

PacifiCare Health Systems is one of the nation's largest health
care services companies. Primary operations include managed care
products for employer groups and Medicare beneficiaries in eight
western states and Guam serving approximately 3.4 million

Other specialty products and operations include pharmacy benefit
management, behavioral health services, life and health
insurance, and dental and vision services.

In January, as previously reported in the Troubled Company
Reporter, PacifiCare Health Systems Inc., (Nasdaq:PHSY) obtained
approval from the majority of the company's bank syndicate to
exclude its $60 million pre-tax restructuring charge to be
recorded in the fourth quarter of 2001 from financial covenants.

Also included in the waiver was the elimination of a requirement
that the company retain a financial consultant. PacifiCare, the
report said, expected to remain in compliance with these and all
other terms of its credit facility. More information on
PacifiCare Health Systems can be obtained at
http://www.pacificare.comor by calling 877/PHS-STOCK (877/747-

PENN NATIONAL GAMING: Commences Sale of 2.5 Million Shares
Penn National Gaming, Inc. delivered a registration statement to
the SEC offering 2,500,000 shares of its common stock, and the
selling shareholder is offering 1,000,000 shares of its common
stock. Penn will not receive any proceeds from the shares of
common stock sold by the selling shareholder. The Company's
common stock is quoted on the Nasdaq National Market under the
symbol "PENN." On February 1, 2002, the last sale price of its
common stock as reported on the Nasdaq National Market was
$31.95 per share.

Penn has granted the underwriters a 30-day option from the date
of its prospectus supplement to purchase up to an additional
525,000 shares at the public offering price, less the
underwriting discount, to cover over-allotments.

The company owns and operates horse racing and casino gaming
facilities in the South and East, including Pocono Downs and its
namesake Penn National Race Course. Its Charles Town
Entertainment Complex in West Virginia offers patrons horse
racing and casino gaming, with a thoroughbred track, simulcast
racing, and nearly 2,000 slot machines. It also has 11 off-track
betting centers and manages the Freehold Raceway (50%-owned) in
New Jersey. Penn National's casinos include the Boomtown Biloxi
and Casino Magic Bay St. Louis in Mississippi and the Casino
Rouge Riverboat in Louisiana. Penn is buying the Bullwhackers
Casino operations in Colorado from Hilton Group. The chairman
and CEO Peter Carlino and his family own about 35% of the
company. At September 30, 2001, the company reported a working
capital deficit of $15 million.

PEOPLEPC INC: Special Shareholders' Meeting Set for Tuesday
A Special Meeting of the stockholders of PeoplePC Inc., a
Delaware corporation, will be held on February 19, 2002 at 11:00
a.m., local time, at the Hyatt Embarcadero, 5 Embarcadero
Center, San Francisco, CA 94111. At the Special Meeting,
stockholders will be asked to approve:

       1. The issuance of 437,500,000 shares of the Company's
          common stock, which will exceed 20% of its total common
          stock outstanding, upon conversion of the Company's
          Series B Preferred Stock sold in its recent private

       2. Amendments to the Company's 2000 Stock Plan to increase
          the number of shares of common stock reserved for
          issuance thereunder by 126,404,098 shares and to
          increase the Internal Revenue Code Section 162(m)
          limits on the number of options and stock purchase
          rights granted in any fiscal year of the Company or in
          connection with an individual's initial employment with
          the Company from 2,000,000 to 40,000,000.

       3. An amendment to the Company's Amended and Restated
          Certificate of Incorporation to effect a reverse stock
          split of not less than 1 for 15 and not more than 1 for
          20 and to authorize the Company's Board of Directors to
          determine which, if any, of these reverse stock splits
          to effect.

       4. To approve an amendment to the Company's Amended and
          Restated Certificate of Incorporation to increase the
          number of authorized shares of common stock from
          500,000,000 to 750,000,000.

       5. To transact such other business as may properly come
          before the meeting or any adjournment thereof.

Only stockholders of record at the close of business on January
30, 2002 are entitled to notice of and to vote at the Special

The company sells three-year memberships for about $25 a month
and in return, customers receive a name-brand computer (replaced
every three years) with warranty, Internet access, and access to
its buyer's club, which offers discounts for other businesses
(such as E*TRADE and BUY.COM). The company also sells
memberships just to its buyer's club and has a program that
sells products to businesses' employees. Wholesale distributor
Ingram Micro supplies and distributes PeoplePC's computer
products and processes its orders. At September 30, 2001, the
company had an upside-down balance sheet, with its total
liabilities exceeding its total assets by $26 million.

PRECISION AUTO CARE: Rights Offering to Expire on March 15, 2002
Lou Brown, President and CEO for Precision Auto Care, Inc.
(Nasdaq: PACI) (PACI), announced that the SEC had declared
effective the registration statement in connection with a rights
offering by PACI. In this rights offering, PACI will offer an
aggregate of 4,032,723 shares of its common stock.  Individual
shareholders will be able to purchase 1 share of stock for every
2.5 shares that they own as of February 14, 2002.  The exercise
period for the rights will expire on March 15, 2002. Each right
will entitle the holder to purchase the stock for $.30/share.
The rights are non-transferable.

Robert Falconi, PACI's CFO, said "The company is confident that
the rights offering will  enable the company to raise the
capital that it needs to execute its business plan."

Precision Auto Care, Inc. is the world's leading franchiser of
auto care centers, with over 500 operating centers as of
February 13, 2002. The Company franchises and operates Precision
Tune Auto Care centers around the world.

According to Troubled Company Reporter - October 4 Edition,
Precision Auto Care is negotiating extensions of its Senior
Debt. However, the report said, in the event that the Company
would be unable to accomplish its strategic objectives or would
be otherwise unable to generate revenues sufficient to cover
operating expenses and pay other debt, the Company would not be
able to sustain operations at the current level. This would
require the Company to further reduce expenses and liquidate
certain assets.

PRINTING ARTS: Wants Removal Period Deadline Moved to April 30
Printing Arts America, Inc., and its debtor-affiliates ask the
U.S. Bankruptcy Court for the District of Delaware to extend
their time period to remove Prepetition actions.  The Debtors
tell the Court that the time by which they may file notices of
removal with respect to any actions pending on the Petition
Date, needs to be extended through April 30, 2002.  A hearing on
the motion is scheduled on February 18, 2002 at 11:30 a.m.

Due to the size and complexity of these cases, the Debtors
assert that they have not had a full opportunity to investigate
their involvement in the Prepetition Actions. In addition to
this, the Debtors have been highly focused with stabilizing
their business during these cases.

The Debtors believe that this extension will afford them an
opportunity to make fully informed decisions on their
involvement of the Prepetition Actions and will not prejudice
any party in interest.

Printing Arts America, Inc. filed for chapter 11 protection on
November 1, 2001. Teresa K.D. Currier, Esq. and William H.
Schorling, Esq. at Klett Rooney Lieber & Schorling represent the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed an estimated assets
and debts of more than $100 million.

PROVANT: Rejects IIR's Proposal to Buy $47MM Bank Debt Position
On February 5, 2002 Provant, Inc. said that its Board of
Directors has unanimously rejected an unsolicited proposal from
the Institute for International Research, Inc. (IIR).

Under the terms of the proposal, IIR would purchase Provant's
outstanding bank debt of approximately $47 million in exchange
for approximately 47 million new common shares of Provant.
Additionally, IIR would offer existing Provant shareholders the
option to exchange up to 50% of their existing shares at $1.00
cash per share.

The Board cited three main reasons for its rejection of the
proposal: the $1.00 per share price is woefully inadequate; the
structure of the proposed transaction - which contemplates that
Provant's current shareholders will become minority shareholders
in an entity controlled by IIR - is detrimental to Provant
shareholders; and, given that IIR and Provant will compete to an
increasing extent, the proposal would allow IIR to take actions
to enhance its own business at Provant's, and thus its minority
shareholders', expense.

Chairman John E. Tyson said, "The Board unanimously rejected Mr.
Laidlaw's proposal because it is not in the best interests of
Provant's shareholders. The proposal does not reflect Provant's
inherent value and would require Provant's shareholders to
forego any future opportunity to capture a premium for control.
Moreover, since Provant and IIR increasingly compete with each
other, the proposal would create an intolerable conflict of
interest to the detriment of Provant shareholders. We are
confident that the management and go-forward plan we now have in
place will drive enhanced growth and shareholder value."

As a leading provider of performance improvement training
services and products, Provant helps its clients maximize their
effectiveness and profitability by improving the performance of
their people. With over 1,500 corporate and government clients,
the Company offers blended solutions combining Web-based and
instructor-led offerings that produce measurable  results by
strengthening  the performance and  productivity of both
individual employees and organizations as a whole.

Though IIR has not commenced a tender offer, Provant has said
that the subject of the Company's announcement is the receipt of
a proposal to make a possible tender offer.  Provant indicates
that if a tender offer commences, it will file a
solicitation/recommendation statement and other documents with
the SEC.

At September 30, 2001, Provant reported that its total current
liabilities exceeded its total current assets by $41 million.

PSINET INC: Court Okays Staubach to Dispose of 4 Properties
PSINet, Inc., and its debtor-affiliates obtained the Court's
authority to employ and retain to provide additional
professional services as real estate brokers in the disposition
of the Debtors'

     *  Dallas Property located at 1333 Crestside Drive, Coppell,

     *  Boston Property located at 55 Middlesex Tumpike, Bedford,

     *  Atlanta Property located at 40 Perimeter Center East,
        Atlanta, Georgia; and

     *  Miami Property located at 2100 Northwest 84th Avenue,
        Miami, Florida.

Upon the approval of the Court, Staubach will provide further
services for the benefit of the Debtors and their estates.

Staubach has indicated its willingness to be compensated for the
Real Estate Services at the following commission and rebate

Net Commission Per Transaction    Staubach Share   PSINet Share
------------------------------    --------------   ------------
      $0 - $49,999                       100%            0%
      $50,000 - $499,999                 75%             25%
      $500,000 - $999,999                70%             30%
      $1,000,000+                        65%             35%

If Staubach successfully brokers the sale of the Ashburn
Property, it will receive a commission equal to 2% of the
purchase price, less a rebate to be determined according to the
Commission Rebate Schedule.

The Ashburn Parcels most likely will be sold to the purchaser of
the Ashburn Property as part of a single transaction. In that
event, Staubach would receive a single commission from the
Debtors, based on the aggregate purchase price received for the
Ashburn Property and the Ashburn Parcels, the aforementioned 2%
commission rate and the Commission Rebate Schedule. If one or
more of the Ashburn Parcels were sold in one or more separate
transactions, Staubach would receive a separate commission upon
the completion of each such transaction, based on the purchase
price received for the Parcel(s) sold in that transaction, the
aforementioned 2% commission rate and the Commission Rebate

If Staubach successfully brokers the sale of the Dallas
Property, Boston Property and/or the Miami Property, it will
receive a commission equal to 2% of the purchase price of each
property, less a rebate to be determined according to the
Commission Rebate Schedule. If Staubach successfully brokers the
sale of the Atlanta Property, the parties currently contemplate
that Staubach would receive a 4% commission (50% of which would
be paid to the buyer's broker) and the remainder of which would
be subject to a partial rebate to the Debtors in accordance with
the Commission Rebate Schedule.

Staubach and the Debtors agree and acknowledge that any prior
understanding or agreement between the parties regarding
commissions (whether orally or in writing) is null and void, and
the Debtors will be authorized to pay commissions to Staubach
only in connection with the sales of the four properties (the
Dallas Property, Boston Property, Atlanta Property and Miami
Property), unless as provided by a separate application by the
Debtors and order of the Court.

Staubach also acknowledges that any compensation received from
the Debtors or the Debtors' estates remains subject to approval
by the Court in accordance with Sections 330 and 331 of the
Bankruptcy Code, the applicable Bankruptcy Rules, the Local
Rules of the United States Bankruptcy Court for the Southern
District of New York, and all other rules and orders of the
Court. (PSINet Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

SOLA INT'L: S&P Revises Outlook over Continued Weak Performance
Standard & Poor's said that it revised its outlook on SOLA
International Inc., a leading global maker of prescription
eyeglass lenses, to negative from stable due to continued weak
performance stemming from unfavorable market conditions.
Approximately $280 million in rated outstanding debt is

At the same time, Standard & Poor's affirmed its double-'B'
corporate credit rating on the company.

"Management's recent restructuring efforts have enabled the
company to reduce receivable-days-outstanding and lower
inventory levels," commented Standard & Poor's credit analyst
Arthur Wong. "However, continued weakness in business
performance over the next one to two years or longer may result
in a ratings downgrade."

The noninvestment-grade ratings on San Diego, California-based
SOLA International Inc. reflect the company's challenge to
improve the weak operating performance of its worldwide eyeglass
lens manufacturing business. Management has indicated that its
fiscal 2002 fourth quarter ending March 31st, historically the
company's strongest, will be essentially flat compared to year
ago levels, due to continued economic uncertainties.

SOLA holds a 20%-25% share of the prescription eyeglass lens
market. However, unfavorable market conditions have continued to
hamper the company's performance. Return on capital remains well
under 10%, from over 18% as recently as 1998, and earnings
before interest, taxes, and depreciation coverage of interest
expense is approximately only two times -- measures indicative
of a low double-'B' rating.

SUN HEALTHCARE: Judge Walrath Confirms Plan of Reorganization
The Sun Healthcare Group and its debtor-affiliates obtained
confirmation of their Amended Joint Plan of Reorganization of
Debtors Under Chapter 11 of the Bankruptcy Code from Judge

Prior to the confirmation hearing, the Debtors filed some last-
minute amendments:

   (i) clarifying the treatment of Subclass B-11;

       B-11 --- Sun Life of Canada

       On the Effective Date, Masthead and Sun Healthcare each
       shall execute and deliver to Sun Life Assurance Company of
       Canada that certain Assumption and Reinstatement Agreement
       in form and substance acceptable to Sun Life, pursuant to
       which Masthead and Sun Healthcare shall reinstate and
       assume their respective obligations under that certain:

       (a) Promissory Note by Masthead in favor of Sun Life dated
           May 29, 1997,

       (b) Real Property Deed of Trust, Security Agreement,
           Assignment of Leases and Rents and Financing Statement
           by Masthead in favor of Sun Life dated as of May 29,
           1997 and recorded May 30, 1997,

       (c) Absolute Assignment of Leases and Rents by Masthead in
           favor of Sun Life dated May 29, 1997 and recorded May
           30, 1997,

       (d) Security Agreement by Masthead in favor of Sun Life
           dated May 29, 1997,

       (e) Guaranty by Sun Healthcare in favor of Sun Life dated
           as of May 29, 1997,

       (f) certificate and agreement concerning hazardous waste
           executed on May 29, 1997,

       (g) Financing Statement by Masthead, as debtor, to Sun
           Life Assurance Company of Canada, as secured party,

       (h) letter dated May 29, 1997 from Sun Healthcare Group,
           Inc., as tenant to Sun Life Assurance Company of
           Canada containing estoppel certificate and
           subordination, non-disturbance and attornment

  (ii) modifying the list of assumed contracts and leases;

(iii) modifying treatment of Subclasses B-3 through B-6 to
       conform to a settlement approved by the Court; and

  (iv) deleting reference to former officers, directors and
       employees of the Debtors.

                        Confirmation Standards

Michael F. Walsh, Esq., at Weil, Gotshal & Manges LLP, in New
York, tells Judge Walrath that the Plan warrants confirmation

  (a) The Bankruptcy Court has the jurisdiction over the
      Reorganization Cases pursuant to section 157 and 1334 of
      title 28 of the United States Code;

  (b) The Debtors have the burden of proving the elements of
      section 1129(a) and (b) of the Bankruptcy Code by the
      preponderance of evidence and they have met that burden as
      further found and determined herein;

  (c) The Disclosure Statement, the Original Plan, the Ballots,
      the Solicitation Order and the Confirmation Hearing Notice
      were transmitted and served in compliance with the
      Solicitation Order and the Bankruptcy rules;

  (d) Votes to accept and reject the Plan have been solicited
      and tabulated fairly, in good faith and in a manner
      consistent with the Bankruptcy Code, the Bankruptcy Rules,
      the Solicitation Order and industrial practice;

  (e) The Plan satisfied section 1129(a)of the Bankruptcy
      Code by:

       - the plan designates 12 Classes of Claims and Equity
         Interests aside from the Administrative Expense Claims
         and Priority Tax Claims. Other Secured Claim in
         Subclasses B-1 through B-17 shall be deemed to be
         separately classified in a subclass of Class B and shall
         have all rights associated with separate classification
         under the Bankruptcy Code. The Claims and Equity
         Interests placed in each Class are substantially similar
         to other Claims and Equity Interests, as the case may
         be, in each such Class. Valid business, factual and
         legal reasons exist for separately classifying the
         various Classes of Claims and Equity Interests created
         under the Plan, and such Classes do not unfairly
         discriminate between or among holders of Claims and
         Equity Interests. The Plan satisfies section 1122 and
         1123(a)(1) of the Bankruptcy Code;

       - Section 4 of the Plan specifies that Class A and
         Subclass B-1, B-23, B-4 and B-6 through B-17 are
         unimpaired under the Plan, thereby satisfying section
         1123(a)(2) of the Bankruptcy Code;

       - Section 4 of the Plan designates Subclasses B-2 and B-5,
         Classes C,D, E-1, E-2, and F through K as impaired and
         specifies the treatment of Claims and Equity Interests
         in those Classes, thereby satisfying section 1124(a)(3)
         of the Bankruptcy Code;

       - The Plan provided for the same treatment by the Debtors
         for each Claim or Equity Interest in each respective
         Class unless the holder of a particular Claim or Equity
         Interest has agreed to a less favorable treatment of
         such Claim or Equity Interest, thereby satisfying
         section 1123(a)(4) of the Bankruptcy Code;

       - The Plan and the various documents and agreements set
         forth in the Plan Supplement provide adequate and proper
         means for the Plan's implementation, including the
         deemed consolidation of the Debtors and the Exit
         Financing Facility, thereby satisfying section
         1123(a)(5) of the Bankruptcy Code;

       - Section 5.10 of the Plan provides that the Amended
         Certificate of Incorporation for Reorganized Sun shall
         prohibit the issuance of nonvoting equity securities.
         Thus, the requirements of section 1123(a)(6) of the
         Bankruptcy Code are satisfied;

       - Section 5.9 of the Plan contains provisions with respect
         to the manner of selection of directors of Reorganized
         Sun that are consistent with the interests of creditors,
         equity security holders, and public policy in accordance
         with section 1123(a)(7);

       - The Plan's provision are appropriate and not
         inconsistent with the applicable provisions of the
         Bankruptcy Code; and

       - The Plan is dated and identifies the entities submitting
         it as proponents, thereby satisfying Bankruptcy Rule

   (f) The Debtors satisfy section 1129(a)(2) of the Bankruptcy
       Code as:

       - The Debtors are proper debtors under section 109 of the
         Bankruptcy Code;

       - The Debtors have complied with applicable provisions of
         the Bankruptcy Code, except as otherwise permitted by
         orders of the Bankruptcy Court;

       - The Debtors have complied with the applicable provisions
         of the Bankruptcy Code, the Bankruptcy Rules and the
         Solicitation Order in transmitting the Plan, the
         Disclosure Statement, the Ballots and related documents
         and notices and in soliciting and tabulating votes on
         the Original Plan.

   (g) The Debtors have proposed the Plan in good faith and not
       by any means forbidden by law, thereby satisfying section
       1129(a)(3) of the Bankruptcy Code. The Debtors' good faith
       is evident from the facts and records of these
       Reorganization Cases, the Disclosure Statement and the
       hearings thereon, and the record of the Confirmation
       Hearing and other proceedings held in these Reorganization
       Cases. The Plan was proposed with the legitimate and
       honest purpose of maximizing the value of the Debtors'
       estate and to effectuate a successful reorganization of
       the Debtors;

   (h) Any payment made or to be made by any of the Debtors for
       services or for cost and expenses in or in connection with
       the Reorganization Cases, or in connection with the plan
       and incident to the Reorganization Cases, has been
       approved by, or is subject to the approval of, the
       Bankruptcy Court as reasonable, thereby satisfying section
       11299(a)(4) of the Bankruptcy Code;

   (i) The Debtors have complied with section 1129(a)(5) of the
       Bankruptcy Code as the identity and affiliations of the
       persons proposed to serve as initial directors or officers
       of the Reorganized Sun after the confirmation of the Plan
       have been fully disclosed on the Debtors' web site, and
       the appointment to, or continuance in, such offices of
       such persons is consistent with the interests of holders
       of Claims against and Equity Interests in the Debtors and
       with public policy. The identity of any insider that will
       be employed or retained by the Reorganized Debtors and the
       nature of such insider's compensation have also been fully

   (j) After confirmation of the Plan, the Debtors' business will
       not involve rates established or approved by, or otherwise
       subject to, any governmental regulatory commission. Thus,
       section 1129(a)(6) of the Bankruptcy Code is not
       applicable in these Reorganization Cases;

   (k) The liquidation analysis provided in the Disclosure
       Statement and other evidence proffered or adduced at the
       Confirmation hearing are persuasive and credible, have not
       been controverted by other evidence and establish that
       each holder of an impaired Claim or Equity Interest either
       has accepted the Plan or will receive or retain under he
       Plan, on account of such Claim or Equity Interest,
       property of a value, as of the Effective Date, that is not
       less than the amount that such holder would receive or
       retain if the Debtors were liquidated under chapter 7 of
       the Bankruptcy Code on that date. This satisfies section
       1129(a)(7) of the Bankruptcy Code.

   (l) Class A and B of the Plan are Classes of unimpaired Claims
       that are conclusively presumed to have accepted the Plan
       under section 1126(f) of the Bankruptcy Code. Subclasses
       B-2 and B-5, and Classes D, E-1, E-2, and F have voted to
       accept the Plan in accordance with section 1126(c) and (d)
       of the Bankruptcy Code. Classes G through K are not
       entitled to receive or retain any property under the Plan
       and, therefore, are deemed to have rejected the Plan
       pursuant to section 1126(g) of the Bankruptcy Code.
       Although section 1129(a)(8) has not been satisfied with
       respect to the deemed rejected Classes identified above
       and with respect to Class C, the Plan is confirmed because
       the Plan satisfies section 1129(b) of the Bankruptcy Code
       with respect to such classes;

   (m) The treatment of Administrative Expense Claims and
       Priority Non-Tax Claims pursuant to section 2.1 and 4.1 of
       the Plan satisfies the requirements of section
       1129(a)(9)(A) and (B) of the Bankruptcy Code, and the
       treatment of Priority Tax Claims pursuant to Section 2.3
       of the Plan satisfies the requirements of section
       1129(a)(9)(C) of the Bankruptcy Code;

   (n) At least one Class of Claims against the Debtors that is
       impaired under the plan has accepted the Plan, determined
       without including any acceptance of the Plan by any
       insider, thus satisfying the requirements of section
       1129(a)(10) of the Bankruptcy Code;

   (o) The evidence proffered or adduced at the Confirmation

       - is persuasive and credible;

       - has not been controverted by other evidence; and

       - establishes that confirmation of the Plan is not likely
         to be followed by the liquidation, or the need for
         further financial reorganization, of the Reorganized
         Debtors, thus satisfying the requirements of section
         1129(a)(11) of the Bankruptcy Code;

   (p) All fees payable under section 1930 of title 28 of the
       United States Code, as determined by the Bankruptcy Court,
       have been paid or will be paid pursuant to Section 12.1 of
       the Plan from the funds deposited by the Debtors into an
       escrow account pursuant to an escrow arrangement, the
       terms of which are satisfactory to the Debtors and the
       United States Trustee, thus satisfying the requirements of
       section 1129(a)(12) of the Bankruptcy Code. On or before
       the Effective Date, the Reorganized Debtors shall deposit
       the sum of $3,900,000 earmarked for payment of pre-
       confirmation United States Trustee's fees pursuant to 28
       U.S.C. 1930(a)(6) and 11 U.S.C. 1129(a)(12), through and
       including Third Quarter 2201, in a segregated interest
       bearing account at a bank reasonably acceptable to the
       United States Trustee. In addition, the Reorganized
       Debtors shall deposit in the Account, on or before the
       Effective Date, the disputed amount of United States
       Trustee fees for Fourth Quarter 2001. No withdrawals or
       transfers of funds of the Account shall be made until the
       amount due has been determined final non-appealable order
       and upon further order of this Court;

   (q) Section 12.2 of the Plan provides that, on and after the
       Effective Date, the Reorganized Debtors will continue to
       pay all "retiree benefits", at the level established
       pursuant to section 1114(e)(1)(B) or 1114(g) at any time
       prior to confirmation of the Plan, for the duration of the
       period the Debtors have obligated themselves to provide
       such benefits. Thus, the requirements of section
       1129(a)(13) of the Bankruptcy Code are satisfied;

   (r) Classes G, H, I, J and K are deemed to reject the Plan.
       Based on the Confirmation Affidavits and the evidence
       presented by the Debtors at the Confirmation Hearing, the
       Plan is fair and equitable with respect to the Rejecting
       Classes, as required by section 1129(b)(1) of the
       Bankruptcy Code. Thus, the Plan may be confirmed
       notwithstanding the Debtors' failure to satisfy section
       1129(a)(8) of the Bankruptcy Code. Upon confirmation and
       the occurrence of the Effective Date, the Plan shall be
       binding upon the members of the Rejecting Classes;

   (s) The principal purpose of the Plan is not the avoidance of
       taxes or the avoidance of the application of section 5 of
       the Securities Act off 1933;

   (t) The modifications to the Original Plan set forth in the
       Plan Amendments constitute technical changes and/or
       changes with respect to particular Claims by agreement
       with holders of such Claim, do not materially adversely
       affect or change the treatment of any Claims or Equity
       Interests, and comply in all respects with the
       requirements of section 1127 of the Bankruptcy Code.
       Accordingly, pursuant to Bankruptcy Rule 3019, these
       modifications do not require additional disclosure under
       section 1125 of the Bankruptcy Code or re-solicitation of
       votes under section 1126 of the Bankruptcy Code, not do
       they require that holders of Claims or Equity Interests be
       afforded an opportunity to change previously cast
       acceptances or rejections of the Plan.

   (u) Based on the record before the Bankruptcy Court, the
       Debtors and their directors, officers, employees,
       shareholders, members, agents, advisors, accountants,
       investment bankers, consultants, attorneys, and other
       representatives have acted in "good faith" within the
       meaning of section 1125(e) of the Bankruptcy Code in
       compliance with the applicable provisions of the
       Bankruptcy Code and Bankruptcy Rules in connection with
       all their respective activities relating to the
       solicitation of acceptances to the Plan and their
       participation in the activities described in section 1125
       of the Bankruptcy Code, and are entitled to the protection
       afforded by section 1125(e) of the Bankruptcy Code and the
       exculpation provisions set forth in Section 10.6 of the

   (v) Section 8 of the Plan governing the assumption and
       rejection of executory contracts and unexpired leases
       satisfies the requirements of section 365(b) of the
       Bankruptcy Code. Pursuant to Section 8.2 of the Plan,
       within 60 days of the Confirmation Date, the Debtors shall
       file and serve a pleading with the Bankruptcy Court
       listing the cure amounts of all executory contracts or
       unexpired leases to be assumed to the extent such cure
       amounts are not already listed on Schedule 8.1 to the
       Plan, consistent with section 365 of the Bankruptcy Code.
       The parties to such contracts to be assumed by the Debtors
       shall have 30 days from service of the pleadings
       referenced above to object to the cure amounts listed by
       the Debtors. The Debtors shall retain their rights to
       reject any of their executory contracts, including those
       that are listed in Section 8.1 to the Plan, and including
       contracts or leases that are subject to a dispute
       concerning amounts necessary to cure any defaults;

   (w) No creditor of any of the Debtors will be prejudices by
       the deemed consolidation of the Debtors; such deemed
       consolidation will benefit all creditors of the Debtors;

   (x) The Plan satisfies the requirements for confirmation set
       forth in section 1129 of the Bankruptcy Code.

After a thorough examination of the Plan, the Voting Reports,
the Boston Affidavit, Responses and Confirmation Memorandum, the
Confirmation Haring and the Debtors' arguments, Judge Walrath
confirms the Debtors' Joint Plan of Reorganization on February
6, 2002.

The Confirmation Order provides that the Debtors shall pay -- on
the Effective Date -- all amounts outstanding under the DIP Loan
Agreement.  At the same time, Judge Walrath rules that any
outstanding letters of credit issued under the DIP Loan
Agreement shall be either replaced or secured by letters of
credit issued under the exit facility.

The Court authorizes the Debtors to enter into a new
$150,000,000 Exit Financing Facility for purposes of funding
obligations under the Plan, including the payment of
Administrative Expense Claims, the repayment of obligations
under the DIP Loan Agreement, financing the Reorganized Debtors'
working capital requirements, and satisfying the treatment of
Class E-2 Claims, as well as any Other Secured Claims, or other
Claims that the Debtors elect to satisfy with Cash payments.

Furthermore, the Confirmation Order states that:

-- All distributions to any holder of an Allowed Senior Lender
   Claim shall be made to Bank of America, N.A., as
   administrative agent under that certain Credit Agreement dated
   as of October 8, 1997, among Sun Healthcare Group, Inc., Bank
   of America, N.A., as administrative agent, certain co-agents,
   and the lender parties.

-- All distributions to any holder of an Allowed Senior
   Subordinated Note Claim shall be made to:

   (a) U.S. Bank Trust National Association, as trustee, under
       the Indenture, dated as of May 4, 1998, between Sun
       Healthcare Group, Inc., and U.S. Bank Trust National
       Association, as trustee, for the 9 3/8% Senior
       Subordinated Note due 2008,

   (b) U.S. Bank Trust National Association, as trustee, under
       the Second Amended and Restated Indenture, dated as of
       January 10, 1998 between Sun Healthcare Group, Inc., and
       U.S. Bank Trust National Association, as trustee, for the
       9-1/2% Senior Subordinated Note due 2007,

   (c) Bank of New York, as trustee, under the First Supplemental
       Indenture, dated as of January 4, 1995, between Sun
       Healthcare Group Inc., The Mediplex Group Inc., and Bank
       of New York, as trustee, for the 11 3/4% Senior
       Subordinated Note due 2002, or

   (d) U.S. Trust Company of California, N.A., as trustee, under
       the Indenture dated as of October 12, 1995, as
       supplemented on October 8, 1997, between Regency Health
       Service Inc., the guarantors, and U.S. Trust Company of
       California, N.A., as trustee for the 9 7/8% Senior
       Subordinated Notes due 2002.

-- The Sun Lease Guarantees will be reaffirmed pursuant to
   documentation that is reasonably acceptable to Karrell Capital
   and the Debtors; provided, however, that entry into such
   documents shall not be a condition to the Effective Date.  In

   (a) as a condition of assuming two leases which are of the
       Nampa and Avondale facilities entered into with National
       Health Investors Inc:

      (1) SunBridge shall cure all defaults under the National
          Health Leases on the Effective Date of the Plan by
          satisfying all obligations outstanding under the
          National Health Leases, pursuant to the terms therein,
          and reinstating National Health's senior perfected
          security interests in the property securing
          SunBridge's obligations, including without limitation
          accounts receivable, equipment, inventory, and general
          intangibles, and

      (2) Sun shall reinstate its guaranty of the National
          Health Leases in its entirely, which guaranty shall
          not be discharged; and

   (b) in the event the National Health Leases are rejected,
       National Health's current security interests and liens in
       the collateral securing the National Health Leases shall
       not be impaired, discharged or made subordinate to any
       security interests or liens securing the Exit Financing

-- The Debtors' rejection of the Master Lease Agreement entered
   into with Line Capital Inc. on May 5, 1997 shall not become
   effective until March 31, 2002.

-- The Plan does not extinguish, waive or adversely affect the
   rights of the Internal Revenue Service of the United States of
   America.  In addition, nothing in the Plan or the Confirmation
   Order prejudices, diminishes, limits, extinguishes,
   eliminates, or affects any of OmniCell Technologies Inc.'s
   setoff rights or other rights to payment, under the January 1,
   1997 OmniCell Distribution Agreement.  The reservation of
   OmniCell's rights shall not affect any interest of the Lenders
   under the Exit Financing Facility.  Such Lenders are not
   taking a security interest in Claims by or against OmniCell.
   (Sun Healthcare Bankruptcy News, Issue No. 32; Bankruptcy
   Creditors' Service, Inc., 609/392-0900)

SUPERIOR TELECOM: S&P Cuts Ratings On Weakening Fin'l Condition
Standard & Poor's said that it was lowering its corporate credit
rating on wire and cable manufacturer Superior Telecom Inc. to
single-'B'-minus from single-'B'-plus due to deterioration of
its financial condition.

Standard & Poor's also said that it was removing its ratings on
the company from CreditWatch where they had been placed July 26,
2001. The outlook is now negative. The Atlanta, Gergia-based
company currently has $1.2 billion of total debt.

According to credit analyst Thomas Watters, Standard & Poor's is
concerned about the company's ability to service its heavy debt
amortization schedule over the next year or two amid current
weak market conditions.  Mr. Watters said, "The company has
delayed its previously announced divestiture plans because it
felt it had not received satisfactory valuations for its cable
operations. Absent such asset sales, Superior's liquidity and
cash flow generation may be insufficient to meet its scheduled
bank principal repayments due in the fall of 2003, which could
lead to a restructuring of these payments." Standard & Poor's
would deem an inability to meet such payments or a restructuring
of these payments as being tantamount to a default.

Superior's business position benefits from its substantial
market share in a broad line of copper wire and cable products,
as well as diversified manufacturing and distribution
facilities. However, Standard & Poor's remains concerned about
the company's aggressive debt leverage and burdensome debt
repayment schedules given its exposure to the current difficult
industry conditions in its end markets. The ratings could be
lowered again if continuing weak business conditions further
reduce the company's financial flexibility.

Following Superior's $936 million acquisition of Essex
International Inc., in October of 1998, the company's total debt
has remained very high. Indeed, total debt to EBITDA for the
last twelve months ending Sept. 30, 2001 was a lofty 6.8x with
total debt to total capital at 83%. EBITDA for the nine months
ended September 30, 2001, has fallen precipitously to $144
million compared with $217 million during the same period in
1999. Consequently, EBITDA to interest was a weak 1.79x. In
light of the expected continuation of weak market conditions,
Standard & Poor's anticipates cash flow measures to remain near
or at current levels for the medium term.

TELESYSTEM INT'L: Extends Purchase Offer for Units to Feb. 28
Telesystem International Wireless Inc., announces that it has
given proper notice to the depository to extend its purchase
offer for all of its outstanding Units.  The Offer will expire
at 5:00 p.m., Montreal time, on February 28, 2002, unless
further extended or withdrawn.

The Offer will be further amended to comply with an order of the
Ontario Superior Court of Justice.  The Company intends to
launch the amended offer shortly and to have it expire at 5:00
p.m., Montreal time, on February 28, 2002.

As permitted by the Court's order, TIW has already taken-up and
paid for the 25.3 million Units validly tendered by Telesystem
Ltd, Caisse de depot et placement du Quebec and all its
subsidiaries, and Rogers Telecommunications (Quebec) Inc.  As a
result, TIW's economic ownership in ClearWave N.V. (ClearWave)
has increased from 45.5% to approximately 75.5%.

By reason of the Court's order, Units are no longer subject to
the deemed TIW exchange option which would have resulted in each
Unit not tendered on June 30, 2002 being exchanged for 0.2
subordinate voting shares of TIW if less than US$ 100 million of
Units, based on the original issuance price, remained
outstanding on that date.

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").

TELESYSTEM INT'L: Commission Rejects Highfields' Hearing Request
Telesystem International Wireless Inc., welcomes the Commission
des valeurs mobilieres du Quebec (CVMQ)'s ruling rejecting
Highfields Capital Limited (Highfields)'s application.

The Commission agreed with TIW's position that Highfields had
not acted in a timely manner and had already sought preventive
relief before the Ontario Superior Court.

Highfields was asking the CVMQ to hold a hearing to examine if
TIW should be required to extend its purchase offer and request
of consents for its 7% Equity Subordinated Debentures beyond
February 4, 2002.  The Offer expired on Monday, February 4, 2002
at 12:00 noon and was successfully completed with over 97% of
ESD holders tendering their debentures to the Offer.  As a
result, the Company took up and paid for the debentures tendered
into the Offer.

Highfields alleged that an Order from the Ontario Superior Court
rendered on February 2, 2002, in connection with another issuer
bid for another TIW security, the TIW Units, was a material
change within the meaning of section 130 to 132 of the Quebec
Securities Act (QSA) which warranted an extension of the Offer
until 11:59 pm on February 13, 2002.

The Offer was part of a comprehensive recapitalization plan
involving a number of interrelated transactions including the
conversion of debt by Hutchison Whampoa Limited and JP Morgan
Partners LLC, the infusion of new capital in the Company, the
conversion of Telesystem Ltd's multiple voting shares into
subordinate voting shares, the amendment and partial repayment
of the corporate bank facility and the acquisition of a majority
of Units.  For the last two months, TIW collaborated with the
TSE and the Securities Commissions-and more recently with the
Ontario Superior Court-on various aspects of these transactions,
all with a view to enabling the plan to proceed.

Highfields previously attempted to block TIW's recapitalization
plan before the Ontario Superior Court.  Highfields had filed an
application pursuant to the oppression remedy under the sections
241 of the Canada Business Corporations Act in connection with
TIW's bid for the TIW Units.  Highfields had sought to restrain
TIW from taking up any Units under its bid, including those
locked-up under agreements with Telesystem Ltd, Caisse de depot
et placement du Quebec and all its subsidiaries (CDPQ), and
Rogers Telecommunications (Quebec) Inc., and to thereby preclude
TIW from fulfilling a condition precedent to its entire
recapitalization plan.  Highfields' legal arguments were that a
component of the plan, namely a funding commitment of up to
US$90 million by JP Morgan Partners LLC, Telesystem Ltd and
CDPQ, in law, constituted a collateral benefit and that the
standard US$100 million cleanup clause in the trust indenture
for TIW Units should not be applicable because of its coercive
impact in the context of the bid.  The Ontario Superior Court
accepted Highfields' legal argument but instead of voiding the
entire recapitalization plan, as had been desired by Highfields,
simply ordered that the funding commitment be made available
prorata to ownership of TIW Units and that the cleanup clause be

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").

TERAGLOBAL COMMS: WallerSutton Takes Over Controlling Interest
TeraGlobal Communications Corp. (OTCBB:TGCC) announced that
WallerSutton 2000 L.P., the principal investor in the company's
recent bridge financing, has acquired a controlling interest in
the company's Common Stock.

Pursuant to a Convertible Promissory Note and Warrant Purchase
Agreement, dated Dec. 10, 2001, WallerSutton 2000 L.P. purchased
$1,128,857 in Convertible Promissory Notes and 4,486,890 Bridge
Warrants to purchase Common Stock at exercise prices ranging
from $.185 to $.20 per share. In addition, the Purchase
Agreement provided that WallerSutton and the other purchasers
thereunder would be issued certain warrants to purchase common
stock exercisable at a price of $.001 per share, in the event
certain events of default specified in such warrants occurred.
As previously announced, on Jan. 12, 2002 such an event of
default occurred and the Default Warrants held by WallerSutton
and the other purchasers became exercisable. The Default
Warrants held by WallerSutton were exercisable for a total of
34,592,395 shares of Common Stock.

On Feb. 5, 2002, WallerSutton 2000 L.P. exercised its Default
Warrants on a cashless basis in exchange for 34,373,455 shares
of Common Stock. After giving effect to the exercise of those
Default Warrants, the company has approximately 60,749,377
shares of Common Stock and 7,468,661 shares of Series A
Convertible Preferred Stock outstanding. WallerSutton 2000, L.P.
presently owns 34,373,455 shares or 57% of the outstanding
Common Stock and 5,597,016 shares or 75% of the outstanding
Series A Convertible Preferred Stock.

In a series of releases, the company has announced its efforts
to secure additional financing to fund operations. However, no
definitive agreement or plans for a financing have been reached,
and no firm commitments for further funding exist at this time.
The company is continuing to receive bridge financing from
existing investors, principally WallerSutton 2000 L.P., to
support its operations on an as needed basis. Repayment of the
promissory notes being sold in the bridge financing is secured
by a first lien on all of the company's assets.

The company's board of directors continues to investigate a
number of avenues for raising additional capital. To that end,
the company recently filed a preliminary information statement
on Form 14C with the SEC on Feb. 5, 2002. The information
statement relates to actions taken by the board of directors to
approve certain transactions intended to increase the company's
options to finance its ongoing capital requirements, including

      (1) amending the company's Certificate of Incorporation to
authorize 1,000,000 shares of "blank check" Preferred Stock;

      (2) amending the company's Certificate of Incorporation to
effect a 1 for 25 reverse split of the company's issued and
outstanding Common Stock; and

      (3) approving of the formation of a subsidiary corporation,
and the authorization to transfer of all of the company's
operating assets and certain of its liabilities to the new
subsidiary, with the intent to cause the subsidiary to issue
debt or equity securities to prospective investors or to sell
some or substantially all of the company's assets.

The company expects to obtain stockholder approval of these
transactions by a written consent resolution signed by the
owners of a majority of the company's outstanding voting power.
A final Information Statement would then be filed with the SEC
and mailed to shareholders on or about Feb. 19, 2002 informing
them of the transactions approved by the Consent Resolution. In
accordance with applicable federal securities laws, the
transactions would take place at least 20 days after the
Information Statement is mailed to shareholders.

While the board of directors believes that each of the
transactions will increase the company's financing options, no
agreement exists for the sale of any securities or the company's
operating assets at this time. Despite the fact that the company
has filed the preliminary Information Statement with the SEC,
and may obtain stockholder approval of the transactions pursuant
to the Consent Resolution, the board of directors may, in its
discretion, determine not to proceed with any or all of the
transactions at any time prior to their consummation.

In an unrelated transaction, Grant Holcomb has separated his
relationship with the company. Holcomb served as the company's
chief technology officer from 1998 through Jan. 31, 2002, and
was largely responsible for coordinating development of the
company's Apple-based TeraMedia product. In connection with his
separation Holcomb sold to the company 750,000 shares of Common
Stock and 600,000 options to purchase Common Stock as partial
payment for loans the company had extended to Holcomb during his

TeraGlobal Communications Corp. develops software real-time
collaboration with integrated IP voice and video communications.
The software applications are IP based and run over standard
broadband computer networks. TeraGlobal's TeraMedia(R)
collaboration software, is industry leading technology combining
extensive collaboration tools with integrated IP voice and video
communications on the Apple Mac OS 9 operating system. The
company is now releasing Session collaboration software which
runs on the Windowsr operating system.

TeraGlobal's corporate office is in San Diego. TeraGlobal stock
is traded on the OTCBB under the symbol "TGCC."

U.S. INDUSTRIES: First Quarter Net Loss Nearly Doubles to $7MM
U.S. Industries, Inc. (NYSE-USI) announced that net sales and
operating income from continuing operations for the three months
ended December 31, 2001 was $254.4 million and $14.6 million,
respectively, as compared to the same period last year of $251.8
million and $12.0 million.

Net loss for the period was $7.0 million for the first quarter
of fiscal 2002 compared to $4.2 million for the same period in
fiscal 2001. Prior year sales and results from continuing
operations have been restated to exclude the sales and operating
results of the non-core assets due to the Disposal Plan adopted
by the Board of Directors on December 28, 2001. Accordingly,
results of continuing operations for 2002 and those restated for
2001 do not include these discontinued operations (which
reported net sales of $287.1 million and operating income of
$11.5 million in the first quarter of fiscal 2002). Interest
expense incurred in the 2002 and the 2001 quarters was $22.9
million and $19.8 million, respectively. Interest expense is
expected to decrease as the Company sells its non-core assets
and utilizes net proceeds to satisfy debt amortization
requirements under the Restructured Debt Facility. As of this
date, the Company has made, through its Disposal Plan and
operating cash flow, approximately $270 million of amortization

Fiscal 2002 includes sales of $26.6 million and operating income
of $7.6 million of Rexair, Inc., that was acquired
contemporaneously with the restructuring of the Company's debt
on August 15, 2001. While still owned by its former owner,
Rexair's sales and operating income for the first quarter of
fiscal 2001 was $29.0 million and $8.4 million, respectively.
Rexair's sales and operating income decreased from the first
quarter 2001 results due to a decrease in unit sales in certain
international markets.

Excluding Rexair, sales and operating income decreased compared
to the prior year principally due to the continued softness in
the Spa and Whirlpool businesses at Jacuzzi and the inclusion in
2001 of $11.8 million of sales from the disposed European HVAC
businesses and discontinued U.S. Brass product lines. Unit sales
of certain spa and whirlpool bath product lines decreased due to
customer requests for price and service concessions that the
Company declined. Operating income decreased from the prior year
primarily due to the decreased sales and the reduced absorption
of overhead caused by a reduction in inventory levels and
production. Also contributing to the decrease were the costs of
consolidating selected whirlpool bath manufacturing facilities.
USI adopted SFAS 142 "Goodwill and Other Intangible Assets" in
the first quarter of fiscal 2002 and therefore goodwill
amortization has been eliminated from the first quarter 2002
results. Goodwill amortization, after tax, included in
continuing operations in the first quarter of fiscal 2001 was
$2.2 million.

Following the completion of its Disposal Plan, U.S. Industries
will own several major businesses selling branded bath and
plumbing products, along with its consumer vacuum cleaner
company. The Company's principal brands will include Jacuzzi,
Zurn, Sundance Spas, Eljer, and Rainbow vacuum cleaners.

VANGUARD AIRLINES: Set to Revise Loan Guarantee Application
Vanguard Airlines, Inc. (OTC Bulletin Board: VNGD) released its
unaudited results for the quarter and the year ended December
31, 2001.  This release was made to comply with Regulation FD
(fair disclosure) as a result of Vanguard's circulation of these
unaudited results in connection with its application for a
federal loan guarantee.  Vanguard's actual results for these
periods may be different than the unaudited results due to final
year-end closing entries and the completion of the audit.

For the quarter ended December 31, 2001, Vanguard expects an
operating loss of approximately $6 to $7 million, as compared to
an operating loss of $10.5 million in the fourth quarter of
2000.  For the year ended December 31, 2001, Vanguard expects an
operating loss of approximately $27 million as compared to an
operating loss of $24.8 million for the year ended December 31,

The substantial improvement in operating loss for the fourth
quarter as compared to the prior year period, achieved despite
the general recession in the airline industry, is due to
Vanguard's restructuring of its business operations through (i)
operation of a Kansas City hub with new destinations, (ii)
replacement of older 737-200 aircraft with newer, more reliable
MD-80 series aircraft featuring a SkyBox ? business class cabin,
(iii) improvements in customer service and on-time reliability
and (iv) participation in a major global distribution system
with direct travel agency and Internet sales capability.

"Despite the tragedy of September 11, Vanguard's results for the
fourth quarter improved tremendously as compared to the fourth
quarter of 2000," said Scott Dickson, Chief Executive Officer
and President.  "This improvement demonstrates the viability and
strength of our business plan."

For the quarter ended December 31, 2001, Vanguard expects a net
loss of approximately $2 to $3 million, as compared to a net
loss of $11.0 million in the fourth quarter of 2000, reflecting
grant income received under the Air Transportation Safety and
System Stabilization Act (ATSSSA) of approximately $5.0 million.
For the year ended December 31, 2001, Vanguard expects a net
loss of approximately $28 million, as compared to a net loss of
$26.0 million for the year ended December 31, 2000, also
reflecting grant income received under ATSSSA of approximately
$7.3 million during the latter part of 2001 and also reflecting
an approximate $4.1 million noncash charge related to the
issuance of equity in the second quarter.  Without this noncash
charge, the Company's expected net loss for the year ended
December 31, 2001, would have been approximately $24 million: an
improvement over 2000 of approximately $2 million.

"The funds granted by DOT under the ATSSSA were intended to
offset losses that would not have occurred but for the events of
September 11," said Dickson.  "In Vanguard's case, the
preponderance of these extraordinary losses were related to lost
passenger revenues, and secondarily to the impacts of increased
security requirements. However, accounting rules require this
grant income to be recorded as non-operating income.  Applying
the $5 million of grant income to reduce Vanguard's operating
loss demonstrates the improvement from the fourth quarter of
2000 that Vanguard would have realized had the tragic events of
September not occurred."

Vanguard's average fares for the quarter and year ended December
31, 2001, are expected to be $81 and $78, respectively, as
compared to $76 and $66 for the comparable periods in 2000.
Vanguard's revenue per passenger mile, or yields, for the
quarter and year ended December 31, 2001, are expected to be
$0.107 and $0.104, respectively, as compared to $0.120 and
$0.129 for the comparable periods in 2000.  The change in yield
corresponds with Vanguard's increased flight lengths as its
route system evolved in 2001 to focus on longer haul routes,
which tend to have lower yields.  Vanguard's average passenger
flight for 2001 was approximately 750 miles, a 46 percent
increase from 512 miles in 2000.

"We are very pleased that, following the implementation of the
revised route system in the first quarter of 2001, our yields
have steadily improved," continued Dickson.  "Vanguard's
expected yield for the fourth quarter of 2001 is eight percent
higher than Vanguard's yield realized in the second quarter of
2001.  This is another demonstration of steady improvement in
Vanguard's operational efficiency during calendar year 2001."

As previously announced, Vanguard's load factor for the full
year 2001 increased 11.1 percent to 65.8 percent from 59.2
percent in 2000.  "The increases in yield during the year, and
substantial year-over-year increases in average fare and load
factor are contrary to general results in the industry and,
accordingly, validate Vanguard's business turnaround," continued
Dickson.  "Considering the impact of September 11 and the
general economy, Vanguard's results in 2001 as compared to 2000
are substantially better than most of the industry."

While the results are very encouraging, they do not eliminate
the need for Vanguard to take strong action to preserve its
financial condition as a result of the September 11 terrorist
attacks.  As Vanguard previously reported in its Form 10-Q for
the quarter ended September 30, 2001, Vanguard requires
additional debt or equity financing to fund ongoing operations.
The Company is seeking to raise additional capital with the
federal loan assistance made possible by ATSSSA; however, there
can be no assurance that such capital can be obtained.  Without
such capital, Kansas City and the nation may lose a valuable
airline competitor.

Vanguard filed an application for a federal loan guarantee under
ATSSSA on December 6, 2001; revised its application on December
20, 2001; and is in the process of preparing a further revision
in response to comments received from the Air Transportation
Stabilization Board.

"We believe in Vanguard's value to Kansas City and the nation,
and that this value far exceeds the amount of the loan guarantee
requested," continued Dickson. "Vanguard was demonstrating the
viability of its revised plan when the tragedy struck on
September 11.  The tragedy is lengthening our turnaround, but we
have continued to demonstrate that the new Vanguard rolled- out
in 2001 is an airline with a future. We have continued
improvements post-September 11 with the addition of Colorado
Springs and Ft. Lauderdale to our route map, as well as the
return to Myrtle Beach, and through the addition of newer
aircraft.  We have obtained commitments from aircraft lessors
with whom we previously did not lease aircraft.  Our load factor
has recovered nicely, and we anticipate traffic returning to
pre-September 11 levels during the second quarter of 2002."

Vanguard Airlines, Kansas City's Hometown Airline, provides
convenient all-jet service to 16 cities nationwide: Atlanta,
Austin, Buffalo/Niagara Falls, Chicago-Midway, Colorado Springs,
Dallas/Ft. Worth, Denver, Fort Lauderdale, Kansas City, Las
Vegas, Los Angeles, Myrtle Beach (March 28), New Orleans, New
York-LaGuardia, Pittsburgh and San Francisco. The airline offers
low fares with no advance-purchase requirements, advanced seat
assignment and extra legroom on all flights with a fleet of
seven Boeing 737s and seven Boeing MD-80-series aircraft, which
feature SkyBox Business Class service. For more information or
to make reservations online, visit Vanguard's Web site at

WILLIAMS COMMS: Will Give Banks a Restructuring Plan by Feb. 25
Williams Communications (NYSE: WCG), a leading provider of
broadband services for bandwidth-centric customers, announced
its full year 2002 financial objectives and first quarter 2002
financial guidance.

"In 2002, Williams Communications will continue to execute and
deliver solid financial results by profitably growing our top-
line revenue, strengthening our balance sheet and solidifying
our liquidity position," said Scott Schubert, executive vice
president and chief financial officer for Williams
Communications.  "For the first quarter of 2002, consolidated
revenues for the company are expected to range between $328
million and $347 million, marking a minimum year-over-year
growth rate of approximately 20 percent."

For full-year 2002, Williams Communications is targeting year-
over-year revenue growth rates of 15-30 percent for its Network
segment and 25-40 percent for its Emerging Markets segment.
Driving this growth rate will be increased existing customer
traffic, new customer growth and new products and services
innovation.  The company is expecting Network to be EBITDA
(earnings before interest, taxes, depreciation and amortization
and other adjustments) positive on an operating basis for the
full year, and is targeting Emerging Markets to be operating
EBITDA positive on a run-rate basis by year-end.  Net capital
expenditures (net of proceeds from asset sales) are expected to
be less than $100 million for 2002.

For the first quarter 2002, Williams Communications is targeting
a consolidated minimum revenue growth rate of approximately 20
percent compared to the year ago period.  Network revenues are
expected to range between $285 million and $300 million, marking
an increase of approximately 20 percent (excluding dark fiber
sales) from the first quarter 2001.  Emerging Market revenues
are expected to range from $43 million to $47 million, marking
an increase of at least 6 percent from the year ago period.
Network EBITDA for the quarter is targeted to range between a
$10 million loss and breakeven. Emerging Markets EBITDA is
expected to be a loss of between $9 million and $11 million.

"As stated on Feb 4, we have agreed to provide our banks, by
February 25, 2002, a comprehensive plan for restructuring and
de-leveraging Williams Communications' balance sheet," said
Schubert.  "[Wednes]day's guidance may differ significantly from
actual performance depending upon the ultimate form of such a
plan and its acceptance by the banks and others who may be
affected by it."

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BOOK REVIEW: Creating Value Through Corporate Restructuring:
              Case Studies in Bankruptcies, Buyouts, and Breakups
Author: Stuart C. Gilson
Publisher: Wiley
Hardcover: 516 pages
List Price: $79.95
Review by David M. Henderson
Order your copy -- and one for a colleague -- today at

Most business books fall into two categories.  The first is very
important. It is like that stuff you have to drink before you
have a colonoscopy.  You keep telling yourself, this is very
good for me, while you would rather be at the beach reading
Liar's Poker or Barbarians at the Gate.

Stuart Gilson, of the Harvard Business School, has managed to
write a book important to everybody in the distressed market
that is also quite enjoyable.  His prose is fluid and succinct
and a pleasure to read.  But don't take my word for it.  The
dust jacket endorsements come from Jay Alix, Martin Fridson,
Harvey Miller, Arthur Newman, and Sanford Sigoloff.  At a
collective gazillion dollars a billing hour, that's a lot of

Be advised that this is designed as a text book.  The case study
format might be off-putting to some.  The effect can be jarring
as you read the narrative history of the case and suddenly
confront the financial statements without any further clue as to
what to do, but this must be what it is like for the turnaround
manager.  Even after reading several of the cases, when I got to
the financials I had that sinking feeling of, what do I do now?
If you read carefully, clues to the solutions are in the

The book is divided into three "modules", bizspeek for sections:
Restructuring Creditors' Claims,. Restructuring Shareholders'
Claims, and Restructuring Employees' Claims. The text covers 13
corporate restructurings focusing on debt workouts, vulture
investing, equity spinoffs, tracking stock, assete divestitures,
employee layoffs, corporate downsizing, M & A, HLTs, wage give-
backs, employee stock buyouts, and the restructuring of employee
benefit plans.  That's a pretty comprehensive survey, wouldn't
you say?

Dr. Gilson's chapter on "Investing in Distressed Situations" is
an excellent summary of the distressed market and a good
touchstone even for seasoned vultures.

Even in the two appendices on technical analysis, this book is
marvelously free of those charts and graphs that purport to show
some general ROI of distressed investing.  Those are cute,
aren't they?  As Judy Mencher has famously said, "You can buy
the paper at 50 thinking it's going to 70, but it can just as
easily go to 30 if you are not willing to act on it."  Therein
lies the rub and the weakness, if inevitable, of this or any
book on corporate restructurings.  As Dr. Gilson notes, no two
are alike, and the outcome is highly subjective, in our out of
Court, but especially in Chapter 11. Is the Judge enthralled by
Jack Butler as Debtor's Counsel or intimidated by Harvey Miller
as Debtor's Counsel?  Are you holding "secured" paper only to
discover that when it was issued the bond counsel forgot to
notify the Indenture Trustee of the most Senior debt?    Is
somebody holding Junior paper that you think is out of the money
only to have Hugh Ray read the fine print and discover that the
"Junior" paper is secured?  This is the stuff of corporate
reorganizations that is virtually impossible to codify into a

That said, this is an especially valuable text for anybody
working in the distressed market.  As a Duke grad, I tend to be
disdainful of all things Harvard, but having read Dr. Gilson's
book, I am enticed to encamp by the dirty waters of the Charles
long enough to take his course, appropriately entitled,
"Creating Value Through Corporate Restructuring."


Bond pricing, appearing in each Monday's edition of the TCR, is
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is provided by DebtTraders in New York. DebtTraders is a
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sourcing of attractive high yield debt investments. For more
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Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Go to order any title today.

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


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

Troubled Company Reporter is a daily newsletter co-published by
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 2002.  All rights reserved.  ISSN: 1520-9474.

This material is copyrighted and any commercial use, resale or
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