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/raid1/www/Hosts/bankrupt/TCR_Public/020320.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, March 20, 2002, Vol. 6, No. 56 Headlines 360NETWORKS: Wants Lease Decision Deadline Moved to June 24 AMC ENTERTAINMENT: S&P Places B- Rating On CreditWatch Positive ANC RENTAL: Seeks Okay of Global Settlement with Liberty Mutual ADMIRAL CBO: S&P Places Junk Debt Rating on Watch Negative ADVANTICA RESTAURANT: Posts Same-Store Sales for February Period AMERICA SERVICE: Bank Lenders Waive Loan Covenant Violations AMERICAN COMMERCIAL: Reaches Debt Workout Pact with Danielson AMERICAN SKIING: Wooing Lenders to Revise Credit Facility Terms BERGSTROM CAPITAL: Taps Lipper to Help Seek Business Combination BETHLEHEM STEEL: Intends to Reject Two Gas Purchase Contracts BUCKHEAD AMERICA: Fails to Meet Nasdaq SmallCap Listing Criteria BURLINGTON: Committee Gains OK to Hire BDO Seidman as Advisors CABLE DESIGN TECH: S&P Lowers Credit Rating One Notch to BB CELLPOINT: Signs-Up Cofima Finanz to Arrange Long-Term Financing CELLPOINT: Jay Rynning Nudges-Off Henricsson as Board Chairman CHESTER HOLDINGS: Names Three New Members to Board of Directors CHIQUITA BRANDS: Emerges from Prepack. Chapter 11 Reorganization COMDISCO INC: Committee Balks At Fee Review Panel Appointments CONSECO FINANCE: Fitch Takes Rating Actions on Various Deals CONSECO FINANCE: S&P Affirms B- Ratings over Liquidity Pressure CONSECO INC: S&P Affirms Low-B Ratings After Bond Exchange Deal CONSECO: Fitch Keeping Watch on Ratings after Debt Exchange Deal CONSOLIDATED VAN: CDNX Delists Shares Effective March 15, 2002 CONSUMERS FIN'L: Allows Investors to Acquire Controlling Stake DOE RUN: S&P Drops Ratings to D After Missed Interest Payment EGAMES INC: Brings-In Stockton Bates as Principal Accountants EMMIS COMMS: Wachovia Corporation Discloses 7.83% Equity Stake ENRON CORP: Offers Constellation Power $1.6 Million Break-Up Fee ENRON CORP: Sempra Energy Agrees to Acquire Metals Unit's Assets ENRON METHANOL: Case Summary & 20 Largest Unsecured Creditors ENRON VENTURES CORP: Case Summary & Largest Unsecured Creditor FAIRCHILD CORP: Feeble Financials Force S&P to Cut Ratings to B FEDERAL-MOGUL: Asbestos Claimants Tap Lovells as Int'l Counsel FRIEDE GOLDMAN: Lockheed Martin Contracts Unit to Build Tugs GC COMPANIES: DE Court Confirms Modified 1st Amended Joint Plan GENUITY INC: S&P Airs Concern About Reconsolidation with Verizon GLOBAL CROSSING: Utilities Want More Assurance of Future Payment GLOBAL TELESYSTEMS: KPNQwest's Acquisition Cancels All Shares GUILFORD MILLS: Receives Court Approval of 14 'First Day Orders' HQ GLOBAL: Seeks Authority to Maintain Cash Management System HAYES LEMMERZ: Wants Approval to Reject KIMA Executory Contracts ICG: Telecom Group Settles Bills Dispute with Cincinnati Bell IT GROUP: Committee Signs-Up Chanin Capital as Fin'l Advisors INPRIMIS: Kaufman Rossin Replaces Deloitte & Touche as Auditors INTEGRATED HEALTH: Takes Action to Recover Preferential Transfer INT'L FIBERCOM: Has Until Mar. 22 to File Schedules & Statements KAISER ALUMINUM: Seeks OK to Hire Ordinary Course Professionals KAISER ALUMINUM: Secures Final Approval of $300MM DIP Financing KMART CORPORATION: Brings-In Ernst & Young as Financial Advisors KMART CORP: Appaloosa Management Discloses 5.5% Equity Stake LERNOUT & HAUSPIE: Dictaphone Plan's Settlement Distribution MARINER POST-ACUTE: Seeks Okay of 8th DIP Financing Amendment METROMEDIA FIBER: Defers Interest Payment on 6.15% Sub. Notes METROMEDIA FIBER: Missed Payment Forces S&P Drop Rating to D MOONEY AIRCRAFT: Wins OK to Sell Assets to Advanced Aerodynamics NATIONAL STEEL: Will Maintain Existing Cash Management System NATIONSRENT INC: Committee Members Seek Okay to Trade Securities NORTHERN MOUNTAIN: CDNX Delists Shares Effective March 15, 2002 OGLEBAY NORTON: Sets Annual Shareholders' Meeting for April 24 OPTICON MEDICAL: May Opt to File for Bankruptcy to Get Financing PERRY ELLIS: Firming-Up Pending Acquisition of Jantzen Brand PHILIP SERVICES: Seeking Covenant Amendments Under Credit Pact PHILIPS INT'L: Kensington Investment Reports 14.5% Equity Stake PLANVISTA: Nearing Completion of Debt Restructuring Transaction POLAROID CORP: Seeking Approval of Revised $4.5MM Bonus Plan PSINET: Agrees to Reimburse JPMorgan Chase for $5.17MM L/C Draws RADIO ONE: Secures Bank Facility Amendment to Ease Liquidity SERVICE MERCHANDISE: Intends to Sell All Fixtures & Equipment SERVICE MERCHANDISE: Designation Rights Sold for $235 Million STANDARD AUTOMOTIVE: Files for Chapter 11 Reorg. in New York STANDARD AUTOMOTIVE: Case Summary & Largest Unsecured Creditors SUNRISE TECHNOLOGIES: Inks Pact to Acquire ScienceBased Health SUPERVALU: Will Close & Sell Belle Vernon Distribution Facility W.R. GRACE: Signing-Up Kinsella Communications as Notice Agents * Meetings, Conferences and Seminars ********* 360NETWORKS: Wants Lease Decision Deadline Moved to June 24 ----------------------------------------------------------- 360networks inc., and its debtor-affiliates seek the Court's authority to further extend their time to assume or reject 140 unexpired leases of non-residential property for an additional 90 days to and including June 24, 2002. Alan J. Lipkin, Esq., at Willkie Farr & Gallagher, in New York, relates that the Debtors remain a party to numerous unexpired leases of non-residential real property that have been neither assumed nor rejected. "These Leases may be valuable assets of the Debtors' estates or integral to their continued operations," Mr. Lipkin states. Accordingly, Mr. Lipkin explains that in order to determine which of the Unexpired Leases should be assumed or rejected, the Debtors need an extension of time to continue to evaluate the need for these locations in the context of a long-term business plan. "Absent such as extension, the Debtors would be forced to choose between losing valuable locations and assuming leases that ultimately should be rejected," Mr. Lipkin adds. Mr. Lipkin assures the Court that granting this motion will not prejudice the lessors under the Unexpired Lease because: (i) to the best of their knowledge, the Debtors are current on their post-petition rent under the Unexpired Leases; (ii) the Debtors have sufficient liquidity and the intent to continue to perform timely all of their obligations under the Unexpired Leases as required by the Bankruptcy Code; and (iii) in all instances, individual lessors may, for cause shown, ask the Court to fix an earlier date by which the Debtors must assume or reject an Unexpired Lease. "Nonetheless, the Debtors reserve all their rights respecting their Leases the right to determine whether or not the Unexpired Leases are in fact true leases," Mr. Lipkin adds. (360 Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) AMC ENTERTAINMENT: S&P Places B- Rating On CreditWatch Positive --------------------------------------------------------------- On March 18, 2002, Standard & Poor's placed its 'B-' ratings on AMC Entertainment Inc. on CreditWatch with positive implications based on evidence of positive developments in the company's financial policy. Although AMC is actively looking for acquisitions, it has reduced the financial risk somewhat by using equity as part of its funding strategy. AMC's pending sale of $94.5 million in common stock is part of its effort to maintain a more moderate capital structure. In addition, the use of equity to partially finance its purchase of GC Cos., Inc. will help preserve key credit measures, while the acquisition modestly increases its geographic reach and diversity. AMC is the second-largest movie exhibitor in the U.S. and is headquartered in Kansas City, Missouri. As of December 27, 2001, AMC had a total of $544 million in debt. The extent of any upgrade is probably limited to one notch. Any ratings upside will depend on balancing its growth objectives with credit quality concerns and increasing its discretionary cash flow, which remains negative. In resolving the CreditWatch listing, Standard & Poor's will meet with management to ensure that its business and financial strategies are consistent with a higher rating. ANC RENTAL: Seeks Okay of Global Settlement with Liberty Mutual --------------------------------------------------------------- ANC Rental Corporation, and its debtor-affiliates ask the Court to approve a global settlement and compromise with Liberty Mutual Insurance Company about disputes on a number of matters essential to the Debtors' successful reorganization, including: A. The Debtors' obtaining post-petition surety bonding; B. Liberty's agreeing to renew, replace, reinstate and continue certain bonds that have been issued on behalf of the Debtors; C. Liberty's agreement to refrain from canceling or voiding certain surety bonds issued on behalf of the Debtors so long as no Event of Default has occurred; D. The Debtors' assumption of the Liberty Post Petition Bonds and the General Agreements of Indemnity, Commercial Surety in favor of Liberty executed by ANC and dated August 4, 2000 and October 31, 2000; E. Additional collateral and super-priority administrative expense status to be provided to Liberty in connection with the issuance and continuation of surety bond; and F. An acknowledgement of the extent, validity and unavoidability of certain pre-petition payments and grants of security interests. Bonnie Glantz Fatell, Blank Rome Comisky & McCauley LLP in Wilmington, Delaware, relates that the Debtors are required to support various aspects of their business with surety bonds that allow them to operate without the burden of posting cash collateral. The Debtors need surety bonds for among others, airport concession obligations, payment of obligations with the Debtors' Workers' Compensation, Automobile and General Liability Insurers, and procuring utility services. Liberty, by issuing the different surety bonds to the Debtors, has to date provided the Debtors with approximately $133,000,000 in surety credit. These surety bonds, according to Ms. Fatell, mostly run to airport authorities, the Debtors' insurers, or various states or other regulatory bodies and are critical to the Debtors' ability to continue their businesses. At any given time, the Debtors have between 300 to 400 outstanding surety bonds. The Debtors' surety program is very dynamic, Ms. Fatell relates. In most months, millions of dollars worth of surety bonds expire; need to be renewed, continued, increased or decreased; or need to cover additional principals. The Debtors have relied almost exclusively on Liberty to issue surety bonds and to maintain this fluid surety program. Since the Petition Date, Liberty has refused to issue, renew, continue, reinstate, replace, increase, or otherwise adjust any surety bonds. Ms. Fatell fears that a continued freeze on surety bonding will have a serious negative impact on ANC. Ms. Fatell acknowledges that there is a real and serious dispute between the Debtors and Liberty. These conflicts, she states, should be resolved because the Debtors will not be able to procure commercial surety bonds from another source. It's axiomatic that it's difficult for entities in bankruptcy to obtain new credit from a new source, even if collateralized, when several secured creditors already have prior claims to the Debtors' assets. In addition, the commercial surety market has undergone significant upheaval in the last few years especially with the economic downturn and the industry's recent large commercial losses with respect to Enron that several sureties that were formerly major participants opted to retreat from the commercial surety market. Moreover, the lack of available reinsurance is also contributing to a swiftly shrinking commercial surety marketplace. Ms. Fatell submits that the terms of the Debtors' settlement agreement with Liberty is best for both parties since the Debtors are assured of bonding under reasonable terms while Liberty will be given certain protections in recognition of the considerable financial risks it has taken and will continue to undertake on the Debtors' behalf. The Court to approve the settlement because many of the Debtors' key contractual relationships require bonds such as those provided by Liberty. A termination of the bonds would trigger a flood of defaults for which no cures could be provided. The salient terms of the Debtors' settlement with Liberty provides that: A. Bonding Obligations: So long as there is not an Event of Default and subject to certain limitations, Liberty has agreed to issue surety bonds on behalf the Debtors which are essential to the effective reorganization of the Debtors' business, including issuing certain bonds in connection with the Debtors' plan to consolidate the Alamo and National trade names into a single location at most airports doing business as ANC, provided that the total aggregate penal sums of all surety bonds outstanding issued by Liberty on behalf of ANC, its subsidiaries and/or affiliates (including both pre-petition and post-petition) shall at no time exceed $133,000,000. Specifically, Liberty has agreed, at ANC's request, to: a. replace, reinstate, renew or continue all Liberty Post Petition Bonds that became due or will become due for renewal and/or continuation during the period from November 13, 2001 to December 31, 2002 and b. replace, reinstate, renew or continue certain Liberty- issued surety bonds for the benefit of, on behalf of or at the request of ANC or any of its affiliates. B. Assumption Obligations: The Debtors shall assume, with Liberty's consent, all surety bonds issued by Liberty for the benefit of, on behalf of or at the request of ANC or any of its subsidiaries or affiliates that were or are outstanding and in effect at any time during the period following November 13, 2001, except for the "New AIG Retro Bond," and the Liberty Indemnification Agreements. The Debtors shall be jointly and severally liable for the performance of all the Assumed Indemnity Obligations. C. Collateral Terms: In order to induce Liberty to issue surety bonds on behalf of the Debtors that are critical to the successful reorganization of the Debtors, the Term Sheet provides that all of the Assumed Indemnity Obligations shall be secured and treated as: a. an allowed super-priority administrative expenses with priority over any and all other administrative priority expense claims under the same Bankruptcy Court provision, subject and subordinate only to the carve-outs provided to retained professionals and to the quarterly fees payable to the Office of the U.S. Trustee; b. Collateralized by a first priority senior lien, senior to the rights, interests and liens of any other person or entity in the entirety of the assets of the Debtors' estates, provided that, except for the Liberty Post-Petition Cash Collateral and the Debtors' cash collateral replenishment obligation, such senior liens shall be subject and subordinate only to the senior lien granted to the Master Collateral Agent, any valid, perfected and non-avoidable security interests that were in existence as of the Debtors' chapter 11 petition filing dates. Such subordination, however, shall not apply to the Liberty's rights under and relating to the Pre-petition Security Interests and any agreements executed in connection therewith, including relative priorities among and between Liberty and other entities asserting or are entitled to security interests in the Debtors' assets and the anticipated Senior DIP Lender's Lien. c. Further collateralized by the non-cash collateral granted Liberty in the Pre-Petition Secured Creditor Agreements, and at Liberty's sole option and election, the $6,000,000 in pre-petition letters of credit currently held by Liberty or the Pre-Petition Liberty Cash Collateral; and d. Further collateralized by cash and at ANC's option, a letter of credit, upon the entry of the Approval Order, ANC shall deliver to Liberty $6,000,000 in cash or letter of credit in form acceptable to Liberty collateral. Each time that Liberty has drawn a total of $2,000,000 upon the Liberty Post-Petition Cash Collateral in connection with the Assumed Indemnity Obligations, the Debtors- jointly and severally- shall cause the Liberty Post-Petition Cash Collateral to be replenished to the original $6,000,000 amount. The replenishment of the Liberty Post-Petition Cash Collateral shall occur a maximum of six times for a total replenishment obligation of $12,000,000, provided that ANC shall not be required to provide more than a single $2,000,000 replenishment of the Liberty Post-Petition Cash Collateral during any 30-day period. D. Deferred Obligations: So long as there shall be no Event of Default, obligations of the Debtors under the Liberty Indemnity Agreements with respect to the Assumed Indemnity Obligations shall be deemed modified to read: a. Following the full performance of the $12,000,0000 replenishment obligation of ANC as described and the exhaustion of the Liberty Post-Petition Cash Collateral in connection with the Assumed Indemnity Obligations, all indemnifying Debtors shall be jointly and severally obligated to reimburse Liberty within ten business days of written demand for 50% of any of Liberty's loss, cost or expense that is within the scope of the Assumed Indemnity Obligations and which has not been previously paid to Liberty, and (y) pay the remaining 50% of any such loss, cost or expense within six months of the date of Liberty's aforesaid written demand, together with interest on the Deferred Indemnity Obligation at the rate of 6% per annum. b. The Deferred Indemnity Obligations shall be deemed secured and treated in the same manner as the Assumed Indemnity Obligations. c. At Liberty's request, the Deferred Indemnity Obligations may be memorialized in promissory notes setting forth the term, interest rate and amount of the Deferred Indemnity Obligations, which notes shall be deemed secured by collateral and freely transferred, assigned or negotiated by Liberty to the extent permitted by law. However, the execution of such promissory notes shall not be required in order to create the secured Deferred Indemnity Obligations or to insure the survival of such obligations. d. Notwithstanding anything to the contrary in the Term Sheet, the total amount of all Deferred Indemnity Obligations outstanding at any one time shall in no event exceed $8,000,000 and any such Deferred Indemnity Obligations shall survive the confirmation of any plan of reorganization and shall be immediately payable upon such confirmation or the conversion of any of the Debtors' cases. Committee Responds The Statutory Committee of Unsecured Creditors objects in a limited manner to the Debtors' agreement with Liberty. Specifically, the Committee is troubled by: A. Past Due Premiums. The Debtors are required to cure past-due premiums under the existing Liberty surety bond program, but the Term Sheet does not indicate a specific dollar amounts past due. B. Liberty's Fees and Cost. Liberty is entitled to all reasonable attorney's fees and out-of-pocket expenses incurred in its review of any proposed DIP financing. C. Notice of Event of Default or Cancellation. The term sheet sets out a number of events of default under the Surety Bond Program. Liberty is required to notify the Debtors of any event of default and following such notice the Debtors have a 45-day cure period. D. Notice of Debtors' Cancellation. Under the Term Sheet, the Debtors may request or consent to the cancellation, voiding of and reduction of penal sums of any bond without notice to the Committee or other parties-in-interest. Sean M. Beach, Esq., at Young Conaway Stargatt & Taylor LLP in Wilmington, Delaware, asks the Court that any order approving the motion should address the Committee's concerns and that the premiums to be paid under Liberty's existing surety bond program and that any order approving the Motion should reference the amount to be paid. Mr. Beach also asks the Court to order Liberty to provide the Committee a statement of attorney's fees, with the Committee being given seven days to file any objection. The Committee should also be given notice of any event of default and advance notice that Liberty has determined to cancel, void or reduce the penal sum of any bond. Congress Financial Objects Congress Financial Corporation objects to the Debtors' settlement with Liberty to the extent that the relief requested purports to provide Liberty with liens, claims, rights and interests senior to the pre-petition and post-petition liens, claims, rights and interests granted to the Administrative Agent and the Lenders. Rebecca L. Booth, Esq., at Richards Layton & Finger PA in Wilmington, Delaware, says Congress is interposing an objection just in case the Debtors and Liberty do not acknowledge and agree that the super-priority claims liens, rights and interests granted to Liberty in connection with the Motion are subordinate and junior to all pre-petition and post-petition liens, claims and rights and interests of the Administrative Agent and Lenders. The Administrative Agent and the Lenders acknowledge the fact that the Debtors' ability to operate depend upon the issuance and continuation of certain surety bonds. However, she reminds the Court of the Administrative Agent's prior concerns over the Debtors utilizing or investing any portion of cash collateral for any long-term use, including the issuance and continuation of surety bonds, without a viable business plan, which will result in a successful reorganization. Based on the Debtors' own projections and reporting information, Ms. Booth points out that the cash collateral and the accounts receivable have been deteriorating and will continue to do so at an increasing rate. The Court in the last order mandated the Debtors to establish their right to the further use of the cash collateral. It is premature to grant the Debtors' settlement with Liberty when the Debtors still have to comply with the Court's previous order. (ANC Rental Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADMIRAL CBO: S&P Places Junk Debt Rating on Watch Negative ---------------------------------------------------------- Standard & Poor's placed its ratings on the class A-2 and C notes issued by Admiral CBO (Cayman) Ltd. and co-issued by Admiral CBO (Delaware) Inc. on CreditWatch with negative implications. Concurrently, the ratings on the class B-1 and B- 2 notes remain on CreditWatch with negative implications, where they were placed on July 24, 2001. The CreditWatch placements reflect the continuing deterioration in the collateral pool's credit quality and an increase in its pool default rate since the rating on the class C notes was lowered to triple-'C'-plus from double-'B'-minus on Aug. 20, 2001. Since the closing of the transaction, $49.8 million of defaulted assets, or approximately 16.5% of the closing collateral pool, have been sold at a weighted average recovery rate of 17.2%. The transaction also experienced additional par loss due to the sale of several credit risk securities at distressed recovery levels. Furthermore, according to the March 1, 2002 trustee report, a total of $11.25 million (or approximately 4.3% of the total collateral pool) is in default. In addition, the issuer credit rating on one bond ($2 million), listed as a performing asset on the March 2002 trustee report, was lowered to 'SD' on Oct. 31, 2001. As of March 1, 2001, the performing pool, including the principal cash, has an aggregate par value of $249.2 million, compared to the effective date portfolio of $301.2 million. In contrast, only $12.15 million of the principal amount of the liability has been paid down since the transaction's inception. The obligors, with ratings in the triple-'C' and double-'C' range, comprise more than 12.8% of the performing collateral portfolio. Furthermore, approximately 25.1% of the obligors in the performing collateral pool are currently on CreditWatch with negative implications, of which 7.74% are rated in the triple- 'C' and double-'C' range. The class A overcollateralization test (currently 122.01% versus the required minimum of 127%), the class B overcollateralization test (currently 102.66% versus the required minimum of 112%), and the class C overcollateralization test (currently 96.39% versus the required minimum of 100%) have been failing since June 2001, March 2001, and December 2001, respectively. On the payment dates in August 2000, August 2001, and February 2002, approximately $12.15 million in principal was paid to the class A-1 noteholders because of the mandatory redemptions triggered by the overcollateralization test failures. However, the improvement to the overcollateralization ratios resulting from the most recent redemption was not sufficient to bring any of the tests back into compliance. Standard & Poor's noted that Admiral CBO Ltd. may trigger a technical event of default if it fails to maintain the class B overcollateralization ratio at 100% or higher and 66-2/3% of each of the class A and class B noteholders vote to consider this an event of default. If this event of default occurs, a majority of the class A noteholders may declare all the notes immediately due and payable. However, the collateral pool could not be liquidated unless one of the following two conditions is met: (i) the anticipated proceeds from the sale or liquidation of the assets are sufficient to pay in full the unpaid principal and interest on the senior notes; or (ii) at least 66-2/3% of each of the class A-1, class A-2, class B, and class C noteholders vote to direct the sale and liquidation of the assets. In the coming weeks, Standard & Poor's will be performing cash flow analysis, and will be reviewing the results from the cash flow model runs and Standard & Poor's default model to evaluate the effect of the credit deterioration on the current ratings for the notes. Ratings Placed On Creditwatch Negative Admiral CBO (Cayman) Ltd./Admiral CBO (Delaware) Inc. Class Rating To From A-2 AA/Watch Neg AA C CCC+/Watch Neg CCC+ Ratings Remain On Creditwatch Negative Admiral CBO (Cayman) Ltd./Admiral CBO (Delaware) Inc. Class Rating B-1 BBB/Watch Neg B-2 BBB/Watch Neg ADVANTICA RESTAURANT: Posts Same-Store Sales for February Period ---------------------------------------------------------------- Advantica Restaurant Group, Inc. (OTCBB: DINE) reported same- store sales for company-owned restaurants during the four-week and eight-week periods ended February 20, 2002, compared with the same periods in fiscal year 2001. Four Weeks Eight Weeks Feb. 2002 QTD 2002 ---------- ----------- Same-Store Sales Denny's (1.0%) (0.2%) Coco's (8.2%) (7.5%) Carrows (2.9%) (2.6%) Guest Check Average Denny's 1.2% 1.2% Coco's 2.9% 2.7% Carrows 1.6% 1.3% Included here are the Company's restaurant counts at the end of February, compared with year end 2001. Restaurant Units 2/20/02 12/26/01 ------------ ------------ Denny's Company-owned 612 621 Franchised 1,109 1,114 Licensed 14 14 ------------ ------------ 1,735 1,749 Discontinued Operations: Coco's Company-owned 138 139 Franchised 38 38 Licensed 294 298 ------------ ------------ 470 475 Carrows Company-owned 110 112 Franchised 29 30 ------------ ------------ 139 142 ------------ ------------ 2,344 2,366 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 Web site at http://www.advantica-dine.com DebtTraders reports that Advantica Restaurant Group's 11.250% bonds due 2008 (DINE08USR1) are trading between 78 and 80. See http://www.debttraders.com/price.cfm?dt_sec_ticker=DINE08USR1 for real-time bond pricing. AMERICA SERVICE: Bank Lenders Waive Loan Covenant Violations ------------------------------------------------------------ America Service Group Inc. (NASDAQ:ASGR) announced the financial results for the fourth quarter and year ended December 31, 2001. Business Update "During 2001, the Company weathered a difficult year. However, we have addressed our issues and are beginning our recovery. The Company's program to upgrade its contract portfolio is proceeding," commented Michael Catalano, chairman, president and chief executive officer of America Service Group. "From July 1, 2001, through December 31, 2001, the Company has renewed, modified or allowed to expire twenty-five contracts and contracted for approximately $20 million of new business on an annualized basis. The Company's objectives have been to achieve reasonable rates, which reflect current healthcare costs, and to establish risk-sharing models for areas such as pharmacy, off- site utilization and nursing costs. "We have strengthened and reorganized our management team, bringing on Richard Wright as vice chairman of operations and Michael Taylor as chief financial officer during the fourth quarter. Their addition complements an already strong management group. "Company performance is showing some improvement with debt levels significantly reduced from the prior quarter, strong same contract revenue growth for the year and improvements in gross margins and EBITDA, before nonrecurring charges, for the last two quarters." As discussed in the Company's prior quarterly earnings release, five contracts, with combined third quarter revenues of $30.2 million, accounted for a negative gross margin of approximately $2.0 million in the third quarter. The Company has executed amendments that either increase revenues, provide for risk sharing or provide flexibility of staffing on four of these contracts. Reflecting improved terms, these five contracts produced combined fourth quarter negative gross margins of $1.2 million. During the fourth quarter, the Company conducted a comprehensive analysis of its portfolio of 145 contracts for the purpose of identifying loss contracts and developing a contract loss reserve for succeeding years. Resulting from this review, three of the five contracts mentioned above, plus an additional two county contracts, were determined to be loss contracts. These five contracts accounted for a negative gross margin of $2.5 million during the fourth quarter and were included in a charge for loss contracts of $18.3 million as of December 31, 2001. The five contracts covered by the charge have expiration dates ranging from June 30, 2002 through June 30, 2005. Ninety percent of the charge relates to the State of Kansas contract, which expires June 30, 2005, and the City of Philadelphia contract, which expires June 30, 2004. The remaining liability covers the State of Maine contract, which expires June 30, 2002, and two county contracts that expire August 15, 2002 and June 30, 2005. The Company will continue, in cooperation with clients, to address the loss circumstances of the five contracts. As a result of the comprehensive review of all contracts, the Company does not anticipate further contracts requiring loss reserves. "The dramatic and continuing rise in healthcare costs has impacted the correctional healthcare industry, and particularly our Company, the leading player. Long-term, full-risk contracts, the prevailing industry standard for large contract awards, can no longer be supported in the current cost environment. The charge for loss contracts in 2001 recognizes that reality and will shape the Company's future contracting strategy," added Mr. Catalano. Financial Results Healthcare revenues for the fourth quarter of 2001 were $133.6 million, an increase of 17.7% over the prior year quarter. For the year ended December 31, 2001, healthcare revenues were $552.5 million, an increase of 44.6% over the prior year. Same contract revenues increased 11.1% in 2001, as compared with the prior year. Healthcare expenses for the fourth quarter of 2001 were $126.3 million, or 94.6% of revenue, including the impact of the five loss contracts discussed above. In the prior year quarter, healthcare expenses were $102.9 million, or 90.7% of revenue. For the year ended December 31, 2001, healthcare expenses were $532.7 million, or 96.4% of revenue, as compared to $344.8 million, or 90.3% of revenue, in the prior year. Included in the full year results for 2001 was a charge of $6.4 million to healthcare expenses in the second quarter, which was the result of an increase in reserves for medical claims. Selling, general and administrative expenses for the fourth quarter of 2001 were $4.6 million, or 3.5% of revenue. Included in the results for the quarter was an increase in legal reserves of $600,000, primarily related to further development of malpractice cases previously covered by insurance carriers now in liquidation. In the prior year quarter, selling, general and administrative expenses were $3.5 million, or 3.1% of revenue. For the year ended December 31, 2001, selling, general and administrative expenses were $19.1 million, or 3.5% of revenue, as compared to $13.8 million, or 3.6% of revenue, in the prior year. In addition to the $600,000 charge in the fourth quarter noted above, the Company incurred an additional $1.3 million of charges to selling, general and administrative expenses from increases in reserves for legal and malpractice issues in the second quarter. EBITDA for the fourth quarter was $3.2 million, as compared with $7.0 million in the prior year quarter. For the year ended December 31, 2001, EBITDA was $2.6 million, including the negative impact of the $6.4 million increase in reserves for medical claims in the second quarter, as compared with $23.3 million in the prior year. The Company defines EBITDA as earnings before interest, taxes, depreciation, amortization and certain non-recurring charges. Considered to be non-recurring charges for the purposes of calculating EBITDA for 2001 were $1.9 million of charges to selling, general and administrative expenses related to increases in reserves for legal and malpractice issues, $2.6 million of strategic initiative and severance expenses, $13.2 million of charges related to impairment of long-lived assets, and the $18.3 million charge for loss contracts. As of December 31, 2001, the Company had $16.1 million of gross deferred tax assets primarily created during 2001 by the various charges mentioned above. Under accounting rules prescribed by Financial Accounting Standards Board Statement 109, the Company established a full valuation allowance related to its gross deferred tax assets. Assuming the Company achieves sufficient profitability to realize the deferred income tax assets, the valuation allowance will be reduced in future years through a credit to income tax expense. Primarily as a result of the charge for loss contracts, establishment of a valuation allowance related to deferred taxes and the increase in legal reserves, the Company incurred a net loss of $27.8 million, or $5.12 per diluted share, in the fourth quarter, as compared with net income of $2.0 million, or $0.38 per diluted share, in the prior year quarter. For the year ended December 31, 2001, the Company incurred a net loss available to common shareholders of $45.0 million as compared with net income available to common shareholders of $7.2 million in the prior year. Cash and cash equivalents increased to $10.4 million at December 31, 2001, as compared with $256,000 in the prior year. The Company has reduced debt levels from $63.0 million at the end of the third quarter to $58.1 million at December 31, 2001, and $52.025 million as of the date of this release. Additionally, the Company has amended its revolving credit facility with its syndicate of bank lenders, effective March 15, 2002. Among other changes, this amendment reduces the level of facility commitment reductions required before ultimate maturity of the facility on April 1, 2003, waives certain financial covenant violations for the period ended December 31, 2001, and modifies financial covenant targets prospectively. If the current credit facility is still in place at December 31, 2002, the Company must deliver to the lenders warrants entitling the lenders to acquire either 2.5% or 5% of the fully diluted common stock of the Company. The amount of the warrants would be based on the facility size at December 31, 2002. America Service Group Inc., based in Brentwood, Tennessee, is the leading provider of correctional healthcare services in the United States. America Service Group Inc., through its subsidiaries, provides a wide range of healthcare and pharmacy programs to government agencies for the medical care of inmates. America Service Group also reported that its total current liabilities exceeded its total current assets by close to $4 million at December 31, 2001. AMERICAN COMMERCIAL: Reaches Debt Workout Pact with Danielson ------------------------------------------------------------- American Commercial Lines LLC (ACL) and Danielson Holding Corporation (Amex: DHC) announced the execution of a definitive recapitalization agreement on March 15, 2002 for the acquisition of ACL by Danielson. The holders of more than two thirds of ACL's outstanding senior notes, substantially all the indirect preferred and common members of ACL and the management of ACL have agreed to support the recapitalization plan. ACL's senior lenders have executed forbearance agreements pending the negotiation and execution of definitive documentation relating to the amendment and restatement of ACL's senior secured credit facility. Under the terms of the recapitalization agreement, Danielson will acquire 100% of the membership interests of American Commercial Lines Holdings LLC, ACL's parent holding company. ACL's present indirect preferred equity holders (that are not members of ACL management) will receive $7.0 million in cash. ACL's management will receive approximately $1.7 million of restricted Danielson common stock. In addition, Danielson will deliver $25.0 million in cash, which will be used to reduce borrowings under ACL's senior credit facility, and approximately $58.5 million of ACL's outstanding senior notes to ACL Holdings in connection with the transaction. The recapitalization is expected to close in the second quarter of 2002. The transaction will result in a reduction of ACL's senior secured bank debt by $25.0 million. In addition, the parties will seek to restructure ACL's 10-1/4% senior notes due 2008 through an exchange offer and consent solicitation. Upon the successful completion of the exchange offer and consent solicitation, up to approximately $236.5 million of ACL's outstanding senior notes (all notes held by parties other than Danielson) will be exchanged for $120.0 million of new 11-1/4% cash pay senior notes due January 1, 2008 and approximately $116.5 million of new 12% pay- in-kind senior subordinated notes due July 1, 2008. ACL will also issue additional new cash pay senior notes in an aggregate principal amount (not to exceed $20.0 million) equal to the accrued and unpaid interest on its outstanding senior notes, other than those held by Danielson, and to the extent that such accrued and unpaid interest exceeds $20.0 million, additional pay-in-kind senior subordinated notes in an amount equal to such excess would be issued in full satisfaction of such accrued and unpaid interest. In connection with these transactions, Danielson expects to effect a $42 million rights offering to its existing security holders, the proceeds of which will be used to fund Danielson's cash contribution for the recapitalization and for general corporate purposes. Consummation of the recapitalization agreement is not conditioned on the successful completion of the rights offering. Under the terms of the rights offering, holders of Danielson common stock will be entitled to purchase additional shares of Danielson's common stock, at a subscription price of $5.00 per share, up to such holders' pro rata share of the rights offering. This announcement does not constitute notice of the commencement of the rights offering. Further information regarding the terms and conditions for the expected rights offering will be announced prior to the commencement of the rights offering. The recapitalization agreement provides that the exchange offer and consent solicitation will be made in reliance on a registration exemption provided by Section 3(a)(9) under the Securities Act of 1933, conditioned on the minimum participation of 95% of the outstanding principal amount of ACL's outstanding senior notes, as to which noteholders holding more than two thirds of the outstanding principal amount of such notes have agreed to tender. In the event that the exchange offer and consent solicitation is not consummated by June 15, 2002, the recapitalization agreement provides for the implementation of the recapitalization through a voluntary prepackaged bankruptcy plan under Chapter 11 of the Bankruptcy Code, as to which noteholders holding more than two thirds of the outstanding principal amount of ACL's outstanding senior notes have agreed to accept. American Commercial Lines LLC is an integrated marine transportation and service company operating approximately 5,100 barges and 200 towboats on the inland waterways of North and South America. ACL transports more than 70 million tons of freight annually. Additionally, ACL operates marine construction, repair and service facilities and river terminals. Danielson Holding Corporation is an American Stock Exchange listed company, engaging in the financial services and specialty insurance business through its subsidiaries. Danielson's charter contains restrictions which prohibit parties from acquiring 5% or more of Danielson's common stock without its prior consent. AMERICAN SKIING: Wooing Lenders to Revise Credit Facility Terms --------------------------------------------------------------- American Skiing Company (OTC: AESK) announced results for its second fiscal quarter and six months ended January 27, 2002. The Company reported that aggressive cost control and performance enhancements steps taken as part of its previously announced restructuring program, coupled with additional steps and refocused marketing programs following the events of September 11th, bolstered operating performance during the quarter. However, these were offset by a late start to the ski season, particularly in the east, and weakness in the Utah market resulting from the 2002 Winter Olympics, each of which yielded weaker year-over-year performance. Following the late start to the ski season, the Company achieved record results at Heavenly during the crucial Christmas and New Years period as well as strong Martin Luther King and Presidents' Day holidays. "Following the events of September 11th, our resort management teams did an exceptional job of promoting visitation and implementing aggressive cost control measures which helped mitigate the affect on our resort operations," said CEO B.J. Fair. "Nationwide call volume and reservation activity continued to improve since the start of the season, however, a lack of snowfall and warm temperatures in the east have hampered a return to last year's levels." Restructuring Plan Update To date, the Company has completed all the elements of its previously announced restructuring plan with the exception of closing the Steamboat resort sale to reduce leverage. The Company announced on February 1, 2002 that it had entered into a definitive agreement to sell the resort to Triple Peaks, LLC, a consortium of investors led by Tim and Diane Mueller, the owners of Vermont's Okemo Mountain Resort and operators of Mount Sunapee Resort in New Hampshire. The sale remains subject to a number of contingencies. The Company anticipates that the sale will close within the next thirty days. The Company also reported that, as a result of the slow start to the ski season and delays in completing the sale of Steamboat, it was not in compliance with several financial covenants under its resort credit facility at the end of the quarter. The Company has obtained a waiver from its lenders for the financial covenant defaults as of the second quarter of fiscal 2002. Accounting Changes and Non-Recurring Items During the second quarter and first six months of fiscal 2002, the Company incurred $0.8 million, and $2.4 million, respectively, in non-recurring charges related to its previously announced restructuring program. All of the non-recurring charges relate to resort operations except for $0.2 million associated with real estate operations incurred during the second quarter of fiscal 2002. During the second quarter of fiscal 2002, the Company also took an additional $25.5 million asset impairment charge on Steamboat based on modifications from preliminary estimates to the final purchase and sale agreement and delays in completing the sale. During the first quarter of fiscal 2002, the Company incurred an $18.7 million non-recurring charge from the cumulative effect of a change in accounting principle related to the impairment of goodwill resulting from the adoption of Statement of Financial Accounting Standards No. 142. The net loss for the first quarter of fiscal 2001 included $0.8 million in pre-opening expenses at the Steamboat Grand Hotel, which opened in October 2000, and a $2.5 million benefit, net of taxes, from the cumulative effect of a change in accounting principle related to marking interest rate derivatives to their market value as a result of the adoption of Statement of Financial Accounting Standards No. 133. Fiscal 2002 Second Quarter Results The net loss available to common shareholders for the second quarter of fiscal 2002 was $43.5 million compared with a net loss of $10.4 million for the second fiscal quarter of 2001. Excluding non-recurring items, and adjusting for the Company's previously announced decision not to recognize any tax benefit or expense, the net loss available to common shareholders for the second quarter of fiscal 2002 was $17.3 million, compared to a net loss of $12.6 million, during the second quarter of fiscal 2001. Total revenues were $121.2 million for the second quarter of fiscal 2002, compared with $156.3 million for the previous year's second quarter. Resort revenue was $108.8 million for the quarter, compared with $125.5 million in the second quarter of fiscal 2001. The decline in resort revenues reflects the later start to the ski season in fiscal 2002 and the Company's strategic decision to sell its Sugarbush resort during the first quarter of fiscal 2002. Adjusting for the sale, resort revenue for the second quarter of fiscal 2001 would have been $118.8 million. Real estate revenue from ongoing quartershare sales was $12.3 million, versus $30.7 million for the same period in fiscal 2001. While a decline in real estate revenues was expected due to the Company's strategy to sell it's remaining quartershare inventory prior to commencing any new projects, western real estate sales have been negatively affected by economic weakness following September 11th and weakness in the Utah market resulting from the Olympics. The Company's real estate revenues in the second quarter of fiscal 2001 were also positively affected by the delivery of the Steamboat Grand Hotel in October 2000 and a land sale to Marriott Vacation Club International. "We have essentially eliminated our eastern quartershare inventory as a result of a successful auction at Attitash and improved sales results at Mount Snow," said CFO Mark Miller. We are continuing efforts to reduce our remaining inventory in the west as quickly as possible. We have seen gradual improvement in western real estate sales following the events of September 11th, but sales continue to be weaker than planned." The Company's total earnings from operations before interest, income taxes, depreciation, and amortization ("EBITDA"), was a loss of $7.4 million in the second fiscal quarter of 2002, compared with earnings of $27.9 million in the same period in fiscal 2001. Resort EBITDA for the quarter was a loss of $7.5 million versus earnings of $23.4 million for the previous year's second quarter. After adjusting for non-recurring items and results from Sugarbush, resort EBITDA from core operations was $18.5 million compared to $22.4 million for the comparable period in fiscal 2001. Real estate EBITDA was $0.1 million, or $0.3 million after adjusting for non-recurring items, compared with $4.5 million in the second fiscal quarter of 2001 when the Company benefited from a land sale to Marriott Vacation Club International. Fiscal 2002 Six Month Results The net loss available to common shareholders for the six months ended January 27, 2002 was $109.0 million, compared with a loss of $34.6 million in the corresponding period of fiscal 2001. Excluding non-recurring items in both periods and adjusting for the decision not to recognize any tax benefit or expense, the net loss available to common shareholders for the first six months of fiscal 2002 was $62.4 million versus a net loss of $50.0 million during the comparable period in fiscal 2001. Total revenues were $144.3 million for the first six months of fiscal 2002, compared with $204.4 million for the first six months of fiscal 2001. Resort revenue was $129.2 million compared with $146.5 million in fiscal 2001. Excluding results from Sugarbush, resort revenue was $128.5 million for the first six months of fiscal 2002 versus $138.6 million in the prior year. Real estate revenue was $15.1 million, versus $57.9 million during the same period last year. The expected decline in real estate revenues primarily reflects the delivery of the Steamboat Grand Hotel in October 2000 and a land sale to Marriott Vacation Club International, which generated $31.8 million and $8.5 million in real estate revenue, respectively, during the first half of fiscal 2001. Total EBITDA for the first six months of fiscal 2002 was a loss of $28.6 million versus earnings of $11.7 million in the comparable period in fiscal 2001. Resort EBITDA was a loss of $27.4 million compared to earnings of $3.5 million last year. After adjusting for non-recurring items and results from Sugarbush, resort EBITDA from core operations was $1.2 million compared to $4.8 million during the same period in fiscal 2001. Real estate EBITDA was a loss of $1.2 million, or a loss of $1.0 million after adjusting for non- recurring items, compared to earnings of $8.1 million in fiscal 2001. Debt Reclassification As a result of the slow start to the ski season and delays in completing the sale of Steamboat, the Company was not in compliance with several financial covenants under its $156.1 million resort senior credit facility as of the end of the second quarter of fiscal 2002. On March 18, 2002, the Company obtained a waiver from its resort senior lenders that waived the financial covenant defaults as of the end of its second fiscal quarter. However, since several of the Company's covenants are based on a rolling 12 month EBITDA calculation, and therefore will include results from its recently completed second quarter, management expects that, based on projected covenant calculations for the Company's third fiscal quarter which will end on April 28, 2002, the Company will again be in default under several financial covenants unless it is successful in completing the sale of Steamboat and negotiating new covenants with its lenders. As a result of these projected covenant defaults, the Company has reclassified all of its long term debt as current since most of its debt obligations have cross-default provisions that will accelerate the maturity of these obligations unless the default is corrected or waived by the holder of the obligation. "We are actively engaged in negotiations with our lenders and expect to revise the terms of our senior resort credit facility, in conjunction with the closing of Steamboat, in order to accommodate ongoing operations consistent with our business plan," said Fair. "We remain focused on reducing our leverage and positioning the company for future growth." In addition, the Company has experienced a significant reduction in real estate sales activity from the previous year, and its business plan for the current year, as a result of the events of September 11th and the related economic slowdown. Although conditions have improved in recent weeks, the Company's ability to meet scheduled amortization requirements under lending agreements for its real estate subsidiary, American Skiing Company Resort Properties, Inc. is dependent on completing the Steamboat transaction prior to March 31, 2002. The Company also believes that its hotel development subsidiary, Grand Summit Resort Properties, Inc., will not be able to meet scheduled amortization requirements under its lending agreement absent concessions from lenders. The Company is engaged in discussions with its lenders to revise the terms of the agreement. The Company anticipates that if it is successful in completing a significant asset sale and restructuring its credit facilities, and can reasonably expect to remain in compliance with its covenants based on internally developed forecasts, it will reclassify the appropriate portion of debt to long term. Headquartered in Newry, Maine, American Skiing Company is one of the largest operator of alpine ski, snowboard and golf resorts in the United States. Its resorts include Killington and Mount Snow in Vermont; Sunday River and Sugarloaf/USA in Maine; Attitash Bear Peak in New Hampshire; Steamboat in Colorado; The Canyons in Utah; and Heavenly in California/Nevada. More information is available on the Company's Web site, http://www.peaks.com BERGSTROM CAPITAL: Taps Lipper to Help Seek Business Combination ---------------------------------------------------------------- Bergstrom Capital Corporation (AMEX:BEM) announced that its Board of Directors has engaged a financial consultant, Lipper Consulting Services, Inc., to assist it in seeking a tax-free merger or other business combination with a larger registered investment company. Any such combination would require a two- thirds vote of the stockholders. The Board of Directors has decided to take this action in view of the relatively small size of the Company and the increasing expense and effort required to operate it. In addition, members of the Board, including the Chairman and the President of the Company, have indicated their desire to pursue other interests. If an appropriate combination cannot be achieved, the Board will consider other alternatives, including the liquidation of the Company. The Company is a closed-end, non-diversified investment company whose principal investment objective is long-term capital appreciation, primarily through investment in equity securities. The Company's shares are traded on the American Stock Exchange under the symbol BEM. For further information, contact William L. McQueen, President of the Company, at 206/676-1148. BETHLEHEM STEEL: Intends to Reject Two Gas Purchase Contracts ------------------------------------------------------------- Pursuant to section 365(a) of the Bankruptcy Code, Bethlehem Steel Corporation and its debtor-affiliates seek the Court's authority to reject two executory Gas Purchase Contracts effective March 5, 2002: Gas Supplier Contract Date Expiration Date ------------ ------------- --------------- BP Energy Company October 2000 December 31, 2002 Conoco Inc. October 2000 December 31, 2002 George A. Davis, Esq., at Weil, Gotshal & Manges, in New York, relates that the Debtors entered into several gas purchase agreement with various suppliers. According to Mr. Davis, the Conoco and BP Energy Contracts contain the classic provision of price hedging, which establishes "ceiling" and "floor" prices to protect the Debtors from excessive market price fluctuations. For year 2002, the floor prices for natural gas are set to $3.56 for Conoco and $3.70 for BP Energy, per one million British thermal units -- "MMBtu". However, Mr. Davis notes that the current spot price of natural gas remains below $2.50 and industry sources predict the average price will remain below $3 this year. Accordingly, Mr. Davis asserts that the contracts should be rejected. The Debtors will save an additional $1 for each MMBtu purchased from other sources and the Debtors estimate the savings to reach $8,000,000 with the rejection of the two contracts. Objections (1) BP Energy Company BP Energy asks the Court to clarify that: (a) the rejection of the Floor Contract terminates all obligations of BP Energy to provide natural gas supply, delivery and related services to the Debtors; (b) the timing of rejection selected by the Debtors is inconsistent with the Bankruptcy Code and case law; and (c) all services that BP Energy has been compelled to provide or has committed to provide to the Debtors up through the date of the order granting the Debtors' Motion are valid administrative claims, whether or not those services are actually rendered prior to the date of the order granting the motion. Keith H. Wofford, Esq., at Kelley Drye & Warren, in New York contends that the rejection order must apply to the entire Floor Contract, including its balancing accommodations, since the Utility Order, dated October 15, 2001, contains an injunction that prevents BP Energy from "altering, refusing, or discontinuing services to or ... discriminating against the Debtors". Further, Mr. Wofford contends that the Debtors must be obligated to pay all obligations that have been incurred in connection with the Floor Contract prior to March 31, 2002. Mr. Wofford insists that BP Energy must be entitled to administrative expense treatment for all natural gas and services actually delivered post-petition under the dictates of the Bankruptcy Court's Utility Order. Mr. Wofford clarifies that the nature of the balancing services under the Agreement is that the Debtors will be able to take natural gas supply from BP Energy through March 31, 2002, regardless of whether the Debtors have rejected the Floor Contract. Mr. Wafford also explains that the BP Energy's balancing pool agreement with Northern Indiana Public Service Company only allows participants to be removed twice per year - April 1 and October 1 of each year. (2) Conoco, Inc. Conoco adopts the objections and arguments of BP Energy. Debtors Respond George A. Davis, Esq., at Weil, Gotshal & Manges LLP, in New York, contends that the Utility Order does not preclude the Debtor from rejecting and limiting its liability under burdensome Utility Supply Contracts. Also, Mr. Davis argues that the Court should authorize the Debtors' rejection of the Floor Contract effective March 5, 2002 because there is no statutory requirement similar to section 365(d)(3) or 365(d)(10) requiring the Debtors to comply with its obligations under an executory contract pending assumption or rejection of such contract. Mr. Davis notes that the First Circuit observed that retroactive lease rejection would be appropriate when the "balance of equities preponderates in favor of such remediation" and that "retroactive orders are within the bankruptcy court's sound discretion". Further, Mr. Davis argues that BP Energy is not entitled to an administrative expense claim for unwarranted gas deliveries to the Debtors after March 5, 2002 since the Debtors had already repeatedly instructed BP Energy not to make any gas deliveries after March 5, 2002. If Conoco is able to follow such instructions, Mr. Davis asserts that the Debtors should not be liable to pay for BP Energy's continued supply of gas after March 5, 2002. On the balancing services arrangement, Mr. Davis declares that the Floor Contract is a separate and independent contract from the Balancing Services Arrangement, which the Debtors are not asking for relief. Since the balancing services can only be removed on April 1, 2002, the Debtors will pay BP Energy in the ordinary course for any requested balancing services through March 31, 2002. (Bethlehem Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) BUCKHEAD AMERICA: Fails to Meet Nasdaq SmallCap Listing Criteria ---------------------------------------------------------------- Buckhead America Corporation (Nasdaq: BUCK), a hospitality services company, said the company recently received letters from The Nasdaq Stock Market, Inc. to the effect that its shares failed to meet the Nasdaq SmallCap Market's minimum price requirement of $1.00 per share for 30 consecutive trading days, and also that its shares had not maintained a minimum aggregate market value of publicly held shares of $1.0 million for 30 consecutive trading days. The Company's shares are subject to delisting unless prior to June 4, 2002 the aggregate market value of publicly held shares is $1.0 million or more for a minimum of 10 consecutive trading days, and prior to August 14, 2002, the shares close at $1.00 or more for a minimum of 10 consecutive trading days. Nasdaq could require a longer period of compliance to avoid delisting. Buckhead America said that if the qualification requirements have not been met by the specified times, the shares likely will be delisted, in which case the company's shares may be traded on the Nasdaq Over-the-Counter Bulletin Board, if a broker-dealer makes a market in them and requests that they be included, and subject to other conditions. Buckhead America common shares trade on the Nasdaq SmallCap Market under the stock symbol "BUCK." BURLINGTON: Committee Gains OK to Hire BDO Seidman as Advisors -------------------------------------------------------------- Judge Newsome authorizes the Official Committee of Unsecured Creditors, in the chapter 11 cases of Burlington Industries, Inc., and its debtor-affiliates, to employ and retain BDO Seidman as its financial advisor. However, instead of the requested effective date of November 30, 2001, the Court rules that BDO Seidman's retention is effective nunc pro tunc to January 23, 2002. Thus, BDO Seidman will assist the Committee in: (i) analyzing the current financial position of the Debtors; (ii) analyzing the Debtors' business plans, cash flow projections, restructuring programs and other reports or analyses prepared by the Debtors or its professionals in order to advise the Committee on the viability of the continuing operations and the reasonableness of projections and underlying assumptions; (iii) analyzing the financial ramifications of proposed transactions for which the Debtors seek Bankruptcy Court approval including, but not limited to, DIP financing, assumption/rejection of leases, management compensation and/or retention plans; (iv) analyzing the Debtors' internally prepared financial statements and related documentation, including store level operating results, in order to evaluate the performance of the Debtors as compared to its projected results; (v) attend and advise at meetings with the Committee, its counsel and representatives of the Debtors; (vi) assist and advise the Committee and its counsel in the development, evaluation and documentation of any plans of reorganization or strategic transactions, including developing, structuring and negotiating the terms and conditions of potential plans or strategic transactions and the value of consideration that is to be provided to unsecured creditors; (vii) render expert testimony on behalf of the Committee; and, (viii) provide such other services, as requested by the Committee and agreed to be BDO Seidman. Additionally, BDO Seidman will bill for services at its customary hourly rates: Professionals Rates ------------- ----- Partners $330 - $600 Senior Managers 215 - 480 Managers 195 - 330 Seniors 140 - 245 Staff 90 - 185 (Burlington Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) * * * DebtTraders reports that Burlington Industries' 7.250% bonds due 2005 (BRLG05USR1) are trading between 12 and 14. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BRLG05USR1 for real-time bond pricing. CABLE DESIGN TECH: S&P Lowers Credit Rating One Notch to BB ----------------------------------------------------------- On March 14, 2002, Standard & Poor's lowered the corporate credit rating on Cable Design Technologies Corp. to 'BB' from 'BB+'. At the same time, Standard & Poor's assigned a 'BB' rating to CDT's $200 million unsecured credit facility, which expires in January 2005. Also, Standard & Poor's removed its outstanding ratings on CDT from Credit Watch where they were placed on February 1, 2002. Rating outlook is stable. CDT's senior credit facility is rated the same as the corporate credit rating because it is unsecured. The rating action reflects continued profitability pressures stemming primarily from the severe downturn in demand from telecommunication end markets. Since the facility is unsecured, the bankers will fare the same as other senior unsecured creditors in the event of default. Pittsburgh, Philadelphia-based CDT manufacturers cable and wire products for various end markets including networking, telecommunications, industrials. CDT's profitability and debt protection measures have been negatively affected by the downturn in investment spending by telecommunications service providers. This segment fell to 17% from 37% of CDT's total revenues in the January quarter of 2001. Also, segment margins dropped to 8% from 21% for the two quarters ending in January of fiscal 2001. Cost cutting measures in the telecommunications segment are helping to offset gross margin pressures. However, telecom segment profitability is likely to remain constrained for at least the next several quarters, particularly as the RBOCs continue to revise their capital expenditure plans downward. Ratings support is provided by CDT's moderate debt burden and positions in industrial and networking end markets, which currently provide more than 80% of CDT's total revenues. These relatively stable revenue streams and margins help to offset pressures from the telecommunication segment. The industrial segment serves end markets such as automotive and aerospace which, despite mild cyclicality, provide a solid base of revenue. Here competition is dispersed and CDT has long- standing customer relationships. In the networking area, despite some aggressive pricing moves by competitors, revenues and margins have fallen far less than in the telecommunication segment. Profitability is likely to remain constrained for at least the next several quarters. However, the worst of the margin deterioration is probably behind the company. CDT's moderate debt burden should support the rating during the upcoming period of depressed profitability. Financial Details Total debt-to-EBITDA has increased to 3.5 times for the two quarters ended January 2002 from 1.3x in fiscal 2001. The increase reflects depressed EBITDA levels. Debt-to-EBITDA will recover in part as profitability gradually recovers. Annualized EBITDA fell to $42 million for the two quarters ended January 2002 from $98 million in fiscal 2001. Cost reduction actions taken by the company, including headcount reduction and consolidations, will help alleviate gross margin pressures. The company has a track record as a moderate generator of free cash flow and has paid down debt, reducing total debt outstanding to $148 million currently from $229 million in fiscal 1999. CELLPOINT: Signs-Up Cofima Finanz to Arrange Long-Term Financing ---------------------------------------------------------------- CellPoint Inc. (Nasdaq: CLPT), a global provider of mobile location software technology and platforms, has entered into an agreement with a Swiss group, Cofima Finanz AG, to arrange institutional financing for long-term funding. This contract is subject to the successful completion of the financial restructuring outlined last week. Once this is done, and their due diligence on CellPoint is completed, the institutional brokers advise that the first tranche of funding should be closed in a very short time. The Company has been in discussions with Cofima for six months, but only with the current financial restructuring and the subsequent improvement to the balance sheet in process could an agreement be struck in February and the formal due diligence process launched. "The preparations for this contract were made prior to the recent agreements with Castle Creek and other debt holders, and once executed, should put an end to the Company's financing needs," said Peter Henricsson, Chairman and CEO. "The contract is not an underwritten offering but rather an agreement to secure institutional funding done on a 'best-efforts' basis. Cofima has an excellent track record, including prior financing work with CellPoint's corporate legal counsel, and since they have long-term knowledge of CellPoint, we are optimistic that together we will secure the working capital for the Company for at least the next year." CellPoint's technical advantage and leading market position has never been in question, but the improved balance sheet resulting from a financial restructuring has been a prerequisite for any institutional investments. With a much-improved balance sheet that returns focus to the commercial business opportunities in the emerging mobile location services market, CellPoint is now in a position to attract institutional investors. In addition to the contract with the Swiss institutional brokers, the Company is continuing to work very closely with its investment bankers, Gerard Klauer Mattison, on strategic alliances and is in discussions with several established companies for potential partnership in the US wireless marketplace. CellPoint Inc. (Nasdaq and Stockholmsborsen: CLPT) is a leading global provider of location determination technology, carrier- class middleware and applications enabling mobile network operators rapid deployment of revenue generating location-based services for consumer and business users and to address mobile E911/E112 security requirements. CellPoint's two core products, Mobile Location System (MLS) and Mobile Location Broker (MLB), provide an open standard platform adapted for multi-vendor networks with secure integration of third-party applications and content. CellPoint's entry-level location platform handles over 500,000 location requests per hour and has a seamless migration path to GPRS and 3G. CellPoint's early entry and experience with European mobile operators has allowed the development of products and features that address key requirements such as active and idle mode positioning, international roaming, multiple location determination technologies and consumer privacy. CellPoint is a global company headquartered in Kista, Sweden. For more information, please visit http://www.cellpoint.com CELLPOINT: Jay Rynning Nudges-Off Henricsson as Board Chairman -------------------------------------------------------------- CellPoint Inc. (Nasdaq: CLPT), a global provider of mobile location software technology and platforms, announces changes to its Board of Directors. Jan Rynning, a director since October 2001, will replace Peter Henricsson as Chairman of the Board. Mr. Rynning is a Swedish lawyer, specializing in company reconstructions and has extensive experience in working as a board member in turn-around situations. Mr. Henricsson, who has been the Chairman and CEO since inception in 1997, will continue as a working board member full time and concentrate his work over the next period on the Swiss financing and new strategic partners. Stephen Childs, President of CellPoint, will take on the role as Chief Executive Officer. Mr. Childs has been a member of the board of CellPoint since May 2000 and the President since October 2001. The Company has had discussions with a few potential board members that are prepared to join the board after the restructuring and new financing are completed. Henrik Andersson, the founder and former head of Stockholm Bors Information (SBI), the second Swedish Stock Exchange, has accepted to join the board. "It is a privilege if I can be able to lend support to CellPoint," said Andersson. Jan Rynning said, "During my time on the CellPoint board, I have become convinced that the Company is fundamentally sound and that the technology and products are excellent. We also firmly believe that the customers will start placing orders this spring for these types of location platforms. The balance sheet and debt structure, however, have been an obstacle to getting the needed capital to make our customers feel comfortable to place orders with us. When the financial restructuring is complete, I am convinced that CellPoint will have a very bright future and will provide an excellent return to its stockholders." Peter Henricsson concluded, "Jan Rynning, with his experience, will be a strong Chairman to take the lead through this final transition stage. While the past year has been a tremendous struggle for everyone, the board determined it was best to initiate these changes now as CellPoint rebuilds for a promising future. Our balance sheet now has $5.5 million of the prior debt converted to equity with the remaining $5.5 million debt pushed out two years. We are working with a strong financial partner out of Europe and have good strategic opportunities in the North American market. CellPoint is reemerging as a tough company, lean and focused with outstanding technology and a highly competent team of passionate and dedicated staff." CellPoint Inc. (Nasdaq and Stockholmsborsen: CLPT) is a leading global provider of location determination technology, carrier- class middleware and applications enabling mobile network operators rapid deployment of revenue generating location-based services for consumer and business users and to address mobile E911/E112 security requirements. CellPoint's two core products, Mobile Location System (MLS) and Mobile Location Broker (MLB), provide an open standard platform adapted for multi-vendor networks with secure integration of third-party applications and content. CellPoint's entry-level location platform handles over 500,000 location requests per hour and has a seamless migration path to GPRS and 3G. CellPoint's early entry and experience with European mobile operators has allowed the development of products and features that address key requirements such as active and idle mode positioning, international roaming, multiple location determination technologies and consumer privacy. CellPoint is a global company headquartered in Kista, Sweden. For more information, please visit http://www.cellpoint.com CHESTER HOLDINGS: Names Three New Members to Board of Directors --------------------------------------------------------------- Chester Holdings, Ltd. (Pink Sheets: CHES) announced that it has appointed three new members to its Board of Directors as part of the recently announced acquisition of Red Mountain Energy, Inc. of Scottsdale, Arizona. Michael O'Shea, President of Chester, commented, "I am pleased to announce the addition of the new Board Members and look forward to working with them in the development of a reorganization plan for the Company. All three new members have extensive experience in their respective fields and are committed to helping the Company achieve its new business plan." The new Board members are: Stephen L. Thomas - Stephen has been Managing Director of Red Mountain Energy, Inc. since January 2000. Since 1978 Stephen has held positions as Senior Geologist, Exploration Manager and Managing Director of numerous public and private exploration companies including Austin Oil N.L., Phoenix Oil & Gas, Australian Mineral Sands and Marvel Petroleum. He holds degrees in Geophysics and Geology from University College Cardiff South Wales. Edward Zulaica - Ed holds a degree in Finance from the University of Southern California and a degree in Finance and Accounting from the American Graduate School for International Management. He has extensive experience in international finance, business development and securities. Ed has held senior management positions with Merrill Lynch Capital Markets, Republic National Bank - Singapore, and Shearson Lehman Brothers - Singapore. William Wieringa - Bill resides in Australia where he has had more than 40 years experience in the Asia Pacific region. He has held senior positions with some of the largest insurance companies in Australia and was responsible for numerous business development projects in the region. Bill has years of in depth experience in the development and operation of business which will be of tremendous value to Chester/Red Mountain as the companies begin their reorganization plan. Stephen Thomas said, "I am delighted to join the Board of Directors and I look forward to working with the other members to reorganize Chester and begin working on some very promising projects that Red Mountain will announce shortly in the US and Australia." As recently announced, Chester Holdings has filed a Chapter 11 Bankruptcy as part of a plan to reorganize the structure of the Company. A First Meeting of Creditors has been set for April 5, 2002 and it is anticipated that a hearing to confirm the Plan could occur within 30 days of that meeting. CHIQUITA BRANDS: Emerges from Prepack. Chapter 11 Reorganization ---------------------------------------------------------------- Chiquita Brands International, Inc. announced that it has emerged from its Pre-Arranged Chapter 11 restructuring as a healthy company with a solid financial structure. Yesterday, the Company's Plan of Reorganization went into effect, only 111 days after its filing. The Plan had received overwhelming approval from all classes of the Company's security holders and had been confirmed by the Court on March 8. Under the Plan, the Company is issuing 40 million shares of new common stock, 13.3 million warrants for the purchase of new common stock, and $250 million of new 10.56% Senior Notes, all of which will begin trading on the New York Stock Exchange today, March 20. As stipulated in the Plan, Chiquita's new securities replace all prior public debt and equity securities issued by the Company. The Plan put into effect has reduced the Company's debt and accrued interest by more than $700 million and its annual interest expense by about $60 million. Chiquita's other creditors and its assets, strategy and ongoing operations have been unaffected by the Chapter 11 process. Holders of Chiquita's old senior notes and preferred stock will receive their new Chiquita securities shortly. Holders of Chiquita's old subordinated debentures and common stock will need to submit their old certificates with a letter of transmittal in order to receive their new securities. The company will begin sending letter of transmittal forms to these holders tomorrow. Further information about the terms of the Pre-Arranged Chapter 11 Plan of Reorganization can be found on the Company's Web site at http://www.chiquita.comor at http://www.bmccorp.net Chiquita is a leading international marketer, producer and distributor of quality fresh fruits and vegetables and processed foods. COMDISCO INC: Committee Balks At Fee Review Panel Appointments -------------------------------------------------------------- The Official Committee of Unsecured Creditors disputes Comdisco, Inc. and its debtor-affiliates' emergency motion to establish a Joint Fee Review Committee. Michael S. Leib, Esq., at Latham & Watkins, in Chicago, Illinois, relates that the Committee disagrees with the Debtors' proposal to have three additional persons serving as ex officio members of the Fee Review Committee. "These representatives have a conflict of interest with the goals of the Fee Review Committee and are not necessary to the function of the Committee which, unnecessarily increases the fees charged to the Debtors' estates," Mr. Leib asserts. Mr. Leib further explains that one of the functions of the Fee Review Committee will be to review compensation and expense reimbursement requests. "These fee requests that the Fee Review Committee will review includes requests from lead counsel to the Debtors, lead counsel to the Creditors' Committee and lead counsel to the Official Equity Committee," Mr. Leib adds. Thus, it is a clear conflict of interest to appoint members to the Fee Review Committee, which are lawyers from the same firms as that of the Debtors' counsel, the Creditors' counsel or the Equity Committee's counsel. Mr. Leib states that although it was stated in the motion that ex officio members of the Fee Review Committee would not have voting rights, the presence of these members on the Committee would compromise: (i) the independence of the Fee Review Committee; (ii) the Fee Review Committee's ability to carefully review applications; and (iii) the Fee Review Committee's ability to challenge those applications as deemed appropriate. Furthermore, Mr. Leib believes that the inclusion of three additional lawyers who would charge fees for the time they serve as non-voting members on the Fee Review Committee would be wasteful. Mr. Leib states that the business representatives of the Debtors, the Creditors' Committee and the Official Equity Committee are sophisticated business people, many of who have extensive experience with bankruptcies. "Their expertise in conjunction with the assistance of the U.S. Trustee's Office is sufficient to review such applications," Mr. Leib says. Therefore, the Creditors' Committee asks the Court to deny the Debtors' motion to the extent it calls for representatives of lead counsel to the Debtors, the Creditors' Committee and the Official Equity Committee to serve as ex officio members of the Fee Review Committee. (Comdisco Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) CONSECO FINANCE: Fitch Takes Rating Actions on Various Deals ------------------------------------------------------------ On February 5, 2002, Fitch Ratings announced that it had undertaken a review of all Conseco Finance Corp structured finance transactions which included those backed by manufactured housing loans (MH), home equity loans (HE), home improvement loans (HI), recreational vehicle (RV) loans, truck loans, dealer floorplan loans, equipment lease and credit card receivables. Due to the sheer size of CFC's total structured finance portfolio and the different analysis required to review each asset, the results of the review of the various portfolios are being announced in two separate press releases. This release covers the company's MH and HE/HI securitizations. Fitch's rating actions reflect the performance trends of both the MH and HE portfolios, the quality of the current and expected servicing, and the deterioration in credit quality of CFC which was downgraded to 'CCC' on November 21, 2001. The majority of the rating actions taken are concentrated in the MH portfolio. The sheer size of the $28 billion MH portfolio, the difficult environment in this industry, and the challenges associated with servicing this unique asset make these transactions particularly vulnerable. The review has resulted in the downgrade of 48 MH bonds and 26 HE/HI bonds plus 8 MH bonds are being placed on Rating Watch Negative. A number of the securities (B-2's) are enhanced by a limited guarantee from CFC. The ratings on these securities typically reflect the ability of CFC to make payments under the limited guarantee. While these securities are also supported by monthly excess interest, and in some cases, over- collateralization (O/C), Fitch's review determined that, with the exception of 4 HE deals and 7 MH deals, this additional credit support was not sufficient to support a rating above the 'CCC' rating of CFC. These securities are now rated 'CCC'. Fitch's analysis consisted of a review of the current and anticipated credit enhancement levels needed for each transaction, as well as additional factors associated with each distinct asset. The manufactured housing pools have displayed a relatively high level of delinquencies and Fitch is particularly concerned with the level of repossession inventory. Recovery rates in manufactured housing are already under significant pressure due to an oversupply of both new and repossessed homes in the market place. The reliance upon a dealer based network in order to obtain adequate recovery rates on liquidations is particularly concerning. CFC has indicated that it intends to continue to originate new loans, thereby keeping its relationship with the dealer-based network unchanged. If CFC were no longer funding new originations, thus severing its relationships, recovery rates would be lower than they are currently. In addition, since there is currently a high level of repossessed homes in the market place, CFC provides a large percentage of loans to borrowers to purchase repossessions (aka repo refis). Without a dealer based origination channel in place, repo refis would not be available as an option by CFC and loss levels could increase dramatically. For example, CFC's recovery rates have been running at approximately 43%, however rates observed for entities with no origination platform are approximately 20%. Further, CFC's recent exit from the MH inventory finance business (dealer floorplan loans) causes additional concerns since providing financing to both MH dealers as well as individual borrowers has been a noted strength for the company in the past. The lack of these retail/inventory finance tie-ins could create additional pressure for the company with regard to re-marketing repossessions. On January 17 & 18, 2002, Fitch conducted an onsite review of both the HE and MH servicing operations. Fitch found that despite the financial concerns surrounding CFC, the servicing platform continues to operate without significant changes to the servicing functions being performed and the level of staffing. The MH servicing operation uses certain loan workout options, which include deferrals, default transfer of equities (DTOE), forbearances and extensions. All of these options may cause delinquent loans to be coded as current when they are in fact delinquent under the original loan contract. This practice may portray more favorable delinquencies than is actually the case. Furthermore, the use by CFC of rate modifications (a reduction in a loan's current interest rate) as a loan workout option for its MH portfolio will cause a decrease of monthly excess interest which is a form of credit enhancement in the securitized transactions. Most of these workout options were incorporated into the MH servicing process over the past year. A few of these practices have been used for quite some time, however, only on a limited number of loans. While these practices are concerning, their potential impact on the transactions has not been fully realized. This is due to the newness of these practices and/or the limited use of these methods in the past. Therefore historical information is not available to be fully incorporated into our analysis. Fitch will continue to monitor CFC's usage of these practices, particularly with regard to level of usage as a percent of the entire portfolio. While the rating actions reflect current performance the risks mentioned above will continue to be reviewed for possible future effects on the transactions. In addition to monitoring portfolio performance Fitch will continue to follow the financial condition of CFC and take appropriate rating action as conditions warrant. The review has resulted in the following rating actions: The following limited guarantee classes (B-2's) are downgraded to 'CCC' from 'B'. Green Tree Financial Corp. and Conseco Finance Corp. manufactured housing contracts pass-through certificates: Series 1994-3, Series 1994-5, Series 1994-6, Series 1994-7, Series 1994-8, Series 1995-1, Series 1995-2, Series 1995-3, Series 1995-4, Series 1995-5, Series 1995-6, Series 1995-7, Series 1995-8, Series 1995-9, Series 1995-10, Series 1996- 1, Series 1996-2, Series 1996-3, Series 1996-4, Series 1996-5, Series 1996-6, Series 1996-7, Series 1996-8, Series 1996-9, Series 1996-10, Series 1997-1, Series 1997-2, Series 1997-3, Series 1997-4, Series 1997-5, Series 1997-6, Series 1997-8, Series 1998-1, Series 1998-3, Series 1998-4, Series 1998-6, Series 1998-7, Series 1999-1, Series 1999-2, Series 1999-3, Series 1999-4, Series 1999-5. Green Tree Financial Corp. and Conseco Finance Corp. home equity loan certificates: Series 1996-C, Series 1996-D, Series 1996-F, Series 1997-A, Series 1997-B, Series 1997-C, Series 1997-D, Series 1997-E, Series 1998-B, Series 1998-C, Series 1998-D, Series 1998-E, Series 1999-C, Series 1999-D. Green Tree Financial Corp. and Conseco Finance Corp. home improvement loan certificates: Series 1996-C, Series 1996-D, Series 1996-F, Series 1997-A, Series 1997-C, Series 1997-D, Series 1997-E, Series 1998-B, Series 1998-D, Series 1998-E, Series 1999-E. -- Series 1996-E, class CERTS, downgraded to 'CCC ' from 'B'. Additionally, the following rating actions have been taken: Green Tree Financial Corp. and Conseco Finance Corp. manufactured housing contracts pass-through certificates: -- Series 1999-2, class B-1, downgraded to 'BBB-' from 'BBB' and placed on Ratings Watch Negative; -- Series 1999-3, class B-1, downgraded to 'BBB-' from 'BBB' and placed on Ratings Watch Negative; -- Series 1999-4, class B-1, downgraded to 'BBB-' from 'BBB' and placed on Ratings Watch Negative; -- Series 1999-5, class B-1, downgraded to 'BBB-' from 'BBB' and placed on Ratings Watch Negative; -- Series 2000-1, class B-1, downgraded to 'BBB-' from 'BBB' and placed on Ratings Watch Negative; -- Series 2000-1, class B-2, downgraded to 'B-' from 'BB-' and placed on Ratings Watch Negative; -- Series 1997-1, class B-1, rating 'BBB+' placed on Ratings Watch Negative; -- Series 1997-2, class B-1, rating 'BBB+' placed on Ratings Watch Negative; -- Series 1997-3, class B-1, rating 'BBB+' placed on Ratings Watch Negative; -- Series 1998-3, class B-1, rating 'BBB+' placed on Ratings Watch Negative; -- Series 1998-4, class B-1, rating 'BBB' placed on Ratings Watch Negative; -- Series 1998-6, class B-1, rating 'BBB' placed on Ratings Watch Negative; -- Series 1998-7, class B-1, rating 'BBB' placed on Ratings Watch Negative; -- Series 1999-1, class B-1, rating 'BBB' placed on Ratings Watch Negative. CONSECO FINANCE: S&P Affirms B- Ratings over Liquidity Pressure --------------------------------------------------------------- On March 7, 2002, Standard & Poor's affirmed its 'B-' ratings on Conseco Finance Corp., the specialty finance subsidiary of Carmel, Indiana-based Conseco, Inc., and removed the ratings from CreditWatch, where they were placed on December 11, 2001. The initial CreditWatch placement reflected concerns that Conseco Finance would be hard pressed to meet the 2002 maturities of several debt issues rated by Standard & Poor's. Since this time, the finance company and its parent have succeeded in raising a significant amount of cash through asset sales and other measures to redeem at full face value all rated unsecured debt of the finance company coming due this year. Outlook The company continues to face a number of challenges. Even if the U.S. economy has already entered recovery, the negative effects of the recession, including higher unemployment, are expected to linger. Therefore, asset quality problems could actually increase over the short term, complicating management's efforts to establish the company on a more stable financial footing. CONSECO INC: S&P Affirms Low-B Ratings After Bond Exchange Deal --------------------------------------------------------------- Standard & Poor's said that it affirmed its single-'B' long-term and short-term counterparty credit and senior debt ratings on Conseco Inc. and its double-'B'-plus counterparty credit rating on Conseco's insurance subsidiaries following the company's announcement of a proposed bond exchange. More than $4 billion in debt is affected. The outlook is revised to negative from stable. Standard & Poor's also said it anticipates that any senior securities issued by Carmel, Indiana-based Conseco Inc. and guaranteed by CIHC Inc. would receive a rating of single-'B'. "Standard & Poor's believes Conseco's management will experience increased pressure to maximize cash flow from the insurance operations for the benefit of the parent company and to the potential detriment of the policyholders," said credit analyst Jaydan Dhru. This is evident from the continued payment of trust-preferred dividends even though the terms of those securities permit the company to defer such dividends. "The ratings on all of the Conseco entities assume a clean opinion from the auditors. Should this not be the case, Standard & Poor's will reassess all the ratings," Mr. Dhru said. While the proposed debt refinancing benefits the overall credit profile of Conseco, Standard & Poor's believes that this action signals continuing pressure on the company to seek additional sources of cash which may, in turn, place further reliance on the remaining insurance operations for parental support. This could place further strain on the remaining insurance company policyholders. The proposed bond exchange provides some marginal subordination of the interests of the holders of the old bonds relative to the bank lines and the new bondholders, but such subordination is viewed as not material enough to warrant a rating differential between the old and new classes, especially at this rating level. Standard & Poor's continues to monitor Conseco's insurance operations as well as the parent company's progress in reducing debt and generating additional cash flow. Conseco has made considerable progress in reducing debt during the past 18 months, largely through the sale of nonstrategic assets. However, there is the expectation that the current economy will place continued pressure on Conseco to generate additional cash to reduce debt further and that the insurance operations may be an increasingly important source for such cash. This potential pressure on the insurance operations is the major reason for changing the outlook to negative. Standard & Poor's assessment of the potential rating for the senior securities to be issued as a part of the bond exchange assumes the underlying credit factors remain unchanged and that structurally, the securities will not be different from existing securities, except as noted in Conseco's announcement of March 18th. Financial leverage, interest coverage, operating earnings, and operating cash flow remain in line with Standard & Poor's previous expectations. Nevertheless, asset sales and other capital market transactions may be necessary for the parent to continue to meet its debt-reduction objectives. Standard & Poor's continues to believe that these subsidiaries maintain an appropriate level of capitalization and a good level of liquidity. DebtTraders reports that Conseco Inc.'s 10.750% bonds due 2008 (CNC08USR1) are being quoted at a price of 50. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC08USR1for real-time bond pricing. CONSECO: Fitch Keeping Watch on Ratings after Debt Exchange Deal ---------------------------------------------------------------- Fitch Ratings has placed all its Conseco-related corporate ratings on Rating Watch Negative. This action reflects the announcement that Conseco is offering a debt exchange for substantially all of its public debt issues. Upon completion, Fitch expects to downgrade the existing senior debt to reflect its structural subordination to the new notes. Resolution of Rating Watch on other entities and securities is dependent on Conseco entities receiving unqualified audit opinions, and Fitch's review of Conseco's and Conseco Finance's 10K filings. If Conseco or Conseco Finance receives a qualified audit opinion, Fitch may lower all Conseco-related corporate ratings. The new senior debt securities will have the same terms as the existing senior debt except for a maturity extension and a guarantee. Depending on the individual security, the new notes will extend maturities by one year to two-and-a-half years. The new debt will have a subordinated guarantee from CIHC, Incorporated. CIHC, Incorporated is the holding company for Conseco's insurance and finance operations. Fitch does not view this offering as a distressed debt exchange. Provisions of the offering that support this conclusion are the par-for-par exchange, no minimum participation required, and no amendments to covenants. In 2002, Conseco's and Conseco Finance's debt maturities exceed expected cash flow from operations and cash on hand by approximately $350 million. The company is currently pursuing cash raising alternatives such as assets sales, reinsurance and refinancing to meet these maturities. Fitch believes these efforts will be challenging given the difficult economic environment and the company's limited financial flexibility. Fitch will continue to monitor progress on these initiatives. Conseco Inc. Long-term rating 'B-', Rating Watch Negative; Senior debt rating 'B-', Rating Watch Negative; Short-term rating 'B', Rating Watch Negative; Commercial paper rating 'B', Rating Watch Negative. Conseco Financing Trust I-VII Preferred securities ratings 'CCC', Rating Watch Negative. Conseco Finance Corp. Long-term rating 'CCC', Rating Watch Negative; Short-term rating 'C', Rating Watch Negative. Bankers Life & Casualty Company Conseco Annuity Assurance Company Conseco Direct Life Insurance Company Conseco Health Insurance Company Conseco Life Insurance Company Conseco Life Insurance Company of New York Conseco Medical Insurance Company Conseco Senior Health Insurance Company Conseco Variable Insurance Company Manhattan National Life Insurance Company Pioneer Life Insurance Company Insurer financial strength 'BBB-', Rating Watch Negative. DebtTraders reports that Conseco Inc.'s 10.500% bonds due 2004 (CNC04USR2) are trading between 54 and 56. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC04USR2for real-time bond pricing. CONSOLIDATED VAN: CDNX Delists Shares Effective March 15, 2002 -------------------------------------------------------------- Effective at the close of business March 15, 2002, the common shares of Consolidated Van Anda Gold Ltd. was delisted from CDNX for failing to maintain Exchange Listing Requirements. The securities of the Company have been suspended in excess of twelve months. CONSUMERS FIN'L: Allows Investors to Acquire Controlling Stake -------------------------------------------------------------- Consumers Financial Corporation announced that it has entered into an Option Agreement with CFC Partners, Ltd., a New York- based investor group, which will permit the Investor Group to acquire a 51% interest in the Company's common stock through the issuance of new shares. In August 2001, the Company's Board of Directors determined that it would consider a transaction of this type in lieu of the Plan of Liquidation and Dissolution approved by the shareholders in March 1998, because it has the potential to produce future value for the common shareholders, who are projected to receive nothing in a liquidation. The Board also concluded that, in proceeding with this approach, the Company's preferred shareholders should be protected by offering such shareholders the option, prior to the change in control, of tendering their shares in exchange for cash or continuing to hold the shares. Following the issuance of the new common shares, the Investor Group has indicated its intention to merge or otherwise combine certain existing and start-up businesses into the Company. These businesses, in which the Investor Group has indicated it has a significant position, initially include (i) a company that will provide international long distance telephone services to government, corporate and residential customers at discounted prices, (ii) a company which provides services that enable its customers to deploy and migrate to E-business portals and E- marketplaces and (iii) a company that will offer business to business online financial services. Under the terms of the Option Agreement, the Investor Group has 15 business days from completion of the planned tender offer to the preferred shareholders to exercise the option to acquire the Company's common shares. The Investor Group will pay $108,000 in cash for the new shares. In order to proceed with the tender offer to the preferred shareholders, the Company must first complete either the sale or liquidation of its insurance company subsidiary. Virtually all of the net assets of the Company are held by the subsidiary, and those assets cannot be withdrawn under Delaware Insurance Laws until the subsidiary is sold or liquidated. In that regard, the Company recently signed an agreement to sell the subsidiary. The completion of that transaction is subject to the approval of the Delaware Insurance Department which is now reviewing the purchaser's request for a change in control. In the event the Investor Group elects not to exercise its option to acquire control of the Company, the Board of Directors intends to continue with the liquidation and dissolution of the Company. DOE RUN: S&P Drops Ratings to D After Missed Interest Payment ------------------------------------------------------------- On March 18, 2002, Standard & Poor's lowered its ratings on Doe Run Resources Corp. to 'D' and removed them from CreditWatch. The action followed the company's announcement that it missed its scheduled interest payments. Doe Run is in discussions with lenders to restructuring its debt. EGAMES INC: Brings-In Stockton Bates as Principal Accountants ------------------------------------------------------------- On March 1, 2002, the Audit Committee of eGames, Inc. unanimously approved the engagement of Stockton Bates, LLP as the Company's principal accountant to audit the Company's financial statements for the fiscal year ending June 30, 2002 and to review the Company's interim financial statements. The Company's previous certifying accountant, KPMG LLP, resigned on February 19, 2002, eGames, Inc., markets "Family Friendly" video games that are easy to use and nonviolent. Its titles, like Spooky Castle and MahJongg Master, typically sell for less than $15 and are marketed under brand names including Galaxy of Games, Galaxy of Home Office Help, and Game Master Series. In North America, eGames sells its games through national retail chains like CompUSA and Toys "R" Us. Its products are sold in nearly 30 countries. To establish its name in the game market, eGames also markets its products through the Internet and through point-of- sale displays. As reported in Troubled Company Reporter (March 4, 2002 edition), the company announced that KPMG's audit report on the Company's consolidated financial statements as of and for the fiscal years ended June 30, 2001 and June 30, 2000 did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, except as follows: KPMG's audit report on the Company's consolidated financial statements as of June 30, 2001 and for the years ended June 30, 2001 and 2000 included this paragraph: "The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has working capital and stockholders' deficits at June 30, 2001, suffered a net loss, incurred negative cash flows from operations for the year ended June 30, 2001, and no longer has a credit facility available for future borrowings. These matters raise substantial doubt about the Company's ability to continue as a going concern. * * * The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty." KPMG advised the Company that, in connection with KPMG's audit of the Company's consolidated financial statements for the year ended June 30, 2001, KPMG had noted a matter involving the Company's internal control procedures and its operation that KPMG considered to be a reportable condition of a material weakness under standards established by the American Institute of Certified Public Accountants. KPMG advised the Audit Committee that the Company did not have sufficient internal controls in place to ensure that shipments with FOB destination shipping terms were recognized as revenue only after the customer had received these shipments. KPMG advised the Audit Committee of the foregoing in a letter to the Audit Committee dated February 11, 2002, although KPMG had previously communicated this issue to the Audit Committee prior to the date of the letter. The Company's says its management has implemented the procedures recommended by KPMG in its February 11, 2002 letter, to obtain the requisite proof of delivery documentation for product shipments made during approximately the last two weeks of a reporting period, in order to enable the Company to comply with accounting principles generally accepted in the United States of America. The Company has authorized KPMG to respond fully to the inquiries of any successor auditor concerning this matter. EMMIS COMMS: Wachovia Corporation Discloses 7.83% Equity Stake -------------------------------------------------------------- Wachovia Corporation has reported ownership of 225,000 shares of the common stock of Emmis Communications Corporation, representing 7.83% of the outstanding common stock of Emmis. Sole power to vote or to direct the vote, and sole power to dispose of or direct the disposition of the stock rests with the stockholder. Wachovia Corporation filed the ownership schedule with the SEC in regard to its relevant subsidiary Evergreen Investment Management Company (IA). Evergreen Investment Management Company is an investment advisor for mutual funds and other clients; the securities reported by this subsidiary are beneficially owned by such mutual funds or other clients. Emmis Communications Corporation owns and operates more than 20 radio stations serving some of the top markets in the US, including New York City, Los Angeles, and Chicago. It also owns two radio networks (AgriAmerica and Network Indiana) in Indiana. Abroad, the company has stakes in two stations in Argentina and one in Hungary. Emmis plans to spin off its TV division -- 15 network-affiliated television stations in 12 states. In addition to broadcasting, the company publishes several regional magazines, including Indianapolis Monthly, Los Angeles Magazine, and Texas Monthly. Chairman Jeffrey Smulyan controls nearly 60% of the firm. * * * As previously reported, Emmis Communications Corporation in December announced the amendment of its existing $1.29 billion senior secured credit facility of Emmis Operating Company, a wholly-owned subsidiary of Emmis Communications, as part of its efforts to reduce its leverage. The amendment provides Emmis with financial covenant relief through December 1, 2002. ENRON CORP: Offers Constellation Power $1.6 Million Break-Up Fee ---------------------------------------------------------------- If the proposed sale of its Retail Contracts to supply power to customers located in Texas, Maine and Massachusetts to Constellation Power Source, Inc., does not go through, Enron Energy Services, Inc., asks the Court to approve payment of a break-up fee in an amount not to exceed $1,600,000. Enron Energy points out that Constellation has already invested significant time and money in connection with its potential purchase of the Retail Contracts. Constellation has also advised the Debtors that it will not finalize the Purchase and Sale Agreement unless the Court approves the Termination Payment. The Purchase and Sale Agreement provides that: -- In the event that the Retail Contracts are sold to a third party for consideration in excess of the total consideration provided for in the Purchase and Sale Agreement notwithstanding Constellation's willingness and ability to consummate the transactions contemplated in the Purchase and Sale Agreement, Constellation shall be entitled to receive from the Debtors a payment equal to 1.5% of the Base Purchase Price and an amount equal to the reasonable out-of-pocket expenses (including attorney's fees) incurred by Constellation in connection with the Purchase and Sale Agreement and the transactions contemplated, provided that the aggregate amount of such Termination Payment shall in no event exceed $1,600,000. -- The Termination Payment shall be fully earned upon the date the Bankruptcy Court enters an order approving such Third Party Sale or each Third Party Sale, if more than one such sale is approved, without the requirement of any notice or demand from Constellation and payable upon the earlier of: (a) the date of the closing of the such Third Party Sale, or (b) 60 days after the entry of the Bankruptcy Court's order approving such Third Party Sale. (Enron Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: Sempra Energy Agrees to Acquire Metals Unit's Assets ---------------------------------------------------------------- Sempra Energy Trading, the wholesale commodity trading subsidiary of Sempra Energy (NYSE: SRE), announced that it has signed an agreement to acquire the metals concentrates business of New York-based Enron Metals & Commodity Corp., a leading global trader of copper, lead and zinc concentrates. Sempra Energy Trading is purchasing the business for a cash price of $43.5 million, subject to a final audit of the net assets. The transaction is expected to be accretive to Sempra Energy's earnings in 2002. The purchase is subject to approval by the U.S. Bankruptcy Court. "This complements our recent acquisition of Sempra Metals Limited, the leading metals trader on the London Metals Exchange, and provides us with another profitable product line in metals trading," said David Messer, president of Sempra Energy Trading. Upon completion of the transaction, the acquired business will be named Sempra Metals Concentrates and continue to be based in New York. Philip Bacon, currently president and chief executive officer of Enron Metals & Commodity Corp., will continue to manage the day- to-day operations of Sempra Metals Concentrates. Thomas McKeever, chairman of Sempra Metals Limited, will head Sempra Metals Concentrates. Enron Metals & Commodity Corp. is active in trading and transporting metal concentrates between mines and smelters and refiners worldwide, as well as providing its clients with risk- management, logistics, accounting and contract administration services. Based in Stamford, Conn., Sempra Energy Trading -- a subsidiary of Sempra Energy Global Enterprises, the umbrella for Sempra Energy's growth businesses -- is a leading participant in marketing and trading physical and financial commodity products, including natural gas, power, petroleum products and base metals worldwide. Sempra Energy Trading combines trading and risk management experience with physical energy commodity expertise to provide innovative solutions for its wholesale and retail customers. Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2001 revenues of $8 billion. The Sempra Energy companies' nearly 12,000 employees serve more than 9 million customers in the United States, Europe, Canada, Mexico, South America and Asia. DebtTraders reports that Enron Corp.'s 9.125% bonds due 2003 (ENRON2) are being quoted at a price of 15. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2for real-time bond pricing. ENRON METHANOL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Enron Methanol Company 1400 Smith Street Houston, TX 77002 Bankruptcy Case No.: 02-11239 Type of Business: Enron Methanol Company operated a methanol production facility in Pasadena, Texas. This facility has been mothballed since August of 2001. Chapter 11 Petition Date: March 18, 2002 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 212-310-8602 Fax: 212-310-8007 and Melanie Gray, Esq. Weil, Gotshal & Manges LLP 700 Louisiana, Suite 1600 Houston, Texas 77002 Telephone: (713) 546-5000 Total Assets: $29,297,240 Total Debts: $54,573,369 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Praxair, Inc Trade Debt $892,022 Attn: J.A. Campana P.O. Box 840193, Dallas, TX 75284-0193 Deer Park ISD Trade Debt $300,507 P.O. Box 56028, Deer Park, TX 77256-6028 Harris County Trade Debt $138,221 Oxy Vinyls L.P. Trade Debt $111,453 Hydro Chem Industrial Trade Debt $84,533 Services Inc Marley Cooling Tower Trade Debt $70,844 Company Reliant Energy-HL&P Trade Debt $34,384 Dow Fence & Supply Co. Trade Debt $29,704 Cooper Energy Services Trade Debt $24,323 Vopak Trade Debt $21,202 Federal Container Trade Debt $16,748 Corporation Mobley Industrial Painters Trade Debt $11,886 Inc JE Merit Constructors Trade Debt $11,564 Jacobs Engineering Trade Debt $10,437 Foxboro Invensys Systems Trade Debt $6,089 Inc. Lansco Trade Debt $5,563 Eagle Construction & Trade Debt $5,382 Environmental Services, L.P. PSC Deer Park Trade Debt $4,890 Way Service Ltd. Trade Debt $4,650 Southwestern Bell Trade Debt $4,021 ENRON VENTURES CORP: Case Summary & Largest Unsecured Creditor -------------------------------------------------------------- Lead Debtor: Enron Ventures Corp. 1400 Smith Street Houston, Texas 77002 Bankruptcy Case No.: 02-11242 Type of Business: Enron Ventures Corp. manages the Enron business group encompassing Enron Engineering & Construction Company and Enron Clean Fuels Division, among others. Chapter 11 Petition Date: March 18, 2002 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 212-310-8602 Fax: 212-310-8007 and Melanie Gray, Esq. Weil, Gotshal & Manges LLP 700 Louisiana, Suite 1600 Houston, Texas 77002 Telephone: (713) 546-5000 Total Assets: $(13,114,413) Total Debts: $48,037,407 Debtor's Largest Unsecured Creditor: Entity Nature Of Claim Claim Amount ------ --------------- ------------ State Street Bank and Trust Lease Obligation $74,000,000 Company of Connecticut, National Association Attn: Corporate/Muni Department 225 Asylum Street, Goodwin Square, 23rd Floor Hartford, CT 06103 Facsimile: 860-244-1897 FAIRCHILD CORP: Feeble Financials Force S&P to Cut Ratings to B --------------------------------------------------------------- Standard & Poor's on March 18, 2002, lowered its ratings on Fairchild Corp. to 'B' and removed them from CreditWatch, where they had been placed on September 21, 2001. Rating outlook is negative. The rating actions reflect significantly weaker intermediate- term business prospects for commercial aerospace, the firm's largest market, and the likelihood that the company's financial profile will not be appropriate for the previous rating. In the wake of the September 11, 2001, attacks and a softer global economy, orders and deliveries of new jetliners are expected to be substantially lower in 2002 and 2003, compared with demand in recent years (demand for fasteners is tightly correlated to pounds of aircraft delivered). Furthermore, since the industry downturn is only in an early stage, there are considerable uncertainties as to its duration and timing and strength of a recovery. Consequently, despite cost reduction efforts, Fairchild's financial performance will be adversely affected, thus putting pressure on already somewhat subpar credit protection measures. Moreover, although the company is in compliance with bank covenants, liquidity is tight, as evidenced by limited availability under a secured credit agreement and material debt service requirements on subordinated notes in relation to modest cash flow generation. Fairchild's corporate credit rating reflects a weak financial profile, stemming from substantial debt burden and poor profitability, which overshadow its major position in a cyclical industry. The firm is a worldwide leading supplier of fasteners and fastening systems to the commercial aerospace, defense, and industrial markets, with the remainder of sales derived from distribution of aircraft parts. Fairchild's operating margins, historically about 10%, are not expected to improve much in the near term, reflecting a weak commercial aircraft market and lingering softness in the industrial sector, which more than offset relative strength in the smaller military business. A difficult operating environment, combined with a sizable debt load, translate into weak credit protection measures. In the near term, debt/EBITDA should be 6 times-7x, funds from operations to debt below 10%, and EBITDA and EBIT interest coverages about 1.5x and .75x-1.0x, respectively. Debt to capital in the 60%-65% range (pro forma for the planned write-down of goodwill in accordance with new accounting rules) is better than average for the rating, and has been enhanced by nonrecurring gains over the past several years. Looking ahead, some debt reduction is anticipated, primarily from the sale of noncore assets, including real estate, but the timing of such proceeds is uncertain. Outlook Difficult industry conditions in commercial aerospace, coupled with a heavy debt burden and tight liquidity, will challenge management to improve the financial profile consistent with current expectations. Failure to do so could lead to a downgrade. DebtTraders reports that Fairchild Corp.'s 10.750% bonds due 2009 (FRCHILD1) are trading between 42 and 45. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FRCHILD1for real-time bond pricing. FEDERAL-MOGUL: Asbestos Claimants Tap Lovells as Int'l Counsel -------------------------------------------------------------- The Official Committee of Asbestos Claimants, in the chapter 11 cases of Federal-Mogul Corporation and its debtor-affiliates, seeks entry of an order authorizing them to retain Lovells, a law firm headquartered in London, England, as international counsel, nunc pro tunc to January 23, 2002 to perform services in connection with the Debtors' Chapter 11 cases, the administration proceedings of the English Debtors, the Cross- Border Insolvency Protocol approved by the Court in this case, and relevant issues that may arise with respect to non-debtor European affiliates of the Debtors. Lovells is an international firm with offices in 26 locales, including England, Europe, Asia, and the United States. The Committee believes that the retention of international counsel will be of invaluable assistance in enabling the Committee to carry out its statutory duties under Section 1103(c) of the Bankruptcy Code. Matthew G. Zaleski, Esq., at Campbell & Levine LLC in Wilmington, Delaware, tells the Court that the Committee selected Lovells based on Lovells's expertise in business restructuring and insolvency, including debt rescheduling and restructuring on an international basis. Lovells has extensive experience in handling and managing complex, multi-jurisdictional litigation and international commercial disputes arising out of cross-border insolvencies and asset recovery. Laurence Crowley, a partner of the law firm of Lovells, informs the Court that the cross-border insolvencies in which Lovells has played a substantial role include those of the Bank of Credit and Commerce International S.A. matter, an entity with branches or subsidiaries in England, Luxembourg, the Cayman Islands, Abu Dhabi, and 65 other jurisdictions world-wide; Maxwell Communications PLC, in which Lovells acted for the creditors committee in the United Kingdom in relation to the reorganization of the company and its U.S. and U.K. subsidiaries; and Viatel, Inc., in which Lovells advised a major North American-based supplier to the Viatel Group regarding recovery of debts and retention of title claims against Viatel Inc. The activities and the services of the Committee's international counsel for the foreseeable future are expected to include: A. assisting and advising the Committee regarding legal issues that arise concerning the English Debtors and the Debtors' other European affiliates; B. representing the Committee at hearings to be held in the U.K. and communicating with the Committee regarding the matters heard and issues raised as well as the decisions and considerations of the U.K. Courts; C. reviewing and analyzing applications, orders, operating reports, schedules and statements of affairs filed and to be filed with this Court or the U.K. courts by the English Debtors or other interested European or international parties; D. advising the Committee as to the necessity and propriety of the foregoing and their impact upon the rights of asbestos-health related claimants, and upon the case generally; E. and, after consultation with and approval of the Committee, consenting to appropriate orders on its behalf or otherwise objecting thereto; F. assisting the Committee in preparing appropriate legal pleadings and proposed orders relating to the English Debtors or the Debtors' other European affiliates, as may be required in support of positions taken by the Committee and preparing witnesses and reviewing documents relevant thereto; G. assisting the Committee and its U.S. Counsel in the solicitation and filing with the Court of acceptances or rejections of any proposed plan or plans of reorganization; H. assisting and advising the Committee with regard to communications to British and other European asbestos-related claimants regarding the Committee's efforts, progress and recommendation with respect to matters arising in the case as well as any proposed plan of reorganization; and I. assisting the Committee and its U.S. Counsel generally by providing such other services as may be in the best interest of the creditors represented by the Committee, including issues that may arise from time to time in this Court. Lovells' hourly rates are: England United States ------- ------------- Partners 450 $345 - 625 Senior Associates 330 - 350 265 - 400 Junior Assistants 220 - 275 195 - 255 Mr. Crowley assures the Court that Lovells does not represent any interest adverse to the Committee with respect to the matters for which Lovells will be employed, and is a "disinterested person" as that phrase is defined in the Bankruptcy Code. However, due to the size and diversity of its practice and the large number of the Debtors' affiliations, it is possible that Lovells may have represented or may now represent other persons who may consider themselves to be creditors, equity security holders, or parties with an interest in these cases. Lovells has undertaken to supplement the Crowley Declaration if and when necessary to disclose any further relationships that require disclosure in this case. Mr. Crowley advises the Committee that Lovells has conducted database searches to identify any relationship between Lovells and the Debtors, the entities listed as affiliated entities of the Debtors, the entities included on the Consolidated List of Creditors Holding 20 Largest Unsecured Claims against the Debtors, and other entities. Based on that search, they have determined on the basis of its database searches that it currently represents or formerly represented the entities but that those engagements all involve or involved matters unrelated to these bankruptcy cases and create no actual conflict of interest. These representation include ABN Amro Bank, ACE Insurance, AIG Global Investment Corp., AON Risk Services, Banco Espirito Santo, Bank of America, Bank of New York, Bank of Nova Scotia, Bankof Tokyo-Mitsubishi, Bayerische Hypo and Vereinsbank, BMW, BNP Paribas, Caterpillar, Chase Manhattan Bank, Chubb Insurance, Citicorp, Commerzbank, Compagnie Financiere, Credit Agricole Indosuez, Credit Lyonnais, CSFB, Dai Ichi Kangyo Bank, DaimlerChrysler, Denton Wilde Saple, Dresdner Bank, Ernst & Young, Erste Bank, Fiat, Ford Motor, Fuji Bank, General Motors, Goldman Sachs, HSBC, IKB Deutsche Industriebank, Indosuez, Industrial Bank of Japan, Jaguar, KBC Bank, Lloyds TSB, Marsh USA, Mellon Bank, National City Bank of Indiana, National Westminster Bank, Owens-Illinois, Penningtons, Peugeot, President & Fellows Harvard College, PricewaterhouseCoopers, Renault, Rothschild, Royal Bank of Scotland, Societe Generale, Spriggs & Hollingsworth, State Street Bank & Trust, Swiss Re, Turner & Newell Ltd., Travelers, Volkswagen, Volvo, Willis Corroon, and Winterthur. Mr. Crowley relates that Lovells maintains a substantial practice involving the representation of insurers and reinsurers. These engagements do not include representing any person in connection with these cases or in any matter relating to the Debtors or their estates. Lovells and the Committee have agreed that Lovells will not represent the Committee with respect to any insurance or reinsurance issues or matters. The Committee seeks this Court's approval of Lovells' retention nunc pro tunc to January 23, 2002, since the Committee required Lovells's assistance immediately upon having selected it as international counsel. Mr. Crowley notes that Lovells has advised the Committee in connection with meetings convened by the Joint Administrators of the English Debtors in February 2002 under Sec. 23 of the English insolvency statute. Lovells undertook the process of investigating any potential conflicts concerning its engagement by the Committee and given the vast number of the entities related to these cases, as well as their various relationships and affiliations, the scope of the conflicts search was unusually wide and unusually time consuming. Consequently, the Committee submits that the requested nunc pro tunc retention is reasonable and should be approved. (Federal-Mogul Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) FRIEDE GOLDMAN: Lockheed Martin Contracts Unit to Build Tugs ------------------------------------------------------------ Halter Marine, Inc. (HMI), a division of Friede Goldman Halter, Inc. (OTCBB:FGHLQ) announced that it has received a Letter of Intent from Lockheed Martin Overseas Corporation to design, and build two Voith Schneider Tractor Tugs. This is a portion of a contract that Lockheed Martin signed with the Egyptian Ministry of Transport earlier this month. Lockheed has released funding for design and planning at this time, with details on the remainder of the project to be finalized later. The project is expected to take twenty-six months to complete. Anil Raj, Chief Operating Officer for Friede Goldman Halter said, "The partnership between Halter Marine and Lockheed is added confirmation that demand for quality vessels produced by Halter continues to grow internationally. When coupled with Lockheed Martin's Vessel Traffic Information Management System (VTIMS), Egypt will have all the necessary capabilities to support navigation traffic management and maritime response efforts in the Gulf of Suez. This selection is important to Halter as it finalizes its' plan to emerge from the Chapter 11 process." Friede Goldman Halter is a world leader in the design and manufacture of equipment for the maritime and offshore energy industries. Its operating units are Friede Goldman Offshore (construction, upgrade and repair of drilling units, mobile production units and offshore construction equipment), Halter Marine (construction and repair of ocean-going vessels for commercial and governmental markets), FGH Engineered Products Group (design and manufacture of cranes, winches, mooring systems and marine deck equipment), and Friede & Goldman Ltd. (naval architecture and marine engineering). Friede Goldman filed for Chapter 11 Reorganization on April 19, 2001, in the U.S. Bankruptcy Court for the Southern District of Mississippi. GC COMPANIES: DE Court Confirms Modified 1st Amended Joint Plan --------------------------------------------------------------- AMC Entertainment Inc. (AMEX:AEN), one of the world's leading theatrical exhibition companies, announced that the Bankruptcy Court for the District of Delaware has entered a confirmation order approving the Modified First Amended Joint Plan of Reorganization for GC Companies, Inc. and its jointly administered subsidiaries. The Plan calls for GC Companies and its subsidiaries to be acquired by AMC Entertainment Inc. The effectiveness of the Plan is subject to the court's confirmation order becoming final and nonappealable, as well as other conditions. The Company anticipates the effective date will occur in late March. "Acquisition of the GC theatre circuit expands AMC's national footprint of industry-leading theatres, especially in key markets in the Northeast and upper Midwest," said AMC chairman and chief executive officer Peter C. Brown. AMC anticipates that, after the effective date, GC Companies will be operating 66 theatres with 621 screens in the United States. GC Companies also has a 50 per cent interest in a joint venture that operates 17 theatres with 160 screens in South America. AMC Entertainment Inc. is a leader in the theatrical exhibition industry. Through its circuit of AMC Theatres, the Company operates 182 theatres with 2,907 screens in the United States, Canada, France, Hong Kong, Japan, Portugal, Spain, Sweden and the United Kingdom. Its Common Stock trades on the American Stock Exchange under the symbol AEN. The Company, headquartered in Kansas City, Mo., has a Web site at http://www.amctheatres.com GENUITY INC: S&P Airs Concern About Reconsolidation with Verizon ---------------------------------------------------------------- The ratings on Genuity Inc. were lowered to `BB' and placed on CreditWatch with negative implications on March 15, 2002, based on increased uncertainty regarding the ultimate reconsolidation of the company with Verizon Communications Inc. The previous rating imputed a very high likelihood of reconsolidation with Verizon, on the completion of Verizon's Section 271 long-distance approvals expected by 2003. However, on March 11, 2002, Verizon's management publicly stated that Genuity's financial position must improve to a point where, post consolidation, it would not be dilutive to Verizon. To Standard & Poor's this statement signaled a change in Verizon's position towards Genuity. Due to the economy and Internet service provider (ISP) bankruptcies, Genuity's revenue growth and EBITDA levels have been significantly impacted over the past year and are significantly lower than previously anticipated by Standard & Poor's. The CreditWatch listing indicates that the ratings could be further lowered, depending on the outcome of Standard & Poor's additional review of Verizon's relationship with Genuity. On a stand-alone basis, without the benefit of the Verizon relationship, Genuity's corporate credit rating would be no better than 'CCC'. In 2001, excluding the Integra acquisition, total revenue declined 1%, which was attributable to reduced demand by enterprise customers, and increased customer churn due to bankruptcies and overcapacity in the industry. Although EBITDA loss saw a 15% improvement in the fourth quarter of 2001 compared with the third quarter, an EBITDA loss of $676 million (55% of total revenue) for the full year of 2001 was still high. Genuity has taken steps to reduce costs via headcount reductions, lower circuit costs, and lower capital expenditures. In addition, the company has restructured its dial access business by renegotiating contracts with AOL and Verizon Communications Inc. to further reduce its cost structure. Near term, Genuity's challenge is to balance its cost-reduction measures with its strategy to increase enterprise business revenue and turn EBITDA positive in a weak telecommunications environment. In the fourth quarter of 2001, Genuity recorded a $2.6 billion non-cash charge to reflect the decrease in the market value of certain network-related assets. As of December 31, 2001, Genuity's liquidity position, which included a cash balance of $979 million, $850 million available under the bank facility, and $850 million available under the Verizon credit facility, appeared adequate for the near term. The credit facilities both have the financial covenant that consolidated debt to contributed capital cannot exceed 73%. As of Dec. 31, 2001, this ratio was about 45%. More importantly, an event of default under the bank facility would be triggered if Verizon does not control, directly or indirectly, at least 50% of the combined voting power of all Genuity's voting stock on exercise of its option to reconsolidate, which expires on June 30, 2005. The $2 billion bank facility expires the earlier of September 5, 2005, or three months before any scheduled expiration of the Verizon option. On the exercise of the Verizon option, the bank facility would automatically extended one year to September 5, 2006. GLOBAL CROSSING: Utilities Want More Assurance of Future Payment ---------------------------------------------------------------- Robert A. Boghosian, Esq., at Kronish Lieb Weiner & Hellman LLP in New York, New York, argues that the administrative expense status offered by Global Crossing Ltd., and its debtor- affiliates, and set forth in the Utility Order fails to provide sufficient adequate assurance of future payment of the foregoing Accounts to Norlight Telecommunications Inc. In particular, the Utility Order has no provision or procedure that would allow Norlight to seek a deposit or other security, or seek to terminate service, should the Debtors fail to make payments after the short 20-day window provided for additional requests for adequate assurance. Under Norlight's agreement with the Debtor, Mr. Boghosian relates that if the Debtor fails to make a payment on time, Norlight arguably may not terminate service until the expiration of a 30-day grace period. Under the current Utility Order, even assuming Norlight could promptly file a motion to terminate service and obtain a final non-appealable order to that effect, another 30 days could easily pass where the Debtors obtain service without payment. At current rates, two months service is approximately $1,900,000. As Norlight's request under the Utility Order for additional assurances of payment and performance by the Debtor on the accounts for post-petition telecommunication circuit charges and other services, Norlight requests that the Debtor: A. Immediately provide to Norlight a security deposit in the amount of $1,864,400.00 to secure the payment of future telecommunication charges owed to Norlight on the Accounts arising from post-petition telecommunication circuit charges or other services; and B. Agree that in the event that the Debtor fails to pay any post-petition invoice in full on or before the 5th day of the month for that month's service, Norlight shall have the right to send Debtor a Notice of Termination of Service. Should Debtor fail to pay all amounts due within 5 business days of the Termination Notice, Norlight shall be permitted, without further notice or Court order: a. to terminate immediately the Master Capacity Agreement between Norlight and Debtor and all Service Orders outstanding thereunder; b. to terminate immediately Debtors' access to and use of all telecommunications circuits and services; and c. apply the security deposit to all unpaid amounts. In addition, Norlight further requests that the Debtor be ordered to immediately pay to Norlight $144,019.09 for past due telecommunication circuit charges and services provided. NTS Responds John H. Maddock III, Esq., at McGuire Woods LLP in Washington, D.C., assures the Court that NTS Communications Inc. is ready and willing to provide post-petition services to Debtors pursuant to the Court's First Day Utilities Order; however, it simply asks that it be furnished with a deposit providing adequate assurance that it be paid for such post-petition services. Given the Debtors' high cash-burn rate relative to cash-on-hand, the thin margins in NTS' business and the substantial exposure to out-of-pocket loss if Debtors fail to pay, and the other factors noted above, a cash deposit is necessary under the circumstances of this case to provide adequate assurance of payment. NTS requests a deposit in the amount of $1,696,000, or in the alternative, a smaller deposit accompanied by a corresponding shortening of the time between when NTS provides service and when it may terminate service for non-payment. Additionally, NTS requests that the Court modify page 2 of the First Day Utilities Order in order to require that Debtors pay into escrow disputed invoices of over $5,000 for post-petition services. Integra Responds Pursuant to the Order, Integra requests these additional assurances of payment and performance by the Debtor for its use of Integra's services: A. That the Debtor immediately provide to Integra advance payments in the amount of $80,000 (representing two months of charges) to be credited to Debtor's bill for the purpose of assuring payment of the next two months of Integra's services; and B. That the Debtor immediately provide to Integra a security deposit in the amount of $240,000 (representing six months of charges) to secure payment of future post-petition telecommunications services provided by Integra. Citizens Responds Citizens Communications Company asks the Court to: A. grant Citizens adequate assurance of payment by ordering that it be paid a 60-day security deposit on account of postpetition utility services to be provided to the Debtors in the amount of $11,220,326, B. alternatively, grant Citizens adequate assurance of payment by ordering that it be prepaid the amount of $1,402,541 on a weekly basis, subject to subsequent reconciliation as provided herein, C. reconsider and modify the Utilities Order to limit its injunction against the utility companies only on account of prepetition payment defaults of the Debtors, or to the extent that utility companies are denied the right to terminate service on account of the Debtors' postpetition payment defaults without further relief of this Court, to provide an expedited procedure for redress in this Court on account of any such defaults. MCI Responds Deborah A. Reperowitz, Esq., at Reed Smith LLP in Newark, New Jersey, tells the Court that the Debtors have failed to provide adequate assurance of payment for post-petition services. In this case, WorldCom should receive a deposit in the amount of two months' services, plus payment for all unbilled postpetition services. A two months' deposit of $25,200,000 is required to cover a billing cycle, which spans over sixty days. Absent such a deposit, and due to the expiration of the 20-day period set forth in Section 366(b), WorldCom should be permitted to exercise its right to terminate postpetition services as authorized by Section 366(b). AT&T Responds Paul Kizel, Esq., at Lowenstein & Sandler LLP in New York, New York, informs the Court that AT&T Corporation, a provider of local, domestic and international long distance, international private line, and internet services to the Debtors, is currently owed by the Debtors $7,509,728.87 for pre-petition Services and $4,409,686.57 for postpetition Services. The Debtors continue to use AT&T's Services post-petition and currently use approximately $4,812,206.00 of AT&T Services per month. AT&T requests additional adequate assurance as follows: A. Cure all Post-Petition Arrears and pay AT&T current through February 28, 2002; B. Provide AT&T with bi-weekly prepayments in the amount of $2,406,103 which sums represent payment in advance for AT&T Services to be provided during the two-week period following the date of each such payment. Additionally, the Bi-Weekly Prepayment shall be adjusted on a retrospective basis to reflect actual usage. The Bi-Weekly Prepayments shall be due on the 1st and the 15th day of each month; C. In the event that AT&T does not receive a Bi-Weekly Prepayment on a payment due date, AT&T requests that it be authorized to suspend or terminate all Services rendered by AT&T to the Debtors unless, within 5 business days after AT&T provides written notice of such default to the Debtors and their counsel, the Debtors cure such default. D. AT&T reserves the right to request a security deposit equal to 3 months of anticipated usage for AT&T Services provided to the Debtors. Verizon Responds According to Stephen K. Gallagher, Esq., at Hunton & Williams LLP in McLean, Virginia, on January 28, 2002, when these cases were filed, the Debtors owed Verizon roughly $44,000,000 in wholesale service charges alone, of which, $21,200,000 was over 30 days past due. At the time the cases were commenced, the value of the wholesale services that Verizon had been delivering to the Debtors was averaging roughly $20 to $25 million per month. Though likely not as large as the wholesale figure, Verizon expects that the Debtors owe Verizon a substantial prepetition debt for retail services as well (the retail figure is presently being calculated). Mr. Gallagher submits that both the magnitude and the terms of this prepetition debt reveal the Debtors to be a significant credit risk for postpetition service providers like Verizon. These numbers more than justify Verizon's demand for additional adequate assurance under Section 366(b). For the reasons, Verizon requests that it be granted adequate assurance of payment pursuant to 366(b), and that the Court enter an Order directing the Debtors to pay to Verizon a deposit of $25,000,000 to applied to postpetition services, together with the additional assurances described above. FBN Responds James H. Lister, Esq., at McGuire Woods LLP in Washington DC, informs the Court that FBN America Inc. is owed more than $221,219 for pre-petition services, and are incurring substantial charges for post-petition services. The average daily usage by Debtors of FBN's services in a two-month period just prior to the bankruptcy was $29,899 per day. Significantly, FBN does not provide these services over its own facilities, but rather through procuring the services of third parties whom FBN must pay regardless of whether the Debtors pay FBN or not. For wholesale services such as those provided to Debtors, Mr. Lister explains that for every dollar that FBN bills to its customers FBN must pay a substantial majority of that amount to underlying providers. As a result, FBN is subject to hard out-of-pocket losses for the amounts Debtors have failed to pay and may fail to pay in the future. This impact of this potential loss is substantial as Debtors are FBN's largest single customer. Mr. Lister assures the Court that FBN is ready and willing to provide post-petition services to Debtors pursuant to the Court's First Day Utilities Order; however, it simply asks that it be furnished with a deposit providing adequate assurance that it be paid for such post-petition services. Given the Debtors' high cash-burn rate relative to cash-on-hand, the thin margins in FBN' business and the substantial exposure to out-of-pocket loss if Debtors fail to pay, and the other factors noted above, a cash deposit is necessary under the circumstances of this case to provide adequate assurance of payment. FBN requests a deposit in the amount of $823,676, with the right to increase that amount should Debtors substantially increase their post-petition usage on a sustained basis and confirmation of the right to restrict usage in the event of a sudden spike in usage. Additionally, FBN requests that the Court modify page 2 of the First Day Utilities Order in order to require that Debtors pay into escrow disputed invoices of over $5,000 for post-petition services. C&W Responds Robert J. Stark, Esq., at Akin Gump Hauer Strauss & Feld LLP in New York, tells the Court that prior to the Petition Date, Cable & Wireless USA provided the Debtors with the right to use certain telecommunication circuits and telecommunication carrier services, which they continue to utilize postpetition. The Debtors currently owe C&W approximately $2,222,741 for pre- petition services provided within the 3 months preceding the Petition Date pursuant and approximately $354,916.20 for services provided post-petition. Mr. Stark argues that the treatment proposed in the Utility Order is not sufficient to adequately assure C&W of future payment and performance. A mere promise to pay future invoices, and C&W's entitlement to an administrative expense priority for any unpaid invoices, fails to provide C&W anything more than that which it is entitled to as compared to any other vendor that provides goods and/or services on a post-petition basis. Moreover, the Utility Order compels C&W to continue providing services despite a failure of the Debtors to make timely payment, thereby placing C&W in a position where the post- petition balance due could increase substantially before C&W is able to obtain an order from this Court to permit the termination of services. C&W hereby requests, pursuant to and in accordance with the Utility Order, additional assurances of future payment and performance by the Debtors on the Accounts. Specifically, C&W requests that: A. The Debtors immediately provide to C&W a security deposit in the amount of $2,400,000 (representing 3 months of charges on the Accounts) to secure payment of future telecommunication charges owed to C&W pursuant to the Accounts arising from post-petition telecommunication Circuit charges and other services; and B. The Debtors shall immediately pay C&W for all post-petition services and charges currently due and owing in the amount of $354,916.20; and C. The Debtors shall pay each and every invoice in full within 5 business days of receipt of each invoice. In the event that the Debtors fail to timely pay any post-petition invoice, C&W shall have the right to send the Debtors a notice of Termination of Service. In the event that the Debtors fail to pay all amounts due within 5 business days of receipt of the Termination Notice, C&W shall be permitted, without further notice or order of this Court to: a. terminate immediately all Accounts between C&W and the Debtors, and any and all service orders outstanding thereunder; b. terminate immediately the Debtors' access to, and use of, all telecommunications circuits and services related to, and arising from, the Accounts; and c. apply the security deposit to all unpaid amounts. SBC Affiliates Respond Southwestern Bell Telephone Company, Pacific Bell Telephone Company, The Southern New England Telephone Company And Ameritech moves the Court, for an order: A. to compel the Debtors to make payment for all services rendered to the Debtors by the SBC Affiliates since the filing date in the approximate amount of $15,000,000; B. directing the Debtors to provide adequate assurance of future performance pursuant to 11 U.S.C. 366, including requiring the Debtors to pay in advance for all post petition services provided to the Debtors by the SBC Affiliates on a monthly basis and to post a $42,000,000 security deposit and C. alternatively granting the SBC Affiliates relief from the automatic stay to permit termination of service in the event of any continuing post petition default. Lisa M. Golden, Esq., at Jaspan Schlesinger & Hoffman LLP in Garden City, New York, informs the Court that pursuant to certain interconnection agreements, service agreements and applicable tariffs, the SBC Affiliates furnish a variety of telecommunications services to certain of the Debtors. The Debtors have numerous accounts with the SBC Affiliates with respect to these telecommunications services. Based on a preliminary review of the SBC Affiliates records, as of the filing of the petition, the Debtors collectively owed the SBC Affiliates approximately $47,000,000, of which, more than approximately $22,000,000 was past due. Ms. Golden submits that post-petition, the Debtors continue to receive telecommunications services from the SBC Affiliates. The value of the services provided by the SBC Affiliates to the Debtors is approximately $19,000,000 per month. There is no question that the services provided by the SBC Affiliates to the Debtors constitute actual and necessary expenses of preserving the Debtor's estates as the Debtors cannot fully operate without the services provided by the SBC Affiliates. The Utilities Order fails to provide the SBC Affiliates with anything more than the SBC Affiliates are already entitled to receive in these bankruptcy cases, and thus, without further adequate assurances the SBC Affiliates should not be compelled to continue to provide services to the Debtors in these cases. Avaya Responds Avaya, a provider of telecommunication and related services to the Debtors, requests additional adequate assurance as follows: A. Cure all Post-Petition Arrears and pay Avaya current through February 28, 2002; B. Provide Avaya with a three month security deposit in the total amount of $1,125,000. Paul Kizel, Esq., at Lowenstein & Sandler P.C. in New York, New York, informs the Court that Avaya is reconciling the Debtors' accounts and is in the process of determining the amount of post-petition Services. The Debtors continue to use Avaya's Services post-petition and currently use approximately $375,000 of Avaya Services per month. Mr. Kizel notes that the Order simply provides Avaya and other utilities with an administrative claim for any and all Services provided to the Debtors post-petition. The administrative expense set forth in the Order does not provide sufficient adequate assurance of future payment for services that Avaya will provide to the Debtors post-petition. The Order fails to establish any procedures whatsoever for Avaya to request a security deposit or termination of service in the event that the Debtors fail to make payments after the 20-day period provided in 11 U.S.C. Sec. 366. (Global Crossing Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL TELESYSTEMS: KPNQwest's Acquisition Cancels All Shares ------------------------------------------------------------- Global TeleSystems, Inc. announced that in connection with the acquisition by KPNQwest NV, all common and preferred stock in the company is cancelled, effective March 15, 2002. Shares can no longer be traded and all quotation and trading has ceased on all exchanges, including the NASDAQ over-the-counter market (GTLSQ); NASDAQ Europe (GTSG) and Frankfurt (GTS). The company also advises that the NASDAQ Europe market authority has approved the request submitted by GTS for withdrawal of it financial instruments from listing on NASDAQ Europe. The delisting took place at the close of business on March 15, 2002. The company also advises that there will be no distribution to former GTS common or preferred stockholders following the cancellation of the respective stock. On 18 March, 2001 KPNQwest (NASDAQ and ASE: KQIP) announced that subject to the definitive share purchase agreement with GTS, under the terms and conditions in the agreement, the business of Ebone and GTS Central Europe have been acquired. Shareholders are advised to contact their financial advisors for further advise, including implication for tax purposes. * * * Global TeleSystems, Inc. is a provider of data, internet and borderless broadband services across Europe, serving businesses and carriers in European countries with a range of broadband, Internet/IP and voice services. The Company also operates a cross-border fiber-optic network and a Tier-1 IP backbone (Ebone). In addition, until May 14, 2001, GTS was the majority owner of Golden Telecom, Inc., which offers a variety of fixed- line and mobile telecommunications services in Russia, Ukraine and other former Soviet nations. As previously reported in Troubled Company Reporter, KPNQwest announced on October 18, 2001, its intention to acquire the GTS assets in a pre-negotiated bankruptcy proceeding for Euro 645 million (net of cash). KPNQwest will issue approximately Euro 210 million in 10-year convertible notes to GTS bondholders in exchange for GTS bonds of Euro 1.9 billion (face value) and will assume the GTS credit facility of approximately Euro 210 million and GTS capital leases of approximately Euro 250 million at the date of closing. GTS will have approximately Euro 25 million in cash at closing. KPNQwest and the GTS credit facility banks have agreed to replace the current GTS facility with a Euro 500 million facility (in the aggregate). GUILFORD MILLS: Receives Court Approval of 14 'First Day Orders' ---------------------------------------------------------------- A U.S. Bankruptcy Court judge entered 14 first-day orders to ensure that Guilford Mills, Inc. (OTC Bulletin Board: GFDM) will continue operating its business by providing continuity of payments to its suppliers and uninterrupted salaries to its employees. The orders, entered on Thursday, covered all of Guilford Mills' requests, and there were no contested hearings. The Company's pre-arranged bankruptcy filing this past Wednesday is being made to implement as quickly as possible a debt restructuring on which the Company and its senior lenders have already agreed in principle. Under the restructuring, the Company will cut its $270 million senior indebtedness to approximately $145 million. "We've gained the cooperation of our lenders and have an agreement in principle with them," said John A. Emrich, president and chief executive officer of Guilford. Emrich visited customers on Wednesday, the day Guilford filed its reorganization petition, continuing his efforts to communicate freely and frequently with Guilford's customers and suppliers. Judge Burton Lifland in the U.S. Bankruptcy Court for the Southern District of New York also approved an agreement with First Union National Bank in which the bank will furnish a debtor-in-possession revolving credit facility of up to $30 million. Other court orders allow Guilford Mills to: * Gain immediate access to the first $10 million of the DIP financing. * Continue its long-standing factoring relationship with CIT to finance Guilford's accounts receivable. * Issue paychecks following Guilford's normal schedule. * Continue honoring customer incentive programs. * Retain Nightingale & Associates, LLC as financial adviser. * Retain Togut Segal & Segal as bankruptcy counsel. "It's very reassuring to know these guys are going to be here for a long, long time," said Bill Scott, business director of textile and automotive products for BASF, an automotive supplier to Guilford since 1974. "We see ourselves as a Guilford supplier for years to come." Albert Togut, senior member of Togut Segal & Segal, said Guilford expects to file a plan in about a month and exit the proceedings this summer. Wednesday's petition filing follows an in-depth reorganization of the company's operations that allowed Guilford to focus on a select number of businesses with solid growth potential. "This filing was made to allow us to complete this restructuring effort successfully," Togut said. "Our case is not a conventional bankruptcy because we're here to conclude our reorganization, not to see if one is possible." Guilford Mills is an integrated designer and producer of value- added fabrics using a broad range of technologies. The Company is one of the largest warp knitters in the world and is a leader in technological advances in textiles, including microdenier warp knits and wide width circular knits of cotton blended with LYCRAr. Guilford Mills serves a diversified customer base in the apparel, automotive and industrial markets. HQ GLOBAL: Seeks Authority to Maintain Cash Management System ------------------------------------------------------------- HQ Global Holdings Inc. and its debtor-subsidiaries ask the U.S. Bankruptcy Court for permission to continue using their cash management system, existing checks and other business forms without alteration or change. The Debtors use an integrated cash management system in their daily business operations. The Debtors believe that in order to reorganize, their cash management procedures must not be substantially disrupted. In handling cash receipts and disbursements, the Debtors relate that they maintain approximately seven bank accounts, including deposit accounts, operating accounts and lockbox accounts. Along with the Debtors' efforts to maintain a "business as usual" atmosphere, they also seek authority to continue using their prepetition bank accounts. The Debtors believe that maintaining the same account numbers will afford a smooth transition in operating under chapter 11. The Debtors say they can prevent their banks from honoring any checks issued prior to the Petition Date. The Debtors also ask the Court to allow them to maintain all existing business forms and that they may not be required to include the legend "Debtor in Possession" or a "debtor in possession number" on any checks or other business forms to avoid unnecessary expenses. HAYES LEMMERZ: Wants Approval to Reject KIMA Executory Contracts ---------------------------------------------------------------- In order to avoid further administrative expenses that do not provide equivalent revenues, Hayes Lemmerz International, Inc., and its debtor-affiliates move to reject a non-competition contract and a Share Repurchase Agreement with KIMA Management Limited. Grenville R. Day, Esq., at Skadden, Arps, Slate, Meagher & Flom in Wilmington, Delaware, relates that the Debtors entered into a $5,750,000 non-competition deal with Roberto Paulo Pusset. Not intending to receive the payment directly, Pusset established KIMA, an offshore entity to effectuate the transaction. On August 5, 1998, the Debtors and KIMA executed the "HLI Non- Competition Agreement" for KIMA's non-competition until May 19, 2003. Mr. Day tells the Court that on the same date, both parties also entered into an Escrow and Option agreement, which serves as the mechanisms by which the Debtors pay KIMA. The Escrow Agreement stipulates that the Debtors deliver 143,750 shares of the Debtors' common stock to Harris Trust and Savings Bank and, correspondingly, Harris was to send 28,750 of the shares to KIMA every May 19th of each year from 1999 to 2003, provided that KIMA does not breach the Agreement. The Option Agreement grants KIMA the choice to put the Debtors Shares to the Debtors at the end of the non-competition period. The agreed Share price would then be $8,446,750, which represents the original purchase amount plus 8% annual interest. Mr. Day relates that in August 2, 2000, both parties decide to alter the Debtors' method of payment and contracted the Share Repurchase Agreement, thus, terminating the Escrow and Options agreements. Upon execution of the deal, the Debtors paid $1,500,000 to KIMA, and reclaimed 28,750 shares from KIMA as well as the shares being held in escrow pursuant to the Escrow Agreement. The new agreement provides for three promissory notes to substitute for the annual delivery of the Shares reserved in the Escrow and Option Agreement. Mr. Day contends that the Debtors satisfied the first note under the Share Repurchase Agreement worth $1,000,000 due May 19, 2001, the second note, also worth $1,000,000, is due May 19, 2002 and the final note, for the $3,313,504 balance is due on May 19, 2003. After evaluating their obligations under the Contracts, the Debtors conclude that the HLI Non-Competition Agreement does not provide any material benefit to the Debtors' estates. (Hayes Lemmerz Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) * * * DebtTraders reports that Hayes Lemmerz Intl Inc.'s 11.875% bonds due 2006 (HAYES1) are currently quoted at a price of 52.5. See http://www.debttraders.com/price.cfm?dt_sec_ticker=HAYES1for real-time bond pricing. ICG: Telecom Group Settles Bills Dispute with Cincinnati Bell ------------------------------------------------------------- Prior to the Petition Date, Debtor ICG Telecom Group, Inc. and Cincinnati Bell Telephone Company entered into two interconnection agreements. Pursuant to the Interconnection Agreements, the parties exchanged various telecommunication services. CBT has disputed over $5 million of various prepetition and postpetition bills with respect to such services. The Debtors, represented by Marion M. Quirk of the Wilmington office of Skadden Arps, desired to settle such disputes in order to afford Telecom the opportunity to continue, on a cooperative consensual basis, its relationship with a significant vendor and customer. Accordingly, the Debtors negotiated a consensual settlement. The salient terms and conditions of the CBT Settlement Agreement are: Payment: CBT shall pay Telecom $2,187,000.00 within five business days of the date Judge Walsh enters an order approving this Motion. Release: Telecom releases CBT from any and all claims for compensation based on telecommunication services exchanged between the parties in any state from the beginning of time up through and including June 13, 2001. The Debtors submit that the CBT Settlement Agreement is highly favorable to the Debtors and their estates. Indeed, the Debtors negotiated the best terms and conditions they could with respect to amounts owed under the Interconnection Agreements, and a component of that deal is the Debtors' receipt of over $2 million in revenue. The Debtors believe that granting the relief requested in this Motion is in the best interests of the Debtors' estates, their creditors and other interested parties. (ICG Communications Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) IT GROUP: Committee Signs-Up Chanin Capital as Fin'l Advisors ------------------------------------------------------------- The Official Committee of Unsecured Creditors in the chapter 11 cases of The IT Group, Inc., and its debtor-affiliates asks the Court for authority to employ and retain Chanin Capital Partners, LLC as its financial advisor. Brent Williams, vice president of Chanin Capital Partners, LLC, informs the Court that the firm is a boutique investment banking firm, specializing in providing a wide range of financial services to companies, creditors, and other constituents in highly leveraged situations. With over 35 professionals and offices in New York and Los Angeles, the firm is one of the largest advisory firms specializing in this area. The firm provides traditional investment banking, financial advisory, and corporate finance services, and, merger and acquisition services as well. Over the past decade, Mr. Williams submits that Chanin has assisted in restructuring over $15,000,000,000 of public and private debt securities for companies such as Carter Hawley Hale, Sunterra Corp., Kaiser Engineers, Harvard Industries, SpectraVision, Purina Mills, Morrison Knudsen, Bucyrus Erie, Sun Healthcare and Stone and Webster. Such considerable experience in facilitating complex financial restructuring transactions and serving as financial advisor to official committees of unsecured creditors and other parties in several bankruptcy cases makes the firm well-qualified to serve as the Committee's financial advisor in these cases. John J. Hale, Committee Co-Chairperson, submits that Chanin is expected to: A. review the Debtors' business operations including historical financial results and future projections and assist the Committee in assessing the Debtors' business, operating and financial strategies; B. review and evaluate the Debtors' ongoing asset ales efforts, any chapter 11 plan filed by the Debtors and the proposed distributions to the classes of claimants under the Debtors' plan; C. analyze and value the securities and other assets to be distributed to each class of claimants under the Debtors' plan including the estimated trading value of any such securities; D. assist the Committee in negotiating the terms of the Debtors' plan including, as may be necessary, developing, evaluating, proposing and negotiating alternatives to the plan; E. advise the Committee with respect to strategic options available with respect to the Debtors' business operations and assets; F. analyze the financial and economic rights and interest in relation to inter-creditor issues regarding the Debtors' various claimants and the rights and obligations of other constituents in connection with the Debtors' estates; G. advise the Committee with respect to the exclusive sale or disposition of assets and the raising of capital, including DIP financing; and, H. render such other financial advisory and investment banking services as may be agreed upon by Chanin and the Committee in connection with the foregoing. Chanin agrees to perform these services in exchange for a $150,000 monthly fee plus monthly reimbursement of the actual and necessary expenses that the firm incurs in connection with its services. Mr. Williams assures the Court that none of the firm's directors, officers or associates hold or represent any other entity in connection with these cases having adverse interest except for CMI Investors, LLC, Oaktree Capital Management, LLC and The Bank of New York which the firm has previously represented in matters unrelated to these bankruptcy cases. (IT Group Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) INPRIMIS: Kaufman Rossin Replaces Deloitte & Touche as Auditors --------------------------------------------------------------- On March 5, 2002, Inprimis, Inc. appointed Kaufman, Rossin & Co. as the independent accounting firm to audit Inprimis' financial statements for the year ended December 31, 2001 replacing Deloitte & Touche LLP, which resigned as Inprimis' independent accounting firm on January 23, 2002. Inprimis, the foundering company (formerly Boca Research), has exited the waning modem market and offers software, hardware, and design services related to interactive TV, video-on-demand, and Internet access systems. Inprimis furnishes its technology design services through subsidiary Inprimis Technologies. It targets consumer electronics companies, cable operators, Internet service providers, and telecommunications companies. German Internet specialist Infomatec Integrated Information Systems owns 11% of the company; National Semiconductor owns 6%. * * * As reported late last year, Datawave (CDNX:DTV.V, OTCBB:DWVSF) decided not to proceed closing the Plan of Arrangement with Inprimis as announced on October 12, 2001. DataWave informed Inprimis that it may reconsider its decision if Inprimis is able to demonstrate that the Plan of Arrangement would be in the best interest of DataWave shareholders. In October 2001, Inprimis' securities were delisted from Nasdaq and thus, is now currently trading on Over-The-Counter Bulletin Board. INTEGRATED HEALTH: Takes Action to Recover Preferential Transfer ---------------------------------------------------------------- Integrated Health Services, Inc., represented by Kaye Scholer LLP and Young Conaway Stargatt & Taylor, LLP, commenced adversary proceedings seeking avoidance and recovery of preferential or fraudulent transfers made to various parties during the 90-day period prior to the Petition Date. IHS alleges that: -- Each of the Transfers was made on account of an antecedent debt or debts owed by one of the Debtors to the Defendant before the Transfer was made; -- Each of the Transfers was made by IHS while it was insolvent; -- Each Transfer enabled the Defendant to receive more than it would have received: (i) if IHS' case was a case under Chapter 7 of the Bankruptcy Code; (ii) if the Transfer had not been made; and (iii) if the Defendant had received payment of such debts as provided by the provisions of the Bankruptcy Code. IHS seeks to avoid and recover the full value of the preferential or fraudulent transfers from these Defendants pursuant to Sections 547, 548 and 550 of the Bankruptcy Code and other applicable law: Defendant Amount of Transfer --------- ------------------ Accountants Inc. Services $157,840.90 ATC Healthcare Services, Inc. $167,790.49 Associated Receivables Funding, Inc. $245,303.39 Baltimore Electric and Gas Company $198,116.81 BT Office Products International, Inc. $421,811.04 n/k/a Corporate Express Office Products, Inc. Comprehensive Consulting Solutions, LLC. $223,359.50 Critical Care Concepts, Inc. $160,525.13 CSDI Construction, Inc. $342,791.83 Danka Financial Services, and $224,273.26 Dank Industries Inc. Dooley and Mack Constructors, Inc. $208,353.25 El Camino Resources, Ltd. $247,296.18 Florida Power and Light $351,540.26 Health Care Management Corporation $176,529.30 Highland Healthcare $303,935.05 HIPP Industries, Inc. $327,364.32 Hyatt Corporation $530,441.53 IOS Capital, Inc. $251,814.19 J and M Construction Company Incorporated $206,806.00 MCSI Computer Supplies $85,907.76 Medcare Equipment Company 224,766.47 Medical Connection Inc. $300,671.00 National Abandoned Property Processing Corp $250,000.00 RDA Consultants Limited $251,943.75 Rouse Teachers Properties $103,935.26 Smithkline Beecham Clinic Laboratories $177,775.06 Sprint Corporation Ltd. $907,489.53 Starmed Health Personnel, Inc. $175,749.69 TXU Electric $224,229.16 Unisys Corporation $821,273.53 IHS seeks payment of debt and avoidance and recovery of transfers from the following defendants: (1) Anthony R. Masso IHS alleges that, in or about June and July 1999, it loaned amounts totaling $520,000 to the Defendant. On or about June 10, 1999, the Defendant executed an Amended Promissory Note in favor of Plaintiff in the principal amount of $220,000. In or about July, 1999, the Defendant executed an Amended Promissory Note in favor of Plaintiff in the principal amount of $300,000. Plaintiff alleges that the entire sums of the promissory notes, $220,000 and $300,000 plus unpaid interest and costs and reasonable attorneys' fees are due and payable by the Defendant and Defendant is obligated to pay such amounts pursuant to Sections 541 and 542(b) of the Bankruptcy Code. To the extent that the June Debt and/or the July Debt was released or forgiven by IHS, IHS transferred property to or for the benefit of the Defendant in the amount of the Debts. Each of the Transfers were made during the period within one year before the Filing Date. IHS therefore seeks avoidance and recovery of the transfers pursuant to Section 548 of the Bankruptcy Code. (2) Francis P. Kirley IHS alleges that, in or about March 1999, it loaned amounts totaling $100,000 to the Defendant. In or about March 1999, the Defendant executed a Promissory Note in favor of Plaintiff in the principal amount of $100,000. IHS seeks the payment of the Note Debt in the entire amount of $100,000 plus all unpaid interest and costs and attorneys' fees pursuant to Sections 541 and 542(b) of the Bankruptcy Code. Further, on or about December 8, 1999, IHS and the Defendant entered into a Termination Agreement pursuant to which, among other things, the Defendant's employment with IHS was terminated and Plaintiff agreed to pay Defendant a severance payment of $170,000 and a bonus payment of $30,000 (the Prepetition Payments). In or about December 1999, Plaintiff paid the Prepetition Payments to the Defendant (the Transfers). Pursuant to Sections 548 and 550 of the Bankruptcy Code, IHS seeks to avoid the Transfers and recover the full value of the Prepetition Payment from the Defendant. IHS also claims that, to the extent that the Note Debt was released or forgiven by Plaintiff (the Released Amount), it transferred property to or for the benefit of the Defendant in the amount of the Released Amount (the Note Transfers), and the Transfers were made within one year before the Filing Date. Therefore, pursuant to Section 548 of the Bankruptcy Code, IHS seeks to avoid the Note Transfers. (Integrated Health Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) INT'L FIBERCOM: Has Until Mar. 22 to File Schedules & Statements ---------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the District of Arizona, International Fibercom, Inc., and its affiliated debtors have until March 22 to their statements of financial affairs and bankruptcy schedules as required by 11 U.S.C. Sec. 521(1) and Rule 1007 of the Federal Rules of Bankruptcy Procedure. International Fibercom, Inc. resells used, refurbished communications equipment, including fiber-optic cables. The Company filed for chapter 11 protection on February 13, 2002. Robert J. Miller, Esq. at Bryan Cave, LLP represents the Debtors in their restructuring efforts. KAISER ALUMINUM: Seeks OK to Hire Ordinary Course Professionals --------------------------------------------------------------- Kaiser Aluminum Corporation, and its debtor-affiliates ask the Court for authorization to employ, retain and pay certain professionals in the ordinary course of business without further order from the Court. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger in Wilmington, Delaware, relates that, in the day-to-day performance of their duties, the Debtors' employees regularly call upon ordinary course professionals to assist them in carrying out their assigned responsibilities. However, because of the magnitude and breadth of the Debtors' business and the geographic diversity of the professionals regularly retained, it would be costly, time-consuming, and administratively cumbersome for the Debtors and the Court to require each of these professionals to apply for approval of his employment and compensation separately. Such interruption of their services can be detrimental to the Debtors' continuing operations and ability to reorganize. Mr. DeFranceschi believes that none of the ordinary course professionals will have average monthly fees of more than $50,000 during the pendency of these chapter 11 cases. However, if the average monthly fees of any of these professionals exceed that amount during any six-month period, the Debtors will seek to retain that professional, pursuant to section 327 of the Bankruptcy Code. Mr. DeFranceschi proposes that no ordinary course professional will receive payment for postpetition services rendered until such files a retention affidavit with the Court. The affidavit must specify that such professional does not hold any adverse interest to the Debtors or their estates with respect to the matters for which the professional seeks retention and must be served by first class mail on the Office of the U.S. Trustee, the DIP lenders and counsel to any statutory committees appointed in these cases. Mr. DeFranceschi believes that the ordinary course professionals the Debtors hired are not "professionals" in accordance to section 327(a) because these professional generally are involved in the administration of these reorganization cases. Instead, these people only provide services in connection with the Debtors' ongoing business operations and the resolution of any related operational difficulties. If in case the services expended by these professionals involved administration, Mr. DeFranceschi believes that such involvement will be minimal. Thus, Mr. DeFranceschi infers that the Court need not approve the retention and payment of the ordinary course professionals. Consequently, Mr. DeFranceschi propose to the Court that all professionals materially involved in the actual administration of these chapter 11 cases shall be employed by the Debtors. In addition, ordinary course professional with monthly fees averaging in excess of $50,000 for rendered services during the six-month period will no longer receive any future payments from the Debtors until the Debtors first obtain order from the Court authorizing the retention of such professional. Nevertheless, the Debtors may pay without the Court's prior review or approval, all fees and expenses incurred by an ordinary professional through and including the end of the month following the month in which the professional's fee first exceed the monthly averages fee limit. The Debtors can also pay prior to the professional having a material involvement in the administration of the Debtors' cases. However, once the professional is retained in these cases, all of its fees and expenses incurred from and after the petition date will be subject to the review and approval of the Court in relation with the professional's final fee application. In addition to this, the Debtors propose to file a statement with the Court, duly informing all parties-in-parties, commencing with the last day of the calendar month that is at least 180 days after petition and every six months thereafter. The statement will contain the list of ordinary professionals the Debtors' employed during the past 180 days and each respective name, aggregate amounts paid as compensation and a general description of the services rendered. (Kaiser Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392- 0900) KAISER ALUMINUM: Secures Final Approval of $300MM DIP Financing --------------------------------------------------------------- Kaiser Aluminum said it has received final approval from the Bankruptcy Court for its $300 million Debtor-in-Possession (DIP) financing. "The final approval of the DIP facility continues the momentum in Kaiser's restructuring process," said Jack A. Hockema, Kaiser's president and chief executive officer. "The addition of a committed credit line availability to our strong invested cash position will provide continued financial flexibility to address the needs of our customers, suppliers and employees as we move forward. Our focus is to deliver best-in-class products and services and to build a better company for all our constituencies." As of March 14, 2002, the company had no cash borrowings and approximately $51 million of letters of credit outstanding under the DIP. For additional information on Kaiser's restructuring, visit the company's Web site at http://www.kaiseral.comor call the Kaiser restructuring hotline at 888/829-3340 or 402/220-0856. Kaiser Aluminum is a leading producer of alumina, primary aluminum and fabricated aluminum products. DebtTraders reports that Kaiser Aluminum & Chemicals' 12.750% bonds due 2003 (KAISER2) are quoted at a price of 20. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KAISER2for real-time bond pricing. KMART CORPORATION: Brings-In Ernst & Young as Financial Advisors ---------------------------------------------------------------- Kmart Corporation and its 37 debtor-affiliates seek the Court's authority to employ Ernst & Young Corporate Finance LLC as their Financial Advisors, nunc pro tunc to February 18, 2002. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom in Chicago, Illinois, reminds the Court that PricewaterhouseCoopers LLC has provided financial advisory services similar to those E&Y is being called-in to do. PwC will stop those advisory services and provide only audit services going forward. The Debtors don't want the same firm providing Kmart with both financial advisory and audit services any longer. "The Debtors believe that in today's corporate environment that it is prudent to make this change," Mr. Butler explains. Consequently, Mr. Butler says, PricewaterhouseCoopers will cease performing certain of the financial advisory services that it currently performs and Ernst & Young Corporate Finance will start performing those services. Mr. Butler relates that PwC will continue to perform other tasks, which are presently ongoing, until they are completed. Mr. Butler emphasizes that the retention of Ernst & Young does not reflect upon the quality of the services and advice that PwC has provided the Debtors. In fact, "the Debtors are grateful to PricewaterhouseCoopers whose services have been instrumental to their reorganization efforts." In a press release, James B. Adamson, Chairman of Kmart's Board of Directors further clarifies that, "The decision to retain Ernst & Young Corporate Finance as the Company's financial advisor was unanimously approved by the Kmart Board. The Board believes that in today's corporate environment it was prudent to make this change. We appreciate the dedication and hard work performed by the Business Recovery Services Group of PricewaterhouseCoopers LLP. They have been instrumental in guiding us through to this point in our reorganization. This change certainly does not reflect upon the quality of the services and advice they have provided to us." Mr. Butler assures the Court that the Debtors will make sure PwC and Ernst & Young don't duplicate their efforts. For instance, Mr. Butler illustrates, PwC will complete their work, which is already well underway, with respect to the Debtors' schedules and statements, reclamation and PACA and PASA claims, and vendor relations. Likewise, Mr. Butler notes, PwC will not be assigned any new projects related to the Debtors' restructuring efforts and all other ongoing projects related to the Debtors' restructuring efforts will be transferred to Ernst & Young in the most efficient manner possible. Mr. Butler tells Judge Sonderby that Ernst & Young has a wealth of experience in providing financial advisory services in restructurings and reorganizations and enjoys an excellent reputation for services it has rendered in large and complex chapter 11 cases on behalf of debtors and creditors throughout the United States. According to Mr. Butler, Ernst & Young is expected to: (a) advise the Debtors' management on its development of the Debtors' business plans, cash flow forecasts and financial projections. Such business plans, cash flow forecasts and financial projections, including strategic content, specific action plans and related assumptions will be the responsibility of, and be prepared by, the Debtors' management; (b) advise the Debtors' management with respect to the Debtors' ongoing liquidity position and cash management procedures; (c) advise the Debtors' management with respect to restructuring and strategic alternatives, including recommending specific courses of action and assisting with the design, negotiation and implementation of alternative restructuring and transaction structures; (d) advise the Debtors' management in the identification and processes related to the disposal of assets, leases and other contracts as it relates to effecting modifications to the Debtors' business through sale, liquidation or rejection of executory contracts; (e) advise the Debtors' management in its preparation of financial information that may be required by the Debtors' creditors and other stakeholders, and in coordinating communications with the parties-in-interest and their respective advisors; (f) advise the Debtors' management in preparing for, meeting with and presenting information to parties-in-interest and their respective advisors, specifically including the Debtors' senior lenders, other debt holders and potential sources of new financing and their respective advisors; (g) advise the Debtors' management with the evaluation of, and analyses related to, avoidance actions, preferential transfers or fraudulent conveyances; and (h) perform other services as may be requested in writing, from time to time, by the Debtors or its counsel and agreed to by Ernst & Young, and approved by the Court. Ernst & Young will charge the Debtors its customary hourly rates: Managing Directors and Principals $550 - 650 Directors 475 - 545 Vice Presidents 375 - 440 Associates 320 - 340 Analysts 275 Client Service Associates $140 Furthermore, the Debtors and Ernst & Young agree that: -- any controversy of claim related to the services provided by Ernst & Young to the Debtors shall be brought to the Bankruptcy Court or District Court for the Northern District of Illinois, if the District Court withdraws the reference; -- both parties consent to the jurisdiction and venue of such court as the sole and exclusive forum for the resolution of such claims; -- both parties waive trial by jury; -- if the Bankruptcy Court or the District Court does not have jurisdiction over such claim, the parties will submit first to non-binding mediation; if mediation is not successful, the parties will proceed to binding arbitration; -- judgment on any arbitration award may be entered in any court having proper jurisdiction. Ernst & Young also agrees not to raise or assert any defense based upon jurisdiction, venue, abstention or otherwise to the jurisdiction and venue of the Bankruptcy Court or the District Court to hear or determine such controversy or claim. Peter M. Schwab, senior managing director of Ernst & Young Corporate Finance LLC, tells the Court that the firm searched its databases to determine whether it has provided or is currently providing services to parties in interest in these cases. Mr. Schwab assures Judge Sonderby that Ernst & Young does not represent any interest adverse to the Debtors and will not represent any entity other than the Debtors in connection with these chapter 11 cases. Since Ernst & Young Corporate Finance is part of an international organization, Mr. Schwab admits that that firm and its affiliates may have business associations with parties in interest in these cases. "But Ernst & Young believes that these relationships will not impair the firm's ability to objectively perform professional services on behalf of the Debtors," Mr. Schwab asserts. Ernst & Young will not accept any engagement that would require the firm to represent an interest adverse to the Debtors, Mr. Schwab adds. Mr. Schwab insists that Ernst & Young is a "disinterested person" as defined in section 101(14) of the Bankruptcy Code. (Kmart Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) KMART CORP: Appaloosa Management Discloses 5.5% Equity Stake ------------------------------------------------------------ Appaloosa Management L.P. and its President, David A. Tepper beneficially own 29,222,666 shares of the common stock of Kmart Corporation, (consisting of (i) 775,000 shares of common stock, par value $1.00, of Kmart Corporation and (ii) 8,534,300 7-3/4% Trust Convertible Preferred Securities which are convertible into 28,447,666 shares of common stock). The amount held represents 5.5% of the outstanding common stock of Kmart as disclosed in Kmart Corporation's Form 10-Q for the quarterly period ended October 31, 2001, as of October 31, 2001, when there were 498,416,655 shares of common stock outstanding. Appaloosa and Mr. Tepper have the sole power to vote or to direct the vote of, and the sole power to dispose of, or direct the disposition of the entire 29,222,666 shares. Persons other than Appaloosa Management L.P. and David A. Tepper have the right to receive dividends from, or the proceeds from the sale of, the reported securities. None of these persons has the right to direct such dividends or proceeds. LERNOUT & HAUSPIE: Dictaphone Plan's Settlement Distribution ------------------------------------------------------------ On January 31, 2002, Dictaphone Corporation filed the Plan and the Third Amended Disclosure Statement With Respect To Third Amended Plan Of Dictaphone Corporation Under Chapter 11 Of The Bankruptcy Cody. Dictaphone subsequently filed a "Supplement" to the Plan which generally outlined the distribution settlements described in detail in this Motion. In its terms, the Plan, as amended and supplemented to incorporate the outline of the terms of the settlements described in this Motion, reflects a consensual resolution and settlement among the L&H Group, the Creditors' Committees, and the Dictaphone estate's primary creditor constituencies of various intercreditor issues that allowed for the formulation of distributions under the Plan. More specifically, the settlements embodied in the Plan through the Supplement involve: (a) Dictaphone's pre-petition debt obligations, including obligations under (i) Dictaphone and L&H NV credit facilities, (ii) a Dictaphone guarantee of an L&H NV credit facility, and (iii) Dictaphone's senior subordinated notes; (b) intercompany loans and allocations among members of the L&H Group; and (c) fees owed to the Dictaphone Ad Hoc Committee and the indenture trustee for Dictaphone's senior subordinated notes. The L&H Group seeks Court approval of these various settlements in conjunction with the confirmation of the Plan. While the settlements described herein are also addressed in both the Plan and Disclosure Statement, this Motion summarizes these settlements and also describes certain aspects of the settlements that were finalized after the date that the Disclosure Statement was filed and before the hearing on confirmation of the plan. Dictaphone advises that it is anticipated that the entry of the Confirmation Order will constitute the Court's finding and determination that the compromises and settlements reflected in the Plan, including, but not limited to, the settlement of the Distribution allocations among the various Classes of Claims, are (a) in the best interest of Dictaphone and its estate, (b) fair, equitable and reasonable, (c) made in good faith, (d) approved by the Bankruptcy Court, and (e) in full satisfaction, settlement, release, and discharge of any rights that might otherwise exist. The Belgian Proceedings and The Tag-Along Right The Debtors remind Judge Wizmur that On October 29, 2001, the Curators in the concordat proceeding sought and obtained from the judge-commissaires appointed in the L&H NV Belgian Bankruptcy Case approval to continue L&H NV's U.S. chapter 11 case (including the plan confirmation process) subject to (i) obtaining a "tag-along" right from certain of the Lenders, so that if certain of the Lenders -- specifically KBC Bank NV, Fortis Bank N.V. and Artesia Banking Corp. -- sell the Dictaphone New Common Stock distributed to them under the Plan, L&H NV (as holder of Allowed Class 8 Intercompany Loan Agreement Claims) would be entitled to sell the Dictaphone New Common Stock distributed to it at the same time, on the same terms and conditions, and in the same proportion as the Dictaphone New Common Stock being sold by these certain Lenders (as holders of Allowed Class 5 Lenders' Guaranty Claims)) and (ii) attempting to obtain a larger distribution of Dictaphone New Common Stock from L&H NV. The Class 8 Intercompany Loan Agreement Claims arise from advances by L&H NV to LHCCC to fund the advances by LHCCC made to Dictaphone under the LHCCC Loan Agreement). All such claims are held by L&H NV. As a result of negotiations between the Lenders and L&H NV, the Lenders have agreed to provide L&H NV with a larger distribution of Dictaphone New Common Stock and therefore to re-allocate the distribution of Dictaphone New Common Stock that was proposed in Dictaphone's Second Amended Plan Of Reorganization Of Dictaphone Corporation Under Chapter 11 Of The Bankruptcy Code -- which was sixty-five percent to the Lenders and eight percent to L&H NV -- to a new allocation of sixty-three percent to the Lenders and ten-percent to L&H NV. Furthermore, certain of the Lenders (KBC Bank NV, Fortis Bank nv-sa and Artesia Banking Corporation NV/SA) agreed to the "tag-along" right. Description Of Claims To Be Settled The Plan as amended and supplemented embodies the settlement and compromise of claims and controversies that can generally be grouped into three discrete categories: (1) Disputes relating to priority of payment among holders of claims arising under Dictaphone's prepetition obligations under certain loans, a guarantee, and Dictaphone's senior subordinated notes; (2) Claims arising from and relating to the allocation of certain costs among members of the L&H Group (i.e., intercompany allocations); and (3) Disputes relating to fees owed to the Dictaphone Ad Hoc Committee and the trustee under the indenture governing Dictaphone's senior subordinated notes. B. Dictaphone Pre-Petition Loan, Guaranty, And Senior Note Obligations On the Petition Date, Dictaphone was party to certain public and private debt obligations including the Amended Guaranty, the LHCCC Loan Agreement, the Deutsche Bank Facility, and the Senior Subordinated Notes. 1. Belgian Credit Facility And Dictaphone Guaranty Belgian Credit Facility. On or about May 5, 2000, L&H NV acquired Dictaphone from Stonington Partners, Inc., Stonington Holdings L.L.C. and Stonington Capital Appreciation Fund 1994, L.P. through a merger of Dictaphone into one of L&H NV's wholly- owned subsidiaries, Dark Acquisition Corp. In conjunction with the Dictaphone Acquisition, L&H NV agreed to assume or refinance approximately $430 million of existing Dictaphone debt obligations. In this regard, L&H NV entered into an unsecured $430 million Revolving Credit Facility, dated May 2, 2000, by and among L&H NV, Fortis Bank N.V., KBC Bank NV (Lead Arrangers And Banks), Artesia Banking Corporation N.V., Deutsche Bank N.V., Dresdner Bank Luxembourg S.A. (Joint Arrangers And Banks), Artesia Banking Corporation N.V. (A-Agent), and KBC Bank NV (B- Agent). As of the Petition Date, the principal amount outstanding under the Belgian Credit Facility was approximately $340 million. Dictaphone Guaranty Of L&H NV's Obligations Under Belgian Credit Facility. As a condition subsequent to the Lenders' obligations under the Belgian Credit Facility, L&H NV was required to cause Dictaphone (which would be a wholly-owned subsidiary of L&H NV post-acquisition) to guarantee the performance of L&H NV's obligations under the Belgian Credit Facility. In conjunction with this obligation, on or about May 30, 2000, Dictaphone executed a Limited Guaranty with respect to L&H NV's obligations under the Belgian Credit Facility. The Dictaphone Guaranty provided that, among other things, Dictaphone unconditionally and absolutely guaranteed all obligations of L&H NV under the Belgian Credit Facility up to an amount not to exceed: (i) $167 million (plus interest accruing under the Belgian Credit Facility) plus (ii) the "Indenture Amount," defined as the total outstanding balance of advances received by L&H NV under the Belgian Credit Facility, which L&H NV advances to Dictaphone were to enable Dictaphone to satisfy its obligations ($200 million principal, plus interest and any applicable premium, charges and fees) under the following: (1) Dictaphone Corporation 11_% Senior Subordinated Notes due 2005 in the aggregate principal amount of $200 million, and (2) that certain Indenture, dated as of August 1, 1995, among State Street Bank & Trust Company (successor to Shawmut Bank Connecticut, National Association as Trustee, Dictaphone Acquisition, Inc. as Issuer and Dictaphone U.S. Acquisition, Inc. On November 8, 2000, Dictaphone executed an Amended and Restated Limited Guarantee which replaced in its entirety the Dictaphone Guaranty. Under the term of the Amended Dictaphone Guaranty, among other things, the dollar amount of Dictaphone's guarantee of L&H NV's obligations under the Belgian Credit Facility increased to approximately $208.6 million to reflect additional drawings under the Belgian Credit Facility that were advanced by L&H NV to Dictaphone to enable Dictaphone to redeem approximately $41.6 million of the Senior Subordinated Notes pursuant to the change of control "put right" under the Dictaphone Indenture. Dictaphone's obligations under the Amended Dictaphone Guaranty are unsecured. Repayment Of Dictaphone's Former Bankers Trust Credit Facility. The Belgian Credit Facility also required L&H NV to use a portion of the first advance to satisfy, among other things, the obligations of Dictaphone under a Credit Agreement, dated as of August 7, 1995, among Dictaphone, Bankers Trust Company, and certain other parties, and a Credit Agreement, dated as of November 14, 1997, among Dictaphone, Bankers Trust Company and certain other parties thereto. On or about May 8, 2000, L&H NV drew down $173 million from the Belgian Credit Facility and advanced these funds through LHCCC (as defined below), a wholly- owned subsidiary of L&H NV, to Dictaphone for the paydown of all of Dictaphone's outstanding obligations under the Bankers Trust Credit Agreements, which at that time totaled approximately $167.5 million. 2. LHCCC Loan Agreement Dictaphone entered into a Loan Agreement, dated as of May 5, 2000, between Dictaphone, as borrower, and L&H Coordination Centre C.V.B.A., a subsidiary of L&H NV, as lender, pursuant to which LHCCC advanced $173 million to Dictaphone. As mentioned above, L&H NV contributed funds borrowed under the Belgian Credit Agreement to LHCCC who in turn loaned them to Dictaphone under the LHCCC Loan Agreement. On or about November 20, 2000, the LHCCC Loan Agreement was amended and restated in its entirety to provide that payments made by Dictaphone to the Lenders under the Amended Dictaphone Guaranty would reduce dollar-for-dollar Dictaphone's obligations to LHCCC under the Amended And Restated LHCCC Loan Agreement. The Amended And Restated LHCCC Loan Agreement also provided that at any such time as Dictaphone was required to make any payment to LHCCC thereunder, Dictaphone was only obligated to make such payment if, simultaneous with Dictaphone's payment to LHCCC, Dictaphone's obligations under the Amended Dictaphone Guaranty were reduced by an amount equal to the payment that Dictaphone was required to make to LHCCC. The Amended And Restated LHCCC Loan Agreement also extended the date upon which the first interest payment under the LHCCC Loan was due from November 5, 2000 to May 5, 2001, a six-month extension. Dictaphone's obligations under the Amended And Restated LHCCC Loan Agreement are unsecured. 3. Dictaphone Deutsche Bank Facility In connection with the Dictaphone Acquisition, on or about May 5, 2000, Deutsche Bank AG New York Branch and/or Cayman Islands Branch made available to Dark Acquisition Corp. (i.e., the L&H NV subsidiary that acted as an L&H NV acquisition vehicle in the Dictaphone Acquisition) a revolving line of credit in the aggregate principal amount of $20 million with a final maturity date of March 4, 2001. The Deutsche Bank Facility was unsecured and, among other things, replaced Dictaphone's letter of credit facility in place prior to the Dictaphone Acquisition. As of the Petition Date, the amount outstanding under the Deutsche Bank Facility was approximately $13.5 million. 4. Senior Subordinated Notes Dictaphone is party to the Dictaphone Indenture relating to the Senior Subordinated Notes. The Senior Subordinated Notes are unsecured senior subordinate obligations of Dictaphone limited to a $200 million aggregate principal amount. Under the terms of the Dictaphone Indenture, holders of the Senior Subordinated Notes were entitled to put to Dictaphone their Senior Subordinated Notes at 101% of par value as a result of the Dictaphone Acquisition, which transaction constituted a "change of control" as defined in the Dictaphone Indenture, within ninety days of the closing. As mentioned above, following the Dictaphone Acquisition, holders of approximately $41.6 million of Senior Subordinated Notes exercised this put right, while holders of approximately $159 million of the Senior Subordinated Notes did not. Light Acquisition Corporation, a wholly-owned subsidiary of L&H NV, holds approximately $16 million (principal amount) of the Senior Subordinated Notes (which notes were purchased on the open market). The Plan provides that Light Acquisition Corporation will receive the same distribution under the Plan as other holders of the Senior Subordinated Notes. As of the Petition Date, approximately $164,517,000 (including accrued interest) of the Senior Subordinated Notes were outstanding. C. Disputes Relating To Pre-Petition Debt Obligations and Senior Subordinated Notes The nature and extent of Dictaphone's prepetition loans, the Amended Dictaphone Guaranty, and the Senior Subordinated Note obligations gave rise to a number of post-petition disputes among various creditors with respect to the validity and priority of their respective claims. Senior Subordinated Note Priority. The Dictaphone Indenture provides, in relevant part, that Dictaphone is permitted to incur, within certain limits, indebtedness that would be deemed senior in payment priority to the Senior Subordinated Notes if the incurrence of such "Senior Indebtedness" did not violate the terms of the Dictaphone Indenture. A dispute, however, arose over the extent and relative priority of several of Dictaphone's pre-petition obligations relative to the priority of the Senior Subordinated Notes. More specifically, if Dictaphone's obligations under the LHCCC Loan Agreement and Amended Dictaphone Guaranty were considered valid "Senior Indebtedness" under the Dictaphone Indenture, payment in full of the obligations under such instruments would have to occur prior to any payment on account of the Senior Subordinated Notes. In addition, if Dictaphone's obligations under the Deutsche Bank Facility were also deemed "Senior Indebtedness" under the Dictaphone Indenture, as Deutsche Bank AG has asserted, payment in full of these obligations would also have to occur prior to any payment on account of the Senior Subordinated Notes. Accordingly, in such a scenario, the likelihood of distributions to the holders of the Senior Subordinated Notes was remote. Certain holders of the Senior Subordinated Notes, however, had questioned the validity and priority of the LHCCC Loan Agreement and/or the Amended Dictaphone Guaranty. These creditors (and the Dictaphone Creditors' Committee) asserted that the incurrence of the obligations under either the LHCCC Loan Agreement or the Amended Dictaphone Guaranty was a fraudulent transfer and that the incurrence of all or a portion of the obligations under either the LHCCC Loan Agreement or the Amended Dictaphone Guaranty violated the terms of the Dictaphone Indenture. These parties thus asserted that Dictaphone's obligations under the LHCCC Loan Agreement and the Amended Dictaphone Guaranty must be treated pari passu (i.e., on the same parity) with the Senior Subordinated Notes. Not unexpectedly, several parties in interest, including the Lenders and the L&H Creditors' Committee, on behalf of L&H NV, have maintained otherwise. These parties contend, among other things, that Dictaphone's obligations under the Amended Dictaphone Guaranty are valid and enforceable obligations and senior in right of payment to Dictaphone's obligations under the Senior Subordinated Notes. Validity and Status of LHCCC Loan Agreement. The Lenders have questioned both the validity and priority of the LHCCC Loan Agreement, contending, among other things, that: (a) Dictaphone's alleged obligations under the LHCCC Loan Agreement were fraudulently incurred and should be avoided under section 544 and/or section 548 of the Bankruptcy Code. (b) In the event that such advances are not avoided, the repayment of the advances under the LHCCC Loan Agreement is contractually subordinated to the claims of the Lenders under the Belgian Credit Facility by the express terms of the LHCCC Loan Agreement; and (c) Dictaphone's alleged obligations under the LHCCC Loan Agreement should be equitably subordinated to all other claims against Dictaphone under section 510(c) of the Bankruptcy Code. The Lenders also asserted that the funds advanced under the LHCCC Loan Agreement did not constitute a "loan," but rather are more properly characterized as an "equity contribution," which would, under the Plan, not be entitled to any Distributions under the Plan and instead would be treated as an Equity Interest in Dictaphone. In support of this position, inter alia, the Lenders contended that the LHCCC Loan Agreement, while dated May 5, 2000, was not executed until August 2000. The Lenders sought to use the alleged delay in execution as evidence to support their position that the funds amount to nothing more than an equity contribution. To the contrary, the L&H Committee has taken the position that the funds advanced under the LHCCC Loan Agreement constitute a refinancing, irrespective of the date of execution. Such funds, according to L&H NV and the L&H Committee, are not tantamount to an equity contribution, but instead are pari passu with the obligations under the Dictaphone Guaranty. The consensual resolution of these issues forms a substantial and material part of the basis for the Plan. Specifically, L&H NV agreed, in an effort to resolve these (and other) issues, to a lesser distribution under the Plan than the Lenders. Accordingly, L&H NV's claims will not be treated pari passu with the Lenders' claims. At the same time, the Lenders agreed not to share in any distributions to L&H NV under the Dictaphone Plan, which increases substantially the distribution ultimately made to the creditors of L&H NV (the L&H Group believes that the Lenders' claims account for approximately 90% of the aggregate amount of all claims against L&H NV). D. Intercompany Allocation Among Members Of The L&H Group Immediately after the Dictaphone Acquisition, the L&H Group commenced efforts to integrate the businesses of L&H NV, Dictaphone, L&H Holdings and their respective subsidiaries. This entailed merging research teams, appointing executives to lead business units that straddled various legal entities, and sharing various technologies among the members of the L&H Group without regard to which member owned such technologies. In various instances, there were no intercompany agreements governing the use of employees and technology or payment for, and restrictions on such use. These issues were brought to the Court's attention early on in these cases and the L&H Group mandated that PricewaterhouseCoopers LLP, the L&H Groups' restructuring advisor, spearhead a task force to make recommendations on these issues and to examine the appropriate allocation of revenues with respect to various transactions. The Allocation Project and the PwC Task Force produced a series of recommendations that have been discussed extensively with the L&H Creditors' Committee and the Dictaphone Creditors' Committee (and their respective retained professionals), and that focused principally on the relationship between L&H NV and its affiliates on the one hand and Dictaphone on the other hand. The PwC Task Force analyzed post-petition intercompany activity through May 31, 2001, except as where specifically noted, and proposed a settlement of intercompany activity and their respective intercompany account balances among the members of the L&H Group. The post-petition activity can be broken into four components: (i) technology, (ii) research & development, (iii) distributions, and (iv) shared administrative costs. In addition to interviewing various employees of the L&H Group, PwC analyzed comparable industry information and metrics to arrive at prescribed allocation rates among the members of the L&H Group with respect to these components. Since May 31, 2001, the members of the L&H Group began analyzing and reconciling all intercompany activity (particularly with respect to distributions and shared administrative costs) based on the recommended and agreed upon allocation methodologies. The members of the L&H Group in conjunction with PwC, the Creditors' Committees, and their respective retained professionals have now prepared an allocation of costs and expenses among the members of the L&H Group that is substantially complete as between Dictaphone and L&H Holdings, but which remains subject to the review and approval of the Curators on behalf of L&H NV. E. Fees Of Dictaphone Ad Hoc Committee And Indenture Trustee 1. Dictaphone Ad Hoc Committee Fees The Dictaphone Committee was appointed as a result of the Dictaphone Official Committee Motion filed by the Dictaphone Ad Hoc Committee, which was comprised of certain holders of the Senior Subordinated Notes. The Dictaphone Ad Hoc Committee, L&H NV, the Dictaphone Creditors' Committee, Dictaphone, and the L&H Creditors' Committee have engaged in extensive negotiations regarding the payment of fees of the Dictaphone Ad Hoc Committee and its professionals, and have reached a resolution regarding the payment of these fees, described in detail below. 2. Indenture Trustee's Fees The Indenture Trustee, L&H NV, Dictaphone, the Dictaphone Creditors' Committee, and the L&H Creditors' Committee have engaged in extensive negotiations relating to the manner in which the Indenture's Trustee's fees will be paid. Specifically, the Indenture Trustee asserts that it has a lien on the proceeds of any distributions to holders of the Senior Subordinated Notes under the Plan to secure the payment of its fees and expenses under the Dictaphone Indenture. The L&H Group believes that the parties have reached a resolution regarding the payment of the Indenture Trustee's fees, described in detail below. Description Of Settlement Of Claims And Disputes A. Proposed Settlement And Compromise The Plan as amended and supplemented reflects a consensual resolution and settlement among the L&H Group, the Creditors' Committees, and the estate's primary creditor constituencies (including the Lenders and Deutsche Bank AG) of all these disputes. In this respect, the Plan has two major components: (a) the reorganization of Dictaphone and (b) the formation of a litigation vehicle to maximize the recoveries on certain Dictaphone litigation claims. The Plan is premised upon effecting a debt for equity exchange that will result in approximately $400 million of Dictaphone's pre-petition indebtedness being converted into Dictaphone New Common Stock and other securities on the Effective Date. Specifically, the Plan allocates among Dictaphone's creditors Dictaphone New Common Stock, Litigation Membership Interests, new notes of Reorganized Dictaphone, and warrants exercisable for shares of Dictaphone New Common Stock. B. Settlement Of Intercreditor Disputes To resolve the Intercreditor Disputes (i.e., issues regarding the validity and priority of the LHCCC Loan Agreement and the Amended Dictaphone Guaranty under the Dictaphone Indenture, and the claim of Deutsche Bank AG under the Deutsche Bank Facility, among other issues) on a consensual basis, the L&H Group and the Creditors' Committees entered into discussions with the relevant creditor constituents concerning a consensual resolution of the disputes. After severa weeks of extensive negotiations, the Creditors' Committees and certain creditor constituents agreed on the terms of a plan as they relate to Claims against Dictaphone. The Distributions to such Claims under the Plan reflect a settlement of all issues regarding the validity and priority of the Claims of the holders of (i) Allowed Dictaphone Lenders' Guaranty Claims (Class 5), (ii) Allowed Deutsche Bank Line Of Credit Claim (Class 6), (iii) Allowed Dictaphone Noteholders' Claims (Class 7), and (iv) Allowed Intercompany Loan Agreement Claims (Class 8). Subject to readjustments in the event of fluctuations in the amount of Allowed Class 4 General Unsecured Claims, 12 the Plan provides for the distribution of Dictaphone New Common Stock, the Litigation Membership Interests, the Reorganized Dictaphone/DB 12% Note, the Reorganized Dictaphone/Lenders 12% Notes, and Dictaphone New Warrants to be issued by Reorganized Dictaphone, and/or other consideration as follows: (a) Allowed Class 4 General Unsecured Claims: each holder of such Claim will receive a Ratable Proportion of (i) nine percent of the Distributable Shares of Dictaphone New Common Stock and (ii) nine percent of Class D Litigation Membership Interests; (b) Allowed Class 5 Lenders' Guaranty Claims: each holder of such Claim will receive a Ratable Proportion of (i) sixty- three percent of Distributable Shares of Dictaphone New Common Stock, (ii) sixty-five percent of the Class D Litigation Membership Interests, and (iii) Reorganized Dictaphone/Lenders 12% Notes. Lenders' Guaranty Claims arise from the Amended Dictaphone Guaranty. As part of the settlement contemplated hereby, the Lenders' Guaranty Claims are being Allowed for purposes of the Plan in the amount of $208,600,000.; (c) Allowed Class 6 Deutsche Bank Line of Credit Claim: Deutsche Bank AG will receive the Reorganized Dictaphone/DB 12% Note. The Reorganized Dictaphone/Lenders 12% Note is a promissory note payable by Reorganized Dictaphone and to be issued on the Effective Date. The Reorganized Dictaphone/Lenders 12% Notes will be in the aggregate original principal amount of $20,500,000 and bear interest at the rate of 12% per annum, payable semi-annually as follows: the first four semiannual interest payments may be, at Reorganized Dictaphone's sole option, paid in kind or in Cash; commencing on the fifth semiannual interest payment and thereafter, all payments of interest must be paid in Cash. The maturity date will be the; fifth anniversary of the Effective Date. The Reorganized Dictaphone/Lenders 12% Notes may be prepaid in whole or in part at any time without penalty or premium. All payments of principal, interest and other amounts under the Reorganized Dictaphone/Lenders 12% Notes will be subordinated to the Exit Facility and will be pari passu with the Reorganized Dictaphone/DB 12% Note. As part of the settlements contemplated hereby, the Deutsche Bank Line of Credit Claim will be deemed to be an Allowed Claim solely for purposes of the Plan in the amount of $13,456,964.88. The Reorganized Dictaphone/DB 12% Note is a promissory note payable by Reorganized Dictaphone issued on the Effective Date. The Reorganized Dictaphone/DB 12% Note will be in the aggregate original principal amount of $6,750,000 and bear interest at the rate of 12% per annum, payable semi-annually as follows: the first four semi-annual interests may be, at Reorganized Dictaphone's sole option, paid in kind or in Cash; commencing on the fifth semiannual interest payment and thereafter, all payments of interest must be paid in Cash. The maturity date will be the fifth anniversary of the Effective Date. The Reorganized Dictaphone/DB 12% Note may be prepaid in whole or in part at any time without penalty or premium. All payments of principal, interest and other amounts under the Reorganized Dictaphone/DB 12% Note will be subordinated to the Exit Facility and will be pari passu with the Reorganized Dictaphone/Lenders 12% Note. In addition to receiving the Reorganized Dictaphone/DB 12% Note, all original letters of credit outstanding as of (and in the amounts outstanding as of) October 1, 2001 (except for letters of credit that expired before the Effective Date) either through the letter of credit beneficiaries (i) agreeing to cancel and terminate the letters of credit or (ii) accepting a replacement letter of credit will be returned to Deutsche Bank AG. In the event that Dictaphone is unable to cause the original letters of credit to be returned to Deutsche Bank AG on or before the Effective Date, Dictaphone will, on the Effective Date, cash collateralize the letters of credit by placing in an account under the control of Deutsche Bank AG cash in an amount equal to 110% of the outstanding amount of the letters of credit as of October 1, 2001 not replaced, expired or terminated (with the original letter of credit delivered to Deutsche Bank AG). Cash in such account will be released to (a) Deutsche Bank AG in amounts equal to the amount of any drawings under the letters of credit are returned to Deutsche Bank AG (or Dictaphone provides Deutsche Bank AG with other reasonably acceptable evidence that the letters of credit no longer remain outstanding (i.e., an affidavit stating that the letter of credit was destroyed or that such letters of credit have expired)). (d) Allowed Class 7 Noteholders' Claims: each holder of such Claim will receive a Ratable Proportion of (i) eighteen percent of the Distributable Shares of New Common Stock, (ii) eighteen percent of the Class D Litigation Membership Interests and (iii) the New Warrants. To the extent the application of Section 5.2.4(b) of the Plan causes the holders of Allowed Dictaphone Noteholders' Claim to receive less than eighteen percent of the Distributable Shares of the Dictaphone New Common Stock, the holders of Allowed Dictaphone Noteholders' Claim will receive, in the aggregate, additional Dictaphone New Warrants for shares in an amount equal to the Decreased Allocation. (e) Allowed Class 8 Intercompany Loan Agreement Claims. Class 8 Claims are claims of L&H NV arising from the LHCCC Loan Agreement. Based upon a consensual settlement as to the allocation of such distributions, and the status and validity of the LHCCC Loan Agreement, the Lenders have agreed that they will not share in such Distributions to Class 8 Intercompany Loan Agreement Claims either directly at the Dictaphone level or indirectly as a creditor of the L&H NV estate. This has substantially increased the distribution to L&H NV creditors, because the L&H Group believes that the Lenders' claims account for approximately 90% of the aggregate amount of all claims against L&H NV. By the settlement, L&H NV will receive (i) ten percent of the Distributable Shares of Dictaphone New Common Stock and (ii) eight letters of credit that Deutsche Bank AG or Bankers Trust Company honors on any such letters of credit (and as to any letters of credit drawn after October 1, 2001, and before the Effective Date, such cash will be paid to Deutsche Bank AG on the Effective Date) or (b) Dictaphone as the original percent of the Class D Litigation Membership Interests. C. Settlement Of Intercompany Allocation The parties have prepared an intercompany allocation among the members of the L&H Group in accordance with the PwC Allocation, which allocation is substantially complete as between Dictaphone and L&H Holdings but remains subject to the review and approval of the Curators on behalf of L&H NV. Accordingly, the costs and expenses outlined in the Motion provide for an allocation among the estates, and the net effect of such allocation as currently contemplated is that Dictaphone will pay an aggregate of $2,445,736 to the other members of the L&H Group, with L&H Holdings receiving $1,777,749 and L&H NV receiving $677,987. D. Settlement Of Fees Of Dictaphone Ad Hoc Committee And Indenture Trustee 1. Fees of Dictaphone Ad Hoc Committee Subject to the occurrence of the Effective Date of the Plan occurring, the Dictaphone Ad Hoc Committee, L&H NV, the Dictaphone Creditors' Committee, Dictaphone, and the L&H Creditors' Committee have agreed that the Dictaphone Ad Hoc Committee will be entitled to file an application under section 503(b) of the Bankruptcy Code seeking reimbursement from Dictaphone of fees and expenses of all of the Dictaphone Ad Hoc Committee's professionals incurred during the period commencing on the Petition Date and ending on February 28, 2001. The terms of the Fee Settlement were put on the record at a hearing held on October 12, 2001. As recited on the Bankruptcy Court record, the Fee Settlement provides that the Dictaphone Ad Hoc Committee may file an application under section 503(b) of the Bankruptcy Code seeking reimbursement from Dictaphone of fees and expenses of all its professionals, but that no more than $250,000 of such fees and expenses can be allowed. The Dictaphone Ad Hoc Committee now takes the position that it may seek fees and expenses in excess of the $250,000 limit, and that the only consequence of such action would be the loss of (i) Dictaphone's support for the Fee Settlement and (ii) the Lenders' and the L&H Creditors' Committee's agreement not to object to the Fee Settlement. Dictaphone, the L&H Creditors' Committee, and the Lenders believe the terms of the Fee Settlement as recited on the Bankruptcy Court record (i.e., the imposition of the $250,000 limit) are binding and enforceable. If the Fee Settlement is found to be neither binding nor enforceable, the settlement regarding the Indenture Trustee's fees also may unravel, causing the Indenture Trustee to recoup its fees and expenses through its liens under the Dictaphone Indenture. If the Indenture Trustee exercises this option, the recovery to holders of the Class 7 Dictaphone Noteholders' Claims will be reduced in the amount of the Indenture Trustee's unpaid fees and expenses. 2. Fees of Indenture Trustee The Indenture Trustee, L&H NV, Dictaphone, the Dictaphone Creditors' Committee, and the L&H Creditors' Committee have agreed that, subject to the occurrence of the Effective Date of the Plan occurring, the fees and expenses of the Indenture Trustee for the: (i) services described in the Plan, in accordance with customary charges for such services, and (ii) services rendered throughout Dictaphone's chapter 11 case (including the reasonable fees and expenses of its counsel) up to $350,000 will be allowed as an Administrative Expense Claim against Dictaphone, and will be paid pursuant to this settlement without the need to file an application for allowance with the Court, subject to such fees and expenses being reasonable. The Court will retain jurisdiction over any disputes regarding the reasonableness of such fees and expenses. Upon all of the fees and expenses of the Indenture Trustee being paid in full, the Indenture Trustee will be deemed to have released its lien and priority right under the Dictaphone Indenture securing payment of its fees Claims will be reduced in the amount of the Indenture Trustee's unpaid fees and expenses. In the event such payment of the Indenture Trustee's fees and expenses, or any portion thereof, is not made, the Indenture Trustee has indicated that it intends to exercise its lien and priority rights under the Dictaphone Indenture prior to making distributions to holders of Class 7 Dictaphone Noteholders' Claims. This would result in a material reduction in the Dictaphone Noteholders' recovery, and if there is a problem with liquidating the property held by the Indenture Trustee, could result in a delay in distributions. During the hearing held on October 12, 2001, the foregoing settlement relating to the Indenture Trustee's fees was reached and recited into the Bankruptcy Court record, but was not embodied previously in a formal pleading or order. Dictaphone, the L&H Creditors' Committee, and the Lenders believe the agreement relating to the Indenture Trustee's fees is linked to the Fee Settlement (which the Indenture Trustee and the Dictaphone Ad Hoc Committee dispute). Dictaphone's Arguments Dictaphone and the other Debtors assure Judge Wizmur that they believe that they have sound business justification for entering into the settlements embodied in the Plan. Absent the settlement of the various disputes described in the Plan Supplement and in this Motion, Dictaphone will be unable to confirm a plan of reorganization and emerge from chapter 11, and the other members of the L&H Group may be compelled to engage in time-consuming, expensive, and protracted litigation that could adversely impact their own reorganization efforts and delay their emergence from chapter 11. Indeed, the resolution of these disputes has allowed Dictaphone to negotiate and document a plan of reorganization that has gained the approval of Dictaphone's various creditor constituencies while simultaneously maximizing value for Dictaphone's estate and creditors. The proposed settlements serve the interests of the creditors of Dictaphone, L&H NV, and L&H Holdings in several respects. The proposed settlements bring finality to highly contentious and complex disputes in these chapter 11 cases regarding intercreditor claims totaling hundreds of millions of dollars and intercompany allocations that, if litigated, would have cost the estate a significant amount of resources. The resolution, compromise and settlement of the disputes set forth above will enable Dictaphone to emerge from chapter 11 through the confirmation of the Plan as a reorganized, viable entity. Accordingly, the members of the L&H Group believe that entering into the settlements pursuant to the Plan is in the best interests of its estate and creditors. Judge Wizmur Agrees Pursuant to the Plan as amended and supplement, and under the terms of this Motion, the Confirmation Order constitutes the Bankruptcy Court's approval of the settlements embodied in the Plan and described in this Motion, so that Judge Wizmur grants this Motion and approves these settlements through her order confirming the Plan. (L&H/Dictaphone Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) MARINER POST-ACUTE: Seeks Okay of 8th DIP Financing Amendment ------------------------------------------------------------- Mariner Post-Acute Network, Inc. Debtors' DIP Agreement with Foothill Capital Corporation, successor to The Chase Manhattan Bank (n/k/a JPMorgan Chase Bank) as agent and lender, and with various other lenders, will mature on April 1, 2002. The Debtors' authority to use their prepetition senior secured lenders' cash collateral (for which Chase still serves as agent) will also expire on April 1, 2002 pursuant to the Court's prior orders. Accordingly, the Debtors seek the Court's authority to enter into the "Eighth Amendment to Revolving Credit and Guaranty Agreement" to: (1) extend the maturity of the DIP Agreement to May 31, 2002, and (2) extend the consensual use of the cash collateral of the Prepetition Senior Secured Lenders, also through May 31, 2002. The Debtors submit that they need such an extension because it is unlikely that the Joint Plan will become effective prior to the April 1, 2002 maturity of the DIP Agreement which is only about a week after the confirmation hearing on March 25, 2002. The Debtors tell the Court that the proposed extension of the maturity of the DIP Agreement and use of cash collateral through May 31, 2002 should provide them with sufficient time to implement the Plan by allowing for the transactions contemplated by the Joint Plan to close, and to allow the 10-day stay that Bankruptcy Rule 3020(e) imposes (unless waived). Continued use of cash collateral is critical to the Debtors' daily operations given that the vast majority of the MPAN Debtors' income is derived from the Prepetition Senior Secured Lenders' collateral, including government reimbursements and the vast majority of the MPAN Debtors' current cash on hand constitutes the lenders' cash collateral. Moreover, any interruption in the MPAN Debtors' use of cash collateral would cause great concern for the MPAN Debtors' suppliers, patients, employees, and government regulators. Although the MPAN Debtors have not been required to borrow under the facility, the continuation of the debtor in possession financing facility under the DIP Agreement is equally critical by providing the estates and their creditors with the assurance that financing will be available if and when the MPAN Debtors need it. Following discussions among the parties and their professionals, the MPAN Debtors, Foothill, and Chase agreed upon the following basic terms for an extension as set forth in the proposed Eighth Amendment and Order: (a) The maturity of the DIP Agreement and the use of the Prepetition Senior Secured Lenders' cash collateral shall be extended from April 1, 2002 to May 31, 2002; (b) except as provided in the Eighth Amendment, the terms of the DIP Agreement and the Original Final Order (both as previously amended) will be unchanged; The MPAN Debtors believe that the proposed terms of the Eighth Amendment are fair, reasonable, and an appropriate exercise of the MPAN Debtors' business judgment. An alternative source of financing is not feasible, the Debtors represent, because in the absence of an existing lending relationship, any alternative lender would charge substantial, additional due diligence and commitment fees before committing to provide such financing. In addition, because of the existing relationships among the DIP Agent, the Prepetition Senior Secured Lenders, and the DIP financing lenders, extension of the DIP Agreement avoids many of the potential conflicts that new financing would entail, including priming and the nonconsensual use of the Prepetition Senior Secured Lenders' cash collateral. Accordingly, the MPAN Debtors seek entry of an Order pursuant to Bankruptcy Code sections 105, 363, and 364 approving the Eighth Amendment and extending their use of the Prepetition Senior Secured Lenders' cash collateral through May 31, 2002. (Mariner Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) METROMEDIA FIBER: Defers Interest Payment on 6.15% Sub. Notes ------------------------------------------------------------- Metromedia Fiber Network, Inc. (NASDAQ: MFNX), the leading provider of digital communications infrastructure, announced that it has deferred payment of approximately $30 million of interest due March 15, 2002 on its $975 million 6.15% Subordinated Convertible Notes issued to Verizon Communications, Inc. MFN is currently negotiating with Verizon with respect to this payment. If MFN neither reaches an agreement with Verizon nor makes this interest payment on or before the expiration of a 30- day grace period an "event of default" under the indenture governing these notes will occur. MFN further announced that as a result of a general downturn in the global communications industry, the Company has withdrawn its previously announced revenue and normalized EBITDA guidance for the quarter ended December 31, 2001 and for the year ending December 31, 2002, its capital expenditure guidance for the year ended December 31, 2001 and 2002 and its guidance that it would be normalized EBITDA positive for the quarter ending March 31, 2002. MFN is unable to provide revised guidance at this time. MFN also announced that it will seek to restructure its indebtedness. Absent the deferral of the interest payment to Verizon, MFN would not have been able to make the interest payment and satisfy its other near-term cash requirements. At February 28, 2002, MFN had approximately $3.3 billion of consolidated indebtedness and approximately $37.3 million of unrestricted domestic cash and cash equivalents. No assurance can be given that MFN will be able to successfully restructure its indebtedness in a consensual manner. If MFN is not able to successfully restructure its indebtedness, MFN may be required to file for protection under Chapter 11 of the U.S. Bankruptcy Code. In addition, any potential restructuring of MFN's indebtedness may result in substantial dilution to MFN's existing stockholders. MFN further announced that it had entered into a non-binding letter of intent to sell its PAIX facilities for approximately $50 million in cash and an equity interest in the purchaser. Consummation of the PAIX transaction is subject to a number of significant conditions to closing, including execution of definitive documentation, completion of due diligence, obtaining required consents, and other customary conditions to closing. MFN expects the PAIX transaction to be consummated in the second quarter of 2002, although no assurance can be given that the transaction will be consummated. MFN expects net proceeds from the PAIX sale at closing, after escrow holdbacks to be approximately $44.5 million; however, a substantial portion of those proceeds will be required to repay certain outstanding indebtedness unless a waiver is obtained. MFN continues to explore other opportunities in order to satisfy its near-term and medium-term liquidity needs. MFN is the leading provider of digital communications infrastructure solutions. The Company combines the most extensive metropolitan area fiber network with a global optical IP network, state-of-the-art data centers, award-winning managed services and extensive peering relationships to deliver fully integrated, outsourced communications solutions to Global 2000 companies. The all-fiber infrastructure enables MFN customers to share vast amounts of information internally and externally over private networks and a global IP backbone, creating collaborative businesses that communicate at the speed of light. Customers can take advantage of MFN's complete, end-to-end solution or select individual components to complement their existing infrastructures. By leasing MFN's metropolitan and regional fiber, customers can create their own, private optical network with virtually unlimited, un-metered bandwidth at a fixed fee. For more reliable, secure and high-performance Internet connectivity, customers can use MFN's private IP network to communicate globally without ever touching the public-switched network. Moreover, MFN's comprehensive managed services enable companies to create a world-class Internet presence, optimize complex sites and private optical networks, and transform legacy applications, all with a single point of contact. PAIX.net, Inc., a subsidiary of MFN and the original neutral Internet exchange, offers secure, Class A co-location facilities where ISPs and other Internet-centric companies can form public and private peering relationships with each other, and have access to multiple telecommunications carriers for circuits within each facility. For more information on MFN, please visit its Web site at http://www.mfn.com METROMEDIA FIBER: Missed Payment Forces S&P Drop Rating to D ------------------------------------------------------------ The corporate credit rating on Metromedia Fiber Network Inc. was lowered to 'D' on March 18, 2002, based on the company's missed interest payment due March 15, 2002, on its $975 million 6.15% subordinated convertible notes issued to Verizon Communications Inc. The rating on the company's unsecured notes was also lowered to 'C' and placed on CreditWatch with negative implications at that time. The company has indicated that it may seek Chapter 11 bankruptcy protection if it is unable to restructure its debt. White Plains, New York-based Metromedia's total debt outstanding at February 28, 2002, was about $3.3 billion, and total unrestricted cash was about $37.3 million. The rating on the unsecured notes will be lowered to 'D' on default of the interest payments, a bankruptcy filing, or a restructuring, the last of which would be considered tantamount to default. DebtTraders reports that Metromedia Fiber Network's 10% bonds due 2009 (MTFIB1) are quoted at a price of 9. See http://www.debttraders.com/price.cfm?dt_sec_ticker=MTFIB1for real-time bond pricing. MOONEY AIRCRAFT: Wins OK to Sell Assets to Advanced Aerodynamics ---------------------------------------------------------------- Advanced Aerodynamics & Structures, Inc. (OTC Bulletin Board: AASI) announced it has acquired the assets of Mooney Aircraft Corporation. Judge King, presiding over the US Bankruptcy Court in San Antonio, Texas, signed an order approving the sale at 2:00 PM CST Monday. "With the completion of this transaction, we will be in a position to restore full Mooney production in a few months," said Roy Norris, Chairman and Chief Executive Officer of AASI. He added, "This is the key step in the process of rebuilding the Mooney product line and in building a major new general aviation company." AASI has operated Mooney Aircraft since February 6th under a plan approved by the US Bankruptcy Court in San Antonio, TX. Dale Ruhmel, Executive Vice President of Operations and Engineering for AASI, commented, "We are in a position to quickly ramp up production based on the progress we've made in the past month. We've inventoried spares, and are in the process of calibrating the tooling and reconditioning the machinery. We're in a position to support heavy production of spare parts." Mr. Ruhmel added, "We have detailed plans to complete the 21 airplanes which were partially completed when production ceased. We anticipate completing the first new Mooney in the third quarter of this year." Mr. Jack Jansen, Senior Vice President, Operations, has joined the company with the responsibility of overseeing production operations in Kerrville. He brings years of experience to the company, having previously headed production for both Piper and Mooney. The plan calls for the rehiring of furloughed workers beginning in late March. Along with the purchase of Mooney, AASI announced that it intends to change its name to the "Mooney Aerospace Group, Ltd." The new Mooney subsidiary is being named the "Mooney Airplane Company, Inc." and will operate as a wholly owned subsidiary of The Mooney Aerospace Group, Ltd. Roy Norris, Chairman, President & CEO of the Mooney Aerospace Group, said, "I am extremely pleased to announce this important acquisition as the first step of our strategy to assemble a new and vibrant general aviation manufacturer composed of the very best aircraft products available today along with revolutionary newly developed aircraft products using the latest in technology and cost effective manufacturing techniques." Norris indicated that he intends for all aircraft manufacturing for the Mooney Aerospace Group to take place at Mooney's Kerrville, Texas, manufacturing facility. Norris further commented, "AASI chose to acquire Mooney in order to maximize shareholder value, a company with sales of $42 million in 2000. Any aircraft company operating in today's business environment needs to have a multiple model product line and be composed of both currently produced top of the line aircraft models as well as new development products that take advantage of recent technology advances. In acquiring Mooney, AASI has transformed itself from a startup development company to a going concern and a leading supplier of piston engine aircraft with exciting new models under development." Mooney produces top of the line, single engine piston airplanes including the Eagle, the Ovation2, and the Bravo, which are the performance leaders in the four-passenger single engine aircraft market. For over 50 years, the company has produced high performance piston aircraft, which are considered by many to be the "best of breed" in the owner-flown aircraft market. There are more than 10,000 Mooney aircraft in operation around the world. "We intend to employ proven manufacturing techniques and production control methodologies along with improved sales and distribution techniques to reduce the cost of Mooney aircraft and significantly improve the price performance ratio of all Mooney models," Norris added. Norris also commented on AASI's JETCRUZER 500 program. "Once our new top management team was in place, I asked Dale Ruhmel, our new Executive Vice President of Engineering and an industry acknowledged expert on light aircraft design and certification, to conduct a full technical review of the JETCRUZER 500 program." Based on initial results from the review process, AASI announced previously that an estimated 18 month period of redesign of the JETCRUZER 500 would be necessary in order to reduce the weight of the aircraft, to reduce its manufacturing costs, and to make it compatible with the Mooney line of aircraft. Norris reported Monday, "We are continuing our technical review of the JETCRUZER 500 for compliance with FAA certification requirements in such areas as external noise level, weight and balance, and spin resistant certification." Norris also reported that the company has entered into discussions with Century Aerospace Corporation concerning acquisition of the rights to manufacture the Century Jet, one of the exciting new entrants in the "micro-jet" market. Norris said, "Bill Northrup has developed a revolutionary new business jet design with the Century Jet that could be priced more than one million dollars below the current least expensive business jet. It could set a new benchmark for low cost business travel by private aircraft and provide a cost effective alternative to airline travel for small- and medium-sized businesses." Confirming earlier reports Norris indicated, "We continue to pursue additional acquisitions of other top of the line general aviation models and new product development programs that will complement our existing product lines." NATIONAL STEEL: Will Maintain Existing Cash Management System ------------------------------------------------------------- Prior to the Petition Date, National Steel Corporation and its debtor-affiliates used a centralized cash management system similar to those utilized by other major corporate enterprises in the ordinary course of business. National Steel's Vice President and Treasurer William E. McDonough relates that the Debtors' cash management system is designed to efficiently collect, transfer, and disburse funds generated from the Debtors' operations and to record accurately such collections, transfers and disbursements. "The Debtors' centralized cash management system allows them to concentrate cash and invest excess cash, thus, maximizing the return on excess cash," Mr. McDonough says. The principal components of the Cash Management System are: (i) Lockbox Accounts The Debtors maintain ten lockbox accounts, which are used to collect payments from customers. The Debtors' customers remit payments to post office box addresses established by the Debtors. On a daily basis, the balances in the Lockbox Accounts are swept or transferred into either the Concentration Account or the Operating/Concentration Account. (ii) Concentration Account The Debtors maintain a concentration account at Mellon Bank. This account is a zero balance account. On a daily basis, any balance in this account is applied against the obligations under the Pre-Petition Credit Agreement as well as funds the Debtors can borrow to operate. (iii) Operating/Concentration Account The Debtors have one primary account to centralize disbursements through the cash management system, which is the Operating/Concentration Account at Mellon Bank. This account acts as a concentration account with respect to those Lockbox Accounts that deposit directly into the Operating/Concentration Account. This account is also used to fund: (a) wire payments to lenders, suppliers and utilities among others; (b) certain regular Automatic Clearing House payments associated with services provided by vendors and third party administrators related to employee benefits, as well as payroll for ProCoil Corporation; (c) accounts payable payments, payroll and employee benefits through controlled disbursement accounts; and (d) tax obligations through a segregated tax funding account. (iv) Controlled Disbursement Accounts The Debtors use 25 controlled disbursement accounts established by lines of business to make payments via check, Automatic Clearing House and wire transfer. Majority of check activity is processed via controlled disbursement. These accounts are used to pay by check the Debtors' operating expenses and other obligations. (v) Investment Accounts The Debtors maintain one money market investment account with Citibank, N.A. for the investment of excess cash. (vi) Payroll The Debtors' payroll and related benefits are processed through several separate Controlled Disbursement Accounts. In general, National Steel's corporate personnel process these disbursements. However, in certain instances, third party administrators are used. Mr. McDonough further relates that the Debtors' Cash Management System allows for: (i) overall corporate control of funds; (ii) certain cash availability when and where needed among the Debtors and non-debtor Affiliates; and (iii) the reduction of administrative costs through a centralized method of coordinating funds collection and movement. "The Debtors smooth transition into and out of Chapter 11 depends on their ability to maintain these bank accounts and operate this Cash Management System without interruption," Mr. McDonough asserts. Adopting new, segmented cash management systems would be expensive and would create unnecessary administrative burdens as well as disrupt the Debtors' business operations, Mr. McDonough contends. * * * Convinced it is in the Debtors' best interests, Judge Squires authorizes the Debtors to continue to use their existing Cash Management System. After the Petition Date, all banks at which the bank accounts are maintained are authorized and directed to continue to administer the accounts as such during the pre- petition, without interruption and in the usual ordinary course of business. The Court further directs that each bank that maintains a disbursement account shall implement reasonable handling procedures to avoid payment of a pre-petition check. But, no bank that implements reasonable procedures and then honors a pre-petition check or other item drawn on any account shall be deemed liable to the Debtors or their estates either: (i) at the direction of the Debtors to honor such pre-petition check or item; (ii) in good faith belief that the Court has authorized such pre-petition check or item to be honored; or (iii) as a result of an innocent mistake made despite implementation of such handling procedures. (National Steel Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) NATIONSRENT INC: Committee Members Seek Okay to Trade Securities ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in the chapter 11 cases of NationsRent Inc., and its debtor-affiliates asks the Court for an order permitting its members (including both present members and each future member, if any, and their affiliates) to trade in the Debtors' Securities during the pendency of these cases, on the condition that they establish and effectively implement policies and procedures -- such as an Ethical Wall -- to prevent the misuse of material nonpublic information obtained as Committee members. Daniel K. Astin, Esq., at The Bayard Firm in Wilmington, Delaware, submits that certain present members, including the PPM America, Inc., are investment advisors or managers that provide investment-advisory services to institutional, pension, mutual fund and high net-worth clients and affiliated funds and accounts. These members may buy and sell securities and other financial assets for their own portfolios. As part of these regular business activities, the members have duties to maximize returns for their clients or shareholders through buying and selling of securities and other financial assets. By this motion, Mr. Astin acknowledges that the members have certain legal duties regarding material non-public information about the non-debtor group. In addition, the members acknowledge that trading in securities by members may implicate various federal laws limiting or attaching consequences to trading in securities on the basis of material nonpublic information. Mr. Astin tells the Court that if the members are barred from trading securities during the pendency of these cases because of their service on the Committee, they risk the loss of potentially beneficial investment opportunities for their clients and themselves. Alternatively, if members resign from the Committee, their clients' interest may be compromised by virtue of the members taking less active role in the reorganization process. To resolve this dilemma, Mr. Atin observes that other bankruptcy courts have permitted active Committee members to engage in securities trading provided they establish Ethical Walls. The Committee proposes these Ethical Wall Procedures in NationsRent's cases: A. written acknowledgement by personnel performing committee work that they could receive nonpublic information and are aware of the Ethical Wall procedures in effect; B. a prohibition on the sharing of nonpublic committee information with employees that are not responsible for performing any committee-functions except in-house legal counsel; C. creation of separate file space for committee work that is inaccessible to employees that are not responsible for performing any committee-related functions; D. restrictions on committee personnel's access to trading information; and, E. establishment of a compliance review process. Mr. Atin argues that any current or future members that engage in the business of trading securities should not be precluded from trading in securities of any member of the non-debtor group during their tenure on the Committee. The members have resources and experience, including knowledge of the Debtors' business, industry and capital structure that render them particularly valuable for official creditors' committee service. In addition, because the members are among the non-debtor group's largest creditors or representatives thereof, they have a great incentive to pursue the Committee's work diligently toward the goal of promptly confirming a chapter 11 plan. (NationsRent Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) NORTHERN MOUNTAIN: CDNX Delists Shares Effective March 15, 2002 --------------------------------------------------------------- Effective at the close of business on March 15, 2002, the common shares of Northern Mountain Helicopters Group Inc. ("NMH") was delisted from CDNX for failing to maintain Exchange Listing Requirements. The securities of the Company have been suspended in excess of twelve months. OGLEBAY NORTON: Sets Annual Shareholders' Meeting for April 24 -------------------------------------------------------------- The Annual Meeting of Shareholders of Ogelbay Norton Company will be held on April 24, 2002, at The Forum Conference and Education Center, 1375 East Ninth Street, Cleveland, Ohio, at 10:00 a.m., Cleveland, Ohio time. At the Annual Meeting, shareholders will be asked to: 1. Elect nine Directors for a one year term expiring in 2003; 2. Approve the 2002 Stock Option Plan; and 3. Hear reports and transact any other business that may properly come before the Annual Meeting. The Board of Directors fixed the close of business on March 6, 2002 as the record date for determining the shareholders entitled to notice of, and to vote, at the Annual Meeting, or at any postponement or adjournment of the Annual Meeting. Oglebay Norton Company, a Cleveland, Ohio-based company, provides essential minerals and aggregates to a broad range of markets, from building materials and home improvement to the environmental, energy and metallurgical industries. Building on a 147-year heritage, our vision is to become the premier growth company in the industrial minerals industry. At September 30, the company had a working capital deficiency of about $210 million. OPTICON MEDICAL: May Opt to File for Bankruptcy to Get Financing ---------------------------------------------------------------- Opticon Medical, Inc. (OTC Bulletin Board: OPMI) announced that the company had nearly exhausted its cash resources and was in discussions with potential sources of interim funding, including sources that might be prepared to fund a reorganization of the company under Chapter 11 of the Bankruptcy Code. The company received a short term secured loan of $50,000 last week to meet immediate cash needs pending continuation of these discussions. Opticon President, Glenn Brunner, stated that the company is considering all available alternatives, including reorganization under Chapter 11 and liquidation under Chapter 7 of the Bankruptcy Code. Opticon Medical is a development stage medical device company engaged in the development and marketing of a series of innovative and cost-effective products for use in urology and in the management of urinary incontinence. PERRY ELLIS: Firming-Up Pending Acquisition of Jantzen Brand ------------------------------------------------------------ Perry Ellis International, Inc. (Nasdaq:PERY) reported results for the fiscal year ended January 31, 2002. The Company announced that total revenue for the fiscal year ended January 31, 2002 was $279.7 million versus $287.4 million for the fiscal year ended January 31, 2001. The Company reported fully diluted earnings per share for the fiscal year ended January 31, 2002 of $1.01, compared to diluted earnings per share of $1.16 for fiscal year-end January 31, 2001. "We are extremely satisfied with our results for the past year and believe that our earnings would have exceeded analyst expectations had it not been for K-Mart's unexpected bankruptcy filing, as well as some supply chain disruptions during the last ten days of our fiscal year," said George Feldenkreis, Chairman and Chief Executive Officer. Business highlights for the fiscal year included the following: -- We continued to be design and market innovators and as a result, our product lines continue to have great sell through at retail, especially in the mass markets and national chains. -- We expanded our growth in the corporate market, which culminated with the execution of a new licensing agreement with Nautica Enterprises. This agreement covers the sale of Nautica- branded apparel, bags, and accessories to the corporate ASI market. Shipping under this agreement began in January 2002. -- In a period of rapid technological change and opportunity, the Company launched a comprehensive three-year supply chain overhaul. This overhaul is predicated on the Company's belief that improved information flow is essential in today's global economy. The investment in enterprise-wide sourcing and demand management technology during fiscal year 2003 will bring this capability to Perry Ellis, allowing the Company to accelerate it's revenue growth and provide significant shareholder returns. "The fact that the Company posted such a solid performance under challenging circumstances is a testament to the strength and innovation of our organization, the resourcefulness and dedication of our professional staff, the strong diversification of brands and distribution channels, the economies of scale afforded by our superior sourcing, and the consumer appeal of the products we offer" said Oscar Feldenkreis, President and Chief Operating Officer. "As a result, we believe that FY 2003 will be a period of improved profitability and increased productivity." George Feldenkreis added, "The Perry Ellis business model works well. Our brand and channel diversity facilitates growth in a variety of business cycles. As announced [Sun]day, we are moving forward with our acquisition strategy as we finalize the pending acquisition of the Jantzen brand. This acquisition represents our first entree into the swimwear market where we will build on the heritage of the Jantzen brand. This brand is ranked among the highest brands in consumer awareness and presents a great opportunity to capitalize on its worldwide reputation for high quality swimwear." Perry Ellis International markets men's, women's and children's products in over 40 different categories under the Perry Ellis(R), Perry Ellis Portfolio(R) and Perry Ellis America(R) trademarks. Perry Ellis products are available in the United States and in more than 26 countries with worldwide retail sales of over $1.5 billion. Supreme International, a division of PEI manufactures, markets and distributes other trademarks both domestically and internationally including, Munsingwear(R), John Henry(R), Manhattan(R), and PING Collection(R) among others. Additional information on PEI is available at http://www.perryelliscorporate.com * * * As previously reported in Troubled Company Reporter, Standard & Poor's assigned its 'B+' rating to sportswear designer Perry Ellis International Inc.'s proposed $50 million senior secured notes due 2009. According to S&P, PEI's new notes are rated the same as the corporate credit rating, since they enjoy a senior position in the capital structure and are secured by all of the company's trademarks. In a distressed scenario, Standard & Poor's feels that these assets would retain considerable value and holders would fare significantly better than unsecured creditors. The ratings on PEI incorporate its intention to acquire the Jantzen business from VF Corp. and reflect its narrow product portfolio, debt leverage, and acquisition strategy. These factors are partially offset by the company's diverse portfolio of nationally recognized brand names, largely in men's apparel, and its channel diversity. PHILIP SERVICES: Seeking Covenant Amendments Under Credit Pact -------------------------------------------------------------- Philip Services Corporation (Nasdaq: PSCD/TSE: PSC) announced it has secured $30 million in interim financing under the Company's revolving loan facility. In addition, the Company will be modifying its corporate structure in order to increase the autonomy of its three primary operating groups. PSC is in discussion with its lenders to replace the interim financing with a $60 million increase in the current line of credit and believes it has reached an agreement in principle. The agreement to provide the financing would also amend the Company's financial covenants and extend the revolving loan facility through the first quarter of 2003. The impact of the slow economy in 2001 on the Company's financial performance and the continuing difficulties in the bonding and insurance markets led the Company to seek a more stable financial platform for future operations. A key result of the proposed amendments, would be to restore PSC to compliance with its loan agreements and to cause its debt to be classified as long-term in future financial statements. Separately, the Company announced closure of the Chicago office in the near future and changes to its organizational structure that will decentralize a number of corporate responsibilities to the Company's three operating divisions. In light of this new structure, Mr. Anthony Fernandes, Chairman and CEO, has advised the Board of Directors that he will be departing the Company at the end of March 2002. "I have confidence in the business model of PSC and am pleased with the accomplishments of the last two years" said Mr. Fernandes. "This is definitely a Company that can be successful in the outsourcing market with a committed workforce and client focus. While the businesses were impacted by the soft economy last year, the three units are well situated to take advantage of their strong position in the marketplace as the economy rebounds." Upon his departure, the presidents of PSC's three operating groups, Industrial Outsourcing, Environmental Services and Metals Services, will report directly to the PSC Board of Directors. Continuing corporate functions will be relocated from Chicago to PSC's Houston office by the end of the second quarter 2002. "Tony Fernandes was instrumental in developing PSC into a mature organization with a significant emphasis on safety, streamlined and standardized processes and a focus on profitable growth," said Robert Knauss, Chairman of the Governance Committee of the PSC's Board of Directors. "Over the past several months he has been unwavering in his efforts to secure covenant changes and additional working capital financing necessary to provide long- term stability. On behalf of the Board and all the employees of PSC we thank him for his tenacity and belief in the strength of our company and its people." PSC is an integrated industrial services and metals recovery company with operations throughout North America. PSC delivers diversified industrial services, together with environmental and metals services, to major industrial sectors. PHILIPS INT'L: Kensington Investment Reports 14.5% Equity Stake --------------------------------------------------------------- Kensington Investment Group, Inc. beneficially own 1,066,700 shares of the common stock of Philips International Realty Corporation, representing 14.5% of the outstanding common stock of the Company. Kensington holds sole power to vote or dispose of the total number (1,066,700) of shares held. Philips International Realty is a real estate investment trust (REIT) formed to take over the shopping center operations of the Philips Group, a group of companies associated with chairman and CEO Philip Pilevsky. Disappointed by its shares' performance in the stock market, the company has sold off most of its assets and plans to dissolve itself. Philips International Realty's real estate portfolio includes seven neighborhood and community shopping center properties located primarily in California. Kmart stores occupy the anchor position in all of the REIT's remaining properties. A property management company affiliated with the Philips Group manages the REIT's shopping centers. As reported in the March 15, 2002 edition of Troubled Company Reporter, Philips International Realty expects continued delay in the completion of its plan of liquidation as a result of the uncertainty pertaining to the ultimate status of the Kmart leases. Also, the report said, the potential impact on the proceeds from sales of the Company's remaining five properties and the Company's target of approximately $18.25 of aggregate liquidating distributions to shareholders cannot currently be evaluated. The uncertainty that continues to surround Kmart could impede the Company's ability to achieve prompt sales of its remaining assets at acceptable prices. On October 10, 2000, the Company's stockholders approved the plan of liquidation, which at that time was estimated to generate approximately $18.25 in the aggregate in cash for each share of common stock in two or more liquidating distributions. To date, a total of $15.25 per share has been distributed. The Company's five remaining assets are currently being offered for sale. PLANVISTA: Nearing Completion of Debt Restructuring Transaction --------------------------------------------------------------- PlanVista Corporation (NYSE: PVC) announced that it intends to issue approximately 28,600 shares of Series C Convertible Preferred Stock pursuant to the terms of a Series C Convertible Preferred Stock Issuance and Restructuring Agreement among PVC and the various lenders under PVC's existing credit facility, in connection with a debt-for-equity swap which will reduce over $28.6 million of PVC's debt to such lenders. This debt-for- equity swap and proposed restructure will reduce the outstanding debt under PVC's credit facility to approximately $40.0 million, and will cure PVC's current defaults under such facility. The Preferred Shares shall, among other things, (i) have a liquidation preference of approximately $28.6 million plus accrued and unpaid dividends, (ii) accrue dividends at the rate of 10% per annum until the first anniversary of their date of issuance and 12% of the liquidation preference per annum thereafter, being payable in cash or, at the Company's option, in kind in shares of Series C Preferred Stock, (iii) be redeemable (subject to compliance with certain financial requirements) at the liquidation preference plus all accrued and unpaid dividends, and (iv) prior to conversion authorize the holders of the Preferred Shares to initially elect three out of seven members of PVC's Board of Directors, increasing to four of seven members upon the occurrence of certain events, and will vote with the Common Stock on an as-converted basis upon the occurrence of such events and when the number of Preferred Shares outstanding drops below 12,000 shares. The Preferred Shares may not be converted to Common Stock prior to the 18- month anniversary of their issue date. Upon conversion of the Preferred Shares the Senior Lenders, as a group, will own 51% of the Company's outstanding shares of Common Stock. The described transaction would normally require approval of stockholders according to the Stockholder Approval Policy of the New York Stock Exchange. The Audit Committee of the Board of Directors of Plan Vista Corporation determined that delay necessary in securing stockholder approval prior to the issuance of the Preferred Shares would seriously jeopardize the financial viability of the Company. Because of that determination, the Audit Committee, pursuant to an exception provided in the Exchange's shareholder approval policy for such a situation, expressly approved the Company's omission to seek the stockholder approval that would otherwise have been required under that policy. The Exchange has accepted the Company's application of the exception. PVC, in reliance on the exception, is mailing to all stockholders a letter notifying them of its intention to issue the Preferred Shares without seeking their approval. Ten days after such notice is mailed, PVC will proceed to issue certificates for the Preferred Shares, subject to finalization of the restructuring documents and satisfaction of the conditions to the restructuring. The Company also announced that it is continuing its efforts to close on the transaction involving its new credit facility and debt restructure. The transaction was announced on January 23, 2002 and was originally expected to close on or before March 15, 2002. The parties have agreed to extend the period during which the transaction can be completed through March 29, 2002. PlanVista Solutions is a leading health care technology and product development company, providing medical cost containment for health care payers and providers through one of the nation's largest independently owned full- service preferred provider organizations. PlanVista Solutions provides network access, electronic claims repricing, and claims and data management services to health care payers and provider networks throughout the United States. Visit the company's Web site at http://www.planvista.com POLAROID CORP: Seeking Approval of Revised $4.5MM Bonus Plan ------------------------------------------------------------ DebtTraders reports that Polaroid Corporation is seeking approval of its revised $4.5 million bonus plan. The company withdrew its original incentive and retention bonus plan following a backlash by retirees whose health insurance benefits were cut. The Company, which has lost 15% of its U.S. workers since filing in October of 2001, now claims that it is short- staffed. According to Polaroid's lawyers maintain that "the lack of a retention plan has made a difficult situation worse." Polaroid Corp., filed for Chapter 11 bankruptcy protection in October of 2001. DebtTraders analysts Daniel Fan, CFA, and Blythe Berselli, CFA, advise that Polaroid Corporation's 11.50% bonds due 2006 were last quoted at a price of 6.0. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=PRD3 PSINET: Agrees to Reimburse JPMorgan Chase for $5.17MM L/C Draws ---------------------------------------------------------------- PSINet Inc. and JPMorgan Chase Bank ask the Bankruptcy Court to approve a Stipulation that modifies the automatic stay to allow Chase to liquidate and apply cash collateral to satisfy PSINet's reimbursement obligations -- approximately US$5.17 million -- in respect of recent draws by beneficiaries on three letters of credit. Chase issued the three L/Cs pursuant to Standby or Performance Letter of Credit Applications and Agreements entered by the parties prior to the Petition Date. The face amounts are US$300,000.00, US$248,543.00 and US$8,293,000.00. The respective beneficiaries have drawn down the L/Cs in the amount of US$300,000.00, US$248,543.00 and US$4,620,792.60 for which Chase has not been reimbursed. All three L/Cs have now expired. PSINet agrees to reimburse Chase for: (a) the face amount of any draw; (b) interest from the date of the draw to the date of reimbursement (at Chase's prime commercial lending rate, plus 3.0%;); (c) Chase's customary commissions equal to 0.40% per annum on the undrawn face amount of the outstanding Letters of Credit. PSINet deposited Cash Collateral to secure the Reimbursement Obligations in a restricted account maintained by Chase. In addition to authorizing Chase to apply the cash collateral to satisfy PSINet's Reimbursement Obligation, the Stipulation would requires Chase to release the excess cash collateral remaining in the account -- which exceeds US$3.5 million -- to PSINet's estate. The Stipulation also provides that PSINet is released and discharged from all Reimbursement Obligations and any other obligations, liabilities, debts, security interests, pledges, liens, encumbrances or other interests in respect of the Letter of Credit Agreements and the Cash Collateral Agreements. Based on their review of Chase's claims and security interests, the Debtors believe it is unlikely they could successfully challenge the validity, amount or perfection of such claims and security interests. The Debtors believe the Stipulation represents the most efficient resolution of these claims and the quickest recovery of the excess cash collateral for the benefit of the Debtors' estates. The Debtors believe the Stipulation is fair and equitable and in the best interests of their creditors and estates. The Debtors have reviewed the principal terms of the Stipulation with counsel for the Committee and believe that the Committee does not oppose the relief sought in this Motion. Accordingly, the Debtors ask the Court to approve the Stipulation pursuant to Section 362(d) of the Bankruptcy Code and Rule 4001(d) of the of the Bankruptcy Rules. In order to speed the recovery of the excess Cash Collateral for the benefit of the Debtors' estates, and to minimize the interest accrual to which Chase, as an oversecured creditor, appears entitled, the Debtors request that the Court provide that the Stipulation shall be effective and enforceable immediately upon entry by the Court and that the stay pursuant to Fed. R. Bankr. P. 4001(a)(3) (to the extent applicable) is waived. (PSINet Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) RADIO ONE: Secures Bank Facility Amendment to Ease Liquidity ------------------------------------------------------------ Radio One, Inc. (Nasdaq: ROIAK, ROIA) announced the amendment of its existing $600 million senior secured credit facility. The amendment adjusts various covenant levels through the end of 2004, while leaving post-2004 covenants at their original levels. Additionally, the Company announced that, given the current state of business, it expects to exceed its first quarter revenue, BCF, EBITDA and ATCF guidance. Scott R. Royster, the Company's Executive Vice President and CFO stated, "I am very pleased with the components of this bank amendment and want to thank our bank group for being so supportive of the Company. We are committed to deleveraging our balance sheet and this amended facility, coupled with appropriate deleveraging, will provide us with significant financial flexibility that will be important as the economy strengthens and further business opportunities develop. Furthermore, we are pleased to report that the outlook for our business has improved fairly dramatically. As such, we expect to exceed our first quarter guidance and are cautiously optimistic that the second quarter will show even faster revenue growth than that which we expect to report for Q1." Radio One is the nation's seventh largest radio broadcasting company (based on 2001 pro forma revenue) and the largest primarily targeting African-American and urban listeners. Pro forma for all announced acquisitions and operating agreements, the Company owns and/or operates 65 radio stations located in 22 of the largest markets in the United States and programs five channels on the XM Satellite Radio, Inc. system. SERVICE MERCHANDISE: Intends to Sell All Fixtures & Equipment ------------------------------------------------------------- Service Merchandise Company, Inc., and its debtor-affiliates seek the Court's approval to sell substantially all of their furniture, fixtures and equipment located at its 218 Stores, free and clear of liens, claims and encumbrances. Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, in Nashville, Tennessee, informs Judge Paine that the Debtors, in consultation with their wind-down consultants -- Abacus Advisory & Consulting Corp. LLC -- decided that the sale of the Fixtures will maximize the recoveries to creditors. Mr. Jennings relates that the Debtors have undertaken thorough marketing efforts to identify potential buyers of the Fixtures. Several parties showed their interest as demonstrated by the proposals received. After evaluating the proposals, the Debtors conclude that to sell the fixtures as a package is more advantageous than on a piecemeal basis. Mr. Jennings asserts that the bulk sale will: -- reduce the Debtors' administrative charges for the transactional costs in disposing the fixtures; and -- no party in interest is prejudiced by the bulk sale because the Fixtures are available to be purchased from the winning Purchaser. (Service Merchandise Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) SERVICE MERCHANDISE: Designation Rights Sold for $235 Million ------------------------------------------------------------- Developers Diversified Realty (NYSE: DDR) announced that a joint venture among Developers Diversified, Lubert-Adler Funds and Klaff Realty, L.P. has been awarded asset designation rights for all of the retail real estate interests of the bankrupt estate of Service Merchandise Corporation for approximately $235 million. Developers Diversified will have a 25% interest in the joint venture. In addition, Developers Diversified will earn fees for the management, leasing, development and disposition of the real estate portfolio. The designation rights enable the joint venture to determine the ultimate disposition of the real estate interests held by the bankrupt estate. The portfolio consists of approximately 227 Service Merchandise retail sites, totaling approximately 12.4 million square feet. Scott A. Wolstein, Chairman and CEO of Developers Diversified, commented, "We are pleased to announce this transaction, which is a natural fit to our core business. Our role in remarketing the portfolio clearly plays to our leasing and development strengths and will further solidify relationships with our national tenants by providing them opportunities to grow and capture additional market share." Final approval of the transaction was announced March 16, 2002 by the US Bankruptcy Court in Nashville, Tennessee. The transaction is expected to close on March 19, 2002, at which time the designation rights will be transferred to the joint venture. Developers Diversified currently owns and manages approximately 230 shopping centers in 41 states totaling 57 million square feet of retail real estate. Developers Diversified is a self- administered and managed real estate investment trust (REIT) operating as a fully integrated real estate company which acquires, develops and manages shopping centers. You can learn more about Developers Diversified on the Internet at http://www.ddrc.com STANDARD AUTOMOTIVE: Files for Chapter 11 Reorg. in New York ------------------------------------------------------------ Standard Automotive Corporation (AMEX:AJX) announced that to facilitate the sale or restructuring of some or all of its subsidiaries, it, Ajax Manufacturing Company and certain of its subsidiary holding companies -- CPS Enterprises, Inc., Barclay Investments, Inc. and Critical Components Corporation -- have filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Ajax Manufacturing Company was the only operating company included in the filing. The Company noted that its primary objective is to minimize the impact of the restructuring process on its operating companies. Concurrently, Standard Automotive said it received a proposal for a commitment for up to $5 million in debtor-in-possession (DIP) financing from Raymond International, W.L.L. to fund operations during the process. The proposal and financing provided for therein would be subject to Court approval. The Company is optimistic this facility will provide sufficient financial resources to operate its business as usual during the Chapter 11 process. "This restructuring process allows time for prospective buyers to evaluate the Company and its operations while day-to-day business activities continue without interruption," said John E. Elliott, II, chairman and chief restructuring officer, who joined the Company on February 11. "A sale of some or all of the Company's subsidiaries is in the best interests of all constituents because it will create greater access to the financial resources necessary for such subsidiaries to prosper and grow, and have the least impact on the jobs of their employees." Mr. Elliott noted over the past few months the Company has held the line on costs while preliminary discussions have been held with prospective buyers for all or parts of the Company. He added that the Company intends to retain, subject to Court approval, Baltimore-based investment-banking firm Legg Mason Wood Walker, Inc. to help facilitate the sale. Mr. Elliott emphasized that daily operations will continue as usual while the restructuring is completed and expects that neither employees nor customers of Standard Automotive should notice any difference in operations as a result of the filing. "Our facilities will remain open and all aspects of the business will go on as before the Chapter 11 filing," Mr. Elliott said. "Our employees will continue to be paid as they always have and transactions that occur in the ordinary course of business will proceed as usual." Standard Automotive is a diversified company with production facilities located throughout the United States, Canada and Mexico. Standard Automotive manufactures precision products for aerospace, nuclear, industrial and defense markets, and it builds a broad line of specialized dump truck bodies, dump trailers, and related products. STANDARD AUTOMOTIVE: Case Summary & Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Standard Automotive Corporation 280 Park Avenue, 21st Floor West New York, New York 10017-1216 Bankruptcy Case No.: 02-11259 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Ajax Manufacturing Company 02-11257 CPS Enterprises, Incorporated 02-11263 Barclay Investment, Incorporated 02-11261 Critical Component Corporation 02-11265 Type of Business: Standard's Truck Body/Trailer Division designs, manufactures and distributes trailer chassis for use primarily in the transport of shipping containers and a broad line of specialized dump truck bodies, dump trailers, truck suspensions and other related assemblies. Standard's Critical Components Division specializes in the fabrication of precision assemblies for the aerospace, nuclear, industrial and military markets. Chapter 11 Petition Date: March 19, 2002 Court: Southern District of New York Debtors' Counsel: J. Andrew Rahl, Jr., Esq. Anderson Kill & Olick, P.C. 1251 Avenue of the Americas New York, New York 10020 Telephone:(212) 278-1000 Total Assets: $113,897,852 Total Debts: $124,975,304 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Mintz, Levin, Cohn, Ferris, Legal $666,291 Glovsky & Popeo 666 Third Avenue New York, New York 10020 212-935-3000 James F. "Pat" former CEO severance $656,750 O'Crowley III and related 344 Third Avenue, Apartment 18D New York, New York 10010 (212) 481-2373 Morgan, Lewis & Bockius Legal $306,295 101 Park Avenue New York, New York 10178-0060 (212) 309-6000 Arthur Anderson LLP Auditing $188,895 McCarter & English, LLP Legal (secured $95,134 lenders' attorneys) Gowlings Suite 2600 $65,000 SSI (U.S.) Inc. $56,696 BP 280 Park Avenue LLC $56,348 Scialabba & Morrison, P.C. Legal $34,900 Policano & Manzo Accounting $29,792 Hogan & Hartson, LLP Legal $29,268 Accountemps Temporary Accounting $23,844 Kemi Insurance $23,386 Brobeck, Phleger Legal $28,000 & Harrison, LLP The Hartford Insurance $18,598 ING Barings Financial $16,814 Edward W. Hayes, P.C. Legal $16,227 Burrups $16,832 Carl Marks Consulting $15,010 Sills Cummis Radin Legal $15,000 SUNRISE TECHNOLOGIES: Inks Pact to Acquire ScienceBased Health -------------------------------------------------------------- Sunrise Technologies International Inc. (OTC Bulletin Board: SNRS) announced it has entered into a non-binding Letter of Intent with Aragon Ventures LLC for Sunrise to acquire all of the equity of SBH Holdings LLC. ScienceBased Health sells ocular nutraceuticals primarily through ophthalmologists. It is expected to have 2002 sales of approximately $5-6 million, and free cash flow of approximately $600 thousand annually. In addition, the Company announced an out-of-court restructuring plan, all as more particularly detailed in the Company's filing on Form 8-K, filed today, which contains the Letter of Intent as an exhibit. Investors and creditors are urged to access the 8-K filing for more details. There can be no assurance that the acquisition or restructuring plan will be consummated. David Brewer, managing partner of Aragon Ventures said, "Aragon previously invested $10 million into Sunrise and I personally guaranteed the Company's bank loan. We were great believers in the technology then, and we are great believers in the technology now. We are not going to let this important, valuable technology die. Also, the Company has obligations to its ophthalmologists and patients that we want to help the Company honor." Under the restructuring plan, trade creditors with verified invoices can receive up to 100% of their claims by converting into Series D Convertible Preferred Stock, which has a mandatory 2 year pay-off beginning in year 5. The Series D Convertible Preferred Stock is convertible into common after 3 years at a conversion price equal to the then market price of the common stock. The plan calls for 97% of the unsecured creditors to agree to the restructure. If this threshold is not reached, the Company will have no choice but to pursue an insolvency proceeding, which, in the opinion of Aragon, would leave nothing for the unsecured creditors, after administrative and legal expenses. The restructuring plan also calls for an additional $2 million of Series B Convertible Preferred Stock to be raised from existing or other accredited investors at an approximately $.06 price per share. This money will be used as additional working capital. A $10-15 million institutional financing is planned for later. In addition, John Hendrick resigned on March 11, 2002, as President & Chief Executive Officer and as a director of the Company, coincident with the layoff of all the remaining employees of the Company on March 8, 2002. Anesti Management LLC, an affiliate of Aragon, will run the Company on a day-to- day basis, pursuant to an interim management agreement. Sunrise Technologies International, Inc. is a refractive surgery company based in Fremont, California, that has developed holmium YAG laser-based systems that utilize a patented process for shrinking collagen developed by Dr. Bruce Sand in correcting ophthalmic refractive conditions. Internet users can access Sunrise's World Wide Web site at http://www.sunrise-tech.com SUPERVALU: Will Close & Sell Belle Vernon Distribution Facility --------------------------------------------------------------- According to the March 18, 2002 edition of Scrambled Eggs, SUPERVALU Inc. will padlock in late summer its 700,000 square- foot distribution center in Belle Vernon, Pennsylvania, and may put the facility up for sale following the closure. The report also says that as a result the operations in the facility will then be transferred to its other Pennsylvania distribution center, which is a 724,000 square-foot facility located in New Stanton. SUPERVALU is a leading supermarket retailer holding the nation's largest position in the extreme value grocery retailing segment and is the nation's most successful food distributor to grocery retailers. At September 8, 2001, the company reported a working capital deficiency of close to $100 million. W.R. GRACE: Signing-Up Kinsella Communications as Notice Agents --------------------------------------------------------------- W. R. Grace & Co., and its debtor-affiliates ask Judge Fitzgerald's approval for their employment of Kinsella Communications as their notice consultant, and to pay Kinsella interim compensation. The Debtors remind Judge Fitzgerald that they previously employed Kinsella under the terms of an advertising and services agreement dated as of July 1, 2001, which provided that the Debtors would compensate Kinsella in an amount equal to 15% of the cost of the "media buy", which was to be paid when the bar date notice program was implemented. The retention agreement further provided that if a bar date is not established in these chapter 11 cases or work is cancelled before the bar date, the Debtors would be obligated to pay an amount equal to a reduced percentage of the media buy for work performed, which reduced amount is to be negotiated between the Debtors and Kinsella. Katherine Kinsella avers to Judge Fitzgerald that Kinsella typically completes half its work in developing a bar date notice plan and the notice materials prior to executing a complex media notice program. It generally then completes the other half of its work when the notice program is executed, at which time it is compensated. This arrangement is usually satisfactory for Kinsella because there is little delay between the time when the notice plan is developed and when the notice program is executed. In these chapter 11 cases, no bar date has yet been set, even though seven months have passed since Kinsella began work to develop and execute a media notice program. Furthermore, Kinsella performed the bulk of its services to date during the period from May to November 2001, at which time other developments in the chapter 11 cases delayed the setting of a claims bar date. Thus far, Kinsella has developed not one but two separate bar date notice plans and sets of notice materials, the first as part of the original case management order filed by the Debtors in June 2001, and the second in conjunction with the Debtors' reply brief filed in November 2001, wherein the Debtors attempted to respond to objections filed to the first plan by the PD Committee. Kinsella expended significant resources without receiving any compensation and since it is still unclear when a bar date may be set, under the retention agreement Kinsella does not have any immediate prospect of receiving any compensation for its significant efforts. Specifically, Kinsella performs and has performed work on the initial bar date notice plan by: (a) extensively researching the Debtors' asbestos-related businesses and products as background for developing a bar date notice plan; (b) gathering and analyzing product information relating to the Debtors' asbestos-related products, including (i) information on Grace's vermiculite and asbestos-containing products; (ii) distribution and sales information by state for MK-3 from sales records; and (iii) information regarding Zonolite Attic Insulation; (c) analyzing claims-related information, including: (i) statistics regarding age of personal injury claimants, ,and (ii) claims filings by jurisdiction for Grace; (d) developing demographic profiles of personal injury claimants, settled claimants, property claimants, and Zonolite Attic Insulation claimants, using factors such as age, gender, occupation and the like; (e) researching and identifying the media vehicles through which different classes of potential claimants in the United States and Canada normally receive information; (f) developing a media program, including general consumer magazines, newspapers, television and public relations, through an extensive analysis of the most effective media vehicles to be used in combination to the reached claimants; (g) calculating the estimated reach and frequency of the notice program; (h) identifying potential geographic concentrations of personal injury claimants based on identifiable areas where the Debtors may have mined, manufactured or distributed vermiculite and asbestos-containing products and operated expanding plants; (i) identifying (i) third-party organizations that may have contact with personal injury claimants, including occupationally-related trade or professional associations and organizations whose membership may include individuals with asbestos-related personal injury, (ii) trade publications that serve industries in which occupational asbestos exposure was likely; (iii) consumer publications targeted to "do-it-yourself" homeowners; and (iv) trade publications likely to be read by owners, administrators and managers of commercial, residential or public buildings; and (j) creating the required notice materials with multiple drafts and layouts, including the bar date notices for use in trade and general publications, a script for a 30-second television spot and materials to be sent to trade unions and other third parties. For the second notice plan, Kinsella performs and has performed: (a) developing a new notice program to address concerns of the PD Committee, including revisions to the planned consumer magazine, television and Canadian media buys; (b) reconsidering all plan elements in light of the PD Committee's concerns; (c) developing several alternative plans using various combinations of television dayparts and print media vehicles; (d) comparing the alternative media plans for their relative efficacies in achieving adequate reach among the intended notice parties; and (e) rewriting and redesigning all notice materials, with multiple drafts and layouts, to address various constituent concerns. In addition, between September and November Ms. Kinsella and Kinsella's staff spent considerable time addressing the concerns raised by the PD Committee to the initial bar date notice plan. Kinsella also provided the PD Committee with all requested information prior to a deposition of Ms. Kinsella. Ms. Kinsella also spent substantial time preparing for the deposition, as well as preparing for testimony to be provided at a November hearing on the bar date motion which was cancelled on the day of the hearing because of other case developments. When the retention agreement was signed, it was anticipated that Kinsella would have substantially completed its work related to the notice program and concluded the media buy by the end of 2001, entitling it to compensation at that time under the terms of the retention agreement. The delays in the chapter 11 cases and the fact that no order has yet been entered allowing the notice program to go forward have created a hardship for Kinsella in light of the back-loaded nature of the retention agreement, and the much greater amount of work demanded in comparison with other notice programs Kinsella has developed in the past. By this Application, the Debtors seek authorization to pay Kinsella now for half of the estimated fees that will be due to Kinsella under the retention agreement. The Debtors estimate this amount is approximately $398,000, and the balance as stated in the retention agreement. Ms. Katherine Kinsella avers that Kinsella is a disinterested person and neither holds nor represents any interest adverse to the Debtors or these estates in the matters for which Kinsella's employment is to be approved. (W.R. Grace Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Meetings, Conferences and Seminars ------------------------------------ March 20-23, 2002 TURNAROUND MANAGEMENT ASSOCIATION Spring Meeting Sheraton El Conquistador Resort & Country Club Tucson, Arizona Contact: 312-822-9700 or info@turnaround.org March 21, 2002 CROSSROADS LLC Thought Leadership Seminar - Hospitality Industry The Harmonie Club, 4 East 60th St., New York, NY Contact: 212-421-1100 x 12 or seminars@xroadsllc.com April 11-14, 2002 COMMERCIAL LAW LEAGUE OF AMERICA 72nd Annual Chicago Conference Westin Hotel, Chicago, Illinois Contact: 312-781-2000 or clla@clla.org or http://www.clla.org/ April 11-14, 2002 NORTON INSTITUTES ON BANKRUPTCY LAW Norton Bankruptcy Litigation Institute II Flamingo Hilton, Las Vegas, Nevada Contact: 770-535-7722 or Nortoninst@aol.com April 18-21, 2002 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org April 25-27, 2002 ALI-ABA Fundamentals of Bankruptcy Law Rittenhouse Hotel, Philadelphia Contact: 1-800-CLE-NEWS or http://www.ali-aba.org April 28-30, 2002 COMMERCIAL LAW LEAGUE OF AMERICA 4th International Conference Jurys Ballsbridge Hotel - The Towers, Dublin, Ireland Contact: 312-781-2000 or clla@clla.org or http://www.clla.org/ May 13, 2002 (Tentative) AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference Association of the Bar of the City of New York New York, New York Contact: 1-703-739-0800 or http://www.abiworld.org May 15-18, 2002 ASSOCIATION OF INSOLVENCY AND RESTRUCTURING ADVISORS 18th Annual Bankruptcy and Restructuring Conference JW Mariott Hotel Lenox, Atlanta, GA Contact: (541) 858-1665 Fax (541) 858-9187 or aira@airacira.org May 24-27, 2002 COMMERCIAL LAW LEAGUE OF AMERICA 54th Annual New England Meeting Cranwell Resort and Gold Club, Lenox, Massachusetts Contact: 312-781-2000 or clla@clla.org or http://www.clla.org/ May 26-28, 2002 INTERNATIONAL BAR ASSOCIATION International Insolvency 2002 Conference Dublin, Ireland Contact: Tel +44 207 629 1206 or member@int-bar.org or http://www.ibanet.org June 6-9, 2002 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800 or http://www.abiworld.org June 13-15, 2002 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Seaport Hotel, Boston Contact: 1-800-CLE-NEWS or http://www.ali- aba.org/aliaba/cg097.htm June 20-21, 2002 RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP Fifth Annual Conference on Corporate Reorganizations Fairmont Hotel, Chicago Contact: 1-800-726-2524 or ram@ballistic.com June 27-29, 2002 ALI-ABA Chapter 11 Business Reorganizations Fairmont Copley Plaza, Boston Contact: 1-800-CLE-NEWS or http://www.ali-aba.org June 27-30, 2002 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains, Advanced Bankruptcy Law Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 770-535-7722 or Nortoninst@aol.com July 11-14, 2002 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Cape Cod, MA Contact: 1-703-739-0800 or http://www.abiworld.org July 12-17, 2002 COMMERCIAL LAW LEAGUE OF AMERICA 108th Annual Convention Grand Summit Hotel, Park City, Utah Contact: 312-781-2000 or clla@clla.org or http://www.clla.org/ July 17-19, 2002 ASSOCIATION OF INSOLVENCY AND RESTRUCTURING ADVISORS Bankruptcy Taxation Conference Snow King Resort, Jackson Hole, WY Contact: (541) 858-1665 Fax (541) 858-9187 or aira@airacira.org August 7-10, 2002 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference Kiawah Island Resort, Kiawaha Island, SC Contact: 1-703-739-0800 or http://www.abiworld.org September 26-27, 2002 ALI-ABA Corporate Mergers and Acquisitions Marriott Marquis, New York Contact: 1-800-CLE-NEWS or http://www.ali-aba.org October 9-11, 2002 INSOL INTERNATIONAL Annual Regional Conference Beijing, China Contact: tina@insol.ision.co.uk or http://www.insol.org October 24-28, 2002 TURNAROUND MANAGEMENT ASSOCIATION Annual Conference The Broadmoor, Colorado Springs, Colorado Contact: 312-822-9700 or info@turnaround.org November 21-24, 2002 COMMERCIAL LAW LEAGUE OF AMERICA 82nd Annual New York Conference Sheraton Hotel, New York City, New York Contact: 312-781-2000 or clla@clla.org or http://www.clla.org/ December 5-8, 2002 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference The Westin, La Paloma, Tucson, Arizona Contact: 1-703-739-0800 or http://www.abiworld.org April 10-13, 2003 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Grand Hyatt, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org May 1-3, 2003 (Tentative) ALI-ABA Chapter 11 Business Organizations New Orleans Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 8-10, 2003 (Tentative) ALI-ABA Fundamentals of Bankruptcy Law Seattle Contact: 1-800-CLE-NEWS or http://www.ali-aba.org July 10-12, 2003 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Eldorado Hotel, Santa Fe, New Mexico Contact: 1-800-CLE-NEWS or http://www.ali-aba.org December 3-7, 2003 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference La Quinta, La Quinta, California Contact: 1-703-739-0800 or http://www.abiworld.org April 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Bond pricing, appearing in each Monday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, 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 publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $625 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***